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

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Those kinds of middling poll numbers are making it politically difficult to support a credit limit deal.

"No one wants to deal with this and would like to 'kick the can down the road' yet again and hope to get re-elected before it blows up," said Bill Dunkelberg, chief economist at the National Federation of Independent Businesses.

Those opposing an expansion of the credit limit have cast aside the warnings from Treasury Secretary Geithner of "catastrophic economic consequences."

"A broad range of government payments would have to be stopped, limited or delayed, including military salaries, Social Security and Medicare payments, interest on debt, unemployment benefits and tax refunds," wrote Geithner in a letter to Congressional leaders on May 2.

It's that interest on the debt which has most economists worried. The "full faith and credit" of the United States has been an unquestioned cornerstone for global finance -- leading U.S. Treasuries to be a safe haven in times of trouble because Uncle Sam has never missed a payment.

The risks are high enough that 62 business groups sent congressional leaders a plea to address the debt limit.

"Raising the statutory debt limit is critical to ensuring global investors' confidence in the creditworthiness of the United States," said the letter signed by the Business Roundtable, National Retail Federation and U.S. Chamber of Commerce, among others. "With economic growth slowly picking up, we cannot afford to jeopardize that growth with the massive spike in borrowing costs that would result if we defaulted on our obligations."

The stakes, while disputed by the Tea Party, are so high that most economists believe there will be action before the U.S. misses any debt payments.

"We have faced debt limits before and have yet to default," said Martin Regalia, chief economist for the U.S. Chamber of Commerce. "As we approach the limit, we may start to see some increases in interest rates and or declines in the dollar, but I do not think that such movements will be large, unless the debt limit was reached and a default occurred."

Should default occur, it is those higher interest rates that would likely have the biggest economic impact. Like a consumer who misses a credit card payment, Uncle Sam would see his borrowing rates increase substantially as buyers of government bonds priced-in the possibility that they wouldn't be repaid.

That could lead to trillions of dollars in extra interest costs in the coming decades and broader economic effects for consumers.

"If there is not a compromise by the August deadline, the result would be a slowdown in government operations which would negatively affect economic growth," said John Silvia, chief economist at Wells Fargo. "In addition, there would be increased uncertainty premiums, slower capital goods orders in the manufacturing sector, and a slower pace of employment growth. The effect would be felt in several parts of the U.S. economy."

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