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Washington, D.C., region as government hub is a wealth magnet -- for better or worse

Say what you will about the record federal debt and talk of a "tax-maggedon" -- for the Washington, D.C., area, government is good for the bottom lines of the region's residents.

The American Community Survey released last Thursday found seven of the nations top 10 wealthiest counties now surround Washington, D.C. They include Loudoun County, Va., ranked No. 1, with a median household income over $119,000 dollars a year. Fairfax County, Va., was second with $105,000 and Arlington County, Va., third with just over $100,000 a year in median household income.

While The Washington Post in a recent story trumpets the statistics as a "feel good" measure of success for its readers, others says its a measure of how redistribution and "crony capitalism" have cushioned the Washington area from the recession that the rest of the nation suffers.

"Do you remember when Ross Perot used to talk about a giant sucking sound of jobs going down to Mexico?" asks Tim Carney, a columnist for the Washington Examiner. "Sometimes I think that D.C. is the vortex and there's a giant sucking sound of American wealth and jobs coming in here. It's not free trade, it's not commerce ... it's government. The taxpayers are the ones who are paying to build up this region."

Indeed, Washington has no natural resources, no commercially navigable waterway, no factories and no industrial base. But it has government - a trough so plentiful that thousands of lawyers, lobbyists, defense contractors, consultants and businesses come to feed from it. In recent years, the Fortune 500 companies Northrup Grumman, Hilton, SAIC, and Volkswagen have moved to northern Virginia, just miles from the Capitol.

"Why are they doing that?" Carney said. "It's because businesses are finding out that the government controls their prosperity and their wealth much more than the rest of the economy does."

Rep. Gerald Connolly who represents Virginia's 11th District, encompassing most of Fairfax County -- arguably the nation's wealthiest congressional district -- vehemently rejects the view that Washington and its suburbs are parasites feeding off the hard-earned money of recession-weary taxpayers.

"I think we've built an economic climate that is pro-business friendly. We have created some of the highest-performing school systems in the U.S., virtually all paid for with local tax dollars, not U.S. tax dollars. We have among the lowest crime rates in any part of the U.S., and it's no surprise that we've attracted half a dozen Fortune 500 companies just in the last few years," he said.

Economist Stephen Fuller, who heads George Mason University's Center for Regional Analysis, offers a middle view.

"The federal government's a very major contributor to the local economy," he said. "It isn't free money, though, and the real story here is that the Washington area workforce works very hard. We have more wage-earners per household than any metropolitan area."

Ironically, at the same time Washington's suburbs are climbing to the top of the wealth ladder, the very same suburbs are also seeing poverty rates shoot up - a statistic that reinforces the view that government employment is increasingly the domain of well-educated, highly compensated workers. In Loudoun County, one food pantry provider tells the Washington Post that demand is up 80 percent since 2007.

"The government jobs that have been pared back over the last few years have been the less skilled jobs, whereas the high-skilled jobs, the ones that are paying the mortgages on the million-dollar homes in Arlington -- those are the ones that have been increasing," Carney said.

Indeed, the Congressional Budget Office reported last January that federal workers make 16 percent more than comparably employed private sector workers -- a statistic that riles many Republicans intent on reducing yearly deficits and debt. The CBO finding also upends the widely held belief that federal workers trade high compensation for predictable hours and the stability of government work, though government workers also are more likely to negotiate wages collectively through a union than their private-sector counterparts.

Still, economist Fuller believes Carney's characterization of Washington as a vortex into which taxpayers' money is sucked, with little economic benefit for the rest of the country, ignores the services that government provides.

"This is a working-class community," Fuller says. "It just happens to work at the high end. So we do pay significant taxes, but we benefited from other taxpayers' transfers here for services rendered to them. And if it's their judgment those services aren't worth the taxes paid, well, that's another debate. "