I quote from the Lexington column in The Economist:
Unless Democrats and Republicans close their differences on taxes and spending, and Congress votes to increase the federal debt ceiling, the United States may default on its debt, an eventuality with incalculable consequences for the world economy as well as America’s......
The smart money bets that it will not happen. Investors are still buying America’s debt, no doubt because they assume that, for all the theatre, its politicians are not mad enough to jeopardise the full faith and credit of the United States......
If the talks fail, it will be because this breed of Republicans has elevated a preference into a fetish. Even Reagan, a supply-sider persuaded by Arthur Laffer’s pretty curves that his tax cuts would pay for themselves, raised taxes when they did not. Today’s Republicans show no such flexibility. After the Democrats insisted in the Biden talks that a deal would have to include more tax revenue, $400 billion of it, and not just less spending, Eric Cantor, the House majority leader, stalked out.
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