Just for the sake of attacking Rand. Ron Paul endorsed this exact same idea when he was in office. This article overlooks several fundamental issues that are irresponsible to ignore.
1. Iceland forgave The private mortgage debt of their citizens, not the public debt issued by the government. Further, they only forgave debt above 110% of the current property value on underwater mortgages. People keep misrepresenting this situation as Iceland writing off all debt of any kind.
2. The author states it is unfair to pay the interest on the debt before paying the social security recipients their monthly check. A large portion of the social security fund is invested in Treasuries, which pays social security recipients using the interest paid out by these treasuries. So if you don't make the interest payment, you won't payout the social security benefits.
3. The article makes the assumption that we will screw over the banks by defaulting. While this is true, in reality we will be screwing over all creditors including the US people. Our citizens are one of our largest creditors (larger than China) having invested in savings bonds and Treasuries in their pension plans, 401ks and mutual funds.
4. Most of these funds are required to invest in AAA rated assets. If we default and get downgraded, there will be a rush to sell the existing treasuries destroying their value and the retirement of many Americans.
The only responsible thing to do is exactly what Rand proposes. Pay the interest while enacting a balanced budget (cut spending) and lay out a plan to pay off our debt.
peace + liberty = prosperity