But, like, OK, when there's a government shutdown, there are these workarounds that will happen where the government will figure out how to get people their checks so that it doesn't hurt people who get Social Security. And it's not really a comparable situation, necessarily. And they should also be worried about that in the case of the debt ceiling deal that Speaker McCarthy and House Republicans recently passed, which would also have an impact on jobs and on restraining growth. SANDERS: Unfortunately, in the scenarios that are happening right now, people should absolutely be worried about their jobs, the state of the economy, the impact this could have on kind of our economic growth. RASCOE: So should people worry for their jobs? You know, and you're basically looking at a economic recession. Treasury could be downgraded depending on how long the government isn't able to pay off the bonds. There's the risk that the credit of the U.S. If the market plunges, that will also wipe out a lot of household wealth. And then there's the bigger-picture impact, also, on financial markets because if Treasury has to delay its payments, you have a lot of chaos in financial markets. Especially, they will cut back on their spending, which impacts their economies. SANDERS: Yeah, for sure because, you know, the first kind of layer is, you know, those people can't pay their bills if many of them are in low- and medium-income ranges. So it would seem to be there would be a huge ripple effect on the whole economy, right? RASCOE: Yeah, because I've read that Goldman Sachs economists said that close to one-tenth of all economic activity would stop. And then that has a big ripple effect on the economy from there. So you're talking seniors or people with disabilities who get Social Security payments, military personnel and veterans benefits, federal employees, people who are getting support from programs funded by federal money like SNAP for food stamps, housing assistance. The people who are hit first and foremost by this is anybody who is receiving some type of payment from the federal government or some type of program that is funded by the federal government. SANDERS: Economic catastrophe is a great way to put it. But who would feel the effects of a default right away? And Treasury Secretary Janet Yellen said it would lead to an economic catastrophe.

RASCOE: So if the government does not raise the debt ceiling, it means it defaults on its bills, runs out of money, can't borrow anymore. SAMANTHA SANDERS: Thanks so much for having me. She's the director of government affairs and advocacy at the Economic Policy Institute. But what does it all really mean for you, a couple trying to pay off a mortgage, a soldier serving in the military or someone on food stamps? To help us make sense of it, we turn to Samantha Sanders.

And negotiators met for three days straight last week to try to come up with a deal on raising the borrowing cap. On Friday, the Congressional Budget Office said there was a significant risk that the government will run out of cash at the beginning of next month.

Debt default meaning