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If House Republicans follow through on their threat to refuse to raise the debt ceiling, all bets are off. Without the ability to borrow, the U.S. government would have to cut spending quickly and deeply, which would dramatically diminish the government’s contribution to GDP, Olivier Blanchard, the IMF’s chief economist said at a press conference. The market reaction is unpredictable, but there is every reason to believe that it would be bad, Mr. Blanchard said.
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