Economists said Tuesday that nothing would likely happen for several days if the US misses the October 17 deadline to raise its borrowing ceiling, though markets already showed nervousness.
With the White House and Republicans still unable to agree a deal to avoid a crisis, analysts were studying how the once-"unthinkable" failure to reach a deal would spill through stock, bond and currency markets come Thursday.
Late Tuesday Fitch ratings agency put the United States on warning for a downgrade of its credit rating because the government could be forced into defaulting on its debt.
But some analysts said that, despite the Treasury's warning that it could be unable to pay its bills as soon as the 17th, there would be at least several days' respite.
"Congress needs to raise the debt limit by October 17 to avoid disruptions, but missing the deadline by a few days would probably be manageable," said Jan Hatzius, chief economist at Goldman Sachs.
He took note of the so-far relatively small disruptions in the markets for short-term US debt, where prices have fallen as investors seek to avoid getting stuck with expiring or untradeable Treasury bonds.
"Going past the October 17 deadline is likely to exacerbate those and could deal another blow to confidence. That said, the practical implications of going past October 17 are manageable."
Economists at Deutsche Bank reiterated their belief that a deal would get done by the deadline, but that, if not, the Treasury "has the leeway to operate past this date." Conceivably, they said, Treasury might have enough operating funds to meet its obligations through the end of October.
On Friday, the last day it reported, the Treasury only had an operating cash balance of $34.9 billion, less than half of what it started the month with and against daily expenditures that can sometimes surge to $60 billion.
Normally it can borrow to cover shortfalls and match the demand of a chronic fiscal deficit.
But Treasury says that from Thursday it will have no more power to borrow given the $16.7 trillion ceiling. As its bills accumulate faster than tax receipts, it will at one point be forced to default on obligations, including potentially the country's debt.
Analysts say that next week's payments schedule at the Treasury is relatively small, so that they should be able to manage. The first challenge, according to the Bipartisan Policy Center, a Washington think tank, is the need to issue $12 billion in checks for social security benefits on October 23.
That, and the Treasury apparently deciding not to roll over about $13 billion in debt on Thursday, should leave it with a cash balance of only $10 billion at the end of next week, according to Hatzius.
At the end of the month, however, the Treasury faces much larger payouts, for interest on the debt, social security, government salaries, and other benefits -- more than $60 billion all told on October 31 and November 1.
"Given the volatility in the Treasury's daily cash flows, as the Treasury's cash balance dwindles the risk of a failure to make scheduled payments increases," said Hatzius.
Investors showed clear worry about the lack of a deal on Tuesday. Stocks fell, erasing much of the gains made on Friday and Monday when investors believed a political solution was in the air.
Demand also fell significantly in the Treasury's auctions of three- and six-month bonds, while the yields on the debt rose significantly from identical auctions in the past four weeks.