(Bloomberg) -- Even a brief U.S. government default on its financial obligations would result in added costs to U.S. taxpayers for decades to come, according to Mark Zandi, chief economist at Moody’s Analytics.

“Even if resolved quickly, Americans would pay for this default for generations, as global investors would rightly believe that the federal government’s finances have been politicized,” Zandi wrote Tuesday in a note to clients. That’s even as the economy withstands a momentary blow to financial markets, he said.

Democrats and Republicans on Capitol Hill are headed for a showdown over raising or suspending the country’s debt ceiling. The limit kicked in at $28.4 trillion at the beginning of August following a two-year suspension, forcing the Treasury to employ so-called extraordinary measures to avert breaching the ceiling.

Treasury Secretary Janet Yellen has said the department will run out of money some time in October.

Zandi pointed to other incidents when the U.S. came close to defaulting or saw payments accidentally delayed. In each case, investors demanded more return for buying Treasury securities, forcing up government borrowing costs.

If Congress resolved the situation shortly after a default, Zandi added, “markets and the economy would right themselves.”

But a longer period of default would result in a “cataclysmic” economic scenario, he said, citing:

  • GDP contracting almost 4% at its worst
  • Loss of nearly 6 million jobs
  • Unemployment rate surge to close to 9%
  • Stock prices cut almost 1/3, helping wipe out $15 trillion in household wealth
  • Permanently higher borrowing costs

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