Lew said that the government's payment systems were not designed to allow him to pick and choose which bills to pay out of the 80 million payments the government makes each month.
"Prioritization is just default by another name," Lew said.
Lew said default would cause serious damage as outlined in a report Treasury issued last week.
That report, Lew said, "points to the potentially catastrophic impacts of default, including credit market disruptions, a significant loss in the value of the dollar, markedly elevated U.S. interest rates, negative spillover effects to the global economy and real risk of a financial crisis and recession that could echo the events of 2008 or worse."
In 2008, a serious financial crisis pushed the country into the deepest recession since the 1930s.
Republicans on the committee insisted that Obama would have to agree to negotiations as a way to end the current stalemate.
"If you are saying, you give me everything I want and then we can have a conversation on things that are important to you, I find that shocking," Republican Sen. Pat Toomey of Pennsylvania told Lew.
Toomey said that if Obama doesn't agree on spending reforms, "There appears to be a real chance that Congress will not pass a debt ceiling increase before Oct. 17."
Toomey pressed Lew to say whether he could provide assurances to the millions of investors who hold Treasury securities that the administration would do everything possible to make sure that payments were made on those obligations.
But Lew refused to provide such an assurance. "The only way to make sure we can pay all of our obligations is to raise the debt ceiling," he said.
Associated Press writer Stephen Ohlemacher contributed to this report.
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