The U.S. economy is again facing the grave threat of a breach of the debt limit. Past debt-limit brinkmanship crises inflicted substantial uncertainty on businesses, drove huge declines in the stock market and consumer confidence and led to higher borrowing costs for taxpayers and consumers. Debt-limit brinksmanship resulted in the first-ever downgrade of the U.S. credit rating and cost the country billions of dollars in lost economic activity, even though a default was ultimately avoided.

Breaching the debt ceiling would render the federal government unable to fulfill its financial obligations, forcing cuts to Medicare payments to hospitals and doctors, pay and benefits for military service members and Social Security payments to seniors.

A debt-limit breach could also cause a default on federal debt, which is widely considered one of the safest financial assets and an essential part of the U.S. dollar’s position as the world’s reserve currency. Defaulting on federal debt would create a financial crisis on par with that of 2008 and would result in catastrophic economic damage, with millions of jobs lost, businesses shuttered and a banking system in chaos.

Read the full brief here.