The Debt Ceiling: A “Choose Your Own Adventure” Story
Have you ever read a “Choose Your Own Adventure” book? Letting the reader select a plot path, the series had multiple endings. Now, a Quartz reporter very cleverly has suggested alternative endings for the “plot path” of the Congressional debt ceiling discussion.
Proposed less than 2 weeks ago, the “Choose Your Own Adventure” debt ceiling story, however, needs to include an unforeseen twist. The House just passed new legislation for a debt ceiling hike to last until mid-May with a Congressional salary clause. The clause? If a “chamber of Congress” does not agree on a budget then its members don’t get paid until one develops or until their terms end.
Still relevant, the “Choose Your Own Adventure” starting scenarios, each with its own series of results, were:
- “A fiscal consolidation bargain”
- “A concession to Republican demands”
- No agreement and the Treasury has insufficient funds to cover its obligations.
Now we can add a fourth initial scenario:
- The House passes legislation to raise the debt ceiling for a limited time period.
Discussing the debt ceiling, we should take a look at the debt. Whenever the US borrows, someone, somewhere buys a Treasury security such as a bond. So who has more than $16 trillion in government securities?
Actually, we do.
We owe 2/3 of the debt to ourselves. The US government lends to itself by using, for example, Medicare trust fund cash it does not need. Meanwhile, individuals, businesses, state governments, local governments, pension funds–the list is long– also buy US Treasury securities.
The rest of the US debt is held by foreign governments, businesses, citizens, etc., with China and then Japan at the top of the list. Next are Caribbean Banking Centers, Oil Exporters, Brazil and then still, a long list with South Africa at the bottom.
Sources and Resources: Here, at Quartz, you can see the entire debt ceiling “Choose Your Own Adventure” while for the debt, my information came from the US Treasury and Fox News and graphs are from the NY Times and the Washington Post. Finally, you can read more here in the Huffington Post about the debt ceiling legislation that just passed in the House. In addition, here and here econlife has debt ceiling facts and history.