Monday is the supposed deadline for raising the debt ceiling. Here are some guesses as to what the consequences of truly breaking the debt ceiling would be.

The U.S. government is able to borrow at rock-bottom rates because investors assume there is almost no chance they won't get their money back. Any sign that the return is not 100% guaranteed is going to send rates much higher. How much rates would rise is an open question. There could very well be panic, but at home and abroad, many investors hold huge amounts of money in the Treasury market that couldn't be moved out of the market that quickly. U.S. Treasuries constitute the deepest and most liquid fixed-income securities market, and there isn't any obvious place for that money to go right away. Euro-denominated bonds hardly look like a safe haven, and emerging-markets countries with great growth potential generally have limited debt markets.

Trying to predict what institutional investors and foreign governments are going to do is hard. But rates will almost surely go higher, potentially much higher, and could stay at elevated levels for years. It could take decades to rebuild the credibility of the U.S. government.

Even if the Treasury is able to keep making interest payments, the cutting of funding to other programs is going to have an impact on the economy and the recovery. The prospect of not paying Social Security, Medicare, contractors, and other government employees could mean a sharp contraction in government spending. 

Even with severe cuts, it would be almost impossible to get the budget in balance without raising the debt ceiling. We've just committed to pay too much to too many people to pull back without issuing more bonds. Given that we will have to raise the ceiling regardless, getting that step out of the way now and hammering out the details of a more gradual reduction in spending after the pressure is off might soothe the pain. 

One of the biggest X-factors is how scared investors will be if Congress fails to lift the debt ceiling. The enormous amount of uncertainty created by that event could look very similar to the enormous swings in stock market indexes we saw at the peak of the financial crisis. Open questions about how much businesses' costs of capital will rise, the stability of regulatory and taxation regimes, worries of a further-stumbling economy, and the quality of capital that banks hold could send shares much lower. The lack of confidence could easily spill over into the consumer mind-set, leading to a contraction in spending that would only compound the other problems.