The good folks at the PEW Charitable Trusts prepared a great document that explains one of the top 3 debates in the country right now, BusinessInsider gurus tell us..
Namely, should we raise the debt ceiling or "strategically default?"
The general consensus of the report (it seems to us) is that if we don't raise the ceiling, the U.S. will default on some of its payments -- probably not the debts to foreign holders of securities, but Medicare payments, Social Security payments, some debts will go unpaid if the debt ceiling isn't raised by August 2nd -- and the effects of even a "strategic default" will be negative to an extreme. The two big ones:
Short term interest rates will likely go up
Foreign governments will likely view the defaults as a sign that we can't meet our obligations, regardless of whether or not we meet our obligations to them. We've always been able to, so it might be catastrophic
Social Security Payments may have to stop. This could be a wakeup call for snoozing seniors...
Read more: http://www.businessinsider.com/10-things-you-need-to-know-about-the-debt-ceiling-2011#ixzz1R9EmKxEs
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