My Harvard colleague Martin Feldstein writes me in an email:
The
WSJ and FT continue to write about the risk of default, quoting the Treasury,
Boehner and others.There
really is no need for a default on the debt even if the debt ceiling is not
raised later this month. The
US government collects enough in taxes each month to finance the interest on
the debt, etc. The
government may not be able to separate all accounts into "pay" and
"no pay" groups but it can certainly identify the interest
payments. An
inability to borrow would have serious economic consequences if it lasted for
any sustained period but it would not have to threaten our credit standing.