Even without additional borrowing authority, the government would continue to receive tax revenue, but hardly enough to keep up with the bills.
Sen. Patrick Toomey, R-Pa., says he will introduce legislation next week that would require the government to pay interest on the debt as well as Social Security benefits and wages for active duty members of the military if the borrowing limit is not raised.
"Because the people who want to keep spending as usual and don't want to negotiate some spending reductions are out there propagating this myth that somehow failure to raise the debt ceiling would result in a default, I felt like it's necessary to demonstrate and, in fact I prefer to codify, the alternative," Toomey said in an interview.
Congressional Democrats have recently urged the president to lift the debt limit unilaterally. He said — as he has before — that he won't do it, that Congress has voted for the spending that resulted in federal borrowing, and should now agree to pay the bill.
"There are no magic tricks here," Obama said Monday. "There are no loopholes. There are no, you know, easy outs."
Obama noted that combined with other legislation he signed earlier in his term, he and Congress have reduced deficits by about $2.5 trillion over a decade, short of the $4 trillion he said is necessary to get them down to a manageable size.
He insisted that in negotiating deficit reductions, both spending limits and tax revenue increases need to be on the table. Aides have said that closing loopholes and placing limits on deductions could generate about $600 billion in new revenue. He added that he is "open to making modest adjustments to programs like Medicare to protect them for future generations."
One option for Boehner is to package a debt limit increase together with a full catalog of spending cuts and try to pass it through the House. That could prove enormously challenging since he would have to accomplish the feat exclusively with GOP votes — and some conservative hard-liners simply refuse to approve any debt increase.
Boehner has made it clear that he's eager to avoid a first-ever default on U.S. obligations — even if some Republicans aren't afraid of the idea.
In one sign of flexibility, a Boehner spokesman says that though there is the so-called Boehner Rule requiring $1 in spending cuts for every $1 in increased authority to issue government debt, the speaker is willing to apply it more leniently to include savings from "reforms" to entitlement programs like Medicare and Social Security that accrue over the long term.
Obama has his doubters, who note that he has compromised before in the face of last-minute deadlines.
Asked during the news conference how steadfast he was, Obama replied: "We've got to break the habit of negotiating through crisis over and over again. Now is as good a time as any, at the start of my second term. Because if we continue down this path, then there's really no stopping the principle."
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