WASHINGTON — A default would be unprecedented and would have the potential to be catastrophic, the Treasury Department warns in a paper issued Thursday.

"Credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008," the Treasury said in the six-page paper, called "The Potential Macroeconomic Effect of Debt Ceiling Brinkmanship."

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