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Around the Corner

August 23, 2012
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Kaiser Permanente opens their new Tysons Corner Medical Center. Wait we already covered that last week… yes we are gloating… good information about the employment numbers associated with the new center. (Virginia Business)

Health Care REIT acquires Sunrise Senior Living of McLean (The large white building along Westpark Drive behind Capital One) for $845 million. Due to SEC rules the Sunrise operations will need to remain an independent arm of REIT, likely ensuring it will retain a presence in the growing health care magnet of Northern Virginia. We’ll keep an eye on this as Sunrise is a large corporate and employment entity in Tysons Corner.

A major bipartisan entity in Northern Virginia, Northern Virginia Technology Council, has endorsed Congressman Wolf’s proposal to reduce the size of MWAA. We tend to agree that having such a large over powering presence from Federal, District, and Maryland delegates makes little to no sense in an Authority that comprises of two airports completely within Virginia. What do you think? (SacBee.com)

When it comes to Sequestration everyone in the House has some guilt on their hands. Tim Kaine, George Allen, and many others all supported the non-compromise that was created to keep the US from default and thereby retaining the full faith and credit of the dollar. Now as the deadline looms over our region, the mess that was created by bickering and politics has to be disarmed like a complicated ordinance ready to destroy whatever recovery we have had. Which party do you believe has the most to do with the ominous inaction?

Urban Design Concept of the Day

Ignore the 19th century school house architecture and pay attention to the concept. Although this project doesn’t create a private public partnership in the traditional sense, the creation of a ballet school encompassed by high rise architecture is not abstract from the concept we previously discussed. In this particular case the ballet school could not afford to own land in the middle of downtown Ottawa, and instead opted to stay out of the real estate game, and partner with a large developer. There is no reason that FCPS could not also be using this method for urban regions to avoid hundreds of millions of dollars in real estate expenses and to have construction costs paid for by the developer in return for other concessions.

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16 Responses to Around the Corner

  1. Larry on August 23, 2012 at 1:23 pm

    Both parties are to blame since they kicked the can down the road to get a debt limit increase.

    The problem with the 1:10 “revenue to cuts ratio” offer (read:tax increases)is that the tax hikes would be real, but the cuts would be fake. The tax increases would happen now, but the cuts would be over 10 years when no future congress would be liable to live up to them.

    Furthermore, all of the cuts are to baseline spending. So instead of spending 8% more then they did last year, they would “only” spend 6% more – then they turn around and call it a 2% “cut” – thats a fake cut.

    I hope sequestration happens. It will help us be more fiscally responsible after the spending binge we have been on. The sky will not fall as all of those politicians are claiming, there will not be massive NoVA job losses. These writers and politicians are just trying to scare up more support for bigger government.

    • Tysons Engineer on August 23, 2012 at 1:31 pm

      Larry, what kind of job do you have if I may ask. I assume you think you are immune to job cuts in the federal government. But let me point out that the difference between us and “the worst economy since the depression” is 4 percent better employment. It doesn’t take large changes to take a region from boom to bust. No on disagrees that some restraint in the budget is necessary. But I think you disregard the fact that spending has increased a whole whopping 2% since the Bush era. This is a revenue problem, 1 part tax cut, 1 part GDP plummet.

      By chain sawing and jamming the cuts down this areas throat it sends us into cardiac arrest. We need to be weened off of the federal economy, not suddenly jolted. Its the same reason why many economists say that ultimately $5 dollar gas is healthy for the economy of the US, but no one wants a middle east oil crisis to occur suddenly which will cause chaos.

  2. Larry on August 23, 2012 at 1:57 pm

    I work with government contractors here in Tysons and like the rest of the residents of Northern Virginia, I certainly get the benefit of the spending binge we have been on. The difference is I am willing to support fiscal responsibility that may personally hurt me economically, in favor of long term sustainable growth.

    Your numbers are completely wrong. It sounds like you are taking talking points directly from Stephanie Cutter or David Axelrod. Spending has not gone up just 2% since Bush. But even if you were right, spending under Bush exploded – he was a terrible spender too.

    From the second quarter of 2007, (the first full quarter of a Pelosi-Reid dominated Congress) to the second quarter of 2009 when President Obama assumed office, government spending skyrocketed to 27.3% of GDP from 21.4%. It was the largest peacetime expansion of government spending in U.S. history.

    Its not a revenue problem, its a spending problem. We could tax every person making over $250,000 at a 100% rate and it wouldnt pay for the cost to run our government for 6 months at current spending levels.

    New numbers just came out from the CBO. Here is a link to a blog post from Dan Mitchell on how we can easily balance the budget in under 10 years without increasing taxes 1 penny if we can simply reduce the growth of government spending to 2.5% a year.

    http://danieljmitchell.wordpress.com/2012/08/23/its-simple-to-balance-the-budget-with-modest-spending-restraint/

    • Tysons Engineer on August 23, 2012 at 2:01 pm

      But government spending has been slowed to 2.5% a year, its actually only been 2.3% per year since 2009. So what you are proposing is we keep doing what we have been doing? You are conducting some serious revisionist history if you are using a time period dating back to when Bush was in office. That wasn’t just the house of representatives taking over government. Many of those policies were straight from the top including “stimulus” funding and the bailouts during Bush, far greater than the impact of increasing the pay rate for government employees or any other policies inacted (those were measures computed in the hundreds of billions if not trillions).

      You are contradicting yourself with your own statement. Simply slowing our spending to current rates will fix the budget problem by your logic. I agree, when the economy returns and our tax revenue grows 15% in 5 years while our spending only grows 10.4% then we will start making impacts, unfortunately there will again be a period in which GDP goes down (although the Ryan plan doesn’t think anything bad will ever happen again if we listen to him). At which point we wouldnt have decreased spending growth enough, and definitely did not take advantage of the new revenue to create reserves either during the boom times.

      The answer is COMPROMISE, how ever much you think it is a dirty word. We need to go back to a tax rate which worked perfectly fine for creating jobs in the 90s, ie stop the Bush era tax cuts which did NOTHING to create long term job growth. All the while, we need to implement more than just slowed growth in spending, we need to implement a decade of austerity which will cut back 1 or 2% per year from current levels. That way we both decrease spending, increase revenue in a leveraged manner to the economy to provide enough reserves for the next economic cycle. Thats what a thriving economy is capable of doing.

      PS your math is wrong, at 100% tax rate for those making greater than $250,000 we would make well over $1 trillion in new revenue in a single year. Of course that is an absurd hypothetical, because if you tax people that high they will inherently stop doing business in this country. But that is not to say that a slight tax rate increase will do the same (because it didnt in every generation before our most ingenious previous president’s)

      Also as another nit picky thing, you say that between 2007 to … it was the largest expansion during peace time. Last time I checked we were at war for all that period, two to be exact, and they were costing about $300 billion per year in defense operations ALONE, and $500 billion if you include the increase in secondary funding necessary for peace keeping. That makes up about 2%-3.6% of annual GDP by itself. If 3.6% of that increase didnt occur, and the bailouts that Bush administered which accounted for 1 trillion spread over 3 years, so lets say another 2% annual increase per year, then how big of a jump would we have? I dont think it would be very historic other than being almost a net decrease in spending vs GDP

      • Larry on August 23, 2012 at 2:33 pm

        Its not revisionist history its the facts and I’m non partisan. I blame both Bush and Obama.

        “But government spending has been slowed to 2.5% a year, its actually only been 2.3% per year since 2009.” Right ,so after Obama and the Democratically controlled congress spent like drunken sailors on TARP, the auto bailouts, and stimulus, then we slowed the increase to 2.3% on an already inflated spending number. Wonderful.

        Higher tax rates do not equal higher tax revenue. In the last 60 years no matter how high the marginal rate has been the tax revenues have always been around 19% of GDP. If thats all we can get from tax revenues, then thats where our spending needs to be. Laffer Curve. Look it up! And read the blog post I posted. Thanks.

        • Tysons Engineer on August 23, 2012 at 2:40 pm

          You say you are not partisan and yet in that retort you say “Obama and the Democratically controlled congress”… no mention of Bush and Cheney in there except to say you “blame bush”. Bush was involved in TARP and stimulus far more than Obama, regardless of who eventually had to sign the damn thing. Dont try to hide yourself as bipartisan if you use that kind of rhetoric. I don’t like about my leanings, I am squarely on the left side of the aisle, I believe investments in education and infrastructure ALWAYS pay dividends. Sure I agree with parts of conservative philosophy too, I have seen plenty of government glut in my life, but I am straight forward and will say first I start left then come to the center.

          I think you need to do the same and admit you do come from a right lean.

          Either way you are contradicting your own platform. If all we have to do is slow our spending growth, then why all the fuss over suddenly collapsing the economy through sequestration which cuts spending, not slows it? Why not just keep with the spending we currently have then? Why all the hub bub from the right about how we are spending ourselves to death if our current spending growth is in line with your bloggers post?

          Also there was a time in which the tax revenue fell below 19% of the GDP and that was under Bush due to those moronic tax cuts that are still in place.

          I appreciate this discussion btw, I am not trying to be dismissive of your points. It is better to discuss than hold the country hostage in brinksmanship which is what the Teaparty has suggested. Atleast a debate gets points out there, and more importantly a vote and legislation atleast addresses this one way or another. No action is the worst action.

          • Larry on August 23, 2012 at 3:02 pm

            I like to think that I am fiscally responsible and socially tolerant. That doesnt align well with the left/right paradigm.

            What you are missing is the phony baseline budget math that Washington uses. Sequestration cuts are not real cuts, they are cuts to the expected growth.

          • Tysons Engineer on August 23, 2012 at 4:03 pm

            I believe you are mis-speaking on the sequestration cuts. Those are most definitely actual cost cuts to todays budget. I assume you meant that the proposed 10:1 ratio cuts were not actual cuts. To that I also disagree, future lack of spending is spending cuts because the dollars value will rise faster than the budget in that case, thereby making them essentially very large scale cuts.

            Tell your boss you dont want a raise for the next 10 years, see how well off your income is in 2022 compared to what a loaf of bread costs. Inflation is always going to happen, costs always get bigger, the only thing that matters is relative cost.

  3. Larry on August 23, 2012 at 2:45 pm

    You keep adding to your response. I cant keep up! I’d like to see where you are getting your numbers from.

    You like to talk about economic activity in Tysons I’m surprised you think that increasing taxes rates is somehow going to spurn growth. Because the government never wastes any money does it? Much better for those tax revenues for the government to “create” jobs then for you know the private sector to do it. Let me keep my own money, I’ll spend it. I promise.

    • Tysons Engineer on August 23, 2012 at 2:57 pm

      But that has been empirically proven to NOT be true. You are returning back to the thesis of trickle down economy, and I’m sorry we tried that for 20 years and it had NO impact on GDP growth. What really makes companies more functional is reducing their operation cost by creating better infrastructure. Our freight system in this country could be spurred through partnerships with private companies. This would use the capital ability of the government and the entrepreneurship of private industry together. That decreases the cost of overland freight which then makes it more competitive for manufacturing to occur in America. Transport constitutes a larger share of manufacturing costs now than employee payrolls for heavy industries.

      Like I said, government does a lot of things really well, ie defending our country, education, infrastructure, and large capital investment and it does other stuff really poorly (see GSA, see healthcare, see many other examples). But to say that ALL government should be decreased is curing the disease with a lethal injection. Sure the virus is dead but so are we.

      PS I hope you continue reading our blog. We enjoy these debates a lot, and hell I wouldn’t mind grabbing a beer with you still, even if you are a republican ;)

      • Larry on August 23, 2012 at 3:07 pm

        I think there are many that would disagree on the free market not working.
        The government doesnt do ANYTHING as well or as efficiently as the private sector. They dont care about cost like a private company or individual would. What you are talking about is Corporatism. Private companies in bed with government. That is how we got TARP and the auto bailouts. All of that kills the tax payers and increases the burden of government on the private sector. Its a weight on the productive sectors of the economy. The government does not create jobs or make money. It redistributes funds that may create a job but ignores the more productive job that could have been created had it not taken those funds. Look up the “Broken Window Fallacy”

        • Tysons Engineer on August 23, 2012 at 3:20 pm

          I am not suggesting the government create jobs or money, my comment is in regard to certain functions being best suited to a centralized government. Education is NOT best in private hands, it becomes corrupt and devoted to revenue instead of the general well being and education of the populous. This has shown in history to be eventually negative to the strength of a country. Military is not best suited in the hands of decentralization, this is how you get in fighting and the eventual action of one region against another. Treasury is best centralized as without it there would be numerous valuations of a countries currency dependent on your region. And the list goes on.

          To say ALL government is bad is just as wrong as saying privatization is ALL bad. Both need controls, both need oversight, and both can use their unique abilities to help the other be more efficient and powerful globally as well.

  4. Larry on August 23, 2012 at 6:10 pm

    I’m not mistaken on the baseline cuts. Thats how Washington does budget math.

    Even the “draconian” cuts in Paul Ryan’s plan, are cuts to baseline spending, not current fiscal year spending. We never actually spend less then the previous year.

    Do just a little research on this before declaring that I am wrong. Here I’ll do some for you –> http://en.wikipedia.org/wiki/Baseline_(budgeting)

    Connie Mack the Rep from FL; had a plan that got little press called the Penny Plan. Basically every government agency cuts 1 penny out of every actual dollar they spent last year (not from the baseline) and the budget is balanced in just 6 years. you are telling me that after this spending binge we have been on, federal agencies can not cut 1 penny on the dollar?

    Also how is my math wrong on the 100% taxes on the “rich”? We spent 3.6 Trillion in 2011, If according to your math it made us 1 Trillion in revenue, thats less then 4 months of expenses. So if those high rates dont do anything to help with the spending, dont you think it would be better to broaden the tax base by getting more people employed? But you are right people would stop working at those high tax rates – thats the Laffer Curve in action.

    I agree with a lot of positions the left takes on social issues, civil liberties, etc., but on economics, they are living in a Keynesian fantasy land.

    • Tysons Engineer on August 23, 2012 at 8:37 pm

      I stated with the increase to a 100% tax rate on over 250,000 citizens that we would receive an additional 1 trillion per year. ADDITIONAL. This discounts corporations and this discounts the tax rate of people who make below 250,000 (the populous) and this also ignores the 35% that those who make 250,000 already pay. The total revenue from over 250ks would be closer to 1.5 trillion, add in the fact that we already make nearly 1.6 trillion from everyone else (corporations and non-rich people) and to paint that out as still not having enough is ridiculous. Of course it would be enough, and of course it would send all of those people out of this country. No one is talking about nationalizing the bank accounts of the rich though, and such hyperbole are about as effective and accurate as calling Obama a communist.

      There is nothing about baseline budgeting that means that cuts vs current year can’t be attained and you still haven’t addressed the fact that the dollar next year will be worth 3% less relative to what it is today. By actually cutting 1% from every budget in a given year, that is still a 4% cut. In todays dollars it might not be a cut, but in tomorrows dollars they are a significant one even if spending is held flat. To remove inflation out of the equation throws off the ratio from 10:1 to (10 x 1.03^n) : 1 a far greater number over the course of 5, 10, and 20 years.

  5. Larry on August 23, 2012 at 9:25 pm

    You are not seriously suggesting that the devaluation of the dollar is a cut are you? The lost value of the dollar doesn’t mean we are spending less, it means that we must spend more of our dollars to buy the same goods. It means everything is getting more expensive. Why do you think inflation happens? It’s the quantitative easing by the fed printing money and devaluing all the money we have in savings. It’s the biggest tax on the poor and elderly in history. It’s all needed to fund big government.

    But let’s not get too in the weeds here. To get back on point, you are right that it is possible to cut enough from the baseline budget to the point we are spending less then the precious year. But that would need to be a 6-8% cut from the baseline. That’s a cut that the left would never let happen. Paul Ryan put up a plan that didn’t balance the balance the budget for decades and included more spending year over year based on baseline spending levels and he gets killed in the media for draconian cuts and a complete radical. None of that is true.

    Enjoy the blog by the way. Keep up the good work.

    • Tysons Engineer on August 23, 2012 at 9:53 pm

      Devaluation of the dollar itself isnt the cut, the point is for example

      If in 2012 you spend 3 trillion, and in 2015 you spend 3 trillion even though you have effectively not cut any of the budget, you have cut your budget because future year dollars are worth far less than todays dollars simply by the fact that inflation will occur. This also occurs with a 1%, 2% or whatever % that is less than the inflation rate over that same time period. For a budget to be growing, it has to grow faster than the growth in GDP, for it to contract it has to grow slower than the growth in GDP (and in some cases actually decrease if it is a very deep cut).

      Inflation is a healthy and eventual event, no matter what you do if people do not gain a value of wealth over the course of a year they will believe their effort that year was for nothing. Now and days we call this the cost of living wage increase, either way, everyone in the world believes they are entitled to some marginal increase year to year. The culmination of all of those millions of pay increases is essentially the increase in inflation. Is there hyper inflation? Sure, thats the unhealthy acceleration and devaluation of the currency. But all inflation is not bad, it’s like saying time is bad. Sure you die from time, but its simply the function of the universe, it is reality.

      I appreciate the compliment about the site, we hope to have more of this level of conversation with more of our readers. You should consider signing up and have these comments count towards winning our 3rd monthly giveaway.

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