The reason it would be bad goes beyond the utter loss of trust with creditors. Its the loss of trust with each other.
Breaching our obligations is not a sound policy. Even if your absolute top priority is lowering government spending, no sane person would do it by simply ceasing to spend money. It's like cutting off your arm to lose weight.
The reason the NYT is wringing its hands is because the are a lot of irresponsible people in Congress who would do just that. Not a majority by any means, but the Speaker is compelled to exclude appealing to a near-majority of them by politics. He cannot maintain his position if he treats them as partners. That would also require a radical change in direction -- almost as radical as causing a government default.
In the end I expect the same thing as we've gotten before: a brief shutdown, the Treasury using emergency financial tricks, and finally a bunch of people being told that they've made their point and it's time to avoid genuine disaster. That's a recurring pattern.
But maybe this time is different. Maybe America's internal dissension means that the rest of the world (and a lot of Americans themselves) finally doesn't trust us with their money.
Breaching our obligations is not a sound policy. Even if your absolute top priority is lowering government spending, no sane person would do it by simply ceasing to spend money. It's like cutting off your arm to lose weight.
The reason the NYT is wringing its hands is because the are a lot of irresponsible people in Congress who would do just that. Not a majority by any means, but the Speaker is compelled to exclude appealing to a near-majority of them by politics. He cannot maintain his position if he treats them as partners. That would also require a radical change in direction -- almost as radical as causing a government default.
In the end I expect the same thing as we've gotten before: a brief shutdown, the Treasury using emergency financial tricks, and finally a bunch of people being told that they've made their point and it's time to avoid genuine disaster. That's a recurring pattern.
But maybe this time is different. Maybe America's internal dissension means that the rest of the world (and a lot of Americans themselves) finally doesn't trust us with their money.