There have been a lot of articles suggesting that the best outcome is to just default, have Obama save the day and dare the Republicans to do anything about whatever remedy he chooses.
I think this is a moderately likely future at the moment, but I do not think it is the best future. The primary problem is that this overlooks the fact that our government is shut down, but has not yet reached the end of this month when 800,000 federal paychecks fail to arrive and all the states run out of whatever money they've been spending to limit the damage. Our economy has taken a hit, but the situation is like a person wounded and bleeding, but not yet gone into shock or critical blood loss.
While we may all be mad that at the people who injured the person, wanting us to go into default so we can extract the maximum political benefit is like hoping a shot hostage will die so we can charge murder instead of assault.
There is another possible future. Something like the current Senate bill is passed before Thursday and both the debt ceiling threat is averted and the government opens before the damage is too bad. No constitutional crisis. 3 months of budget negotiations we wanted anyway for the prior 6 months. Republican shutdown in the news for those entire 3 months as we get closer to 2014 elections. The patient has been given first aid and will probably be ok unless shot again.
I can live with that future even if it means we lose a lot of our political advantage, as long as the final deal doesn't encourage future hostage taking. This is true even if all it does is not encourage it MORE than the incentives on Sep 30.
Follow me below the fold if you still think letting the hostage die is the better solution in the long term. You may be right, but I do have another argument why it is unusually risky at the moment to go down this road.
The problem with the scenario where Congress fails and the President has to stop the country from defaulting is not just the economic shock and long term governmental costs caused by increased interest rates and market reaction to whatever uncertainty the new remedy for debt limit might be until it has clearly survived all constitutional challenges.
The problem is we will be in a period where our government is shut down, providing few or no services AND we're using a constitutionally untested means of paying our bills.
The government shut down means our government is paralyzed. The impact of the shutdown and the debt limit constitutional crisis also means we're going to get an economic shock.
Severe economic shocks caused by governmental dysfunction don't just lead to misery. Historically the most common outcome is either revolution, civil war or martial law and state of emergency, which can extend for decades if convenient to the powers that be.
Furthermore even if those dire outcomes do not occur, constitutional crises (or the equivalents in monarchies) quite often have many unintended consequences down the road that lead to one of the above horrible outcomes.
Lest you think I am being histrionic, I will cite some cases from history. This is only a small sampling.
In Republican Rome, the Brothers Gracci discovered that the Tribune of the Plebs could prevent the Senate and the two Consuls from doing anything if they wielded their veto aggressively. Only custom had prevented this in the past. Government gridlocked while they demanded many things we'd call Populist today. The solution was to kill them by assassination. This introduction of extralegal violence into Republican government is now thought to have made the later proscriptions of Sulla more acceptable, and the logic leads directly to the assassination of Julius Caesar. For more unexpected consequences...J. Caesar was killed because he used unconventional means to be declared Consul for Life, and was killed to prevent him from becoming what his adopted son Augustus eventually became....and the people of Rome allowed it because the Republic's slide into dysfunction had lead to not one but several civil wars, and Augustus put an end to it and presided over a long peaceful period.
In 1640s England, Parliament got so fed up with the King they executed him. That set off a 10 year civil war until Parliament got full control of the country. After Cromwell died, the Parliament became unpopular enough that a King was invited back in, although with more checks on his power.
In 1790s France, there was a severe economic crisis. For the first time in ages the King summoned the Estates General to deal with it. They behaved about as well as our Congress right now, and the result of the Estates+King failing to actually fix problems and being seen as incapable of doing so lead to all of them going up on the block, literally, a decade of Revolution and the Terror, followed by another decade of Napoleonic wars.
In 1849, there was a European Spring of sorts, quite a bit like the Arab Spring, modeled on the French Revolution. Monarchies having learned from France's example, it was bloodily crushed (see Martial Law and State of Emergency). Long term there were some positive results...Serfdom was eliminated from a number of countries and some monarchies got constitutional checks on powers instead of being absolute. Not much comfort to those who lived through it though.
In the 1850s, the American Whig party split over slavery, and the radical rump faction (perceived much as the Tea Party is today) managed to win the equivalent of the 2012 election and put someone perceived by the South about as Michelle Bachman is perceived by us as president, with control of both houses of Congress. The South didn't respond well, and we're still in some ways fighting the unintended consequences of the constitutional crisis they caused when they didn't accept the results of the election. That situation didn't have an economic crisis, unlike most of the others.
In 1917 Russia, a population tired of wars and severe economic hardship shot their entire government and tried to form a democracy. Unfortunately the new government still wanted to fight the war. The second revolution resulted in the USSR.
In early 1930s, the Weimar republic had been made ungovernable during a severe economic downturn by the simple expedient of a determined minority party blocking all votes and forcing repeated elections (parliamentary systems are like this. They can't have a govt shutdown, but repeated no confidence votes amount to something very similar). Finally the corporate powers and some government officials decided the way to stop the obstruction was to make the person who was perceived about how we see Paul Ryan the powers of the Speaker in a system with no Senate to check it. They thought they could control him, they were wrong. One ginned up crisis later, emergency powers acts emasculated the executive and prevented new elections until the Nazi party decided they wanted to hold them. Everybody knows what happened next.
In the late 1970s, absent an economic downturn or similar cause, but with a legitimate complaint that the current govt was a foreign puppet, secular and religious activists paralyzed the government of Iran primarily through nonviolent protests and strikes. When the Shah was out of the country, a little short, sharp fighting toppled his government and replaced it with an ostensibly democratic government, although all of its institutions were subject to review by the clergy. In less than a decade, the secular leaders who supported the revolution were purged and the first significant act of the new government was to get into an extremely bloody and costly war with Iraq.
The common thread in most of these is a government made dysfunctional at a time when the citizens needed it to act (usually economic hardship). I think it is extremely dangerous to have a nuclear superpower in a situation where it has BOTH a constitutional crisis AND a paralyzed government, especially as it would then be about to experience an economic shock of a severity that nobody can even predict but even if it is ONLY a government shutdown during the Christmas season, will at minimum be a severe recession and might spiral into 2008 territory. Or even worse.
If we're going to have an economic shock, I want a government up and running. If we're going to experiment with constitutional crises, I want the economy to at least be limping along without any extraneous shocks. Doing both at once is freaking dangerous.
So for me, while I'm pretty hopeful that the Prez will step in to avoid default and that the Rs will be very severely damaged if that scenario occurs, I prefer the future where some kind of deal is made that doesn't reward hostage taking even if it means the Rs get off the hook and the next few years look a lot like the last couple of years.
I really don't want to live in "interesting times". The Chinese sure have that right. The place for "interesting times" is when all alternatives are worse, or preferably safely in a history book or even better..fiction.