Mark Zandi and Bernard Yaros on failure to raise the debt ceiling

Shutting the government down would not be an immediate hit to the economy, but a default would be a catastrophic blow to the nascent economic recovery from the COVID-19 pandemic.  Global financial markets and the economy would be upended, and even if resolved quickly, Americans would pay for this default for generations, as global investors would rightly believe that the federal government’s finances have been politicized and that a time may come when they would not be paid what they are owed when owed it.  To compensate for this risk, they will demand higher interest rates on the Treasury bonds they purchase.  That will exacerbate our daunting long-term fiscal challenges and be a lasting corrosive on the economy, significantly diminishing it.

~ Mark Zandi and Bernard Yaros, "Playing a Dangerous Game With the Debt Limit," Moody Analytics, September 21, 2021