To former Federal Reserve Chairman Ben Bernanke, the issue is a simple one: The U.S. needs to pay all of its bills.

Republican proposals to prioritize obligations like Social Security payments over other bills aren't feasible long-term strategies, he said during an event organized by Politico on Wednesday in New York.

"Maybe the immediate effects within hours of not paying a Social Security check will be different than not paying interest on the debt but it's also a default," Bernanke said. "It also represents a failure to meet obligations and would lower the U.S. credit rating."

Indeed, political maneuvering over the debt ceiling already cost the U.S. -- the world's largest economy -- its top credit rating from Standard & Poor's in 2011. 

Simply paying some bills before others is a strategy many cash-strapped households employ when their bills arrive more quickly than their paychecks, and while it may work in a pinch, it doesn't address more fundamental issues.

Nonetheless, debates over the debt ceiling, budgetary constraints, and government shutdowns have become routine in recent years as Republicans sought to use Congressional control of spending to force President Obama to make policy changes.

Just two years ago, in 2013, Congress' failure to approve a spending bill resulted in a 15-day government shutdown in which many government operations were curtailed and federal employees were either furloughed or worked without knowing when they would get paid. 

"I really think that we ought to pay the bills," Bernanke said.


The latest round of the debt ceiling talks closely resembles previous iterations, with Treasury Secretary Jack Lew sending bi-weekly letters to Congress warning that its "borrowing capacity likely would be exhausted" by Tuesday, Nov. 3.

"Operating the United States government with no borrowing authority, and with only the cash on hand on a given day, would be profoundly irresponsible," Lew said in his Oct. 15 letter. "The creditworthiness of the United States is an essential component of our strength as a nation."

In the past, financial markets discounted the danger of reaching the debt ceiling because they believed that Congress would compromise rather than leave the government unable to pay its bills, noted Bernanke, who was Fed chief from 2006 to 2013.

An avid student of the Great Depression of the 1930s, he brought that expertise to bear in attempting to stave off economic collapse during the 2008 financial crisis that followed the bankruptcy of Lehman Brothers investment bank.

Bernanke helped arrange bailouts of both banks and insurance company AIG and cut interest rates to nearly zero, where they've remained ever since.

As for when they should be raised, Bernanke was careful not to "second guess Janet [Yellen]," his successor. Many traders speculated that the Fed would start raising rates in September, but the central bank delayed amid global financial turmoil related to an economic slowdown in China.

Negative interest rates are one possible tool to stimulate economies, Bernanke noted, and they have been somewhat successful in Europe. During his own tenure as Fed chair, however, he didn't believe they would provide the necessary "oomph," especially when weighed against the risks to money markets.

Bernanke reiterated his belief that "monetary policy is not a panacea," and said that fiscal policy could be employed intelligently to stimulate growth. That wouldn't be easy in the current Congress, in which Republicans control both chambers but haven't been able to agree on who should be Speaker of the House or renewing the charter of the Export-Important bank, a favorite of large corporate donors.

"If you're totally happy with the way [Congress] runs fiscal policy, let them run monetary policy," Bernanke later joked.