Failure to reach a deal to raise the U.S. debt limit may force President Barack Obama to choose between paying Chinese bondholders or American soldiers, and between Iowa farmers or elderly Social Security recipients.

 Those are among the dilemmas Obama may confront should talks with Republicans founder and the government falls short of funds needed to pay its bills. Other choices would include whether to sell at cut-rate prices financial assets such as gold in Fort Knox or loan portfolios acquired through the bank bailout, to avoid default and keep government services going.

Even if full payments are made to bondholders, interest rates on U.S. debt may still rise, setting off ripples through the financial world that would drive up costs for other borrowers and impede economic growth, said bond traders.