The Super Committee's failure to forge a deal on deficit reduction could have consequences for government agencies and private businesses headquartered in Northern Virginia.
Congress has until 2013 to accomplish what the Super Committee could not; produce an alternative deficit reduction bill before across the board cuts are automatically triggered. As it stands, $600 million of the $1.2 trillion to be cut will come from the U.S. Department of Defense, which is the largest employer in Arlington County.
"Until the law is changed, there are significant cuts hanging over everyone's head," said economist Stephen Fuller, director of George Mason University's Center for Regional Analysis. "The Department of Defense has already agreed to $465 billion in spending cuts, and more cuts are coming but they don't yet know from where. There are still a lot of options at this point, and the impact could be mitigated, so I'm hopeful that before cuts are triggered agreements can be reached."
According to Fuller, Arlington and Fairfax receive the most federal procurements of any counties in the country. In 2009 alone, federal contractors in Fairfax County were awarded $23.3 billion.
Contractors and private businesses in the area that handle a high volume of government contracts are concerned about the future.
For decades, federal funding has driven Northern Virginia’s economy
To understand the risk federal spending cuts pose, it's helpful to know the role that government dollars have played in the region.
Federal spending has driven Northern Virginia's economy for the last 30 years, helping the region grow from a Washington bedroom community to an area known for its specialized knowledge, science and technology and a growing private sector.
From 1980 to 2009, federal contracting in Northern Virginia ballooned from $1.8 billion to $38.5 billion. During the same time frame, Northern Virginia businesses captured 49 percent of all federal procurement spending in the Washington metro area; of the $796 billion spent in the Washington region, $389 billion poured into Northern Virginia, according to a recent report by George Mason's Center for Regional Analysis.
"Most of the work force is employed either directly or indirectly by the federal government, so what’s going on in Capital Hill is going to impact everyone in the region," said economist Troy Palma who works at the Business Investment Group and Arlington's Office of Economic Development. "People are worried about future cuts, but while we are cautious, we believe that our workers are in a good position because they are highly educated and can adapt to changing economic needs."
Join us this week as we take a closer look at Northern Virginia's economy:
Monday: See how Northern Virginia is keeping the unemployment rate low.
Tomorrow: Hear what local retailers are expecting this holiday season and find out what some top selling items have been so far.
Thursday: Is the housing market improving? Some signs say so.
Friday: Wrap up the week with economic guru Stephen Fuller of George Mason University for a discussion on the future of northern Virginia's economy. As federal dollars decrease, where will the economy move?