US Debt Ceiling Issue
Congress needs to authorize the increase of the limit on how much federal government can borrow (currently $14.3 trillion). 
US Govt Debt Rating Reduction
Rating agencies (e.g. Moodys, S&P) have threatened to lower the rating on government debt if the debt ceiling is not raised.
US Govt Debt Reduction Agreement
The U.S. House and Senate would like to reach an agreement on the US Govt Debt Reduction plan before authorizing further increases in debt ceiling.
Default on US Govt Debt
US Govt may not be able to pay interest on treasury bonds and other government debt.
Increased Interest Rates
If debt rating is cut, treasury yields may go up making all other interest rates also to go up. However, 30 Year Treasury Yield continues to be near record lows!
Default on Govt Obligations
US Govt may not have funds to pay for Social Security, Medicare, federal government employees, contract work, and other obligations.
Higher Unemployment
Federal government employees may be laid off; federal government contractors who don't get paid may also lay off their employees.
Economic Slow Down
US Government accounts for a big chunk of the overall economy.
Stock Market Crash
Credit Suisse says stocks can fall 30% if US defaults.