Although Republican frustration is understandable, triggering a default would be reckless and destructive. The possible consequences would be perilous. The conventional channels through which a default might harm the economy are familiar. Consumer and business confidence might suffer, lowering spending; interest rates might increase, hurting investment and adding to the federal debt.
But the real damage would lie elsewhere. America’s global reputation would suffer. The role of U.S. Treasury securities as the world’s safest financial instruments would be thrown into doubt, with what effects no one knows. The economic climate might become more cautious and risk-averse, because a U.S. default, even if brief, would qualify as yet another event — like the financial crisis — that was thought impossible. Indeed, another financial panic can’t be ruled out.
We have enough real problems; we don’t need to make new ones. Default should not be an option.