Will the US default on its loans? The United States operates under a borrowing limit set by Congress. If Congress cannot raise this limit, the U.S. risks being unable to borrow additional funds, potentially leading to a default. This could result in higher borrowing costs, reduced investor confidence, and global financial instability. While the U.S. has never defaulted on its principal debt, past debates over the debt ceiling have raised concerns. Default is widely seen as a catastrophic scenario to be avoided at all costs.