Already, homeowners in the nation’s capitol are in trouble.They cannot pay their bills. First-stage foreclosures are up 144% in Fairfax, Virginia, which borders on the Capitol. The doubled in other Virginia counties: Price William, Loudoun, and Faquier.
The cause: the sequester. The slowdown in government spending has cut off the flow of expected funds to government employees.
The current shutdown is too recent to be the cause. The problem began earlier.
First-time foreclosure notices have doubled in nearby Montgomery County over the last year. They have tripled in Frederick County. As a state, the rate is up 230%, second highest in the nation.
The furloughs will add to this rise in foreclosures if they last very long. The government will make up the losses after it comes to an agreement on raising the debt ceiling, but for the moment, no paychecks are coming to 800,000 employees. So, they will cut spending. Firms that sell to them will face tight money conditions.
Fairfax County is facing more cutbacks. About 35% of the jobs in the county are tied to the government, either directly or through contractors.
This news indicates that, while Federal spending is still rising, it is not rising as much as expected. The federal gravy train is still chugging down the tracks, but at a slower speed. Those who planned on an a more extensive flow of finds have been caught in a debt trap.
The federal government is not expanding at the old rate. It has begun to face the limits to growth. This is good news for the rest of the nation.