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.

8 Thoughts to “Virginia’s love-hate relationship with federal spending”

  1. George S. Harris

    What a great followup to “Big Government and Eating Your Words”. This is just the opposite of NIMBY–in this case, it’s there is too much government spending, except here in Virginia course. Not only do we take everybody’s trash to fill in our beautiful valleys, we are more than pleased to stick our nose in the public trough and pig out. 30%, let me repeat that, 30% of Virginia’s ENTIRE economy is the result of federal dollars. Some 900,000 jobs in Virginia are the result of defense spending, yet while McDonnell and company are feeding at the trough from one side of their mouth, out of the other they are proclaiming, “…the government must restrain spending in other areas — entitlements, earmarks and “other kinds of pork projects.” Except here in Virginia–keep them fedral bucks comin’. And speaking of entitlements, Virginia ranks 48th when it comes to per capita spending for Medicaid.

    How to say this correctly, yes federal spending is seeming out of control and we could be faced with something like what is going on in Greece, Spain and Portugal right now–but , Please sir may we have some more porridge sir.”

    And we haven’t even talked about the “Multiplier Effect” of those federal dollars, but that is a whole ‘nother piece I am certain that Governor McDonnell doesn’t want to bring up and there isn’t room here to discuss. But you can bet your sweet bippy that $1 is worth far more than $1 as it works its way through Virginia’s economy. The economic impact of spending that $1 grows exponentially.

  2. George, you will have to tell us more. There is always plenty of room when you are ready.

    I am actually rather pleased my state is the first pig at the trough. I admit it though. I don’t grouse about other people spending while I take their money.

  3. George S. Harris

    I love it when politicians get caught with their hand in the cookie jar or in this case the piggy bank. A little personal anecdote and then on to a point about politicians and federal money.

    Many moons ago–no pun intended–before such things as Electronic Transfer of Funds or Direct Deposit, the military used to pay their folks in cash. One officer in a unit would be designated the “Pay Officer”. That officer would go to the Disbursing Office, pick and count the payroll, sign for it and then go to a designated place to pay the troops. When I first went in the Navy (1951), you had to fill out a “Pay Chit” and put the amount you wanted on it–you didn’t have to take all your pay if you didn’t want it–along with your thumbprint. You stood line and when it was your turn to get payed, you stood at attention in front of the Pay Officer, announced your name and service number, handed to Pay Officer your ID card and your pay chit. He counted out the amount you had requested, you signed the pay roster, took your money and thanked the officer. Sailors and Marines don’t salute indoors since the Navy and Marine Corps don’t unless wearing a cover (hat) and a duty belt (signifying you are on duty) but I suspect Soldiers and Airmen did.

    So what’s my point here? The story has been around for along time, but supposedly an Army base commander in Georgia was getting complaints from the nearby town about soldiers and what a nusiance they were. The commander ordered that all the troops be payed in $2 bills. Remember what I said about the “Multiplier Effect of Money”? When the $2 bills began to circulate through the town, the bankers, merchants and other citizens suddenly realized just how much the soldiers contributed to the town’s economy. Result–the complaints went away.

    Maybe it’s time for the federal government to drag out a bunch of $2 bills…

  4. George S. Harris

    Incidently, for you Jefferson fans–guess who is on the $2 bill?

  5. PWC Taxpayer

    Well, I am having a rough day. I don’t see the hypocrisy of a State that house the Atlantic Fleet and borders Washington DC and therefore has a high federal spend with the desire to otherwise trim discretionary spending or to bring the entitlements or the non-military stimulus that really will break the bank back on our children under control. Take out the military spend in VA and the Fedral largess per capital presents a significantly different picture. The Washington Post – what would you expect.

  6. I don’t mind that VA is a wealthy state either.

    I just don’t like our elected officials declaring war on the feds.

  7. Censored bybvbl

    What the feds give, they can take away – and give to Maryland or other states. Our AG, with his lawsuits, will waste our tax dollars two ways – from the state and from the feds. Maybe the federal largess will drift elsewhere. California could probably use the bucks.

  8. George S. Harris

    @PWC Taxpayer
    It’s the governor’s hypocrisy. That’s the issue. He doesn’t want fed spending to leave Virginia–just clamp down somewhere else while we get another bowl of porridge. Or clamp down on entitlements– that’s Medicare, Social Security and now Medicaid for more folks. Incidently, as rich as Virginia is, it ranks 48th when it comes to per capital spending for Medicaid.

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