"A default would be felt first by Americans who receive payments either directly from the federal government or programs funded by it — like Social Security, military and veterans benefits, housing assistance and food stamps — says Samantha Sanders, the director of government affairs and advocacy at the Economic Policy Institute."
https://www.npr.org/2023/05/15/1176108817/debt-ceiling-retirement-plans
"At its most basic level, a default is when a person or an entity cannot repay a debt on time. For instance, when a person can't make a payment on a mortgage or a car loan.
When a country does this, it's known as a sovereign default. This is when the country cannot repay its debt, which typically takes the form of bonds.
So if the US were to default, it would essentially stop paying the money it owed US Treasury bond holders.
A quick refresher: the US government spends more money than it collects in taxes. So to make up the shortfall, it raises funds by asking investors to buy US Treasury bonds. Investors, such as the Chinese government and pension funds, do this because these bonds are seen as a safe place to invest money.
What are the consequences of a US default?
No one really knows exactly what would happen, but the likelihood is that markets around the world would plunge and global interest rates would rise."
https://www.bbc.com/news/business-24453400
"The national debt is the accumulation of this borrowing along with associated interest owed to the investors who purchased these securities."
"In reality, the U.S. government must pay interest on the national debt. This interest expense increases spending each year, increasing spending (and thus, deficits) as the debt grows."
https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/
"The interest on the national debt is how much the federal government must pay on outstanding public debt each year. The national debt includes debt owed to individuals, to businesses, and to foreign central banks, as well as intragovernmental holdings."
https://www.thebalancemoney.com/interest-on-the-national-debt-4119024
The US is paying a record amount of interest on its debt. It’s only going to get worse
"The spike in interest payments also contributed to the federal government hitting the debt ceiling that much faster. And it adds to the pressure on Congress to raise taxes, cut spending or allow the government to borrow more to meet all its obligations.
Higher interest payment in coming years
Even if the Federal Reserve slows or stops raising rates this year, as many economists expect, the nation’s borrowing costs will continue to increase. That’s because as the existing debt matures, the government issues new debt with the higher prevailing interest rates.
The higher rates could increase the net interest cost on the national debt to about $9 trillion over the next decade, according to estimates by the Peter G. Peterson Foundation, a nonpartisan organization that seeks to raise awareness of America’s long-term fiscal challenges. That’s up from the record $8.1 trillion that the CBO projected in May 2022 and the $5.4 trillion it projected in July 2021."
https://www.cnn.com/2023/02/14/politics/interest-payments-federal-debt/index.html