President Donald Trump’s proposed 2018 budget features deep cuts to many federal agencies such as the Environmental Protection Agency and could have a significant effect on greater Washington’s economy.
The proposed cuts still need to pass in Congress, where significant changes will likely be made to the president’s proposal, but the proposed cuts have left business leaders in D.C. concerned, according to Andy Medici, money reporter at Washington Business Journal.
“There have been talks about the EPA getting cut. A lot of agencies might not survive the way that they had for all these years, and that might be trouble for our region,” he said.
While the president’s budget is almost never approved by itself, it’s important because it shows the intentions of the administration.
“This is the best indication of what the Trump administration thinks is its priority, and if that priority is cutting the federal workforce, then you can be guaranteed it’ll be happening in some way, shape, or form,” Medici told What’s Working in Washington.
The region had to respond to similar reductions in federal funding following budget sequestration in 2013, when it meant job cuts and negative market growth for a short period.
These changes won’t be unilaterally negative. Virginia and Maryland could face much different futures based on the type of cuts the Trump administration is proposing.
“Virginia’s much more dependent on defense spending, which might get a boost. Maryland, however, is far more dependent on health services with the NIH and FDA,” he said.
Such hits to businesses could be mitigated if the D.C. area branched work out beyond the federal government, but results show that this isn’t happening as much.
“We have had job growth, but not nearly as much as we’d like, and not nearly in the sectors we’d like them to be,” said Medici. “While it’s good to have jobs over no jobs, it’s probably not as good as having that $85,000 or $95,000 entry level cybersecurity job.”
The effects on D.C.’s small businesses are also hard to predict. “Credit markets are strengthening. Higher interest rates do mean that banks become more profitable,” said Medici. Despite this, some companies are hoping stronger credit markets will allow them to restructure their debt, improving their status.
Medici said that the tech community is “quite resilient,” and that despite troubles that may come, “a lot of the great innovations are sort of born out of adversity.”