New York Times: “Washington’s Economic Boom, Financed by You”


Photo of ’14th and U St, NW 1988′ by Michael Horsley

Ed. Note the photographer featured in the article, Michael Horsley, has an incredible archive of DC photos from back in the day.

Thanks to all who sent links for Washington’s Economic Boom, Financed by You:

Washington wasn’t always the place where young professionals plunked down $3,000 a month to announce their arrival. When Abdo founded his business, in 1996, the United States was enjoying around 4 percent economic growth, but in Washington, dysfunction and Mayor Marion Barry Jr. reigned. The city government was locked in a mismanagement-driven fiscal crisis: traffic lights were malfunctioning; garbage trucks stopped picking up trash; District residents were advised to boil their own water; President Clinton and Congress placed the city into federal receivership.

During our drive, Abdo narrated this revival with such intensity that he took a few wrong turns, despite the fact that downtown is just a grid dotted with traffic circles. Near the George Washington University campus, he pointed out a cheap hotel that he plans to turn into a pod hotel. Over by H Street, a neighborhood just a few years ago virtually untouched by gentrification, he pointed out a former convent that he converted into apartments. Abdo announced that he helped develop “thousands” of such tasteful, expensive though not outrageously priced units during the past decade and a half, for “people of substance,” he said, “people who want to participate in this city.”

How Washington managed this transformation, however, is not a story that the rest of the country might want to hear, because we largely financed it.

Read the full story here.

58 Comment

  • We drove north on North Capitol Street, as if we were driving out of the District, to a shabby and decidedly unhip neighborhood called Brookland.

    I see a new motto!!!

    • brookland_rez

      LOL. The parts around the construction site are/were shabby indeed, but it’s actually not Brookland. Brookland is east of the tracks. He probably didn’t drive over past 12th street where all the single family homes are. That’s Brookland. Brookland is quiet, sleepy, all that. There may be a few shabby houses, but overall I wouldn’t say Brookland is shabby.

  • Thanks NYT, you big blabbler mouths!

  • Good – the rest of the country is good at f–ing DC by sending idiots to Congress and not allowing the District’s residents to be represented in their legislative sh-t show. I’m fine with the city taking something back to improve itself.

  • The inequality and real estate booms are so much better in NY where we can pretend they aren’t built on tax dollars

    (Hi, Wall Street bail out!).

  • So “we” financed it; Was it a good investment?

    Actually, the article is really not about financing DC’s growth, it’s the employees who earned those dollars at work and had free choice about where to spend their money — that’s who built it.

    • Yes but where do a majority of workers in this area get their dollars from? Most – either directly or indirectly through tax dollars.

  • I liked the quote “Maryland got the life sciences, and Virginia got the death sciences.” I’ve have a similar thought every time I ride home from Dulles.

  • This is a non-story. What a big surprise that a country’s capital benefits economically from being the seat of government. If you think government is bad, then you will likely view our region’s economic strength as expropriation from the rest of the country. If you view government more positively, then it should not trouble you that people are attracted to government-related jobs.

    The revitalization of DC has been fueled by two factors. One is the economy, fueled by the government. The other is a general, national trend, in which young people are returning to the cities that their parents and grandparents fled in order to improve quality of life by minimizing commutes, living near amenities, etc. People like Abdo astutely saw this trend and capitalized on it, as have many developers across the country. The difference is that here, our economy is somewhat recession proof because of the government. I don’t have a problem with that.

    • Agreed. Also is it a sin for a nation’s capital to be among the top cities in that very nation? The US is currently the greatest nation in the world (despite recent turmoil), shouldn’t it’s capital reflect that?

      I guess I don’t get the point of this article since it seems like it may be trying to incite anger from non-DC area residents for actually having a world-class capital. What, would they prefer how things used to be?

  • I guess we “didn’t build that”

  • I haven’t read the article yet, but

    I’m happy with the development downtown and I hope it continues. Although I miss the old Chinatown – the area has improved significantly. Growing up here has allowed me to witness an incredible amount of change. Some good. Some bad. There’s no way I could ever afford the house I grew up in now. I hate that. I think the inflation in costs is unbelievable. But for some reason, people continue to pay these outlandish prices.

    BUT, things are getting better. The new half st market proposal near Nats Park is another step in the right direction. The city needs to embrace this change and create better incentives for people to stay in the city. And hopefully then people will understand how ridiculous it is that DC has no representation.

    The growth of the DC metro area has been constant since WWII. Thanks to returning GIs and the growth of the federal government. Our suburbs are proof of this growth. The change to developing downtown DC the last few years are a reflection of a new generation of people who would trade in long commutes for convenience.

    • “There’s no way I could ever afford the house I grew up in now. I hate that. ”

      Man, I hate that too. Forget the house, I can’t even afford the neighborhood I grew up in — and still consider home-base. Happily, my folks are still in the “family home” some 45 years later, so at least I can bring my kids over on the weekend to play in a big (i.e., normal) yard and stroll in a safe (i.e., normal) neighborhood.

      When they moved in, the neighborhood was filled with successful (but not outrageously so) single-earner families. Now, you need to be a CEO or dual-ATTY or Supreme Court justice. Gah!

  • There have been a couple articles lately from the NYT that have disappointed me… this being the most resent one. This issue of DC being financed in large part by taxpayer dollars may be true, but don’t doubt for a minute that other areas of the country are also given money for development. There are also other lots of other, more indirect, benefits that spur development in a city (as a commenter pointed out with the Wall Street Bailout).

    The problem is that these issues are much more complicated that NYT has been making them sound, and that just seems a little intellectually dishonest.

  • I found the headline of the article misleading — much of the article itself, or at least my reading of it, seemed to be “How Private-Sector Contractors Have Milked the Federal Government For All It’s Worth.”

    • I don’t see how private sector contractors taking money from the government disproves the thesis that government dollars are playing a huge role in DC’s renaissance.

      • It doesn’t, but it’s more nuanced than the headline (and the conservative talking point about “your tax dollars are enriching the federal government!”) would have one believe.

        Presumably it’s not a bunch of, say, GS-12s plunking down $3,000 a month for a luxury apartment.

  • bizarre how it didn’t mention the DC 1st time homebuyer tax credit (now expired) which was probably the clearest example of federal dollars encouraging people to live in DC.

    Also weird how the article contrasting DC and the surrounding counties, but opened with a description of Gaslight Square, which they oh-so-subtly failed to mention isn’t in DC at all (it’s in Rosslyn). Either the journalist was too dumb to notice she’d left DC, or she realized it but knew it would mess up her story.

    • “Either the journalist was too dumb to notice she’d left DC, or she realized it but knew it would mess up her story.”

      In the article she clearly notes that Gaslight is located across the Potomac.

      • brookland_rez

        Right, but most people that aren’t familiar with DC wouldn’t necessarily know that means it’s in VA.

        I thought it was odd too that she mentioned a project in VA when DC was the subject of the story.

  • I agree with the comment above, that parts of this article were a bit disingenious. In particular, the inclusion of comments by David Boaz, executive vice president of the Cato Institute, in which he siad:

    “Washington’s economy is based on the confiscation and transfer of wealth produced elsewhere. Out in the country they’re growing food, building cars and designing software — all these things that raise our standard of living. Here in Washington, everyone is writing memos to each other about how to take some of that money and which special interest should get it.”

    The author neglected to point out that the Cato Institute, itself, has benefited significantly from this confiscation. Perhaps, Mr. Boaz can “walk to lunch from [his] office without having to avoid the construction projects,” now that Cato has completed its own expansion project:

    http://www.popville.com/2011/04/judging-buildings-cato-institute-expansion/

    • The Cato expansion most likely wasn’t funded with public dollars; whereas the majority of developers in DC take advantage of the massive tax cuts and incentives the city bestows upon them.

      • True… but the Cato Institute isn’t a building that “benefits” the public in the way that a retail establishment or new apartment/condo building might.

        (I do think the D.C. government gives too many sweetheart deals to developers, though.)

      • Actually Cato does depend on tax incentives to exist. From their website: “Cato receives approximately 80 percent of its funding through tax-deductible contributions from individuals”

        • And I believe nonprofits are given sizable tax breaks on real estate holdings in DC, yes?

        • Um, no they don’t. It’s not tax-deductible for Cato, it’s tax-deductible for the DONOR. Non-profits use that to attract donors, especially when the economy is bad. People are less likely to give when things are tight and are more likely to give, if they can see a financial benefit in the end.

  • I will keep saying it, and the folks in the cheap seats will continue to ignore it, choosing rather to believe that DC has found a new real estate paradigm and that everything will be peaches forever. That what has happened here in the past ~decade was nothing more than an unsustainable boom paid for by hundreds of billions

    Yes, yes…those of you who ignore the issue like to fall back on the fact that DC is the seat of the federal government, seemingly ignoring the fact that it has been for more than 200 years, yet the sheer volume of spending occurring now trumps anything in the history of the city, including (inflation adjusted) the spending during WWII.

    People really don’t understand, is the volume of federal procurement dollars pumped into the local economy. Federal procurement, it sounds innocuous but Uncle Sam spends 80 billion a year in the DCMSA on procurement alone, not salaries/wages, but service contracts. Thats up from ~30 billion in 2001.More than half a trillion procurement dollars has been spent in the DC area since Bush took office. This is on top of the 35 billion in salaries the feds pay every year in the DCMSA.

    Total Federal Spending in the MSA has nearly tripled in a decade, from ~65 billion a year to 170 billion. Let that sit in for a second and think about it. In the past 11 years, federal spending in the DC economy increased by ~105 billion per year, EVERY year. And people wonder why there has been a massive housing boom and retail expansion of companies looking to capitalize on that money. Yep…nothing to see here folks.

    While the MSA is large, Baltimore to Richmond, the lionshare of the procurement it is spent in Montgomery County, Fairfax, Arlington and Loudoun County. This 80 billion isn’t spent on planes and tanks, but “services”. 80 billion a year spent on DC Region specific contracting, a large percentage of it the ridiculous “support services” junk the Feds should be embarrassed to spend money on. Spending millions a year hiring 20 to 30 something’s to literally take meeting notes and assemble PowerPoint slide decks.

    George Mason University does a decent job tallying the numbers on the procurement side. The below is the latest I’ve found but they’ve been compiling Federal spending and procurement data for the DC region for years.

    http://www.mwcog.org/uploads/committee-documents/a11eWVZe20120314154000.pdf

    Here is the summary folks. Uncle Sam has spent more than 1 trillion dollars in the DC Metro area in the past 11 years in combined salaries and procurement, most of it spent in a 50 mile radius of the Washington Monument. It is unsustainable and history shows us that DC has in the past and will in the future sustain painful cutbacks, the one that’s coming more painful than any in history because of the size of this spending bubble.

    • It’s called “privatization.” Started under Reagan, continued under two Bushes and a Clinton: eliminate one midgrade Fed position and create three privatized jobs. Pay those three uninsured contractors squat, stick the gummint for a huge bill, and pocket the difference.

      • I beg to differ about those contractors being paid “squat.” Contractors that work with some agencies – particularly the Defense Department – can make a whole lot more money than what they would get paid working for the government. Hence the reason why so many leave the government to become contractors.

    • I just don’t see it happening. Sure, spending may get cut a bit, but no one genuinly wants to cut defense spending, just wants to limit increases. I really don’t buy your doomsday scenario. Perhaps we will see some pullback, but you are not going to see a 20% cut at any point in the next couple of decades, IMO. We can certainly disagree here, but it isn’t going to happen.

      The republicans are not going to control the White House for quite some time (if ever, if they don’t change) and spending increases will simply slow down.

      • As someone who has lived through two cycles of Federal belt tightening in the DC area in the past 25 years, I can assure you it will happen. It was painful for the area then, it will be painful for the area now.

        Defense spending is already down 10% from its 2010 highs (670B to 610B next year).

    • DC Region… see this generalization all over the NYT article as well. I’m not buying contractor wealth in NoVA and MOCO as the cause of a DC renaissance. I’m seeing that in many large cities in many countries.

  • I remember seeing talking heads on TV back in the bad old days, bemoaning how bad things were in DC within eye-sight of the Capitol and how is that possible in the capitol of the US. Damned if you do, damned if you don’t.

  • Yet another media article that perpetuates the myth that the dysfunctional operation of the federal government, especially Congress, somehow reflect upon on the capital city itself including its residents. Now that I live here and plan to for a long time, it is so unfair. The city has undergone such an amazing transformation and the national and out-of-town media continues to trash DC by inciting anger in DC doing so well as opposed to the rest of the country, even in an article that is highlighting how much good has been going on here. I don’t get it. Oh well. Keep being classy, DC, and maybe sometime we, the actual residents of this city, will get properly recognized for it.

  • This swipe at D.C. in the opening struck me as 1) gratuitous and 2) reflecting the stereotypical New York view of D.C.:

    “But Abdo has built his business in the unstylish land of think tanks and tepid salmon lunches and boxy women’s suits.”

    For one thing, surely women’s suits haven’t been boxy *anywhere* since the 1990s.

    • I realized from this sentence that this was an article that was presupposing old assumptions about DC, so it was never going to truly capture our city. Another was the “but just down the street from his office was CHINESE TAKEOUT!” Because in NYC, every storefront is pristine and high tech.

    • +1. Though for some reason I was more bothered by “Logan Circle, one of the many leafy Washington neighborhoods anchored by a statue of a long-dead guy riding a horse.” Because of course none of those people has any historical importance and we should instead just raze them to the ground rather than learn anything about history (sarcasm).

    • I think the first sign of the end of days will be when the NY Times publishes an article about Washington, DC that is both accurate and complimentary. It sure hasn’t happened yet – and that’s why I wasn’t worried about the Mayan prediction.

  • The article sometimes seems to conflate D.C. and its suburbs (or at least the Northern Virginia ones and Montgomery County). The entire metropolitan region has profited from the ramp-up of federal spending… but haven’t those suburbs been fairly well-off for a long time?

    I think what many of us marvel at is how a city with so many unsafe areas, decrepit and abandoned buildings, etc., etc. changed so rapidly in so many neighborhoods, and how that change continues. The ripple effect of federal spending definitely had something to do with it, but I don’t think it accounts for all of it.

    • She conflates it when it suits her thesis, and then drops it when it doesn’t. She pops into Rosslyn when it suits her, then contrasts rich DC now with Marion Barry DC in the 90s, not mentioning that the DC suburbs were rich back then, too. She uses Washington-region stats, and then compares them to DC-specific anecdotes.

      It’s a sloppy article from a usually-good writer.

  • New York’s just jealous because it was such a lousy national capital that they had to relocate the federal government and build a whole new District to accommodate it.

  • I digress – but PoP I must object to 1988 being referred to as “back in the day.”

    I.am.not.that.old.

  • Thanks PoP for reprinting this. It was an interesting assignment to go back and rephotograph locations from the 1980′s seen here:
    http://www.flickr.com/photos/kinorama/sets/72157623412752062/

    In some ways the areas have been so completely reborn like 14th and U street that I don’t recognize it.

  • I did a double take upon reading “More prosaically, though, new residents have flocked to the city for its profusion of jobs and stayed on account of its bars and restaurants and its cheap rents,” and was relieved to see that the sentence ended: “at least compared with New York.”

    Even still, that’s such an NYC-centric point of view. Only someone coming from New York or San Francisco would describe D.C. rents as “cheap”; compared to most other cities in the U.S., they’re expensive.

  • This is the second story in the last few months (previous was Time Magazine) that attributes the improvement of DC’s core primarily to government spending. A lot of what’s happening in places like Logan Circle is primarily a shift within the region as cities got cool again and suburbs and especially exurbs have waned.

    But more to the point, this ignores the role that Citizens United and the influence industry is playing too. DC is capturing a huge share of the billions in campaign finance and lobbying money that come FROM corporate America TO Washington, as opposed to contractors that capture in the opposite direction. I think about this a lot as the three homes that sold on my street recently sold to attorneys and a consultant who work with this stuff.

    Unlike DC’s contracting industry, lobbying is not exclusively about going after taxpayer dollars. Yes, that’s a part of it, but it’s also about shaping the rules that get written for your industry. Or for many corporate lobbyists it’s about stopping rules or trying to get them stricken. Lobbying is about a lot more than appropriations.

  • Was it just me or did it seem the author actually wanted to write a story about the changing demographics of the city (i.e. the gentrification) but did actually have the stones to follow through with it? So instead, we’re left with essentially a non-story about DMV real estate prices being tied to increased federal spending over the past coupe decades.

  • This is disappointing. The NY Times should be above this type of scape goat political journalism. We need serious discussions about economic growth and the growing size of the federal debt and this article only perpetuates the myth that somehow the growth of the debt in recent years has been because of waste, fraud, greed, and largesse in Washington. Its been about taxing and spending decisions.

    A tremendous part of the economy is NOT funded by tax payers. Think tanks, lobbyists, lawyers, non profit association groups, etc are all affording the expensive quality of life in DC too. Its not just “over paid” federal workers and defense contractors.

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