You are vastly overestimating what’s at stake in this “game of chicken”. The financial markets will (quite correctly) give zero credence to the ability of these chumps to make the U.S. actually default on its debt and send the world into financial armageddon. What’s as stake in the worst case is public finances seizing up temporarily - the impact of government workers stopping work and not getting paid, social security payments not getting made, etc. These things would obviously harm vulnerable people and harm the economy, but the stakes are nowhere near as high as default.
To hear the FC tell their side, what they claim to want is if possible to go back to authorizing each individual issuance – explicitly, by individual Act Of Congress rather than implicitly by authorizing the Treasury to issue “up to X” – BUT in either case conditioned to the repayment coming in whole or in part from cuts in Things They Don’t Like.
The other thing I’d like to see, the next time sane people control Congress and the White House, would be a bill that says that, if a year’s budget is ever not passed by the time the new budget is needed, that all spending automatically remains at current levels until such time as a new budget is passed. Republicans would of course try to repeal that, but that would require them to actually accomplish something, as opposed to just stopping all accomplishment.
If this were in place, Congress might never pass a new budget again. It’s the threatened or actual pain of a government shutdown that ultimately gets Republicans to (eventually) agree to pass a budget. If you take that away, why would they ever cave?
It seems to me that, if the MAGA crowd tries to hold things up in the House and absolutely refuse to relent, that just pushes the rest of the Republican party to have to make compromises with the Democrats.
But - IF this happens, why would it be the Crazy Wing that crashes the economy. What would stop the purported non-crazy Rs (if there are any) from proposing some solution enough Dems can agree with? Sure, they would face primaries in the future, but they would actually be able to cite a record of doing their jobs responsibly.
Their donors are small-dollar individuals who just want them to scream about their grievances and corporations who are more interested in tax breaks (which can be done through reconciliation) than direct handouts. Defense industry would go nuts though.
What I am unclear on is how much the Freedom Caucus can obstruct things. They are a minority but we have seen them throw a wrench in the gears with great success in the recent nominating of the Speaker.
Note from experience in a jurisdiction that has such a provision: any inflation, any contingency expense, any reduction or even non-increase in tax receipts (plus no new debt issue), and the “automatic repeat of last year’s budget” provision will not cover this year. You run into a shutdown or a default before the end of the FY anyway .
The thing is the greenback is the fiat currency of the world. It is ludicrous to imagine that because the fuckwits in the Republican party won’t increase the debt limit to cover what Congress has already approved to spend, the world will suddenly flee the dollar for the Chinese yuan (or pick your currency). This is a Sarah Palin reading of the debt. This is a stoopid, made up procedural crisis that has been going on for far too long.
I do believe the Treasury will issue the trillion dollar coin if it comes to that.
The last time this happened, during the Obama presidency, spreads started widening some when it looked like it was a remote possibility. Moody’s (and I think S&P) downgraded the debt from Aaa to Aa1 or Aa2, again giving default more than zero chance.
Those Republicans were much more reality-based and much less nihilist than these.
I’m not saying we will default. I’m saying that the possibility is higher than anyone is giving credit for, and the results would be catastrophic.
The same thing that let them allow the Crazy Wing to hold the Speakership hostage in exchange for massive concessions of power to the Crazy Wing. The non-crazy wing might not be crazy, but they are clearly cowards who simply won’t stand up to the Crazy Wing on any issue.