This hobbyhorse isn't a new one with me -- I've been giving a lot of thought to it for the last couple of years.
From a libertarian standpoint, the justification for repudiating the debt is fairly obvious -- see Murray N. Rothbard's essay on the subject or listen to last night's episode of Free Talk Live (MP3), for example.
In terms of visceral, gut-wrenching populist appeal, debt repudiation has a lot of potential, too, and it's nice to see that appeal exploited. For a good example, see the YouTube campaign of kids (correctly) asserting "it's not MY debt."
Conveying the basic injustice of expecting someone else (especially a bunch of kids) to pick up the tab for spending that they had no part in is easy and effective, and the knotheads in Washington just keep making it easier with their bailouts, projections of future $1 trillion deficits, etc.
The case makes itself. What it needs to succeed is a popular grassroots movement to promote it.
Popular grassroots movements don't always win. One need look no further back than last year's "bailout" fiascoes to see that. The vast majority of Americans said "no bailouts" -- and they happened anyway, because politicians believe (usually correctly) that they can do anything they want and then talk their way out of the consequences later.
A popular grassroots movement for debt repudiation, however, would not depend entirely upon the politicians' cooperation for success. There's another class of actors involved, and those actors are much more sensitive to what's going on around them. I'm speaking of course, of those who speculate in US government debt -- the people and organizations who buy US government bonds.
The value of those bonds is dependent entirely upon the buyer's perception that "the full faith and credit of the United States" is bankable ... that the investment is, for all intents and purposes, risk-free. The perceived profitability of lending money to the US government rests on the notion that all us serfs are either willing, or can be forced, to pick up the check. Dispel that notion and the perception of profitability evaporates with it.
Take away that perception -- stir, in the buyer's mind, the possibility that those bonds may at some point in the near future become mere paper of no value whatsoever -- and that buyer is going to either stop buying or at the very least demand a much larger return for the risk.
And that is how we get at the politicians. They can always vote themselves the power to borrow money and try to stick the rest of us with the debt, but that power is meaningless if nobody's willing to lend it to them.
That's not to say that the politicians wouldn't have other options and evasions open to them ("paying off" the debt in worthless inflated currency while retaining the theoretical power to borrow in the future, for example), but in practical terms, they'd be forced to balance their books -- a creditor "paid" with worthless "money" is no more likely to lend again than one told to go pound sand. And a population aroused to the point of this kind of accomplishment would likely retain the initiative when the discussion turned to just how much of an allowance they're willing to give the politicians they just spanked.