The Washington region’s prospects aren’t all bad under the Trump administration. A top local economist joked at a recent business conference that demonstrators flocking to rallies in the District will drop bundles of cash, spurring growth from “protest tourism.”
But the area is bracing for shock at the hands of a reinvent-the-rules president who routinely insults the city and a Republican-led Congress that for years has sought to shrink the federal government that is the area’s principal employer.
Officials and analysts expect sharp cuts in federal nondefense spending, which would strain local budgets nationwide and pose a particular threat to economic growth here. In addition, proposed tax changes risk stalling the Washington area’s high-priority efforts to provide more affordable housing. And business leaders say President Trump’s demonization of the capital, highlighted by his calls to “drain the swamp,” has hurt the region’s reputation as a good place to work.
There is a potential bright side: Cuts in federal programs could be partly offset by increased spending on the military and infrastructure such as roads and bridges. Some Republicans predict that the District and its suburbs will benefit, along with the rest of the country, as Trump’s policies strengthen the economy.
No one knows what the full impact will be, because the administration and congressional leaders have sent mixed signals about their intentions. And since the White House does not release details of its budget proposal for several weeks, local jurisdictions are making plans for next year with no specific information on how much federal support they’re going to lose.
But the region is widely expected to fare worse than most because of steps to restrict the size and cost of the federal workforce — an effort already begun with the president’s early freeze on federal hiring.
“We will bear undue burden,” Alexandria Vice Mayor Justin Wilson (D) said. The relevant question is, he said, “Is it really, really bad, or cataclysmic?”
Although many of the administration’s plans remain murky, there is a broad expectation that they will include substantial cuts over time in nonmilitary spending.
Such reductions would be necessary to help pay for Trump’s promises to lower taxes and raise defense spending, without cutting entitlements such as Social Security and Medicare.
Trump’s pick for national budget director, Rep. Mick Mulvaney (R-S.C.), is an outspoken advocate for slashing federal budgets. Republicans in Congress and conservative groups advising the White House want to shrink programs including Medicaid, food stamps, housing assistance and Head Start.
“As a whole, we’re spending too much,” said Rachel Greszler, senior policy analyst at the Heritage Foundation, which has supplied advisers to Trump’s team. “They’re trying to take a comprehensive look at government and evaluate it from a business perspective.”
In many cases, the GOP and its allies propose repackaging current domestic spending programs as block grants to states and localities — a change that critics decry as a way to mask cuts.
The net effect would be to shift costs and responsibilities to state and local governments. That’s the scenario that is worrying local officials, who don’t know how much the burden will be.
“We’re sort of adopting a budget this year with a bit of a blindfold on,” said Sharon Bulova (D), chairman of the Fairfax County Board of Supervisors. The county, she said, doesn’t know “what’s going to happen to some sizable sources of funding that come from the federal government, and what will we need to try to pick up ourselves.”
D.C. Mayor Muriel E. Bowser (D) said the “biggest hit” to her budget would occur if President Barack Obama’s Affordable Care Act is repealed without replacement. The District’s auditor has estimated that it would cost $563 million in the first year to preserve insurance for all who have it now.
“Either we would raise revenue or we would have to not do something else,” Bowser said.
Prince George’s County Executive Rushern L. Baker III (D) said an ACA repeal could mean that a long-planned regional hospital would not be financially viable, because so many recently insured poor patients would again need uncompensated care.
“It just means that local leaders are on their own to finance a lot of domestic, social and economic priorities,” said Amy Liu, vice president and director of the Metropolitan Policy Program at the Brookings Institution. “There’s an alarm bell going off across the country, mostly because of uncertainty.”
The threat to affordable housing programs in the increasingly expensive Washington region has received far less attention, but is a prime concern for Bowser and other officials.
The risk is an unintended side effect of a planned slashing of the corporate tax rate, strongly favored by Trump and Congress. Such a tax cut would reduce companies’ incentive to invest in affordable housing projects by purchasing the federal Low-Income Housing Tax Credit, which provides financing that has been vital for building low-cost rental housing nationwide.
Bowser, who has made affordable housing one of her signature issues, said the city would have to find “more local dollars . . . to fill the gaps.” But it is not clear how the city could do so.
Sen. Chris Van Hollen (D-Md.) said cuts in federal investments in health research would hurt the country and his state, which is home to the headquarters of the National Institutes of Health and the Food and Drug Administration.
However, increased spending on defense and cybersecurity would be a boon for the region, given the large numbers of military personnel and private contractors working for the Pentagon and National Security Agency.
“That’s one area that will be very positive,” said Rep. Barbara Comstock (Va.), the only Republican in the local congressional delegation.
Although Comstock criticized Trump’s federal hiring freeze for not being “strategic,” she predicted that his plans to lower taxes and reduce regulations would create jobs throughout the nation, including in the Washington region.
“Getting the economy going again is going to be the single most important thing,” she said.
Trump’s much-publicized proposal to raise $1 trillion for infrastructure over 10 years is fueling a contradictory mix of hope and skepticism.
It would be a big plus for the region if the administration and Congress agreed to sharply boost federal funding for transportation, water projects and other investments. The Metropolitan Washington Council of Governments says the region needs to find an extra $58 billion for such projects over the next 15 years.
Trump’s pick for Interior secretary, Rep. Ryan Zinke (R-Mont.), said at his confirmation hearing that he wanted to spend $150 million to repair the Memorial Bridge and fix nonworking fountains in the District’s parks.
But the most detailed infrastructure plan to emerge from the Trump campaign did not call for fresh government spending. Instead, it proposed tax credits to encourage private investment. And at a recent congressional hearing, none of the corporate chief executives who testified said they thought sufficient private money would surface to meet the public’s infrastructure needs.
“This issue is front and center,” said Chuck Bean, executive director of the Council of Governments. “Will there be federal funding or will this be a financing mechanism?”
Because most House Republicans and conservative advisers in the White House generally favor reducing spending on Metro and other forms of mass transit, local officials are acutely worried about federal funding for Washington’s long-troubled subway.
Comstock said she will fight to protect the unique, $150 million a year subsidy that Congress gives Metro for safety improvements and other capital needs.
The federal workforce and official Washington in general found itself under attack for much of the 2016 presidential campaign. That hostility has not waned since the inauguration and what seems to be a new era of anti-Trump protests in the capital.
For a city that found itself booming and growing more trendy in the years following the 2008 recession, the anti-Washington rhetoric is a bitter, and potentially costly pill to swallow.
“Greater Washington has become the enemy, has become the swamp,” James Dinegar, president of the Greater Washington Board of Trade, told NewsChannel 8. He said Trump “is doing a lot of damage to the reputation of this region, and it will make it difficult to recruit and retain people.”
Although the region is gradually becoming less dependent on federal spending, the federal government is still its largest employer by far.
Beyond barbs and insults, any restraints on federal hiring or pay have an enormous impact here.
Terry Clower, director of George Mason University’s Center for Regional Analysis, said in an interview that a federal pay freeze, as proposed by some Republicans, would deprive the regional economy of more than $900 million a year in cost-of-living increases alone.
But at a conference in Falls Church on Feb. 1, Clower also noted, with a smile, that the new administration was having at least some positive impact.
Spending by anti-Trump demonstrators visiting from the suburbs or out of town, he quipped, could become “the biggest growth sector in our economy.”
Patricia Sullivan contributed to this report.