A deal is taking shape between Congress and the administration on the debt-ceiling vote, and it will likely include some spending cuts in exchange for increasing the amount the government can borrow.

As these negotiations play out, we’re constantly warned that the debt-ceiling fight has high stakes. Refusing to raise the ceiling will prevent us from paying debts and will destroy the faith our bondholders — that is, China — have in us. Or will it ? The Prospect talked with James K. Galbraith, the Lloyd M. Bentsen Jr. chair in government/business relations at the University of Texas at Austin, about just how accurate the doomsday predictions really are.

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