It’s only been a few days since lawmakers in Washington agreed on a budget for the next fiscal year, but Democrats and Republicans are already gearing up for the next big budgetary showdown: raising the nation's debt ceiling. In the coming months, Congress will have vote on whether to raise the debt ceiling, something Tea Party Republicans say they won't support in hopes of forcing President Obama and Congress to cut spending. But for every dollar the government spends, it has to borrow forty cents. In February, Fed Chair Ben Bernanke said that the economic results of not raising the debt ceiling and defaulting would be "catastrophic"
Austan Goolsbee, chairman of the president’s Council of Economic Advisors, told ABC News a default by the government is "totally unprecedented in American history." But Kenneth Rogoff, professor of economics at Harvard, former chief economist at the IMF, and co-author of "This Time is Different: Eight Centuries of Financial Folly," says the U.S. has actually defaulted twice before. He joins the program for a little financial history lesson, and to talk about what a default by the modern U.S. government would mean for the rest of the world.