Days ago it was fashionable to dismiss warnings of a default by the US government as scare talk.
After a nail-biting moment, Republicans opposed to raising the debt ceiling would back down and a last-minute compromise would enable everyone to relax. But as the wrangling continues in Washington, and Tuesday's deadline looms, a solution that enables Barack Obama's administration to pay its bills is looking as if it might not materialise.
One problem is that it's no longer clear that there are just two sides to this dispute. While Democrats want the debt limit lifted far enough to allow the crisis to be pushed beyond the 2012 presidential election, the fractured Republicans barely agree on a way ahead. Last night the Republican House leader, John Boehner, scrambled to put together an alternative Republican plan, cutting spending by $900bn in the longer term while temporarily raising the debt limit for a few months.
As a sop to the Tea Party, whose supporters torpedoed a similar bill on Thursday, Mr Boehner tacked on an absurd-sounding proposal making the package contingent on a constitutional "balanced budget" amendment, which would then of course have to go to the states for ratification. As that will be wholly unacceptable to the Democrat-controlled Senate, it is not clear that the passage of Mr Boehner's plan brings a resolution of the crisis before Tuesday much closer. If the logjam has moved at all, it is by an inch.
Just possibly House and Senate will discover some hitherto invisible piece of common ground, but don't count on it. Some members of the Tea Party relish the prospect of a default, believing it will destroy "big government" at a stroke. John McCain, Mr Obama's Republican opponent in the 2008 presidential race, calls them the "bizarros". They don't mind. Many are freshmen, elected only seven months ago on fiercely anti-Washington tickets, and steeped in an evangelical Christian ideology that sees the world as a setting for a grand settling of accounts between good and evil.
It's anybody's guess what will happen if Congress doesn't reach a deal before Tuesday on raising the debt ceiling beyond the current limit of $14.3trn; we haven't been here before. The last time Washington technically defaulted was in 1933, when the US refused to pay its creditors in gold. That is very different from not being able to pay one's bills at all.
The Treasury and the state governments will, of course, put together contingency plans this weekend for short-term financing, albeit in secrecy. But in the absence of a congressional agreement, even if the Fed staggers on, the price will still be heavy. The possible consequences of no deal include loss of America's triple-A credit rating, a run on money markets, a rise in interest rates and nervousness among holders of dollars throughout the world, China especially. Beijing has been the world's largest purchaser of US Treasury bonds in recent years. In that case, we can also forget President Obama taking a lead on questions beyond America's borders, such as Israel-Palestine, the Arab Spring or climate change. This will necessarily be a much more inward-looking America.
Do Tea Party Republicans care? Not necessarily. Sarah Palin's famed ignorance of foreign parts is a plus to her supporters, a sign of her American First values. Beyond loving Israel and hating Iran, the Tea Party doesn't have time for "abroad", or what it insists is alarmist talk about a default. Ms Palin has dismissed it as an "Obama drama". The omens do not look good.Reuse content