What's worse: A government shutdown or a failure to raise the debt limit? A shutdown sounds more serious, but failing to raise the debt limit would mean the first U.S. government debt default in history, with all the complications that brings.
"The federal government would have to significantly cut back spending, [which] would probably mean delaying about $80 billion in payments due November 1 to Social Security recipients, veterans, and active-duty military for as long as two weeks," writes Mark Zandi, chief economist at Moody's Analytics, in a new report.
"Financial markets would surely be roiled" with spiking interest rates and plunging equity prices. Global investors would sell or stop buying U.S. debt, and the Federal Reserve would have to shore up purchases of Treasury bonds, according to Zandi.
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