A few other people have pointed out the ongoing evidence that the rest of the country's economic pain has meant Washington's gain. The federal government's takeover of General Motors is just a microcosm of what's been happening. The private sector is losing job, but meanwhile, the bureaucracy (and jobs dependent on the bureaucracy) is swelling.
The latest piece of evidence is Kiplinger's 2009 Best Cities list, which seems to really mean Best Cities For Employment. The methodology is based on number of jobs, job growth potential, quality of jobs, and the city's ability to hold on to those jobs in the long run. Washington DC comes in at third on the list.
"Only" about one in eight workers in the DC metro area work for the federal government, but many other jobs are contractors employed by the government, Kiplinger's points out.
The federal government also has tremendous influence on the only two towns Kiplinger ranks above DC: Huntsville, Alabama (a NASA town), and Albuquerque (Sandia National Laboratories is one of the biggest employers).