In it, but not of it. TPM DC
Ryan told the network that he talks to "lots of bond traders" and "lots of economists" and they all say that investors are willing to put up with a default of "a day or two or three or four" if it produced massive budget changes as part of a Capitol Hill debt limit deal.
"They all say, 'whatever you do, make sure you get real spending cuts,'" Ryan said. "Because you want to make sure that the bond-holder has the confidence that the government's going to be able to pay them. You're putting the government in a better position to pay them."
Stan Collender, a veteran of many Capitol Hill budget fights and a budget policy expert, said talk that that could be very dangerous.
"There's obviously no way to know for sure because we've never really been in that situation," he said. "But it's far more likely that there would be relatively immediate negative repercussions in financial markets if there was even a hint of bond holders not being paid."
The problem would be the virtually immediate lost confidence in the political system's willingness to raise the debt ceiling to meet existing obligations. While some investors might be willing to wait, others would sell just to eliminate the risk. That could easily start a financial panic.
Collender also rejected Ryan's idea of a three-day default as "ridiculous." If Congress did make a deal on the debt limit before the Aug. 2 deadline, they'd pass it quickly and make sure to cover all the time the kinks were being worked out with short-term increases, much as it did during the government shutdown battle last month.
But "if there was no deal," Collender said, the short default Ryan's talking about "wouldn't make any difference because few would assume that, after months of talk, something would happen 3 days later. "
Ryan's not the only Republican suggesting that Wall Street would be just fine with the US at least flirting with default this summer. The White House had said that a chance of the country not paying what it owes investors could lead to economic catastrophe. But increasingly Republicans are saying the idea might not be so bad.
Last week, House Majority Leader Eric Cantor (R-VA) told reporters that Wall Street told him basically the same thing it told Ryan. And House Speaker John Boehner (R-OH) has dismissed worry about default as "panic and hysteria" intent on scaring the Republicans away from the deep cuts they demand in return for the increase in the debt ceiling.
Watch Ryan on CNBC: