Washington D.C.-"You Didn't Build That"

It is ironic that we continually hear about the income and wealth divide between the rich and the poor in our country but the income and wealth divide between Washington, D.C. and the rest of the country gets no attention.

A couple of facts might surprise you.

The metro Washington, D.C. area has the highest percentage of millionaires in the United States (as a percentage of households) according to the August, 2012 issue of Money magazine. In fact, seven of the ten richest counties in the United States surround Washington, D.C. according to a report released last week. Money also points out that 40% of the world's millionaires live in the United States. Therefore, it seems to follow that a fair percentage of the world’s millionaires live in close proximity to The White House and Capitol Hill.

This is consistent with Bureau of Economic Analysis data on State Personal Income which shows that per capita personal income in the District of Columbia was $73,105 in 2011.  For the United States as a whole it was $41,663. Washington, D.C. is 75% higher than the nation as a whole.

The highest state was Connecticut at $56,889.

This means that the average income in DC is almost $30,000 higher than the nation at large and over $16,000 more than the highest state.

Since 2000, per capita income in DC has increased at more than twice the rate of the country as a whole. An 81% increase in D.C.- from $40,462 to $73,105- compared to a 37% increase in U.S. per capita income which saw an increase from $30,319 to $41,663.

Is it any wonder that the most recent Gallup poll found that President Obama’s approval rating in Washington, D.C. is an astounding 83%?    

Washington, D.C. has no manufacturing base. It does not grow crops. It has no oil wells or coal mines. It does not produce computer chips or other high tech items. It produces almost nothing that creates value in a traditional economy. Yet, its residents have the highest per capita income in the country. What more is needed to know that something is seriously amiss in our nation?

I am not just talking about the pay for government workers. After all, there are plenty of lawyers, lobbyists and lunch places along with everything else in D.C.  I am also not saying that all of these people don't work hard.  However, almost all of those jobs and wealth would not exist without the massive amount of money that gets shipped to D.C. by the people who are working the factory jobs, tending the crops and mining the coal. People who also work hard every day for a fraction of what the people in Washington, D.C. are making. However, they must pay taxes on that fraction and send it to Washington to support incomes that are almost double what people in my home state of Ohio are earning ($37,791).

How has it gotten this way? A lot of  money to spread around and a lot of special interests. The federal government will spend about $3.7 trillion this year.   Two-thirds of it is in direct payments to individuals on spending for Social Security, Medicare, Medicaid and other entitlement programs. A modest amount of total expenditures is for national defense and the general welfare compared to historical percentages. In 1945, payments to individuals made up less than 3% of federal spending.  In 1970, it was about 30% and it was below 50% as late as 1990.

Washington is largely a gigantic redistribution machine today. Money comes in one end from one group of people and it goes out the other end to another group of people. Money and wealth have been created in Washington because of the bureaucracy to run that machine and all of the politicians, lobbyists, lawyers and special interest groups working to get "their share" of money coming out of the other end. 

Of course, no one in Washington ever believes they are getting their “fair share” for their group.  Therefore, the D.C. answer is always to get more people to pay their “fair share” in taxes.  This is clearly President Obama’s view but he is only one more in a long line that has gotten us to where we are today.

Those taxes are then spent to support a government that legislates, regulates and stipulates almost everything that we do.  Picking winners and losers. Redistributing money from one person to another. From one industry to another. From one business to another. From one region to another.  Functions far removed from the principles of our founding fathers.

You don't need a massive government structure to protect the nation, establish justice and promote the general welfare.  You do need one to manage, control and serve special interests.  Special interests also grow exponentially when the system is designed to pick winners and losers rather than just provide a level playing field for everyone to compete.  That is how District of Columbia residents have come to make almost twice the income as the nation as a whole.  

I will borrow a phrase from President Obama… “You didn’t build that”. If there was ever an example where that phrase is accurate it would be in talking about our nation's capital. Taxpayers built Washington and sustain it today. Taxpayers deserve a return on their current investment before they pay to build any more Washington bureaucracy.

"You Didn't Build That"

Credit: Library of Congress

Mitt Romney and Paul Ryan would be well advised to start talking about the income and wealth divide between Washington, D.C. and the rest of the country as much as the Democrats speak about the divide between the rich and poor.  There is no better way to make the case as to why change is needed in Washington.

It is just another example of The Redistribution of America that I wrote about earlier this week.