How big government creates a new class of the super rich

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Politics,Beltway Confidential,Sean Higgins,Politics Digest,Big Government

Don’t tell Paul Krugman, but Washington’s spending splurge on bigger government has resulted in a new class of the upper, upper-income earners. The Wall Street Journal documents it all in a story headlined: “What Sequester? Washington Booms As a New Gilded Age Takes Root.”

The new moneyed brain trust is being led by professionals in defense, intelligence and data—many of whom excelled initially due to government ties. They’ve propelled the D.C. region as a leader in the cybersecurity and data sectors, as well as in more-specialized arenas including educational products and health-care data management.

In the first decade of the 21st Century, government spending was the major source of growth in metropolitan D.C., an area that includes the neighboring Maryland and Virginia suburbs. In 2010, federal spending, comprising mostly private-sector contracts, made up 40% of the local economy.

By 2012, that proportion had slipped by four percentage points. But the local economy has still grown faster than the nation as a whole and is projected to continue doing so at least through 2017, says economist Stephen Fuller, a George Mason University professor and an expert on the D.C. regional economy. Its nearly $450 billion economy puts the D.C. region in fourth place nationally, behind the more-populous regions of New York, Los Angeles and Chicago, and ahead of Houston.


Meanwhile, it’s not difficult to spot examples of today’s abundance. After only a year in business, Aston Martin of Washington, D.C., based in the wealthy Virginia suburbs, is ranked seventh in sales in North America, having sold 100 of the $120,000-plus cars.

At the Washington Humane Society’s annual “Fashion for Paws” gala on April 13, attendees raised contributions of a minimum of $5,000 each to walk their dogs, dressed in tutus and tuxedos, down a runway. At Karma, a Georgetown salon owned by society cosmetologist Erwin Gomez, customers plunk down $350 for eyelash extensions, while the new Capella hotel down the street charges $22 for a martini.

Locals are soaking up the good life at the Ritz-Carlton, too, where restaurant bookings and special-events sales are surging. “My numbers are up considerably year after year,” says Elizabeth Mullins, vice president and D.C. general manager at the hotel.

The Ritz sponsors “Knock Out Abuse,” a females-only auction to support domestic abuse victims that is a symbol of the new D.C.’s charity bacchanalia. At recent auctions one woman contributed $6,000 to the charity to have dinner with former Redskins football star Clinton Portis, and others contributed hundreds of dollars each to climb a stage and strip the shirts off Maryland firemen.

Seven of the nation’s 10 wealthiest counties are in the Washington, D.C., metropolitan region, compared with only two in the New York metropolitan area, and none in Silicon Valley. Census data from 2010 show median household income was $84,523 in the D.C. area, compared with $83,944 for Silicon Valley’s wealthy San Jose region.


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Sean Higgins

Senior Writer
The Washington Examiner