“It’s Not about Money. It’s about New Thinking.”
Share this article
ADVERTISEMENT
(comments below)
Comments
Comments
23 responses to ““It’s Not about Money. It’s about New Thinking.””
-
well.. a few days ago… I thought I heard something about BR being about Virginia… and not national politics..
😉
Not complaining , actually glad to see that you do see that Virginia is not an island unto itself as both Federal laws as well as Federal spending substantially affect us.
But the Pentagon thing just further reinforces the idea that Virginia has (in my view, irresponsibly) ignored it’s own economic development responsibilities and instead relied on sucking on the Federal Teat and as a result – when Washington sneezes fiscally, Virginia gets pneumonia.
And it’s not just the military. It’s health care where blame MediAid for our financial woes as if some Wizard of Oz is making choices about Medicaid instead of Virginia.. where we willingly choose to spend more than half the money to pay for nursing homes for folks who own their own homes…while cutting benefits to the handicapped and children of poor parents.
and the same is true about education where we end up blaming bad teachers and parents – and disruptive students for why – we are not as good as Massachusetts and Connecticut much less Europe, Japan, and Australia. Nope.. we alone are unique in the US and the world in terms of bad teachers, bad parents and bad kids…
The “Virginia way” is to depend on DOD economically and but blame the Feds for the problem…
-
Larry, you need to run for state delegate or senator and push your views on Medicaid. Transfer money from nursing homes to the working poor. I’d be very curious to see what would happen.
-
@TMT – we need to require people to buy long term care insurance OR pay a fee into a fund or get a reverse mortgage on their homes… BEFORE we start asking taxpayers to basically pay to preserve the wealth of parents so they can give it to their kids.
it’s really a scandal and the very people who will end up relying on taxpayers – right now – they oppose Medicaid for moms with kids which is but 1/4 of the current Medicaid costs.
We delude ourselves on these issues instead of dealing with the hard truth – that many who think they do not get entitlements and subsidies really do – but they still like to blame the “poor”.
If we want to honestly deal with Virginia’s taxes and budget – we need to all be honest about what the costs are – and our own part in them.
-
-
BR isabout Virginia… and so is this blog post!
-
-
Ironically, No. Va’s government-contractor-dependent economy stemmed from Gingrich & Co.’s touting of privatization and outsourcing.
Our Congressional Rep’s are 8 R to 3 Dem….hope the new Administration doesn’t otherwise punish states that didn’t vote for him, as his Victory Tour itinerary would indicate.
At least Hampton Roads is hard power.
-
DOD is but 1/2 of the visible spending for national defense. the whole other half is not booked as DOD/military. That includes things like the VA (categorized as an entitlement) , homeland security, DOE, NASA, border patrol, FBI/CIA/NSA, etc , Coast Guard, etc.
and the HQ for the stealth National Defense agencies – is also in NoVA and most use contractors who masquerade as the “private sector”!!
so the entire budget plays out like this:
True National Defense – one trillion
all entitlements – one trillion
tax expenditures – one trillionPeople may not realize it – but an “entitlement” produces jobs also – no different than a GS-15 in Nova or a shipyard worker in Hampton.
In the case of entitlements – they produce doctors and nurses and diagnostic equipment, laboratory services.. etc..
-
What Gingrich screams loud and clear to me is that we’ve got to continue to diversify our way out of NoVa’s undue dependence upon that Federal Teat. It’s going to shrink in the short run and, even if it comes roaring back in the long run, it’s an unstable economic driver.
Meanwhile, we have, in NoVa, one of the wealthiest, best educated concentrations of population in the world. We have technology and higher academic and research assets galore. We have a great place to live with good schools and surrounded by recreational destinations. Transportation has some issues just now but Virginia at least is working on it. This momentum is not all going to disappear if Trump squares the circle (or triangulates the Pentagon if you will).
But there is a trickle-down effect coming. If NoVa has to tighten its belt a little even as its political power in Richmond grows, who here imagines that the NoVa Teat will continue to underwrite ROVa’s economy the way it does today?
-
One of the biggest problems for NoVA, IMO, are the squishy state legislators who fear playing hardball. Despite yeoman efforts by then Delegates Chap Petersen and Steve Shannon (both D-Fairfax) to get a fairer share of state aid for K-12 from Mark Warner, the rest of the Democrats in the Fairfax County delegation simply caved and voted to give Warner his tax increases and run the new money through the LCI. And the pattern would easily continue as hiking taxes is more important to many local legislators than protecting their constituents.
Meanwhile Fairfax County lacks enough risk takers (non-government contractors) to develop a private sector boom not dependent on Uncle Sam or other taxpayer-funded sources of money.
-
Silicon Valley was a series of fruit orchards until it wasn’t. The change from agriculture to technology took considerable time. However, the counties and cities that comprise Silicon Valley had some advantages – great weather, beautiful scenery and a nearby modern city. Silicon Valley today still has the weather but the scenery is badly compromised. In fact, it looks a lot like Tyson’s.
The first mistake in this analysis is to perpetually switch from county to region to city to metropolitan area. The right economic entity to consider is the Washington, DC Metropolitan Area. Plenty of people live in Fairfax County and commute to Montgomery County, MD and visa – versa. Saying there aren’t enough risk takers in Fairfax County is pretty silly. Untrue, in my estimation, and unimportant as well. The question is whether there are enough risk takers in the Washington DC Metropolitan Area. In 2015 the Washington Metropolitan Areas (which includes Baltimore in this analysis) was #6 in venture capital spending. That’s in line with its population rank and demonstrates no lack of risk taking confidence from the people who “put their money where their mouths are”.
Whether Northern Virginia will disproportionately win or lose within that relatively large region is a matter of debate. Ten years ago I would have said that we were well on our way to crashing and burning – primarily based on the poor quality of life and the fascination of millennials with truly urban environments. But then … the mixing bowl was fixed, the Wilson Bridge was fixed, the first of the two Metro extensions was built, Loudoun County seems to have learned some lessons from Fairfax in how to handle expansion, communities like Reston, Arlington and Alexandria have grown into true urban areas (with the expected influx of younger people). Right outside my office window the next extension of Metro is being built. Meanwhile, those non-risk takers are building new buildings throughout inner NoVa and DC – proper to beat the band. I travel a lot and I can’t think of a place where I see as many construction cranes as inner NoVa and DC.
-
I’ve heard Dr. Gerry Gordon, head of the Fairfax County Economic Development Authority express his concern that the Area lacked risk takers. Perhaps, you see companies I don’t. Most of the phone calls and emails I receive are from people looking to minimize risk. Ditto for many of my colleagues in and around the D.C. Metro Area. How much venture capital goes to companies that do not plan to sell services to the federal government? I would classify any such company and its investors as bone fide risk takers. Companies that want to sell a significant portion of goods and services to the federal government, not so much. Into what type of companies is the 6% of the nation’s venture capital flowing?
Fairfax County is not in good financial shape. While there has been movement of businesses to locations near Metrorail stations, most are coming from other locations in the County, including Tysons. And the last I heard office vacancies throughout the county are still at levels not seen since the 90s. Job growth at the higher income levels has been flat for quite some time. Job growth is mainly at lower-income levels, especially in the service segment of the economy. More affluent people are moving from Fairfax County and, while many immigrants are coming with high-level skills, most aren’t. The Schools have huge numbers of kids who qualify for reduced-price and free lunch. ESL class levels are still high. And many high-needs kids are taking Special Ed classes, as FCPS provides much more than is required by law. Both the County and School pension plans, including the County’s contributions to VRS, are grossly underfunded to the tune of c. $4.7 billion and heading in the wrong direction.
At Tysons, there is less office space today than in June 2010, when the Tysons plan was adopted. Most new construction has been residential, rather than office-based. And a number of the residential building owners are somewhat nervous about their investments. Their costs are high, and their rents must be also. The number of residents is only about 20% above GMU’s low-growth projections and not close to the mid-range projections. Silver Line ridership lags projections and many of the line’s riders are simply transfers from the Orange Line. And, of course, WMATA is a disaster and needs $2 billion to shore up its unfunded pension liabilities.
Things are not rosy in Fairfax County. We’re not ready to declare insolvency by any means, but we are far from the days of rapid economic growth in the 70s and 80s.
-
You should read Gerry Gordon’s LinkedIn profile. He graduated from Catholic University with a PhD in International Economics and has been President and CEO of the Fairfax County Economic Development Authority for 34 years. He’s your expert on understanding people who take business risk?
“Most of the phone calls and emails I receive are from people looking to minimize risk.”
Aren’t you a lawyer? Minimizing risk is why I usually call lawyers. Most of my conversations with lawyers start something like this, “I really don’t need advice on the business or technical concept. I need to know if this is legal and legally enforceable.”
“How much venture capital goes to companies that do not plan to sell services to the federal government?”
Don’t know and doesn’t matter. Aren’t you and Jim Bacon the ones claiming that the government has been cutting back since the late 2000s and will cut back even more if Trump ends up with a Newt whispering in his ear? Sounds like a risky investment to me.
“And the last I heard office vacancies throughout the county are still at levels not seen since the 90s.”
I am just looking at all those construction cranes I see on the way home from work every night.
“Job growth is mainly at lower-income levels, especially in the service segment of the economy.”
Then Fairfax shouldn’t still be one of the richest counties in America.
“More affluent people are moving from Fairfax County and, while many immigrants are coming with high-level skills, most aren’t.”
They must be moving to Loudoun County I guess. Loudon has the highest education level and is the richest county in America. Fairfax is slumming it around #3 or #4. It’s been 10 years since Professor Bacon saw the meltdown starting. How do these NoVa counties keep holding onto their place as wealthiest counties in the US? As for Fairfax v Loudoun – counties lines are truly irrelevant in a regional economy.
“Most new construction has been residential, rather than office-based.” Work from home? New style office floor plans with no closed offices and, often, no cubes? The people in those condos gotta work somewhere.
Your concerns sound like my Dad in the 1970s talking about Arlington County. It was going to hell in a handbag. All you had to do was drive down Wilson Blvd to see that. Closed shops. Foreigners. Suburban decay. Liberals! I thought he might cry when I moved to Arlington after college. I drove down Wilson Blvd every day – either taking the Metro downtown or driving off to see a customer. I saw the transformation with my own eyes. Creative destruction, TMT. Things change. Places evolve.
Fairfax County will be a whole lot better when there are large islands of urban – style density like Reston (have you seen the construction going on there?) surrounded by even larger areas of low density housing and parkland.
Fairfax is re-inventing itself with Transit Oriented Development and neither you nor Bacon can see it.
-
-
-
-
-
Poor Jim Bacon. Another year has dawned and Jim’s quixotic quest to restore his adopted home of Richmond to prominence in the Commonwealth of Virginia begins anew. For the past 152 years the capital of the Lost Cause has fought to regain its antebellum prestige. Jim has anointed himself a leader of the hoped-for Richmond Renaissance for the past 30 years or so. Nary a meat pie shop can open its doors in River City without great fanfare from Jim. Yet Jim doesn’t just walk the streets of Henrico County donning a grey kepi. He astutely points out the impending doom about to befall Richmond’s great nemesis – Northern Virginia. Back in 2008 it was the Great Recession and military cutbacks from the Obama Administration which would smite the Hydra-like beast to the north. NoVa’s economy was going to be shambolic and Jim along with other sons of the south like New Jersey born Ken Cuccinelli would stop funding that ill-advised Metro extension. Why extend Metro when the whole area was about to become a fiscal wasteland? But a funny thing happened on the road to Northern Virginia’s economic apocalypse – the region recovered from the recession, private spending made up for federal cutbacks and the best educated area in America (see link below) just kept moving forward. Now comes Donald J Trump and Jim is back as a nattering nabob of negativism. A liberal Democratic insider is leaving after 8 years to be replaced by a centrist Republican outsider. As Jim thinks, “surely the country can find somebody to destroy Northern Virginia” one can almost see Jim’s hand tightening in anger around his glass of bourbon and branch water. “There must be some way that Donald Trump will bring the doom to NoVa that Barack Obama failed to deliver!” thinks Jim. Don’t squeeze that glass too tightly Jim. It may break and cut your hand. With only one operational hand you’d have to choose between waving the Stars and Bars and brandishing your Confederate battle saber as you stare toward Fairfax County with your eyes blood red and that bitter taste of bile rising (once again) in your throat.
https://www.r-bloggers.com/what-are-the-most-educated-counties-in-the-us/
-
Haha, Don, you are a stitch! Just remember that in the late 2000s I was one of the few voices questioning the exponential-curve projections of never-ending growth and prosperity in Northern Virginia… and I was right on the mark. I also said that if restore the NoVa growth engine, it will be the region’s ability to diversify its economy, and I have touted instances of its doing so.
I have no idea what the Trump administration will deliver but Gingrich-like talk of eliminating 100,000 or so Defense Department civil service jobs would be bad news for the region. None of this was talked about during the campaign. The possibility needs to be factored into our thinking. You have a lot more to win or lose than I do.
https://www.baconsrebellion.com/wp-content/uploads/2017/01/bourbon.png
Cheers!
-
As 22 year old Jerry Lee Lewis said when he married his 13 year old cousin (once removed), “It’s all relative.” Your ten year old prediction of a decline in the exponential growth of NoVa fails to account for the decline in growth and prosperity everywhere in America over that timeframe. Despite government cutbacks adding to a national recession NoVa bounced back further and faster than most places. It still has the most educated workforce, it still boasts the wealthiest counties in the US. If the US returns to normal economic growth levels why wouldn’t you expect NoVa to return to above normal growth levels?
By the way … 5 of the top 10 rated beers made in Virginia are brewed in …. Herndon? Must be all that government spending!
https://www.beeradvocate.com/lists/state/va/-
“If the US returns to normal economic growth levels why wouldn’t you expect NoVa to return to above normal growth levels?”
I would expect NoVa to return to above-normal growth levels… unless the Trump administration gets serious about squeezing Pentagon bureaucracy. Then there will be pain. … And the, after the region adjusts and smart, well-educated bureaucrats start setting up consultantcies and other small businesses, I would expect NoVa to get over the pain.
I think you’re approaching the issue from a different perspective than me. You’re approaching it from the view of a NoVa partisan. I’m approaching it from a statewide public policy perspective. I’m worried about unrealistic population/growth forecasts that become the basis for state infrastructure investment.
The Silver Line is a classic example. Traffic is far below forecasts. Same with the I-95 HOT lanes. In the case of the HOT lanes, the state dished off risk to the Transurban, which has to suck up the shortfall in anticipated revenue. Different story with the Silver Line. In that case, revenue shortfalls will be dished off to Dulles Toll Road commuters. Forecasts and projections matter. The risk that forecasts may not materialize as expected also matters.
-
-
-
-
what would be smart for Va is to leverage the technologies that the govt is pursuing and developing both military and civilian and do it through our major Higher Ed locations.
We could have at UVA – medical technology including satellite locations using remote diagnostics and electronic medical records.
UVA could help revolutionize education , distance learning for K-12, etc.
we have a Smart Highway at Tech which would be a natural place to study and incubate things like autonomous vehicles …. Tech could certainly get into the drone business… for transportation, agriculture and forestry….
community colleges could get HS grads prepped for either 4yr or workforce entry into these fields.
George Mason could get into cyber-security… etc..
our organic assets educationally and government programs and technology are substantial – and form a substantial platform for private sector jobs.. we could easily have our own “Research Triangle”!
-
The comments here reinforce my continuing astonishment of partisan thinking’s ability to eviscerate logic and common sense. Gingrich has enunciated obvious truths. Bacon’s logic is irrefutable.
-
well I was sorta curious since Gingrich was saying stuff like this:
” A small number of people did an amazing amount of effective work. We’ve now replaced them with committees of 60, of whom 40 know nothing. …
This is particularly true in the American military bureaucracy including huge numbers of civilians right now. You have people who’ve been in Iraq and they’ve been in Afghanistan, and they’ve been in combat, dealing with people who have done none of that, and the people who have done none of that think they have the authority to question the people who have actually done it. ”
what exactly gives Mr. Gingrich any particular insight into an environment he has never been in?
hey – don’t get me wrong – the military is one gigantic bloated steaming pile of dog doo… but it’s Congress under the tutelage of folks like Gingrich who insists on funding weapon systems the military says it does not want, military bases the military does not need, and lavish pensions and benefits – for people who have never served in a combat zone – that we cannot afford.
Take a look at aircraft carriers – at 13 billion a pop – in a world where they are giant targets for a huge array of weapons including autonomous planes, subs, and drone swarms.. and yet what does Virginia do ? Well, of course, they want as many deficit-funded ships and shipyard workers that they can get – at the same time they argue that MedicAid will break the budget and cannot be tolerated.
more sailors and shipyard workers – just fine – more doctors and nurses for SW Virginians – no way …
-
I don’t have time this morning for a deep dive, but why simply assume Gingrich is correct?
When the Pentagon was built in 1941, military-related employees numbered about 24,000 spread around DC.
What’s the number today? 26,000 including civilians?
There was a huge rise in related jobs in the DC area after 9/11 but they have been cut back, generally.
I fear the usual echo chamber — we assume there is bloat. Prove it?
-
I am a little worried about NoVA losing military related gov’t jobs. I have a few friends that did lose positions, and they had the feeling more was coming. The feeling I heard before November was, whoever won the election, there would need to be some cuts after the elections.
Jim- Have you done articles on the HOT lanes and Silver Lines not meeting ridership? That sounds interesting.
-
I wrote about the HOT lanes within a year or so of opening. Not sure what the latest figures show. I think I heard somewhere that Transurban had to refinance, but don’t accept that as Gospel.
The data on the Silver Line has been released, but it gets complicated. There’s an inter-relation with the Orange Line (?); you have to look at the system-wide numbers. Silver Line drew passengers from the Orange Line, if I recall correctly. I’m fuzzy on the details now but the data is out there.
-
On the HOT Lanes and I-95 and I-66, and I-395 – they are all a huge congested mess at rush hour and the HOT lanes are doing just fine on I-95 and VDOT went forward with putting HOT lanes on I-66.
but all urban areas in the US with beltways experience horrendous rush hour traffic.. even Richmond at times!
the bigger urban areas – like LA, Chicago, Seattle, Atlanta, Houston, Charlotte are ALL going to tolls and HOT lanes… independent of what the Military or Federal Govt is doing.
We’re 20 trillion dollars in debt – and you’re not going to fix it by cutting entitlements alone. The military is only 1/2 of National Defense in the budget…. when you add in all the other “national defense” agencies – it totals to more than a trillion dollars annually and that’s not counting the entitlements that retirees from National Defense receive.
The military has repeatedly asked to drop certain weapon systems, to close military bases and, yes to trim back housing and living allowance benefits to personnel that is eating their budget needed for their mission and this is why you are seeing more and more autonomous vehicles and computerized weapon systems – that use far less personnel.
It’s the height of hypocrisy for anyone to say they worry about the deficit and debt – and at the same time – advocate for more defense spending.
It’s totally unsustainable unless we are going to increase taxes.Cutting entitlements to then transfer that money to National Defense does nothing for reducing the deficit and debt… not to mention the harm to military retirees who also depend on those same entitlements like Medicare.
-
-
-
According to the Boston College Center for Retirement Research, Fairfax County has one of the highest “Required Payments for Pensions, OPEBs, and Debt Service as a Percentage of Own-Source Revenue.” The Center looked at large counties around the country for 2014. Only Fresno, Sacramento, Kern, Los Angeles, and Orange, CA; Cook County, IL; and Prince Georges County, MD have higher ratios. http://crr.bc.edu/wp-content/uploads/2016/10/slp_51-1.pdf See Table 6.
If one downloads the associated spreadsheets, one finds that Fairfax County “owes” 39.5% of its local source revenues to public employee retirement plans and traditional debt service. The debt service figure for Fairfax County is 3.9% and there is no OPEB “debt.” In contrast, the figure for Montgomery County is 11.5%. It’s 8.3% for the District of Columbia. If one compares the Fairfax County ratio to the states, only Illinois at 43.8% is higher. Virginia, itself, comes in at 8.7%.
As I noted earlier, Fairfax County paid and “borrowed” $1.1 billion for public sector pension costs in FY2016. Things aren’t quite as rosy in Fairfax County under the surface.
Leave a Reply
You must be logged in to post a comment.