The US government default caused by the ongoing budget standoff in the Congress could have a “catastrophic” effect on the country’s economy, which would be felt for decades, the Treasury Department said in report.

The US government went on partial shutdown this Monday after the Democratic-led Senate turned down repeated efforts by the Republicans to pass a budget, constraining the implementation of ‘Obamacare’ – a healthcare law, which the president considers a centerpiece of his political legacy.

If the Congress fails to raise the $16.7 trillion federal borrowing limit by October 17, the government could begin running out of money to pay its bills, which would result in an unprecedented US debt default.

“In the event that a debt limit impasse were to lead to a default, it could have a catastrophic effect on not just financial markets, but also on job creation, consumer spending and economic growth — with many private-sector analysts believing that it would lead to events of the magnitude of late 2008 or worse, and the result then was a recession more severe than any seen since the Great Depression,” the Treasury said in a report on Thursday.

The consequences of the default, which include high interest rates, reduced investment, higher debt payments, and slow economic growth, would also be sustainable and “could last for more than a generation,” the department warned.

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Posted by The NON-Conformist