Some in GOP deny debt ceiling problem

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WASHINGTON, Jan. 16 (UPI) -- Some U.S. lawmakers say arguing that failing to raise the federal debt limit would lead to default is a scare tactic and no president "would actually default."

Sen. Pat Toomey, R-Pa., told Politico President Barack Obama's warning of imminent default was an "excuse to keep spending and never address the underlying problem."

"No treasury secretary or president would actually default on the debt, even if they couldn't borrow more money," Toomey said.

Rep. Stephen Scalise, R-La., chairman of the Republican House Committee, a conservative bloc in Congress, said "Obama is the only person in town right now saying the federal government will not meet its obligations. That's just not the case."

Lawmakers opposed to raising the federal borrowing limit argue creditors will be paid, and what is actually at stake is a government shutdown, not a debt default, Politico said.

Toomey and Rep. Daniel Webster, R-Fla., will reintroduce legislation requiring the Treasury to prioritize interest payments in the event of a debt ceiling breach, and say they have supporters lined up.

"We collect money every day. It just depends on how you spend it," said Rep. Jason Chaffetz, R-Utah. "We're just talking about slowing down government spending."

Keith Hennessey, an economist during the administration of former President George W. Bush, said in a blog post prioritizing payments would be the "first step to becoming a banana republic."

Lou Crandall, an economist with Wrightson ICAP, said anything short of default would be preferable to the consequences of default but "merely saying something is 'not as bad' is not a very powerful argument."