WASHINGTON — If the United States runs short of cash to honor its obligations 18 days from now, the economic impact would be fast and furious.
The country almost certainly would not default on its loans to bond holders, but all other payments would be thrown into doubt. That could start a cascading effect on jobs, loans, investments, prices — virtually every facet of Americans' financial lives.
Some Republicans in Congress dispute the level of chaos that would ensue, charging that the Treasury Department is trumping up the potential repercussions. They include Rep. Michele Bachmann and former governor Tim Pawlenty of Minnesota, both presidential candidates, as well as prominent senators such as South Carolina's Jim DeMint and Pennsylvania's Pat Toomey.
Prominent economists and accountants, business leaders and veterans of Republican administrations disagree, pointing to potentially calamitous results if the nation's $14.3 trillion debt ceiling isn't raised by Aug. 2.
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"The federal government will run short of money and be unable to pay approximately half of its non-interest bills," says Jay Powell, a Treasury undersecretary in President George H.W. Bush's administration. "Those who believe otherwise have been misinformed."
Here are some of the grim realities: