The truth is that nobody really knows exactly what will happen if the US were to default on its debt payments. However, here is a Businessweek article about what could happen.
Note that most see it as unlikely to happen. However, the Speaker of the House, Jon Boehner, said over the weekend that we were on the path to default. It is a political issue now. A very complicated one.
If I were to assign rationality to both Republicans and Democrats, I would explain the situation like this:
Republicans think Obamacare (the nickname of the health care plan made law by the Affordable Care Act) will be very bad for the US. In fact, they think it would be one of the worst things ever. Therefore, from their perspective, anything that stops Obamacare is reasonable.
Democrats don’t want to be extorted. I hate to sound extreme here, but this is what is going on. A small group of very conservative Republicans in the House are seemingly controlling the bills that come to the floor. They are now asking for the President to negotiate with them on Obamacare. If the President doesn’t negotiate, they are signalling that they are willing to let the US default.
We will watch and see what happens.