How the Washington, D.C. area got rich

In 2010, the Washington metropolitan area enjoyed the highest median income of any in the country. A major factor in the growth of our wealth has been government contracts.

The contracting out of the functions of the federal government was pioneered by the Pentagon as its military and civilian officials discovered that the process of contracting out enabled them to kill two birds with one stone, disguising the growth of their own bureaucracy while providing lucrative employment opportunities for their retirement years, which in the case of the military could begin in their early forties. Then, once Bill Clinton had declared an end to the era of big government, his Reinventing Government initiative had to focus on downsizing the number of federal employees. The result: other agencies quickly adopted the Pentagon’s solution of contracting out so that they could appear to downsize by transferring employees from direct hire to contract. Then the Bush administration responded to 9/11 with its giant national security program and the wars in Afghanistan and Iraq and their attendant reconstruction efforts, all of which provided vast new worlds of opportunity for contracting, especially with Republican officials loath to admit they were increasing the size of government.

Some contracts are for things government employees cannot do, like making planes or tanks, but many, including most of those in the Washington area, as Annie Gowen illustrates in a recent article in the Washington Post, are for personal services. And here is the problem: according to the Project on Government Oversight, “the government is now paying contractors nearly twice as much as it would have to pay federal employees to do the same job.”

Charles Peters

Charles Peters is the founding editor of the Washington Monthly and the author of a new book on Lyndon B. Johnson published by Times Books.