Bob Moon: Now on to our own debt dilemma. This week, Congressional leaders will be hauled back from their vacations for a special session to resolve the debt ceiling stalemate. The hard deadline to raise the borrowing limit is August 4th. Republican John McCain said yesterday he might be open to raising some government revenue but he didn’t offer specifics.

The give-and-take over spending cuts versus increasing revenue is fraying some nerves among the GOP rank-and-file, and as Gregory Warner reports, among investors as well.

Gregory Warner: At the July 4th Tea Party rally this afternoon on Independence Mall, there were more people sporting balloon animal hats than political protest signs. It felt like a big picnic. But unlike perhaps most picnics today, everyone here seemed ready and eager to talk about the $12 trillion U.S. debt ceiling.

Man: No debt increase, no. Why keep spending on things aren’t necessary to spend on?

Woman: I certainly wouldn’t approve an increase in the debt ceiling.

Warner: No?

Woman: I think we need to experience the pain to straighten everything out.

That economic pain could start sooner than the August 4th deadline. Markets have been quiet up ’til now as investors expect a political compromise. But Greg McBride with Bankrate.com says that could change.

Greg McBride: As time gets shorter, if we’re not seeing that progess is being made, investors are going to grow increasingly nervous and that’s going to be a recipe for heightened volatility in financial markets.

Adnan Akant manages the currency market for Fischer Francis Trees & Watts in New York. He says if the standoff drags on to late July, that volatility in the stock market will start spilling over into the economy as a whole.

Adnan Akant: Businessmen will stop planning to hire people, interest rates might actually rise, and I think economic conditions will weaken.

And he says if there’s no deal by the August 4th deadline, the economy could fall off the wall. Like Humpty Dumpty, he says, it would be impossible to put the pieces back together again.

In Philadelphia, I’m Gregory Warner for Marketplace.