The US government borrows 42% of each dollar it spends. When the debt ceiling is hit (forecast around 16 May), and the government does not have enough money to pay all its bills - it will have to decide which bills to pay & which to say no to.
Default on repaying government bonds - either on interest or principal - would affect the credit-worthiness of the US Government & raise its subsequent borrowing costs. Future lenders would demand higher interest rates from US Bonds - costing taxpayers more, & also driving up interest rates across the entire economy. Costlier credit for consumers would dampen demand and crimp the economy.
With the government having to spend more on interest payments, it will have to cut down expenditure on other areas - downsizing or shelving projects altogether. This affects directly employees of the government or contractors doing government business. Reduced income of those directly affected then ripples through the rest of the economy as that means they can't spend.
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