"The impact on the economy would be catastrophic," said Goolsbee, chairman of the White House Council of Economic Advisers. "I mean, that would be a worse financial economic crisis than anything we saw in 2008."
Raising the debt ceiling as been an anathema to fiscal conservatives who contend reining in the national debt is vital to preserving the economy.
But Goolsbee said such a move would be devastating to the nation's international credit standing. "People will get the wrong idea," he said. "The United States is not in danger of default. This would be lumping us in with a series of countries through history that I don't think we would want to be lumped in with."
Goolsbee said the U.S. economy was poised for a continued rebound in 2011 due to changes to the tax structure and other moves that have slowed job losses and made it easier for companies to add workers.