SCENARIO ONE: House Republicans agree to lift the debt ceiling in exchange for a cosmetic cut in spending–think getting rid of the additional IRS agents here. RESULT: The markets relax, and life goes on as usual, but the threat of a future confrontation remains.
SCENARIO TWO: Biden and the Republicans agree to defund major parts of the IRA in exchange for debt ceiling relief. RESULT: The markets are happy, but the Democrats are demoralized. Bernie Sanders announces he will challenge Biden in 2024.
SCENARIO THREE: No deal is reached. The markets go crazy, and a worldwide financial crisis ensues. Both parties blame the other. The “burn it down” crowd rejoices.
SCENARIO FOUR: No deal is reached, but Biden invokes the Fourteenth Amendment and pays all federal government obligations, anyway. The markets initially seize up but calm down shortly thereafter. GOP members file suit to stop Social Security payments and payments to contractors, which doesn’t exactly endear them to the public. The suit is dismissed for lack of standing. The crisis is over, never to be repeated.
Which of these do you think is the most plausible?