Sequestration 2013: Big Spending Cuts Coincide With Skyrocketing D.C. Incomes


Automatic cuts in federal spending that took place on March 1st, also known as the sequester, will affect the Washington, D.C., region the most. How much will these cuts, which amount to $85.4 billion, and any future cuts, affect a regional economy so dependent on federal spending? The cuts will make a difference, but income growth that took place from 2000 – 2010 in the region will likely prevent the sort of economic hardships faced by non-Beltway residents in the United States following the 2008 financial crisis.

As data in this article shows, between 2000-2010, the richest counties in the Washington, D.C. region grew at twice the rate as the rest of the country. It is estimated that in the D.C.- area, "4 of every 10 dollars flow directly from the federal government." The area’s growth is due partly as a result of a near doubling of federal spending during the 10-year period examined here.

To put the area’s growth in context, not only did D.C.-area incomes grow twice as fast as the rest of the country during this period, they grew at almost twice the rate of the other richest U.S. counties not around the bBeltway.

This Forbes article lists and describes the richest counties in the United States. The top ten list contains five Washington-area counties (including the top three richest on the list) plus five counties that do not surround Washington. See below: This Forbes article is used not because of its academic rigor, but because it is the top Google search return for the topic. Forbes list: 

Counties that surround Washington: (map) Arlington County, VA, was omitted from the Forbes list although according to 2010 Census statistics, its income is actually higher than Fairfax County. The District of Columbia was included to capture the epicenter of the region’s wealth. 

- Fairfax County, VA

- Fairfax City, VA

- Arlington County, VA

- Loudon County, VA

- Falls Church City, VA

- District of Columbia (added)

- Howard County, MD

The other five Forbes list counties not in the Washington, D.C.-area:

- Los Alamos County, NM

- Hunterdon County, NJ

- Douglas County, CO

- Somerset County, NJ

- Morris County, NJ

United States total

Everyone in the U.S., including the residents of the above counties

All income data was collected using the U.S. Census American FactFinder. Two measures of household income are used to capture both dual and single income households. The following graph shows the differences in income and income growth between the counties listed above:

What these graphs tell us:

Growth in Median Household Income, 2000-2010:

- United States – 16.09%

- 5 Richest DC-area counties (plus DC) – 31.1%

- Other 5 rich counties – 17.85%

Growth in Median Family Income, 2000-2010:

- United States – 17.43%

- 5 Richest DC-area counties (plus DC) – 30.98%

- Other 5 rich counties – 19.88%

The following graph emphasizes the differences in these DC-area counties’ income growth and that of the rest of the United States from 2000 – 2010:

The U.S. federal deficit and budget is a constant in a highly dynamic news cycle. Income growth in the D.C. area is just one effect of what amounts to a doubling in spending by the U.S. federal government during the 10-year period examined here.

Income growth for Washington, D.C.’s richest counties, using both measures of income, was about twice the rest of the United States, 2000–2010. The five richest U.S. counties not surrounding Washington include suburbs populated by many Wall Street employees. Yet despite these counties’ wealth, averaged together, they grew at about the same rate as the rest of the country during this period.

As the parties attempt to work out future budget deals, incomes will be affected if additional cuts take place. This data provides an idea as to which area’s incomes are most affected by increases in federal spending and which may best most responsive to current and future spending cuts.