“What’s going on is, interestingly, the Democrats are scaring people saying we might not pay [interest on the debt] because Republicans don’t want to raise the debt ceiling,” Paul said on CNN. “If you don’t raise the debt ceiling that means you won’t have a balanced budget, it doesn’t mean you wouldn’t pay your bills.”
Paul argued that the House has passed a bill, the Full Faith and Credit law, that mandates payments on debt interest, Social Security, Medicare and soldier’s salaries go out first. He said that if the debt ceiling is breached, other government function wouldn’t get financed, but that no default would occur.
“I’m for taking default completely off the table and for promising to the American people and the markets, to Wall Street, that we will always pay the interest on the debt as a priority,” he said. “You know how we do that? We bring in $250 billion in tax revenue every month. The debt payment is about $30 billion. We just promise that we’ll always pay it. “
With no progress between the two parties on the government shutdown, Democrats and Republicans are mulling tying the debt ceiling to any agreement that funds the government. The administration says the nation’s borrowing authority needs to be increased by Oct. 17.
“We should pay our interest and we shouldn’t scare the markets, so if I were in charge – I’ll say, absolutely we will never default,” Paul said. “I would pass a law saying that the first revenue every month has to go to pay the interest.”
In 2011, the debt ceiling fight provoked S&P to downgrade the U.S. credit rating for the first time in history.