This, unfortunately, is the level of intellect that's the driving the demand of many grass-roots conservatives not to raise America's Debt Ceiling.
But like many things about the Economy, dealing with the Nation's debt is counterintuitive (my personal word of the year in 2010), and things that are counterintuitive require a degree of thinking that it seems the Tea Party is just not capable of.
To Tea Partiers, not raising the Debt Ceiling is a statement of personal responsibility, it shows that America is going to "get serious" with the National Credit Card, and finally start to get it's "act together".
It also shows that the Teabaggers are completely divorced from reality, because here's what's gonna happen (take it away, Ezra Klein!):
Think back to the financial crisis. The underlying cause was that various financial entities stopped believing that their loans would be repaid, and so they stopped making loans, or began demanding such high prices for making loans that credit became unaffordable. The result was economic catastrophe.
If the federal government defaults on its debt, the same thing will happen. But in this case, it will happen to the full faith and credit of the United States, not just to Wall Street.
The basic unit of borrowing in America is the debt that the Treasury sells to finance the government. Much of the rest of the debt in the country -- even when it has no direct connection to the government -- is benchmarked against Treasurys. Treasury debt normally goes for very good prices because it's considered a virtually riskless investment: Modern America has never defaulted on its debt. If that changes, then so too will the prices the market charges to loan the government money.
What happens then? As Geithner explains, "because Treasuries represent the benchmark borrowing rate for all other sectors, default would raise all borrowing costs. Interest rates for state and local government, corporate and consumer borrowing, including home mortgage interest, would all rise sharply. Equity prices and home values would decline, reducing retirement savings and hurting the economic security of all Americans, leading to reductions in spending and investment, which would cause job losses and business failures on a significant scale."
And the damage done by a debt default won't be temporary. Instead, it will permanently introduce a new variable into the market's calculation of America's risk: Right now, the market doesn't believe that our political system would ever allow a debt default. The morning after a default happens, the market will have been proven wrong, and it will have been proven wrong permanently: If it can happen once, it can happen again in 20 years. In that world, the cheap debt that America enjoys and relies on is gone forever, and our economy is likely to be permanently worse off for it.