With the threat of a potential government default only one week away, the new head of the International Monetary Fund had a grave warning for U.S. lawmakers on Tuesday.

Raise the U.S. borrowing limit or potentially damage the global economy, IMF chief Christine Lagarde said in a speech from New York.

Lagarde called upon Congress, urging them to demonstrate the same "political courage" that European leaders showed when they compromised on Greece's debt crisis last week.

The speech comes one day after, U.S. President Barack Obama and House Speaker John Boehner took to prime-time television night to deliver duelling speeches on their rival plans to raise the government's borrowing ability.

But the showdown offered no resolution on the debt stalemate. With the Aug. 2 deadline inching closer, Obama made a last ditch appeal for compromise while Boehner said efforts to negotiate with the White House have been fruitless.

The U.S. debt ceiling showdown that has besieged Congress is more of a political catastrophe than a financial one, says Canadian-American journalist David Frum.

"It's important for Canadians to understand that the United States does not face a debt crisis in the strictest sense of the word…the United States has a political crisis," Frum told CTV's Canada AM on Tuesday.

Though Frum concedes that being forced to default would be a bleak situation for the U.S., he said that political posturing is partly to blame for Congress' stalemate.

"There's a rule on the books that says even if Congress authorizes deficit spending you need a separate vote to allow the government to borrow the money," said Frum, who once worked as a special assistant to former U.S. president George W. Bush.

"The Republican majority in the House of Representatives is refusing to allow that second change.

Rival plans

While there's been no debt decision, Monday night's speeches offered hints that both parties are softening their previously rigid positions. Disagreements over entitlement programs and higher tax revenues were put aside to focus on lowering deficits.

Appealing directly to the public, Obama stressed his plan for achieving lower deficits through spending cuts and new tax revenues. Signaling a small compromise, he also said he supported a Senate Democratic plan that would reduce deficits by about $2.7 trillion over 10 years with spending cuts, not further revenue.

In his speech, Boehner focused on the importance of zeroing in on $1.2 trillion in spending cuts to the day-to-day operating budgets of government agencies

Until last week, Boehner had been negotiating with Obama for a deficit reduction package of up to $4 trillion that included spending reductions in Medicare, Medicaid and Social Security. Boehner has since dropped that discussion.

Both parties have acknowledged that the worst case scenario should the Aug. 2 deadline pass is that the government will default on their loans.

According to Frum, a default scenario would be volatile for the U.S.

"The U.S. federal government will have cash on hand to pay about 60 per cent of its obligations that will be interest on the debt…but everything else will be up for grabs and then it's very unpredictable," he said.

Canada would feel default

A default scenario would also be felt north of the 49th parallel, said Frum adding that any erratic change in the U.S. economy can indirectly affect Canada.

"In the very short run…this is bullish for Canada," he said. "It will mean that Canadian bonds will retain their Triple A rating, Canadian interests rates will be lower than the United States and the Canadian dollar will go up."

But if a potential U.S. debt crisis extends beyond a few hours, or even a few days, staggering consequences could ripple across the border.

"It pushes the U.S. economy into recession and we'll feel that," he said.

With files from The Associated Press