A U.S. ratings downgrade is a non-event

Whether or not the debt-ceiling increase will be passed on time, the U.S. credit rating is vulnerable to a downgrade by the rating agencies. Various news reports portray such a downgrade as a watershed event which will send interest rates skyrocketing and the economy into a tailspin. That is unlikely to happen. Other large developed countries - such as Japan - have seen their ratings downgraded without any meaningful borrowing cost increases. Further, the criteria used by the ratings agencies to determine a country's credit rating - such as the debt to GDP ratio - deserve a more nuanced analysis including whether they are actually relevant. As Shiller points out:

Debt-to-GDP ratios tend to increase for countries that are in economic trouble. If this is part of the reason that higher debt-to-GDP ratios correspond to lower economic growth, there is less reason to think that countries should avoid a higher ratio, as Keynesian theory implies that fiscal austerity would undermine, rather than boost, economic performance. 

The fundamental problem that much of the world faces today is that investors are overreacting to debt-to-GDP ratios, fearful of some magic threshold, and demanding fiscal-austerity programs too soon. They are asking governments to cut expenditure while their economies are still vulnerable. Households are running scared, so they cut expenditures as well, and businesses are being dissuaded from borrowing to finance capital expenditures.
The lesson is simple: 

We should worry less about debt ratios and thresholds, and more about our inability to see these indicators for the artificial – and often irrelevant – constructs that they are.

A ratings downgrade in itself is not a concern - if it was, markets would have already reacted strongly. What IS concerning is the country defaulting. This could wreak havoc in the financial markets who depend on short term liquidity and set off a host of unpredictable events.