What It Will Take To Avoid A Debt Default

The contest for the Speakership legitimated House Republicans using debt default as a bargaining chip. And that means they are thinking the unthinkable, a default. Besides the concerns commonly mentioned, there are some others to mention here. The consequences could make the House Republican leadership have to think through how like Houdini they could get out of the chains put on them by the 20 holdouts Kevin McCarthy needed for the Speaker vote. I would describe what they would do as a “kamikaze tactic” for the Speaker, even with his promises and the rules changes hanging over him.

First, put aside the concerns merely commonly mentioned about debt default. Sure, the national credit will be forever ruined, as the credit agencies lower their rating of the United States. And sure, China (and Japan) will rethink their holding enormous amounts of United States debt – debt China has held on to through all the fierce friction of recent years. And sure, there will be great disruption of governance.