I freely admit to not knowing the gory details of how federal government appropriations and spending go, but the claim that not increasing the debt ceiling will mean "default" seems to me to be pure demagoguery. The argument, I guess, is that without being able to borrow more we won't be able to have the resources we need to pay interest and principal on existing debt. But is that really true?
Not being able to borrow any more does not mean that the income (or wealth) isn't there to pay interest on existing debt anymore than maxing out your credit card means you can't make the minimum payment on that card or any other one. If you can't borrow more and you have debt and interest payments you must make, then you must either a) find new income; b) liquidate some assets; and/or c) reduce expenditures elsewhere to ensure you can make those payments. None of these is "default" or personal bankruptcy.
So my question for those who know more than I do: if the debt limit isn't raised, can't funds that are allocated for specific expenditures be re-allocated toward principal and interest payments on the debt? Rather than talk about future spending cuts, as the current negotiations seem to be all about, there's no non-political reason that funds could not be taken from budget allocations and re-routed to meet the legal requirements of interest and principal. Or is there? Isn't it legally/structurally possible to say "we don't need those new bombers we were going to buy, so let's shift those funds to interest payments?"
In any case, I just don't see why not raising the debt ceiling constitutes "default." Maybe I'm not as smart as Timmy Geithner, so the commentariat should feel free to correct me. (Again, I recognize that doing all of this might not be easy politically, but that's a different argument than the pundits and Timmy are making.)