Debt Ceiling D-Day: U.S. Hits $14.3 Trillion Limit

May 16, 2011— -- The United States today hit its $14.3 trillion congressionally-mandated borrowing limit and the federal government is running on fumes.

While the treasury says it can continue funding Uncle Sam's $3.8 trillion annual spending spree by tapping into what is effectively an emergency credit card -- borrowing from government worker retirement funds and cutting off federally-backed state and local bond programs -- many people are wondering what, if any, impact not extending the debt limit might have as the May 16 deadline comes and goes.

Members of ABC News' economic panel said Wall Street and our foreign creditors have bought into Treasury Secretary Tim Geithner's promise that "extraordinary measures" to keep the government funded will work and the ongoing budget talks between the White House and Congressional Republicans will be productive.

Panelists said there likely will be few economic effects seen next week, with much more dire predictions offered up should a deal on the debt limit and budget not be completed in the next few months.

"Treasury has a lot of wiggle room in terms of shuffling money and delaying payments," said Dean Baker, co-director of the Center for Economic and Policy Research. "At some point it will run out, but I don't doubt that they can get at least until August and quite possibly much later."

The high-stakes political negotiations will require politicians to reach a deal to bring the nation's long-term debt down by trillions of dollars during the next decade. But tying a budget deal to the short-term need to borrow to fund the government and pay the interest on existing debt is a risky proposition.

"My sense is that if the debt ceiling were not raised, the stock market would react much like it did when Congress failed to pass TARP the first time and plunge, and interest rates would surge," said Mark Zandi, chief economist at Moody's Analytics. "The economy would quickly devolve back into recession."

At this point, the market seems to believe that Washington is capable of reaching a deal. Interest rates on government borrowing have not increased in recent months, indicating that investors do not believe it is likely that the U.S. will default. But, economists said, that could change quickly if negotiations break down or we do not have signs of a deal by mid-summer.

"The real worry is market perception," said David Wyss, chief economist at Standard & Poor's. "At this point, [the market] thinks this is just a game and no one could be stupid enough to force a default. They haven't met enough politicians."

While Vice President Joe Biden and Congressional Republicans will continue a series of budget negotiations in the coming weeks, members of the House Tea Party Caucus say they will not vote to support a deal that would expand the government's credit limits. Members say doing nothing would fulfill their campaign promises to stop deficit spending and force automatic cuts in federal spending.

A new Gallup poll suggests the "do nothing" option has support from Republican voters, with 70 percent saying they want their member of Congress to oppose a debt limit increase. Just 8 percent of Republican voters support an expansion.

Among Americans as a whole, 47 percent say they want to do nothing, 19 percent say they support an increase and 34 percent don't know enough to have an opinion.