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I somehow snagged an interview for a gov't internship in DC, without having any previous government related work experience on my resume. I am really concerned that this issue is going to come up. What's the best way to play it off? I spent college in NY and never had a chance to intern in DC, but what if they ask why I didn't work in the NY state or city government? Part of it was financial constraints, but it seems like that might not be a good enough reason.

Sounds like something for 1L summer. If it is, they won't be very concerned about lack of government experience. They recognize college students have bills to pay. More important is being able to articulate an interest going forward and a familiarity with the office you'll be applying to.