I'm willing to bet if you were to count the number of times you've heard the words “debt-ceiling debate” in recent months, it may even outrank all the Superbowl chatter...
This is rightfully so. It's a complicated issue, misunderstood by many.
Today, the Wall Street Journal's David Wessel uses a simple and insightful illustrated video to explain why the debt ceiling is “a looming catastrophe one day and a crisis averted the next.”
Wessel uses a few simple graphics to illuminate how the government acquires deficit, how nearly half-of all our debt is held by foreigners (mainly China and Japan), and how Congress created a “ceiling for debt" back in 1917 – but is almost always able to push the debt ceiling higher through a lot of shouting, coercing, and justifying a means to an end so-to-speak.
To understand why Congress would refuse to raise the debt ceiling and what ramifications are in store for you (either way, whether they raise it again, or not) watch the video below.
Trust me, it's pretty tough to pick the lesser of two evils in the case: voting to spend mounds of money the government doesn't have, or the devastation that would ensue if we ran out of cash completely.
In one solution, if you're a physician relying Medicare payments to make pay-roll, seniors who rely on social security to pay rent, and soldiers waiting for a paycheck you could be directly affected by the debt ceiling dilemma because the Treasury would be busy trying to pay off other bills that arrived first instead of paying you who came after.
To see the other equally frustrating options, watch Wessel as he breaks down the mystery of the debt ceiling:
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