- The Washington Times - Tuesday, January 13, 2009

When the country is in pain, the District often gains.

Whether it’s a buildup of Civil War troops, Depression-era bureaucrats, or defense contractors after Sept. 11, the region has prospered in times of crisis. Today, the financial meltdown is delivering a jolt of its own.

Lawyers, lobbyists and public-relations experts - many of whom live and work in Virginia and Maryland suburbs - are benefiting as companies from Wall Street to the Motor City seek a piece of the federal government’s $700 billion financial bailout.

Business is also percolating as President-elect Barack Obama, a Democrat, prepares an economic-stimulus package composed of infrastructure spending and tax breaks that could exceed $800 billion.

“There will be a mad rush to have influence on where that money should go,” said David Rubenstein, of the Carlyle Group, the District-based private-equity firm whose partners include former high-ranking U.S. and foreign government officials.

At the very least, the expanding federal government, which has added more than 7,500 jobs in the region over the past decade, is helping to insulate the area’s economy and its 4.5 million residents.

Annual military and homeland security spending has increased sharply since Sept. 11, 2001, leading to years of prosperity for the region’s consultants and contractors, including well-known defense companies such as Lockheed Martin Corp., of Bethesda, and General Dynamics Corp., of Falls Church.

Now, as Uncle Sam mounts a multitrillion-dollar effort to rescue the country from its worst financial crisis since the Great Depression, some companies based outside the region are beefing up their District offices.

Local business leaders say the influx of influence peddlers, combined with leadership changes in the White House and Congress, could provide a small lift to the region’s commercial and residential real estate markets, which are hurting like real estate markets are nearly everywhere else.

Still, the region is not immune to the recession.

Retailers are struggling, tourism is flat, unemployment is on the rise (particularly within D.C.) and municipal budgets are strained. The District is facing a $127 million budget gap, while neighboring Virginia and Maryland face even steeper shortfalls.

Some well-known companies based in the region - including Sunrise Senior Living and XM Satellite Radio - have been forced to lay off staff or ask workers to take early retirement.

However, the mood among many business leaders - especially those connected to federal lobbying and contracting - is upbeat compared with the rest of the country.

The Washington offices of companies seeking bailout money will be transformed into “miniheadquarters,” said Stanley Collender, managing director at Qorvis Communications, a consulting firm.

The District and its suburbs gained 31,000 jobs over the 12-month period that ended in November, according to the Bureau of Labor Statistics. Job losses in construction and retail are being offset by gains in federal government positions as well as health and business services, said John McClain of George Mason University’s Center for Regional Analysis.

The gains come as most major metropolitan areas shed thousands of jobs. Mr. McClain predicts job growth for the region in 2009, though he expects it will weaken to about 20,000 new jobs.

The region’s unemployment rate was 4.4 percent in November, the lowest among metropolitan areas with a population of at least 1 million, according to the most recent Labor Department data. Nationally, the unemployment rate was 7.2 percent in December.

With government workers and contractors accounting for roughly one-third of its job force, the District tends to prosper in times of crisis.

During the Civil War, the modest city grew as the government swelled to administer the war and soldiers arrived to protect the capital. The federal work force expanded again during the Great Depression under President Franklin Roosevelt’s New Deal, and the Pentagon was constructed during World War II. The Department of Homeland Security was created after Sept. 11, leading to another burst of hiring, and the wars in Iraq and Afghanistan expanded the Pentagon’s budget to $612 billion in 2009, compared with $310 billion in 2001 before the attacks.

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