First of all, it seems largely unlikely that the debt ceiling will not, in the end, be raised. This sort of edge-of-financial-apocalypse behavior by the right has almost always been political theater: the people who pay for these elections want a stable federal government to keep funneling them money (even if they want the funneling to happen as quickly and non-consensually as possible). But the astro-turf Tea Partiers are much more serious about anti-government sentiment, and their representatives are much dumber (and more revolutionary) than their 1995/1996 counterparts.
If that were the only difference between 2011 and 1996, then we'd be fine (to the extent that we've been fine for the interceding 15 years). When Gingrich and Clinton shut down the government over budget cuts, it was disastrous to social services, but by no means a fatal blow to American governance. This time, that's not so clear.
In 1995, the deficit was 2% of GDP; in 2011, it will be over 10%. Our debt was 67% of GDP then; it's about 100% now, a much larger percentage of which is financial capital to begin with: ie, highly at risk speculative capital. And no matter what it looks like on CNBC, the federal government in 2011 owns a huge percentage of our financial system, particularly in the forms of mortgage, credit card and student-loan debt. We also have a much more jittery global economy, a much more nervous fed, and a much more tenuous relationship to our debtors.
So, let's take what economists are saying seriously--that hitting the debt ceiling could remove global confidence in U.S government debt, the one sure-thing in a world of paper money--and could cause a renewed global financial crisis akin to 2007/8 (without the possibility of bail out- do not pass Go, do not collect $200). This could have unforeseen consequences globally; I don't have the know how to pretend to call how this would play out.
But here in the US, it would result in an immediate renewed crisis (which we've never really left, no matter how many times they rejigger the inflation or unemployment numbers) potentially sending us straight into another Great Depression. It would trigger immediate tremendous cuts (potentially on a level with Greece) that would deaden the possibility of even moderate recovery for years and years.* And war won't get us out this time- we're already in a few.
And that's all assuming that the financial sector behaves with a shred of humanity- they (or China) could make a run on US Debt and shake the Federal government to its very core. The Fed could panic and print money, and we could get explosive inflation, something we're beginning to witness already (and which has been hidden by 'improvements' to the Fed's method of evaluating inflation). Or global markets could grossly devalue the dollar, leaving us unable to import the things we need to continue to 'thrive'.
Even if none of these three worst-case scenarios occur, hitting the debt-ceiling will mean a plunge into much worse times for the US. And it would be the kind of sudden, financial, central government nose-dive that has, in other countries, in other times, given rise to Mussolini, Pol Pot and, yes, that sure fire argument killer- Hitler. The fact is, in two weeks, if the government shuts down, in two months we will have virulent unrest. But it will be chaotic, riotous unrest, violent and anarchic (in the perjorative sense, unfortunately) that will allow whoever is the most organized, best prepared, and deepest pocketed, to make a move.
Of course, the forces of stabilization in the US in 2011 are much greater than those of Italy 1924, Germany 1933 or Cambodia 1969. We are not on the brink of revolution, from either side. But this move, if pulled off, could successfully provide the groundwork for the kind of a-governmental chaos from which right wing revolutionary parties emerge. Tea partiers, emboldened by their success, flush with cash and organized to the gills, could use such a failure as an object lesson in anti-governmental rhetoric, and up the legitimacy of their fascistic impulses in not only their own hearts, but those of the public.
Hats off to an enemy that knows how to deploy their representatives to further their goals. Up with the debt ceiling.
*Any leftist who believes that the suffering of the people is not merely a necessary outcome of capitalism but a to-be-hoped-for good, who wants the next Great Depression to come right away, who hopes for chaos and total insecurity: he is truly an enemy of the people. Not only because he hopes ill on the people, he lacks the empathy and love required to truly build a better world, but because out of such pain and misery no real solidarity can emerge, no movement of the people comes from sudden chaos; only mythical, charismatic leaders.