Big time bluff.

Granted, the tea party came to Washington and changed the nature of the debate. Last December, two debt commissions reported out long-term solutions to the issue of chronic budgetary reliance on debt. Both commission reports recommended a balance of actions affecting expenditure and revenues. Both commissions projected long-term moderation in debt levels. President Obama could have embraced his debt commission, and as Senator Judd Gregg noted on one senior RNC official, had Obama endorsed his commission, Senate Republicans would have been hard-pressed not to fall in line.

But last December was eons ago in the life of Washington, and while that path not taken might have seemed immoderate at the time for the President and Democrats, it is a stark reminder of how far the tea party has moved the debate in a few short months.

But for the tea party—the House radicals and their fellow travelers—the end of Debt Ceiling Crisis of 2011 may loom as the great opportunity lost. Their goals were not to move the debate or incrementally shift the culture, but rather to make radical change, to stop the spending and impose a balanced budget on the nation. Rhetorically at least, they have been unmoved by arguments that rapidly curtailing federal spending would send an already weak economy into a tailspin. Instead, their stance has ranged from the moralistic—that the accumulation of debt must stop—to the contrarian—that based on their own economic calculus a cut-back in federal spending would have curative powers on the private sector and stimulate economic growth.

This week, pointing to the risks of credit downgrades and sovereign default, John Boehner finally brought his caucus into line behind a debt ceiling bill, and it now appears that before the August 2nd deadline, the political parties will agree on some deal that purports to reduce the trajectory of national spending by some trillions of dollars over ten years. But as the numbers are crunched, the reality will look increasingly marginal. And the House radicals find themselves complicit in a process that was closer to business as usual than to radical change.

As the denouement approaches, and a resolution to the debt crisis appears to be at hand, one has to ask how many of the participants continue to believe that a default on U.S. Treasury obligations was ever at risk. Yet that was the hammer held over the heads of the House radicals.

The meaning of a default U.S. Treasury bonds is narrow and specific: It means that principal on maturing Treasury bonds or interest due on any outstanding bonds is not paid when due. A default on our Treasury bonds has been the hammer hanging over negotiations, yet such a default would not be caused by a failure to raise the debt ceiling.

While there appears to have been little public discussion of the process by which default would be averted, it is actually not complicated. First, all maturing Treasury bonds would be rolled over (refinanced) into new bonds, as is currently the practice with all maturing Treasury securities. Refinancing the principal amount of maturing obligations does not impact the par amount of bonds outstanding subject to the debt ceiling, it simply replaces old maturing bonds with new bonds on a dollar for dollar basis. Second, unlike current practice, interest due on such obligations would have to be paid from resources other than the issuance of new bonds. Whether through Federal Reserve credits—effectively the creation of new money—or the utilization of tax receipts flowing into the Treasury, the approximately $15 billion per month of interest payable on outstanding Treasury obligations—a relative pittance—would be prioritized over other uses of funds, as both common sense and the 14th Amendment would dictate.

Two months ago, Tim Geithner made clear that the default argument was a ruse.

I think there are some people who are pretending not to understand it, who think there's leverage for them in threatening a default. I don't understand it as a negotiating position

Ironically, notwithstanding Geithner's assertion that there would not be a circumstance leading to a default, and lack of any risk premium priced into U.S. securities in the Treasury bond or credit default swap markets, for the past two months the debate over the debt ceiling has continued under the specific pretense—the leverage suggested by the fear of default—that Geithner dismisses.

Default has not been at issue in the current debacle in Washington, DC. Rather, it is the fear of default that has been used so effectively as the hammer by the so-called "adults" in the political establishment. Why the language of default risk persists is itself an interesting question, as a bi-partisan spectrum of Congressional leaders and pundits continue to push the default crisis paradigm. More curious still is why it continues to hold sway.

This week, that leverage was brought to bear in full force on the radical members of the House Republican caucus, as those House members finally cow-towed to their elders. Just at the moment of their greatest power, the recalcitrant House members were brought to heel by the John McCains and Mitch McConnells who knew well that a rapid deceleration of federal spending would hurt Republican constituencies as well as Democrat, and who had much to fear of a failure to raise the spending cap. If the House radicals had held firm for one more week—and no default transpired—the Washington debate would have been turned on its head. Instead of raising the debt ceiling to resolve a purported crisis, in such a post-August 2nd world with no threats of default and bond market calamities, raising the debt ceiling would only be done once there was explicit agreement on what actually spending warranted incurring new debt.

In such a post-August 2nd world—where no default had occurred—the debate would return to a debate on spending—which has always been the central issue. But in that new world, the debt ceiling would remain in place, effectively forcing a balancing of revenues and outlays unless the votes could be cobbled together to specifically authorize new debt.

And what an odd world that would be—and we already began to see hints of the arguments that would be made: Soldiers in Afghanistan are worried they may not get their paychecks. The first argument for "patriotic" spending. Then it will be the Medicare recipients. Then Medicaid. And the farmers. Mortgage brokers. Defense contractors. Voting blocks. Major contributors.

What would that world look like, when every tax cut, every tax expenditure, every spending program and every military venture was on the table. Each one with a voting block, each one with a constituency, but each one having to be justified in the full light of day: Are we willing to pay for this? Or are we willing to vote to borrow money for this?

That is the world no one wants to see. And when the House radicals wake up on Wednesday, and see the rare opportunity that passed them by—and that it was their own leadership that sold them out—there should be hell to pay.