Who do you believe about the consequences of not raising the debt ceiling?

Senator Pat Toomey says we should believe him:

But Secretary Geithner knows that congressional delay in raising the debt limit will in no way cause a default on our national debt. If Congress refuses to raise the debt ceiling, the federal government will still have more than enough money to fully service our debt. Next year, about 7 percent of all projected federal government expenditures will go to interest on our debt. Tax revenue is projected to cover at least 70 percent of all government expenditures. So, under any circumstances, there will be plenty of money to pay our creditors.

Moreover, as the Congressional Research Service has noted, the Treasury secretary himself has the discretion to decide which bills to pay first in the event that a cash flow shortage occurs. Thus, it is he who would have to consciously, and needlessly, choose to default on our debt if the debt ceiling is not promptly raised upon reaching it. It takes a lot of chutzpah to preemptively blame congressional Republicans for a default only he could cause.

To be sure, absent an increase in the debt limit, the resulting sudden, drastic spending cuts would be very disruptive and undesirable. That is why I have always argued that we should raise the debt limit once we have adopted the needed spending cuts and budgeting reforms. But disruptive and undesirable spending cuts are not the same thing as a catastrophic default on our debt.

Since it's never happened before, either Toomey or Geithner could be correct (Toomey is probably right about the political aspects of the blame game). We don't know what the reaction of the street would be to a failure to fund government, or even if the possibility of not financing the debt might roil international markets.

Some experts are saying that Toomey's position is technically right, but that in actual practice, funding the debt is a lot more complicated. This CFR study that just came out gives, I think, a relatively balanced appraisal of the consequences of not raising the debt ceiling.

It isn't just Geithner and other administration flunkies warning against not raising the debt ceiling. Some of the top analysts on Wall Street are also concerned that eventually, if an agreement on debt reduction can't be reached and the vote to raise the debt ceiling fails, the US will be unable to fund the debt and we would be in technical default.

At that point, it won't matter whose fault it is.