Recession? What Recession? The Good Times Are Rolling In The Insulated, Inside-The-Beltway Nation's CapitalAug 11, 2010
No wonder the liberal politicians who control the House, Senate and presidency think the economy is flying: Their immediate surroundings are, in fact, humming. There is no recession in Washington, D.C., and when you stay insulated inside the beltway, and all you see is fat cats living it up from from $3.5 trillion in government spending, no wonder President Obama and Vice President Biden call this the :summer of recovery." Andrew Little, a Richmond investment banker with John B. Levy & Co. recently wrote in a Richmond Times-Dispatch column that the real estate market, which burst and led to the recession and remains in the tank around the country, is booming in Washington.
As one lender put it, "the closer you are to the printing press, the better chance you'll have of getting some business."
Another lender unfortunately described just how exclusive the area is that is attracting capital: "We are focused on Washington, D.C., but only inside the Beltway."
A recent sale of the Evening Star Building at 1101 Pennsylvania Ave. in Washington fetched a mind-boggling $790 a square foot, and there is talk that other buildings currently on the market will surpass $900 a square foot.
These numbers indicate a strong desire for investors to put their money into real estate again. But if "frenzied" describes Washington and four other markets, "frail" is more apt for virtually everywhere else.
He adds that interest rates in D.C. are lower than most markets (thus the "printing press" comment). He then notes a Memphis, Tenn., apartment building that sold for a minuscule $2.1 million after costs, or less than $2,500 per unit, even though the average price per unit nationally last year was $72,306. The lender eventually lost $37.3 million on the project. Since this doesn't qualify for pocket change in Washington, we doubt few in the leadership are raising a red flag of concern. But why should they? Not only is real estate booming in D.C., so, too, are salaries (see CNSNews.com).
Federal salaries have grown 33 percent faster than inflation. Their pay and benefits averaged $123,049 in 2009, up 36.9 percent since 2000. Private workers averaged $61,051, up just 8.8 percent during the same time.
Even when factoring out education and experience (federal workers have more of each), The Heritage Foundation's James Sherk found that federal employees get paid 22 percent more per hour on average than private-sector workers. The facts get worse. Conn Carroll of Heritage's The Foundry blog cites the Wall Street Journal's findings that personal incomes fell nationally last year except in markets with heavy concentrations of federal employees, as well as a USA Today report that federal salaries average double private sector wages.
Not only that, but Heritage research shows that while private sector jobs have decreased by 6.8 percent since December 2007, federal government jobs have grown 10 percent. Government work at all levels have added 64,000 new jobs in that period while the private sector has lost 7.8 million jobs. I could go on. For example, President Obama is pushing for a 1.4 percent raise for 2 million federal workers who also qualify for seniority raises, not to mention his most recent bailout, this one for the teachers union and rising pay and benefits for local and state employees.
So, the more people suffer, the less Washington liberals know what to do. They seem to care even less. From what they see, all is good.