NEW YORK (CNNMoney) - What happens if lawmakers fail to raise the debt ceiling by the Aug. 2 deadline?
Well, it's hard to say, because lawmakers have never before put the United States in a position where it can't pay all its bills.
But it wouldn't be pretty. A failure to raise the debt ceiling would likely send shockwaves through the underpinnings of the financial system - and possibly ripple out to individual investors and consumers.
The federal government would be forced to prioritize its payments. It would risk defaulting on its financial obligations. And if that happens, credit rating agencies would downgrade U.S. debt.
"Even if Washington did raise the debt ceiling after just a few harrowing days following a default ... we envisage that the economy could fall quickly back into recession," rating agency Standard & Poor's said in a report Thursday.
Federal Reserve Chairman Ben Bernanke said the fallout could be "catastrophic" and "self defeating."FULL STORY on CNNMoney.com
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