The United States faces a world of uncertainty and a possible default on its debts within days if Congress does not increase the country's $16.7 trillion borrowing limit by Thursday.
If debt payments are missed, financial analysts say it would cause widespread turmoil on international financial markets because investors' faith in the safety of U.S. securities would be broken.
Financial analyst Steve Bell of the Washington-based Bipartisan Policy Center tells VOA the importance of a possible U.S. debt default should not be underestimated.
“This is, I think, historically unprecedented," he said. "This is not a game. This is not like a government shutdown, which is a completely separate subject. This is really playing with nitroglycerin [unstable explosives].”
Some congressional critics of government spending, mostly Republican opponents of President Barack Obama, say the government should set priorities on which payments to make first. But Bell says the government does not want to have make decisions on who gets paid first, such as China or Japan with their vast holdings of U.S. securities, or older Americans entitled to pension and health care benefits.
“The fact of the matter is probably Treasury cannot prioritize. Two, they probably would tell you they’ve never done it before, so we don’t know how it would work," said Bell. "But the most important thing is that markets, well before we started prioritizing, would have gone into a spasm. You’re going to see the stock market, you’re going to see peoples’ retirements, really seriously injured if we push this to the brink.”
At some point, he says the government would run out of cash, and then most likely would delay, day by day, paying bills until it had enough cash on hand to make all the payments it should have made days earlier. But that, he says, can only last so long.
“Now obviously you can’t keep doing this very long because what’s going to happen is you’ll be waiting to December to pay November bills," said Bell. "So it’s really a stopgap measure.”
U.S. Treasury Secretary Jack Lew says come Thursday the government will only have about $30 billion on hand and some revenue coming in from various sources. He says after that, as interest bills come due on government securities and large pension and health care payments are owed to older Americans on November 1, the government could quickly run out of cash.
Washington leaders are continuing discussions in an effort to end the federal government's two-week-old partial shutdown and increase the debt cap so it can continue to borrow enough money to pay its bills.