Bacon’s Fearless Forecast: Hard Times Ahead for Hampton Roads

Presidential candidate John McCain drew a crowd tens of thousands strong at his campaign rally in Hampton Roads earlier this week, and it wasn’t just because the former naval aviator was once stationed at Oceana Naval Air Station. While his supporters share McCain’s flag-waving patriotism and his larger world view, material self interest undoubtedly lurks beneath the surface. Many Hampton Roadsters undoubtedly believe that local military establishment will fare far better under a McCain administration than an Obama one.

I’m not making a partisan statement or casting a value judgment here. My point is not to dredge up the rights and wrongs of U.S. foreign and military policy. I’m simply observing that the Elephant Clan, for better or worse, funnels more money into the military than does the Donkey Clan. Commuities dependent upon military spending, such as Hampton Roads, fare better during Elephant Clan administrations.

Back in the 1990s, the Hampton Roads economy lagged the nation in per capita income growth. That’s because the Clinton administration was spending the “peace dividend”: cutting back the size of the military and curtailing military pay. The Bush administration instituted a dramatic reversal, pumping up military expenditures and payrolls, and Hampton Roads prospered.

As James V. Koch, former Old Dominion University president, writes in his 2008 State of the Region report, “DoD spending is responsible for more than 70 percent of the economic growth of Hampton Roads since the start of the new millennium and perhaps as much as 45 percent of our gross regional product. … The most important component of defense spending is military compensation, which accounts for 56 percent of spending in the region.”

Koch does not speculate on what a Barack Obama administration might mean for Hampton Roads. But I will. Unlike Clinton, who faced no major perceived military threats in the 1990s and felt safe drawing down the military, Obama has promised to contiue fighting the war on radical Islam by escalaating the American presence in Afghanistan. There won’t be a “peace dividend” for him to spend. Still, he will likely look for ways to shave military spending — and that may impact the Navy, which is a less-than-critical player in the anti-insurgency wars.

What can the inhabitants of Hampton Roads reasonably look forward to? Lower pay raises, for starters. Since 2002, compensation of military personnel has increased 63 percent, according to Koch. Even McCain would be unlikely to replicate such an increase. The prospect of Obama doing so is just about nil. Koch also raises the possibility of the loss of an aircraft carrier, which, along with accompanying task force and base support, could take $800 million a year out of the regional economy.

One could reasonably argue that an Obama presidency would be better for the United States economy as a whole (I would not share that sentiment, but I concede that it could be reasonably argued). But that logic does not extend to Hampton Roads. There is every reason to fear that the region will turn from an outstanding performer of the 2000s decade into an economic laggard. The non-military presence there just isn’t dynamic enough to make up the difference.

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16 responses to “Bacon’s Fearless Forecast: Hard Times Ahead for Hampton Roads”

  1. Anonymous Avatar

    And this my friends is why the Republican party has become a joke. There are still subsidies. They just go to the rich and defense and intelligence industries.

    That is the bush legacy. Cut education, social services, (aka anything that actually helps people) and spend on defense and tax cuts that predominantly go to the rich.

    I’ll let people make up their mind on where Obama and McCain stand.


    I dont really have any sympathy for Hampton Roads either. If their community leaders are not smart enough to diversify the economy they have noone to blame but themselves.

    At least NoVa has the tech sector to balance out all of the government work.


  2. Anonymous Avatar

    After this election, you will either get bigger, more intrusive government, or bigger, more intrusive government.

    Either way NOVA wins.


  3. Anonymous Avatar

    NoVA gets an awful lot of money from DoD and other national security-related programs. I strongly respect those Virginians who don’t like the war in Iraq for moral reasons. But, if the truth be known, I suspect that much of the boom times in the state treasury is tied with Iraq-related and other national defense spending. Some of my good Democratic friends in Fairfax County government have agreed with me.

    There are, of course, other federal activities that put dollars into NoVA and Virginia’s bank accounts, but defense and national security spending are the very biggest cash pipelines for this area.

    If either candidate makes big cuts, times will be much tighter in the Old Dominion. What else we we do?


  4. Anonymous Avatar

    You are missing an important issue by framing Hampton Roads’ future in a McCain vs. Obama; Republican vs. Democrat context.
    One sleeper issue is that Florida REPUBLICANS in Congress badly want aircraft carriers returned to Mayport naval base near Jacksonville. They have their eyes on the George Bush under construction at Newport News. Meanwhile, Virginia REPUBLICANS such as Randy Forbes are launching a counterattack to keep those pesky gator lovers from getting their claws on one of our precious carriers. One reason is that Mayport isn’t equippped to handle nuke carriers just yet. At the moment, the decision could be made by the REPUBLICAN Secretary of the Navy.
    Don”t see an Obama or a Democrat in the frey just yet.
    Peter Galuszka

  5. Jim Bacon Avatar

    Peter, you’re probably right about the fight over the aircraft carrier being an interal conflict between Republicans. But the big picture remains. Republicans (for better or worse) spend more money on the military — and military personnel — than the Dems do. If Obama wins, as it surely looks like he’ll do, Hampton Roads is not a likely beneficiary of his vision for reprioritize federal spending.

  6. Anonymous Avatar

    What do you mean “probably right?” It’s “absolutely” right.

    Maybe the GOPs does vote for more military bases. But not the “trick” Nixon. He totally screwed New England and shut down bases in Massachusetts, New Hampshire and Rhode Island because he was mad about their voting in the 1972 election.


  7. Anonymous Avatar

    Peter, I think that your point on Florida versus Hampton Roads is well taken. But I'm confused about the Tricky Dick 1972 election connection. As I recall, only Mass. & D.C. voted for McGovern in '72. If my recollection is correct, how do New Hampshire and Maine fit?

    (Back in 72, I was still a Democrat myself & voted for McGovern, mainly to P.O. my Dad. Minnesota still went for Nixon though.)


  8. Darrell -- Chesapeake Avatar
    Darrell — Chesapeake

    Once upon a time, I was a Democrat. Back in WV nearly everyone was a Dem, and it was part of the family tradition. Jimmy Carter changed that for me. One of the big issues was the paycheck, but not how you think. Military pay raises were small compared to the inflation rate during those times, but that was a minor problem. When you are sitting with a bunch of bills due on the 15th, but your paycheck isn’t released until the 21st, that’s a big deal. If it had only happened once, ok, but it became a regular occurance. That issue alone was a prime reason many of us mid-career guys got out of the service, and also drove the unionization movement. When Reagan was elected, I came back. Learned my lesson, never ever vote for another Dem. Clinton merely reinforced that view among most military persons.

    That poll the other day was fairly close. I’d say the ratio is 55/45 for McCain, split between the career guys and the junior/minority groups. What’s going to kill McCain’s efforts down here is the Jim Webb Effect. Webb was losing his election right up until the inner city precincts started reporting. The MSM went to bed figuring he lost, only to be surprised the next morning. The SBE site gave real time indications as early as 9pm.

  9. Anonymous Avatar

    You may have me there. You are right that Mass. and DC were the only McGovern voters. But I thoght that bases closed included more than the Bay State.
    As Sarah Palin says, let me get back to you on that one.
    Peter Galuszka

  10. Jim Bacon Avatar

    Peter, I’ll accept your word about Tricky Dick. But this thread is a “distraction” (to use a word commonly used in political discourse these days) from my main point, which is that Hampton Roads will likely fare ill under an Obama presidency.

    If you’re in to Virginia bashing, then this is simply more evidence that Virginia’s economy is dependent upon the federal largesse its citizens professes to disdain. Therefore, given the sentiments you normally express on this blog, you should be cheering me on: The 2000s, Bush-era prosperity of Hampton Roads is illusory! Virginia’s superior economic performance is a fraud — an artifact of Bush administration war mongering!

  11. Anonymous Avatar

    Look, Baconater,
    You are trying to make a case that Obama means abysmal for H.R. Let’s look at reality, not the knee-jerk.
    Of course, VA got a big boost in the early W years.We suffered one of the worst attacks on U.S. soil ever. Va. naturally would be in the lead for the investment in defense. We’re No. 2 after Calf. in the defense industry. But now, seven years later, what are our defense needs really?
    Can you point to a specific threat and say we need this or that specific weapons system? Do we need, for instance, an F-22 Raptor costing maybe $300 mill each for defense against the Soviet Air Force of 20 years ago? Maybe Russia’s coming back as a threat and you know that such is my suspicion, but do we really need F-22s out the wazoo to counter Hugo Red Chavez? What’s he going to get. Some old Mig 21s from the 1950s? Early model SU-27s?
    So, dear Baconator, I think you should take the trouble to define what we need in Hampton Roads defense-wise and what is essential. Tell me what McCain would fund and Obama would not.
    When it comes to details, I bet you can’t so explain. In fact, I DOUBLE DOG DARE YOU to detail your argument beyond the usual GOP blather.

    Peter Galuszka

  12. Jim Bacon Avatar

    Peter, you persist in construing my post as a partisan attack on Obama. It’s not.

    You’re right about the need to reappraise U.S. weapons systems. Too many in the military and Pentagon bureaucracy still want to equip an armed forces to fight a non-existent Soviet Union. John McCain has talked extensively about the need to re-think military procurement. I assume that Obama would, too. Hopefully, that reappraisal will happen no matter who is president.

    Here’s the big nut for Hampton Roads: military pay. Let’s look at the track record. The GOP sees the military as one of its constituencies and treats it well; the Dems don’t. The record of the Clinton and administrations support that. I don’t know the numbers but I’m willing to be that the same pattern applies to the Carter and Reagan eras.

  13. I just find it odd – that we have folks with Republican principles fretting about the loss of Federal tax dollars….

    ..that come off the backs of folks in Columbus, Ohio and Waterloo, Iowa – who ..instead of fretting about the size of the defense budget and who gets what share of the pie …

    … are pretty much on their own to figure out how to maintain economic vitality….

    You certainly won’t hear folks in these places wistfully wondering if they will get to keep their 800 million carrier cash-flow, or defense workers pay raises or how many high-grade GS guys/gals might be the result of new Homeland Security duties.

    Virginia is perverted when it comes to a “real world” economy.

    Just back from a bike trip to WVA where I saw thousands upon thousands of homes that don’t look nothing like the typical home in McClean or Henrico….

    and virtually none for sale…much less with “foreclosed” signs…

    but don’t ya’ll think it nothing short of perverted to have folks who espouse conservative principles of self-reliance and personal responsibility – wringing their hands about how much money the Feds planning on spending in Virginia (with the taxes collected in Columbus and Waterloo?)

    “small government” in Virginia is the ultimate oxymoron….

  14. Anonymous Avatar

    Larry — well stated. There clearly are needs for a very strong military, an effective federal government and government contractors. Virginia is well-placed to benefits from these needs.

    But is that all we can do? What if federal government spending in Virginia were frozen for four years? What if Fairfax, Arlington, Loudoun, Alexandria & Falls Church couldn't lay golden eggs from chickens feeding at the federal golden trough?


  15. People in Virgina .. consider the Federal Government an “industry”…..

    that is such an odd use of that word – in conjunction with government….you they selling stuff hand over fist for a profit or something.

    The same folks in Virginia who work themselves into a lather about the “waste” in Richmond proudly gesticulate to the economic genius of NoVa .. and urge RoVa to get a strong dose of the same religion and stop sucking on the NoVa teat.

    .. as opposed to the poor smuck in WVA who is saying: “if I don’t get another cord of wood under that tarp”, we’re gonna freeze our arses off come winter.

    talk about your location subsidies…

    the nerve of those WVA sluggards .. using that wood to warm their homes rather than for 2×4’s for homes in NoVa…

  16. Ray Hyde Avatar

    Interestingly, the word arbiters at the headquarters of the Oxford English Dictionary have discovered something odd: “subprime” has suffered a surprising and unusually rapid evolution. Until 1991 it meant something eminently desirable and worthy of aspiration.

    Lexicon is by its very nature a fugitive affair. Over the centuries the meanings of words slip and slide without cease, and dictionaries have to be constantly revised.


    The dictionary’s New Words Group began looking closely at subprime’s history late this summer, when the bat-wings of the current crisis began fluttering against Oxford’s mullioned windows. Team members discovered that when first applied to financial matters in 1976, “subprime” meant a loan offered below the prime rate and typically was offered only to the most desirable borrowers.

    In was not until 1993 that it took on a much less enticing guise, with Business Wire referring to a company that “buys subprime loans made … to creditworthy buyers unable to qualify for loans from banks.” And an O.E.D. editor was moved to write a new definition: “Of or designating a loan, typically having relatively unfavorable terms, made to a borrower who does not qualify for other loans because of a poor credit history. ”

    And this, one imagines, is the meaning that will go down in history. But what prompted the lexical revisionism? The Oxford lexicographers do not pretend to know why, nor, as dictionary-makers, to care. But they do know the change occurred between 1991 and 1993, …..

    Simon Winchester, New York times.

    So, apparently, sub-prime loans did not necessarily start out as a bad thing.


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