Dear PoPville – Impact of Debt Ceiling Negotiations on DC?

Photo by PoPville flickr user elliotmitchell

From the New York Times:

“President Obama and Congressional leaders of both parties said late Sunday that they had agreed to a framework for a budget deal that would cut trillions of dollars in federal spending over the next decade and clear the way for an increase in the government’s borrowing limit.”

“Dear PoPville,

What do folks think is the likely impact of the outcome of debt ceiling (and related) negotiations on the development of DC?

Should we be worried about significant layoffs in the Federal Govt as a result — and follow-on impact on demand for DC real estate and the like?

Interested in getting the perspective of PoPville…

Thank you.”

41 Comment

  • In short, the impact on everyone is we’re all screwed. Also sounds like they’re still trying to finalize the cuts. If it ends up being a lot of defense, which it should be, thta will hurt NOVA much more than DC.

  • heaven forbid dc has to endure what the rest of the county has had to put up with for the past 3 years….

    (not that i want to see jobs leave dc, but come on now)

    • Interesting. By that logic, a similar statement could be made when discussing drought, famine, and war… “Heaven forbid America has to endure what Sub Saharan Africa has had to put up with for the past 100 years”.

      It sucked when it happened to the rest of the country, who in their right mind, besides tea party extremists, are getting all hot and bothered at the thought of “finally” making DC feel what everyone else has been feeling?

      The worst part of a recession is the bitterness and the scape goating that is engendered in those who draw the short stick.

      • No, what he/she is saying is that our government has been taxing the country – a country dealing with recession – and then redistributing those taxes for their preferred political causes. Those causes – agencies, etc. – are generally, if not entirely, located in the DC area. The resulting high levels of growth in this area are artificially created, to the detriment of the rest of the country.

        So to take your flawed analogy and make sense of it, it would be like if America had confiscated all of the world’s antibodies and food while Sub Saharan Africa was left without recourse.

        • Everything you are saying as the basis of your argument would undoubtedly justify your conclusions, but sadly for you, you are completely off base.

          “our government has been taxing the country – a country dealing with recession – and then redistributing those taxes for their preferred political causes.” Not even a portion of what you explicitly or implicitly say is even approaching accurate. If you think taxes should go down during a recession, it happened. As for “redistributing” the taxes for political causes, it makes a nice talking point, but there’s just no evidence to back it up.

          So I suggest that you contain your rhetoric to blogs because if you ever said it in real life you’d look like a fool.

          Like I said, scape goating, vitriol, and bitterness are just ugly.

          • Yes, and your post was rhetoric free and full of examples.

          • That’s the thing about rhetoric… If you make an unbased claim, you’re supposed to provide the evidence. You aren’t allowed to criticize me for simply saying it’s not true because I didn’t give any evidence. You can’t prove a negative so it’s pointless for me to try to prove something isn’t true. Bring some evidence to the table to suggest what you are saying is true and that it contributes significantly to the debt, and then I would need to defend my assertion that what I said was accurate in the face of your evidence. Thats the way it works

          • Logic isn’t your strong suit is it?

            >>>Not even a portion of what you explicitly or implicitly say is even approaching accurate. If you think taxes should go down during a recession, it happened.

            The federal government taxes and then spends those funds? How did what I say approach inaccuracy?

            As for “redistributing” the taxes for political causes, it makes a nice talking point, but there’s just no evidence to back it up.

            Congress doesn’t redistribute tax payer dollars for their own politically-determined expenditures? Perhaps you need to give examples before I call BS on your whole diatribe.

            >>>So I suggest that you contain your rhetoric to blogs because if you ever said it in real life you’d look like a fool.

            Like I said, scape goating, vitriol, and bitterness are just ugly.

            Haha. You’re no fan of logic are you? First you claim Congress doesn’t spend taxpayer dollars, a ridiculous claim in and of itself, but then go forth calling me every name you can think of and then say that calling someone every name they can think of is ugly. Good luck with that.

        • Hm, that’s the first time I’ve heard political causes equated with the executive branch and its agencies. Usually, political causes are things like earmarks and infrastructure projects in a congressional district far from the DC area.

          Why are we the only country that actively vilifies public employees?

          • We are? At least half the countried in the world have a reputation for having corrupt government employees.

          • Sorry, I’ll rephrase: why are we the only country, of the world’s top 25 LEAST CORRUPT countries, that actively vilifies public employees. Seriously. And the public sector takes up FAR less of our economy than the rest of those with less corruption (mostly EU, with roughly 50% public sector economies). The public sector is NOT the problem. Reforms of the public sector can be part of the solution, but it is not what anyone should be zeroing in on.

      • “The worst part of a recession is the bitterness and the scape goating that is engendered in those who draw the short stick.”


        Spoken like someone who hasn’t felt the pain of the recession. The worst part is that people have lost their jobs, their ability to support their families, had their homes foreclosed on, and been unable to send their kids to college. But no… you think the worst part is that some are angry and bitter?

        What a profoundly self-focused worldview.

        • Well, if it’s people who’ve lost their jobs/mortgages/etc. getting bitter and scapegoaty by blaming those with jobs (e.g. Fed/DC area employees) and wishing they’d lose their jobs via spending cuts, that’s a pretty self-focused and nasty worldview. I was a recession victim, but I moved to DC because I thought the economy was better and it worked out for me. Cutting Federal jobs seems like a pretty problematic way to deal with a recession. It’s far worse for this country to have people wanting to level the playing field WRT employment than to have a 10% unemployment rate. The former is a wish for higher unemployment, which is pretty fucked up. Losing your job sucks, I know; being so bitter as to bring down the rest of your peers? I’m sorry, that’s worse.

          • Sooooo, your justification for not cutting the federal workforce is to keep the unemployment rate from rising? While I see the “logic”, a better approach is to have the federal government function as efficiently and effectively as possible, which, let’s be honest, would precipitate the slashing of a significant number of jobs.

            Let’s be real about this – the systems and products that support our lives require MANY FEWER jobs than we would like. It’s a fact we best deal with as opposed to demanding more jobs! more jobs! We need a new way of understanding employment. Seventy years ago, before the country utilized the advanced technological innovation we have today, most households had ONE BREADWINNER in a system of systemic racism that did not allow people of color to work. Point is – there was a fraction of the number of people in the ‘professional’ workforce (government and private) producing a mammoth scale of services and product compared to today. The U.S. manufacturing base is now mostly gone, given up to China and cents on the dollar wages in favor of domestic for service industry jobs that are supposed to afford a higher standard of living. Highly unsustainable, and I’m surprised the wraith we call our domestic economic model is still considered viable at all because it’s not.

        • Correct, I stand by my statement that the worst part is the anger, vitriol, and bitterness. If 2 people lose their houses and their jobs, the first does everything they can do to make it through, move into a cheap apartment, work when there is work, while the second externalizes their problems, looks for others to blame, and remains in their rut… both may be tragic, but which i worse? I understand failure and I sympathize with their plight. I believe we can do more to help out those who are down, but what i find completely unforgivable, tragic, and damaging are the people who turn around all of the bad things that have happened to them and decide that its the fault of the government and our progressive income tax brackets, or because a healthcare plan passed, or because something else happened. If you always have someone to blame, you dont actually have to do anything, because someone else is preventing you from doing it.

          • This scenario – where the good guy plugs through, and the blamer sinks into his rut – is hopelessly naive. I do not disagree that there may be an element of people looking to scapegoat the government and, at times, federal workers (am one myself), but the notion that this sentiment is the worst thing to come of out the recession is what I find appalling. Children living on the streets -hey, yeah, that’s bad, but someone being angry at the government is WORSE? For real?

            Again, I say, that you clearly are not someone who has suffered as a result of the recession, and it shows in your narrow point of view.

  • DC’s sugar daddy is flat broke and busted, crapped out again…

    • If by DC you mean Defense Contractors and their windfall of a $1 Trillion ‘war’

      • You can toss out a meaningless talking point if you want, or pick your favorite scapegoat…means little to me. Such things are ancillary at best; at worst they’re just designed to stop the most simple people from thinking about the core problems.

        For the record, I was alluding to the Federal largess that forms a large part of the DC budget both directly and indirectly…

        Remember: Things that can’t go on forever, won’t.

        The Feds can’t go on spending 40% more than they take in forever… and they could tax the ‘rich’ at 100% and still not close the gap.

        When the gravy train ends, the engineers & porters will simply find different jobs (productive people can do that)… it’s the people in the dining car waiting for free meals that will be left starving…

  • This seems like a questionable choice for Dear PoPville, unless Ezra Klein comments here anonymously.

  • No telling how this will effect DC at this point. When passed, a committee is formed that will decide where the cuts in federal spending come from….a committee evenly balanced with Reps and Dems. If they can’t agree after a certain amount of time, then there will likely be an across the board cut…like 12% from every agency or something like that. Being that the majority of jobs in DC depent on Government hiring, it is likely that those jobs will diminish.

    But as others have pointed out (and I don’t mean to be unsympathetic), the Public Sector is not recession proof, or at least shouldn’t be. I just recently had to change jobs because I was working in a group within a company that depended on Federal spending that I knew would be hard to come by.

    • …the Public Sector is not recession proof, or at least shouldn’t be.

      True public sector jobs (being a federal government employee) are as close to recession proof as you can get without a signed contract of guaranteed perpetual employment.

      I’ve heard countless stories of dealing with dead weight by simply moving people into positions where they are no longer in charge of anything important. Firing an employee is apparently a huge undertaking and it’s easier to just push them into a corner and redistribute the work to people who will do it, or claim you need additional staff resources. Raises are calculated on an overall “Cost of Living Adjustment” rather than merit, so you still get a raise even when doing a piss poor job. You can thank public sector unions for this crap.

      Budgets are based on what was spent the previous year, so there is no incentive to cut costs, and instead use every penny so year-over-year increases can be justified. My friend who worked in IT for a federal entity, and said come October a huge number of workstations, servers, and other expensive purchases would occur en masse because there was a predicted budget surplus. These servers were usually mounted and powered on to satisfy the minimal requirements of being “in use” and then left to sit for months or years. Contractors were hired to perform pointless or overlapping system reviews to burn through that money.

      People who work for the federal government at more than a rank and file level realize and acknowledge these problems exist, but don’t want anything to change because it scares the shit out of them that they may actually be deemed the dead weight.

      • Cost of living adjustment was caused by the fact that we typically experience inflation in this country.

        No raise during inflation = a pay cut in real dollars. Are you saying that workers’ pay (gov’t or otherwise) should be cut because of economic growth? That’s like, I dunno, double backwards.

        • I think this is a great example of the expectations of the public sector workforce. This basically means you are guaranteed a certain standard of living, perpetually, regardless of your job performance or external economic conditions. COLA is seen as a standard only within public sector jobs.

          In the private sector, you set your “market value” when you initially start your job (agreed upon wage/salary) and then meet or exceed measurable performance goals to maintain or improve your standard of living. Below the midpoint? No raise for you, and yes, you effectively lose dollars due to inflation. Way below the midpoint? Find another job. Granted this is subject to abuse and manipulation, but that can be said for COLA as well.

          • Public sector workers make less, generally speaking. So the trade off for them is less money up front for a greater likelihood of money down the road, i.e., job security. The gov’t gets to pay them less in exchange for assuming some of the risks of long term employment, such as underperforming employees. This all about trade-offs: swapping risks for the benefit of all parties.

            I think this is a better model for the gov’t to use. The gov’t has to be run more conservatively than private enterprise. Locking in wages lower, and at predictably-increasing levels is one way to do that.

        • Not sure I’m following your equation. Wouldn’t a pay cut “in real dollars” mean an actual pay cut (i.e. you go from making $35K to $33K)? No raise during inflation means you still have the same salary, but it is now worth less due to inflation.

          • Real dollars = buying power, relative to a baseline, like the value of a dollar in 2010. Nominal dollars = the numerical value of those dollars in any given year.

      • I disagree with associating the degree that public sector jobs are “recession proof” with some built-in tolerance for “dead weight.” I have family that works for the Feds – I’ve worked in the non-profit and the private sectors and in my experience dead weight – and management reluctance to confront the problem – exists EVERYWHERE.

        Does the civil service provide more reliable guarantees of steady employment, even for folks who turn out to be poor performers? Sure, but there is historical basis for the Civil Service Act (an anti-corruption measure, and before everyone lapses into easy cynicism, how many of you have lived in societies where corruption has become so systematic that it’s the norm and not the exception?)

        Furthermore, if one follows your logic, it would stand to reason that the people who lost their jobs during the recession were actually just “dead weight” that employers were wise to fire. I doubt that’s what you actually think – obviously most of the job losses in recent years have had more to do with forces beyond most employees’ control, unrelated to their performance or productivity. we’ve all heard the stories about how hard it is for many employers to let go of employees, but

        I’m always curious about the myth of private sector efficiency comes from, including the notion that pay is so clearly linked with merit. Your salary increases may just as likely be a factor of your great relationship with your boss or other social connections, or your bosses’ talent at grabbing resources for your division. You see the same “oh, just move them to a rear office where they can’t do any harm” mentality in all kinds of workplaces.

        Yes, your average HUD employee was better protected from the recession than your average residential construction worker – but not because the civil service necessarily tolerates poor performance while the private sector efficiently weeds it out. The supply and demand calculation is different for federal workers, a reality which has both negative and positive repercussions.

  • Cuts amount to only $22 billion in 2012. The majority of the cuts come much later — at which point a true recovery will have taken hold, hopefully.

    More details:

  • What the loonies on the Right aren’t admitting and the press is too spineless to cover is that an extreme messianic Christianity is behind their actions. They need an enemy to justify their belief system, just as the Taliban and other extremists religious groups do. When they lost the Soviet Union, they turned to the Federal Government as the new “Great Satan”, which is something they could find common cause with the business wing of the party about. The monied class has been fighting the New Deal ever since it was enacted, and they’ve allowed the crazy Christian soldiers to be their henchmen. The peasants with pitchforks aren’t afraid of a default, because they think economic catastrophe will usher in the New World Order and the return of the anti-Christ and ultimately the Messiah, and they will be raptured out of this world (and their trailor parks or crappy marriages) and into the next life. I guess it’s no stranger than fighting everyone cause you think you get 40 virgins to screw.

    If you’re astute, you’ll notice that they speak of the Government as though it’s Satan just as they talk about the Constitution like it’s the Bible (must be taken literally) and the Founding Fathers like saints and prophets. They’ve got a one track mind.

    We should be having an honest discussion about this philosophy as the driver of our politics. Debating them on politics, economics or social issues without addressing these issues as a part of the debate will ultimately go nowhere cause you’re not having an honest discussion.

    • i also enjoyed the zeitgeist movies.

      • Don’t believe me? Do some Google searches on “government, satan, etc.” But prepared to do lots o’ readin’.

        • As long as you believe you, Valkyrie, all will be well.

        • I’ll do that….as long as you do google searches on “moonbats, tinfoil hats and windbags”. I think both will return equal results in quantity and sanity.

          Let’s not resort to the lowest common denominator. The subject at hand is how this will affect DC. Your opinions on how this was passed are just that….opinions.

  • part of this discussion is about the result of a default. If the US defaulted this affects bonds in all local jurisdictions so that is one negative consequence.

    Then there is the pay for workers. A shut down government means no pay for those workers who aren’t going to work. They in turn will likely spend less until the situation is resolved. Of course most agencies are going to cut their workforce and not necessarily re-hire. Much of that will come though early retirements and buyouts and not outright RIFs. Unfortunately, this will likely mean less hiring of course but also a diminishing of service. The federal workforce has a very high percentage of workers that fall in the can retire/will retire over the next 1-2 years and most of their positions won’t be filled so the work they do will either be cut or parceled out to others who will get paid the same (frozen) wage for doing the job of 2+ people (something that is already happening depending on your agency).

  • I think the dearth of comments here is evidence of how sick people are of the debt ceiling debate. Kudos to PoP commenters, of whom on the whole I’m admittedly overly-critical, for avoiding this debate.

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