Virginia’s love-hate relationship with federal spending


Northrop Grumman is headed to Virginia. It is the 61st largest company in the United States and it is a huge defense contractor.

According to the Washington Post:

RICHMOND — At a news conference last week at Northrop Grumman’s Rosslyn offices, where a panoramic view of Washington loomed outside a floor-to-ceiling wall of glass, Virginia Gov. Robert F. McDonnell ticked off the reasons he thinks the giant defense contractor chose to locate its new corporate headquarters in the commonwealth.

He cited the state’s low corporate tax rate, its business-friendly regulations and right-to-work laws that prohibit requiring employees to join unions.

One factor the Republican didn’t mention: The massive flow of federal spending that provides the core of Northrop’s business and has made it the nation’s 61st-largest company.

McDonnell has been a leading voice in railing against rising federal spending. But lost amid the calls for Washington to freeze or reduce spending is this twist: Although most economists agree that mounting federal debt could be dangerous to the national economy, Virginia has thrived on Washington’s decade-long spending spree, according to analyses done by professors at Virginia colleges.

Ten cents of every federal procurement dollar spent anywhere on Earth is spent in Virginia. More than 15,000 Virginia companies hold federal contracts, a number that has almost tripled since 2001. Total federal spending — from salaries to outsourced contracts — has more than doubled, to $118 billion, since 2000, as homeland security and defense spending skyrocketed in response to the 2001 terrorist attacks and the wars in Iraq and Afghanistan. By 2008, it accounted for about 30 percent of Virginia’s entire economy.

Federal dollars have filtered through the rest of the economy, too, helping to build the high-tech Dulles corridor and funding new homes and cars for federal workers and contractors and meals at local restaurants. The billions have helped fuel the economic boom cycles of the past decade and have cushioned the blow of the recent recession, particularly in Northern Virginia, where the unemployment rate has stayed stubbornly below 6 percent, less than the state and national rates.

“We have a rich uncle, I like to remind people — Uncle Sam,” said Stephen Fuller, director of the Center for Regional Analysis at George Mason University.

Maybe Cuccinelli shouldn’t be trying so hard to piss off the feds. It sounds like Virginia is riding the old gravy train. To have less than 6% unemployment in this economy is enviable. To be getting 10 cents of every federal procurement dollar spent anywhere on earth is quite an accomplishment.

Much as McDonnell probably won’t like sharing the limelight, much of Virginia’s pro-business reputation was developed and nurtured by people like Mark Warner. Under the Kaine administration, Virginia was voted the number one state to do business in. McDonnell is savvy and should continue the tradition of attracting and maintaining businesses and a robust economy. He just needs to rein in his attorney general since much of that business originates with federal contracting.

Greece Riots in the Street; Our DOW Drops 1000 Points in Minutes

Greece had rioting in its streets near its parliament. As these events unfolded on TV, the DOW dropped 1000 points in a matter of minutes. The American stocks didn’t stay down at -`1000 for long. It came back somewhat, if we call -330 a come back. Investors might want to check their assets.

A work related call prevented me from seeing the entire free fall. Where is Formerly Anonymous to do some interpreting for us? We can’t say he hasn’t warned us of impending doom.

UPDATE: The DOW is hovering just under 300 down. Fox News is saying they just got word that there was a bad trade on Proctor and Gamble. (whatever that means) Who knows. All this is beyond my pay grade.

Arizona Follows PWC’s Path, or Does It?



What’s happening in Arizona is exactly what happened in Prince William, but board Chairman Corey Stewart says outcry and criticism shouldn’t dissuade the state from going forth with tough new immigration laws.

“Essentially, we were the test case for what’s going on in Arizona,” said Stewart, R-At-Large. “I can tell you the intensity they’re facing is exactly the intensity the board of county supervisors faced, and it came from several corridors … that essentially tried to threaten the county.”

In late April, Arizona’s Republican governor, Jan Brewer, signed into law new immigration policy giving local law enforcement the authority “to reasonably determine the immigration status of a person involved in a lawful contact [with officials],” according to the summary sheet of S.B. 1070 posted on the state’s website. The lawful contact clause in particular caused concern among civil rights activists who foresaw worst-case scenarios where police would engage in racial profiling and de-mand paperwork proving legal status from, say, pedestrians based on skin color.

Prince William County’s immigration policy, by contrast, states that police broach the issue of legal presence only after “physical custodial arrest,” according to a June 2008 press release from the police department on the main points of enforcement procedures.[bold mine]

Read More