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The BPC’s analysis was led by Jay Powell, who served as undersecretary of the Treasury in George H.W. Bush’s administration. It’s not pretty. Powell and his team estimate that if we don’t raise the debt ceiling, Treasury will only be able to pay 55-60% of the federal government’s bills in August.

The paper lays out a few scenarios for how that might go. In the “Protect Big Programs” scenario, Treasury pays bills related to interest on the debt, Medicare and Medicaid, Social Security, defense suppliers and unemployment insurance. That means it stops paying military salaries, gives up on the FBI and the Centers for Disease Control, cuts all funding for food stamps and education, shuts down air control, tells NASA to head home, freezes the paycheck of every federal employee, and much more. In another, the Treasury Department tries to protect the social safety net, but has to stop supplying the troops, sending out tax refunds, inspecting offshore oil rigs, etc.

This also leads to an extraordinary assertion of executive power. The executive branch carries out the laws enacted by Congress. Asking them to “prioritize” across different spending needs is asking them to selectively decide between different laws that Congress has passed.

Since the Treasury has never had to make these decisions before, no one quite knows how they’ll be made. The BPC estimates a 44 percent drop in federal spending, but can’t precisely estimate where that drop will happen. That means nobody else can, either. So as we get closer to doomsday, companies that contract with the federal government will start hoarding cash to tide them through a period in which they might stop being paid. Seniors and other Americans who rely on federal transfers would be wise to do the same. And then if we do pass the borrowing limit, the economy is going to have to absorb a sudden and sharp drop in federal spending, which will reverberate among businesses that don’t directly work with the government but sell to those who do.

But at least we’re leaving the bond market alone, right? Wrong. According to the BPC’s calculations, the federal government needs to roll over $500 billion of debt in August. If we’re in quasi-default, who will want to purchase that debt? What will they charge us when they do purchase that debt? A 10 percent premium would cost us $50 billion. A one percent premium would cost us $5 billion. And that’s only the direct cost. Because so many other kinds of debt benchmark against the rates the Treasury pays, you’ll see borrowing costs rising throughout the system. Mortgages, corporate borrowing, all of it. It won’t just be the federal government that pays. It’ll be the economy.