If the political stalemate in Washington impedes an agreement on raising the debt ceiling, it could send the U.S. economy back into a recession, former Treasury official Mark Patterson told CNBC on Wednesday.
Washington was officially shut down on Tuesday, marking the first U.S. government closure in 17 years and sending hundreds of thousands of government workers home, after politicians failed to renew the federal budget into a new fiscal year.
Patterson, the former chief of staff to the Secretary to the Treasury Jacob Lew, said a brief closure would likely have a minor impact on the world's largest economy's gross domestic product, but a longer closure would present a different level of issues.
"If [the shutdown is] allowed to persist and it really affects confidence, or it gets too close or merges with the debt ceiling debate - and God forbid we actually have a problem getting the debt ceiling lifted - then obviously it's a different ball game altogether," said Patterson.
"If the debt ceiling doesn't work out as it should then you could see serious negative economic effects [on the U.S. economy] including a potential return to recession," he added.
Most industry commentators agree that although the current budget freeze is costly and disruptive, the bigger risk for the U.S. government is a potential stalemate over raising the government's borrowing authority once it reaches its $16.7 trillion limit on October 17.
A failure to come to an agreement on this issue, could lead to the Treasury defaulting on its debt payments. Last time Congress came close to forcing a Treasury default in July 2011, it cost the U.S. its Triple-A credit rating, even though no payments were missed.