The United States is rapidly closing in on total financial chaos, as the two ruling parties have failed so far to reach a borrowing ceiling consensus although the debt default is estimated to hit the government in early June, as per earlier statements by US Treasury Secretary Janet Yellen.

The debate over raising the debt ceiling has become an annual occurrence, however, this year Congress is in a race against time while Republicans and Democrats are yet to agree on the terms.

In short, the United State's expenses exceed its revenues, which prompts an increase in the borrowing limit currently sitting at $31.4 trillion.

Read more: Asian markets sink as US debt ceiling talks stall

US markets are accumulating losses every day as the debt default date, also known as X-date, closes in. But the default impact would not be limited to the United States, rather, it would have a tremendous impact on the global markets. 

Moreover, in case this scenario happens, investors would lose trust in the US financial system, and thus won't be as motivated to invest in products and instruments backed by the US dollar.

Spending on federal programs, such as social securities, medical assistance, and benefits programs for serving and retired army personnel, among other payments, that accounted for 45 percent of last year's 6.27 trillion budget, would be forced to a halt - affecting tens of millions of Americans.

"We would simply not have enough cash to meet all of our obligations," Yellen said earlier this month.

On Monday, US House Speaker and President Joe Biden said their first one-on-one talks in months to avoid a calamitous debt default were "productive", but disagreements were still blocking any possible deal.

The White House meeting came after Biden cut off a  short trip to Asia to recommence talks in advance of the US Treasury's deadline for Congress to authorize more borrowing.

Read more: Yellen warns brinkmanship over debt limit risks serious economic costs

Get ready

The US Treasury informed federal bodies to secure a feasible plan for differing scheduled payments to prepare for a budget payment pause, reports said earlier.

Medicare providers are scheduled to receive $47 billion on June 1 from the Treasury, $25 billion dollars for social security programs are planned for June 2, and other payments are supposed to be made in the following days of the month,

Also on June 1, Congress said almost $25 billion in payments must be made to military personnel and civil servants, including other groups.

Selling and delaying

While missing pay dates will affect the US government, delaying some expenses for a few days is still manageable, but which bills to pay or sideline would be the main challenge for the federal government.

Selling government assets to make the due payments is also a plausible, yet less probable, scenario.

US Treasury data show that the Social Security Administration carries over $2.8 trillion in assets as of the end of April - making it the largest US bond holder in the world.

But this scheme would put US President Joe Biden in a political storm, especially from the Republican party, which would accuse him of failing to manage the spending issue.

While the last emergency option would be that US President Joe Biden would use his executive powers granted by the 14th Amendment to bypass Congress on the matter, the White House said earlier this week that Washington is not planning on doing so.