"The president remains willing to negotiate over the future direction of fiscal policy, but he will not negotiate over whether the United States should pay its bills," Lew told the committee.
Sen. Orrin Hatch, R-Utah, accused the administration of intentionally scaring the public and financial markets over the borrowing limit, "in an apparent effort to whip up uncertainty in the markets."
Hatch said the administration was refusing to "even have a conversation" over reducing the soaring cost of the government's big benefit programs such as Social Security and Medicare.
"If the Obama administration won't negotiate on entitlements in the context of the debt limit, when will they negotiate on entitlements," Hatch asked.
Lew said that the government's payment systems were not designed to allow him to pick and choose which bills. He said the government's computer systems issue around 80 million payments each month.
"Prioritization is just default by another name," Lew said.
—By CNBC.com with AP.