The last paragraph in Paul Krugman’s column this morning is easily the most chilling: “What Republicans have just gotten away with calls our whole system of government into question. After all, how can American democracy work if whichever party is most prepared to be ruthless, to threaten the nation’s economic security, gets to dictate policy? And the answer is, maybe it can’t.”

There is a sense of relief in some circles that a deal was reached to avoid default. The exhale may be premature — it’s still unclear if the agreement can pass the House — but some seem to be relieved that tomorrow’s catastrophe probably won’t happen. “Whew,” the sentiment goes, “looks like we dodged a bullet on this one.”

And while I’m not unsympathetic to this — I don’t like the deal, but default is clearly worse — it’s a mistake to think the system steered clear of creating a real problem. By even coming this close, the system has already created a problem.

Even before negotiations went down to the wire on Sunday night, the bitterness, division and dysfunction that resounded around the world in recent weeks as the United States veered toward default did more than just fuel a perception that Washington is approaching Japan-like levels of political gridlock. Among foreign leaders and in global markets, the political histrionics have eroded America’s already diminishing aura as the world’s economic haven and the sole country with the power to lead the rest of the world out of financial crisis and recession. […]

It has left America’s creditors and allies alike wondering what had changed in American politics that a significant part of the country’s political elite was suddenly willing to risk the nation’s reputation as the safest place for the rest of the world to invest.

It raised questions about whether the United States now faces brinkmanship over a variety of issues between an emboldened conservative movement and a president whose authority is under challenge. And for all the talk on the right about “American exceptionalism,” especially among members of the Tea Party, it put doubts in the minds of many about whether America’s military and economic dominance is something the country is still willing to pay for — and will always survive.

Republicans were warned, clearly and repeatedly, that even going down this road would put America in danger. Even if they hit the brakes before going over the cliff, starting this fiasco in the first place would very likely weaken the nation at a critical time.

Republicans didn’t care. Even if the debt deal is signed before the deadline, we will pay a price for their monumental stupidity.

The United States, thanks entirely to the right’s breathtaking stunt, is now seen as a less-safe bet and a less-attractive place for investment. The nation is now seen as more dysfunctional and less responsible. We’ve been made to look like fools on the global stage, and China has sought to exploit the Republican crisis, to the GOP’s indifference.

I’m reminded of something Felix Salmon wrote a few weeks ago: “The base-case scenario is, still, that the debt ceiling will be raised, somehow. But already an enormous amount of damage has been done: the US Congress has demonstrated clearly that it can’t be trusted to govern the country in a responsible manner. And the tail-risk implications for markets are huge.”

I don’t know if Republican lawmakers are aware of any of this. Worse, I also don’t know if they care. But American leadership on the global stage rests on certain pillars that took generations to build and strengthen — credibility, reliability, stability, the integrity of our institutions, sound judgment. The Republican Party severely undermined these pillars in the Bush era, most notably in areas of foreign policy and the use of military force. The Republican Party is now severely undermining them again.

The world has been watching and thanks to GOP madness, the sanity of the world’s greatest superpower is very much in doubt.

When this matter is resolved — if it’s resolved — congressional Republicans will probably just move on to creating another crisis. They almost certainly won’t appreciate the damage they’ve already done.

In politics, disputes come and go. Some missteps, however, are difficult to forgive.

Postscript: Yes, I used this same headline a couple of weeks ago. What can I tell you; I like Neil Young.

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Follow Steve on Twitter @stevebenen. Steve Benen is a producer at MSNBC's The Rachel Maddow Show. He was the principal contributor to the Washington Monthly's Political Animal blog from August 2008 until January 2012.