Washington, D.C

Washington, D.C. shouldn’t run the nation’s economy

Published

2 years ago

April 28, 2024

Washington, D.C. shouldn’t run the nation’s economy

In the popular mind, nearly every American city owes its prominence to one private industry or another: steel barons built Pittsburgh, modern finance defined New York City, San Francisco and Austin have ridden high on technology. The one big city without a defining private industry, of course, is Washington, D.C., home of America’s federal government. That’s why it’s so odd that many on the right are now championing “industrial policy” efforts that would try to transform D.C. into a center of economic innovation.

Indeed, proposals for this heavy level of government engagement in the economy, once considered by many on the right as a crony-capitalist venture favored mostly by Democrats, has become increasingly popular with Republicans ranging from presidential candidate Donald Trump to Florida Sen. Marco Rubio. The sheer size of the federal government – more than a fifth of the economy – means that a totally hands-off attitude towards industry is impossible. But, even if the government can’t stay out of the economy entirely, recent history shows it can still foster innovation without picking winners and losers.

The actions typically thought of as industrial policy have an undeniable allure: nearly all experts consider important certain sectors such as artificial intelligence, energy production and biomedicine. By earmarking resources, changing regulations and imposing tariffs on non-U.S. industries and companies, the thinking goes that D.C. can secure prosperity. This is the fundamental approach taken by the Biden administration’s Inflation Reduction Act subsidies for green energy as well as proposals from Republicans to bolster heavy manufacturing and fossil-fuel production.

But expecting these efforts to work flies in the face of history. Since World War II, nearly every president has picked out a favored industry and tried to slant things in its direction. The Trump administration proposed billions of subsidies and even more costly regulations on competitors intended to benefit coal companies which slumped anyway. Bill Clinton’s administration spent millions on a “supercar” project that angered environmentalists and set back America’s efforts to build hybrid vehicles. Richard Nixon’s Department of Housing and Urban development launched an ambitious effort to change how housing got built and ended up making housing more expensive.

American economic leadership in the 20th century was not the result of a bureaucratically overseen industrial policy. Our nation’s dynamism flows from a broadly supportive government role that involves multi-use infrastructure, limited but important support for science and regulatory certainty.

The government’s role has been most visible in major projects like the interstate highway system and modern internet. While both would not have existed without heavy federal subsidies, neither of these projects was intended to benefit one specific sector. Nobody wanted “leadership” or “jobs” in asphalt or fiber-optic cable production. Instead, the architects of both intended to create accessible scaffolding upon which the private sector could experiment, innovate and scale. Fast-food restaurants probably gained more from the interstate system than roadbuilders.

Similarly, the breakthroughs in technology emerged from regulatory environments where the government’s role was to lay the groundwork – funding basic research, experimenting with a few pilot programs, and then stepping back to allow the private sector to take the lead in development, commercialization and scale. This approach succeeded because it created new knowledge in every field of human endeavor rather than having politicians decide what was important.

Most important, the establishment of limited, efficient regulatory systems that offer clarity and certainty for private enterprises has been critical. Such frameworks enable businesses to plan for the long term, secure in their understanding of the rules of the game. Right now, the American tort law system punishes entrepreneurs and burdensome regulations favor slow-moving incumbent companies. Furthermore, many legacy regulations are ill-suited to the characteristics of new technologies.

For example, the foremost challenge faced by green industries is regulatory burdens, whereas most green subsidies in the Inflation Reduction Act constitute corporate welfare. Comprehensive reforms to outmoded power-industry regulation and permitting and siting processes could do more to reduce emissions than the trillions of dollars the IRA is likely to cost taxpayers.

As policymakers grapple with the best path forward, it is imperative to remember that the strength of the U.S. economy lies in freedom, diversity and innovation. Principles that emphasize a limited government role could pave the way for a new era of American leadership in the global economy in a way that picking winners and losers never has. It is a no-brainer that Washington, D.C. shouldn’t run the economy.

Eli Lehrer is president of the R Street Institute.

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Washington, D.C

Storm Team4 Forecast: A chilly, gusty Sunday before a cool start to the week

Published

4 hours ago

April 19, 2026

Press Room

Storm Team4 Forecast: A chilly, gusty Sunday before a cool start to the week

4 things to know about the weather:

Chances of rain in the morning
Gusty Sunday
Chilly Monday
Temps will rise again through the work week

Download the NBC Washington app on iOS and Android to check the weather radar on the go.

After a nice and warm Saturday, changes arrive for part two of the weekend.

The first half of your Sunday will have a chance for showers. Winds will pick up with our next system and are expected to gust to about 20-30 mph. Cooler air will settle in, and lows Sunday night fall into the 40s.

Highs temps Monday will reach only into the mid to upper 50s.

However, temperatures will rise through the week, so you won’t need your jackets every day.

QuickCast

SUNDAY:
Showers, then partly cloudy
Wind: NW 10-15 mph
Gusts @ 30 mph
HIGH: Lower 60s

MONDAY:
Partly cloudy
Wind: NW 10-15 mph
Gusts @ 25 mph
HIGH: Upper 50s

Stay with Storm Team4 for the latest forecast. Download the NBC Washington app on iOS and Android to get severe weather alerts on your phone.

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Washington, D.C

‘It’s a twilight zone’: Iran war casts deep shadows over IMF gathering in Washington

Published

1 day ago

April 18, 2026

Press Room

‘It’s a twilight zone’: Iran war casts deep shadows over IMF gathering in Washington

The most severe energy shock since the 1970s, the risk of a global recession and households everywhere stomaching a renewed surge in the cost of living – hitting the most vulnerable hardest.

In a sweltering hot Washington DC this week, the message at the International Monetary Fund meetings was chilling: things had been looking up for living standards around the world. But then came the Iran war.

“Some countries are in panic,” said the fund’s managing director, Kristalina Georgieva, addressing the finance ministers and central bank bosses in town for the IMF and World Bank spring meetings. “The sooner it [the Iran war] ends, the better for everybody.”

Such gatherings are not typically used to fight geopolitical battles. “You don’t get people shouting at one another at these things,” one senior figure remarked. But, as a record-breaking April heatwave swept the US capital, no one could ignore the mounting damage from the Iran war.

Those familiar with the mood over breakfast at a meeting of the G20’s representatives on Thursday, which included Donald Trump’s treasury secretary, Scott Bessent, and the outgoing US Federal Reserve chair, Jerome Powell – said the atmosphere in the room was sombre amid an open exchange of serious views.

“It is such a twilight-zone meeting,” said Mohamed El-Erian, a former IMF deputy managing director who is now chief economic adviser at the Allianz insurance group. “There are several shadows hanging over it: one is the shadow that comes from concern about the global economy as a whole.

“The second is that some countries are going to be particularly hard hit, and it’s mostly countries that very few people are talking about. But the third concern is the adding of insult to injury: the fact that the US, which started a war of choice, is going to be hit, but by a lot less than elsewhere in relative terms.”

Before Thursday’s breakfast, Rachel Reeves had started her day with an early-morning jog. Joined by her counterparts from Spain, Australia and New Zealand for a run down the iconic National Mall, she posted an Instagram selfie with a not-so-subtle dig: “Friends that run together – work together.”

A day earlier, the chancellor had told a CNBC conference that she thought “friends are allowed to disagree on things” as she criticised Trump’s Iran war as a “mistake” and a “folly” that had not made the world safer.

Rachel Reeves posted this image on Instagram from Washington DC on Thursday with the message: ‘Friends that run together – work together.’ Photograph: Rachel Reeves/Instagram

Speaking at a venue just steps away from the White House, before a one-on-one meeting with Bessent, she said this “fair message” was needed because UK families and businesses were feeling the pain from higher energy prices triggered by the conflict.

Those close to Reeves insist her meeting remained cordial. Britain and the US have significant shared interests in AI, financial services and trade. The chancellor also said the UK government had little time for the Iranian regime.

But with the IMF having warned on Tuesday that the Iran war could risk a global recession – in which Britain would be the biggest G7 casualty – it was clear Reeves had travelled to Washington ready to pick a fight.

“I’m struck by how vocal she has been and the words she used,” said one global financier. “We know the disagreement between Bessent and [European Central Bank president] Christine Lagarde earlier in the year. But that was in private.”

At a cocktail party held at the British ambassador’s residence for hundreds of diplomats and financiers – including the Bank of England’s governor, Andrew Bailey, the chief executive of Barclays, CS Venkatakrishnan, and dozens of senior figures – this transatlantic tension, weeks before King Charles’s US state visit, was a major topic of conversation.

The other, in the balmy residence gardens, was one of its former occupants, Peter Mandelson, as revelations about the former ambassador’s appointment threatened to further rock the UK government.

Before the war, the agenda for the IMF had been about global cooperation; the adoption of AI, jobs and work to eradicate poverty. Each of those tasks had now been complicated, but not least the task of countries working together.

For many at the meetings, the focus was on forging closer global cooperation without the world’s pre-eminent superpower.

“Everybody is talking about how you hedge against American decisions,” said David Miliband, the former UK foreign secretary, who now runs the International Rescue Committee. “You can’t do without them, because they’re 25% of the global economy. But, in a lot of fora, they’ve pulled out.

“So everyone has to think, how does one structure international cooperation? The old west is not coming back. And so everyone has to figure out how to position themselves for that world.”

For those gathering in Washington, there was irony in the fact that they were meeting in the halls of institutions founded, under US leadership, to promote global cooperation after the second world war. The whole idea of the Bretton Woods institutions was to avoid the dire economic conditions and warfare of the 1930s and 1940s. Yet this year’s meeting was taking place amid these intertwining problems.

In their conversations about the best economic policy response to the shock of conflict, the economists also knew the real power to make a difference lay two blocks across town from the IMF and the World Bank – behind the security cordons and construction equipment blocking the White House from public view. “It is not clear they can do anything about it,” said El-Erian.

Still, with a booming economy driven by AI – including Anthropic’s powerful Mythos model, the topic of much conversation – most countries cannot afford to completely break off US ties.

“People want to find ways to insulate themselves from the mess. But, on the other hand, they admire the US private sector,” El-Erian said. “The best way I’ve heard it put, is: they want to go long the private sector and short the mess. But it’s almost impossible to do.”

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