How the Debt Ceiling Works

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Author's Note: How the Debt Ceiling Works

While researching this article, I came across an illustration that encapsulates the whole debt ceiling debate in a single image. A twitching finger — presumably belonging to a rattled Congressman — hovers above two toggle switches. The first, in calming blue, says, "Raise the Debt Ceiling." The second, in alarming red, reads, "No More Debt." If Congress throws the red switch and fails to raise the debt ceiling, the short-term economic shock waves could be violent. Over the long term, it's not hard to imagine a world in which the dollar is no longer the default currency, and the U.S. cedes its superpower status to the Chinas and Brazils of the world. But what about the danger of throwing the blue switch, again and again and again? Is it sustainable to let China and Japan continue to pay our bills? The price of living without debt would likely mean harsh economic austerity and a downgrading of the American dream. It's painful to watch dreams die, but what if the only other option — spending and borrowing ad infinitum — turns out to be an even more dangerous fantasy?

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