A mild recession, according to analysts, would likely be the best-case scenario in the event of the US government defaulting on its debts, a limit the country is expected to reach next month and for which Congress must act to increase.
The worst case scenario would involve downstream effects of potentially cascading job losses, a shut down in tens of billions in Covid-19 economic recovery aid still set to be delivered, a near-freeze in credit markets and gross domestic product taking a tangible hit that could last for multiple quarters.
"No one would be spared," Maya MacGuineas, president of the Committee for a Responsible Federal Budget, told CNN. "It would be such a self-imposed disaster that we wouldn't recover from, all at a time when our role in the world is already being questioned."
If the Treasury defaults and the impasse drags on, the federal government would have to enact "devastating" spending cuts that would cause a "cataclysmic" situation for the economy, Moody's Analytics warned this week.
Moody's estimates nearly 6 million jobs would be lost, the unemployment rate would spike back to nearly 9% and stock prices would plummet by one-third, wiping out about $15 trillion in household wealth.
Failure to raise the debt ceiling in time could halt payments that millions of Americans rely on, including paychecks to federal workers, Medicare benefits, military salaries, tax refunds, Social Security checks and payments to federal contractors.
Republicans have steadfastly opposed supplying votes to raise the debt ceiling, despite pleas from officials and watchdogs about the disastrous consequences for defaulting or delaying such action.
Read more about the impacts here.