What happens if Congress does not raise the US debt ceiling?
What happens if lawmakers fail to act by the Aug. 2 deadline?
A failure to raise the debt ceiling would send shockwaves through the underpinnings of the financial system — and possibly ripple out to individual investors and consumers.
If the debt ceiling isn’t raised, the federal government won’t be able to pay 44% of its bills worth an estimated $134 billion. The federal government would be forced to prioritize its payments and would risk defaulting on its financial obligations. And if that happens, credit rating agencies would downgrade U.S. debt.
Americans’ investments would get whacked. Or, Treasury yields could become volatile and start to climb as investors lose faith that lawmakers have the political will to be fiscally responsible. And it could cause rates on consumer loans — like mortgages and car loans — to climb higher as well.