Looks like the summer of 2023 will sizzle with the same kind of heat. House Republicans are again newly in the majority and are determined to reach an agreement with a Democratic president to reduce spending before they vote to raise the federal borrowing limit. Doomsday scenarios abound now as they did then. The predicament, in fact, is very similar, except the record amount of debt is nearly double what it was a dozen years ago, making the situation more dire. Thanks to Trump's Tax Cut for the Rich Law.
In the short-term, defaulting on the national debt would be disastrous. The most-recent debt-ceiling battle led to a downgrade of U.S. government-issued securities. A default would be even worse. As interest rates and the prospect of a recession rise, a missed coupon payment on U.S. Treasury securities would be catastrophic and set the stage for a global attempt to find alternatives to the U.S. dollar as the main form of currency for international trade.