“The federal government takes in more than enough revenue to pay the interest on its debt,” Brian Wesbury, chief economist at First Trust Portfolios LP in Wheaton, Illinois, wrote with colleagues in an Oct. 7 report. Federal receipts this month will total $200 billion, while interest owed on the debt will be $25 billion, they said.

Prioritizing ‘Unworkable’

Treasury officials have suggested that a strategy of segregating debt payments isn’t feasible. Lew said in a Sept. 17 speech in Washington that proposals for “prioritization,” or making some payments instead of others, are “unworkable.”

The Treasury makes more than 80 million payments per month and its systems are designed to make each payment in the order it comes due, Treasury Inspector General Eric Thorson said in an Aug. 24, 2012, report.

Some Republican lawmakers are skeptical of Lew’s argument that prioritization won’t work.

“The law requires the Treasury secretary to manage debt, the receipts and payments of the nation,” Representative Mick Mulvaney, a Republican from South Carolina, told Bloomberg Television yesterday. “We are a little worried that they are exaggerating for political advantage because most people up here think they do have the ability to prioritize.”

Spooking Investors

Investors still might be spooked even if debt payments are kept up, said Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania.

“If I were a bond investor and I saw Social Security payments not being made, I would wonder how long it would be before I wouldn’t be paid,” Zandi said.

Whether the Treasury defaults or not, “we’re in for a long, deep recession” without an increase in the borrowing limit, he said.