The economic story of the decade for Maryland? Nope, it wasn't electricity deregulation, although that's a competitor.
In a period with terrible news for jobs, investments, safety and housing, there was one development that painted almost every piece of the Maryland economy with a brighter hue.
The federal spending spigot got twisted to fire-hose volume after Sept. 11, 2001. The era of big government was back shortly after President Bill Clinton said it was over, and that meant a windfall for states next to big government's headquarters.
Billions in federal spending on military defense, spying, anti-terrorism, cyber-security, homeland security, medical research and more kept Maryland from sharing in much of the nation's economic trauma.
For 2008, the year for which the most recent figures are available, total federal spending and obligations in Maryland came to $78 billion. That includes everything from Social Security checks to Transportation Safety Administration salaries to payments to computer contractors.
It's up 60 percent from the level in 2001, almost three times the inflation rate. Maryland's whole economy is less than $300 billion in size. So you can see, more than a decade after then-House Speaker Casper R. Taylor Jr. said, "We no longer have the luxury of relying on the public sector employment engine," Maryland relies on government spending as much as ever.
Another federal swoon of the sort that prompted Taylor's comment in 1996 will surely occur. State authorities will again worry about private-sector employment, which grew far more slowly in the last decade than the rest of the economy.
Another megatrend for the state in the past 10 years, especially for metro-Baltimore, was the continuing rise of the health care industry. From biotechnology to nursing homes, medical employment grew far faster than the economy as a whole.
Part of this was related to the federal boom. Johns Hopkins Medicine and other systems took in billions in research grants as well as money for disaster preparedness and the like. At the same time, aging baby boomers meant more and sicker patients. Baltimore's reputation for quality medicine attracted people from around the world.
As health reform proceeds and the laws of macroeconomics limit what can be spent, medicine is another economic positive that might not stay that way.
In other sectors, the "creative destruction" that characterizes the American economy continued to leave its mark. Metro Baltimore lost several more marquee corporate headquarters, with each sale accompanied by large layoffs. Rouse Co. boss Anthony W. Deering sold the company to General Growth Properties in 2004 for $11 billion, setting the stage for General Growth's bankruptcy filing this year.
CEO Edward J. Kelly III sold Mercantile Bankshares to PNC Financial, although he refused the fat golden parachute that normally comes with such a deal. We lost Provident Bankshares and Allfirst Financial. Black & Decker boss Nolan Archibald is selling the company to Stanley Works and setting himself up for a hugely lucrative job as executive chairman at the combined company.
The General Motors plant on Baltimore's Broening Highway closed. The Sparrows Point steel mill changed hands thrice. The Baltimore Sun's parent company, Chicago-based Tribune, entered bankruptcy proceedings in late 2008. Maryland lost nearly 50,000 manufacturing jobs in the past decade - more than a fourth of the total and almost twice as many as it lost in the 1990s.
As much as anything, the 2000s were marked by white-collar fraud, from Enron to Bernard Madoff. Maryland had its share, including the currency pratfalls of John Rusnak, which led to the sale of Allfirst. Accounting shenanigans preceded the sales of U.S. Foodservice and Safenet. Ferris Baker Watts got sold to Royal Bank of Canada after one of its brokers went to prison for abetting a Ponzi schemer in Ohio.
In a tough decade, the deregulation of Maryland's electricity companies didn't help. Baltimore Gas & Electric turned over its previously regulated, low-cost coal- and nuclear-powered generators to parent Constellation Energy. Constellation collected $1 billion from BGE customers by pleading that the plants were economic losers. A few years later it turned around and cranked up prices in an electricity market where prices were largely set by high-cost natural-gas generators, reaping a windfall.
Tough decade. Good thing there was a manic federal government down the road, borrowing trillions and leaving the tab to the future.
It's 2010. The future is here. The next decade must be about controlling government spending. What Cas Taylor said long ago will be true again: We no longer have the luxury of relying on the public-sector employment engine.
