By Jonathan Easley - 10/09/13 12:14 PM EDT
Sen. Pat Toomey (R-Pa.) joined a growing number of his Republican colleagues Wednesday in arguing that the U.S. won’t go into default if Congress refuses to raise the debt ceiling.
A handful of Republicans, including Sens. Rand Paul (R-Ky.) and Tom Coburn (R-Okla.), have dismissed the dire warnings coming from Democrats that not raising the debt ceiling would lead the U.S. to default on its debt obligations.
They argue that interest on U.S. debt could be paid with existing revenue and that missing payments on lower priority items isn’t the same as a technical default.
Still, most economists are warning about the catastrophic market ramifications if Congress doesn’t raise the debt limit, saying interest rates could spike, and the U.S. could be plunged into a deep and unnecessary recession.
“[Democrats] want to be able to hold the specter of a catastrophe in front of Republicans to cow us and intimidate us into giving the president what he wants, which is a whole lot of additional borrowing authority with no reforms whatsoever,” Toomey said.
Republicans point to a bill passed in the House that prioritizes interest and Social Security payments, that they say eliminates the risk of any default.
“There’s no way that any Treasury secretary or administration would willfully choose to have the catastrophic results that would occur if we actually defaulted on our debt when it’s not necessary,” Toomey said.
At a press conference Tuesday, President Obama addressed those Republicans who have been drawing the distinction between raising the debt ceiling and defaulting.
“There are still some people out there who don't believe that default is a real thing, and we've been hearing that from some Republicans in Congress: that default would not be a big deal,” Obama said.
"Warren Buffett likened default to a nuclear bomb, a weapon too horrible to use," he continued. "It would disrupt markets; it would undermine the world's confidence in America as the bedrock of the global economy; and it might permanently increase our borrowing costs which, of course, ironically would mean that it would be more expensive for us to service what debt we do have, and it would add to our deficits and our debt, not decrease them."
Toomey said the president was willfully misrepresenting the Republican argument.
"I haven’t heard any of my Republican colleagues suggest that it might be OK to default on our debt. What’s totally unacceptable is for the president to think that he should be the first president in modern times not to have to address our overspending problem,” he said.