How a default undermines U.S. power

James M. LindsayThe Washington Post

Default would seriously dim American power and influence overseas, said James M. Lindsay. At the very least, we’d have fewer dollars to spend on defense, resulting in a “smaller, less capable military” at a time when our armed services are already overstretched across the globe. But default would also cause a more general “loss of global clout” for the U.S. president.

One look at the rebellious U.S. Congress would be enough to convince foreign leaders that negotiating with the White House on trade pacts or arms deals is a “waste of time.” At a time when the global recession has raised doubts about “the wisdom of the U.S. economic model,” a default would further erode America’s “soft power,” giving countries like Russia and China “a vivid example” to support their claim that the U.S. is in decline. And the suffering U.S. economy will take a further hit if foreign investors flee U.S. Treasurys.

Politicians in Washington have already done what no other modern Western country has: “taken a manageable fiscal problem and turned it into a crisis.” A default could lead to a chain of negative events that the U.S. would not only long regret but also be “unable to reverse.”