The only thing that matters to the economy is the permanent tax hikes.
Government services close markets and restrict economic freedom.
As for the continuing debt that is an issue of financing the interest(vs everything else) and/or maintaining obligation creditably. The interest on the debt which is already approaching the size of all deference spending will begin to either require more debt(thus greater interest bills) or smaller budgets elsewhere. That is only short term(next 10 years).
Long term were talking about smaller use-able budgets regardless because of the existing & apparently un-closeable deficit.
In my judgement the politically inevitable outcome of that untenable situation will be a reworking of the Federal debt & interest liability to effectively stop/stall repayment.
This I think is inevitable, because we cant possibly repay existing obligations nor can we get the population or congress cut spending, while the debt & interest payments will continue to grow progressively building upon each-other.
Even as we speak now, there is simply not enough money in theses united States to pay for this Government and its debt.
Don’t worry there will be plenty of money to go around, Bernanke is running the presses at full throttle as we speak. $100 Billion a month forever plus what they don’t tell us about. Granted it won’t be worth a wheelbarrow full of Continental’s, But we will All Be Millionaires subjected to the New Obama Tax on Millionaires.