Geithner Thursday said in a letter to Congress a failure to raise the debt ceiling, which could be hit by the end of March, would have "catastrophic economic consequences that would last for decades." Geithner said the national debt is currently $13.961 trillion, and the legal limit for government borrowing was set by Congress last year at $14.29 trillion.
Geithner said Congress should raise the limit "early this year, well before the threat of default becomes imminent."
In the event U.S. borrowing hits the ceiling and legislators don't raise it, the Treasury Department would be barred from borrowing more money. In such a case, and unless drastic measures were taken, the nation would be unable to pay its bondholders, fund programs or fully pay benefits, Geithner said.
Loan costs would rise for federal, state and local governments, as well as for businesses and consumers. Stock, real estate values and retirement savings would suffer, and millions of jobs could be lost, Geithner said.
Some GOP lawmakers have either said they will not vote for an increase or will bargain for spending cuts in exchange for their agreement to raise the debt cap, the Washington Post and CNN/Money reported.
"While America cannot default on its debt, we also cannot continue to borrow recklessly, dig ourselves deeper into this hole, and mortgage the future of our children and grandchildren," House Speaker John Boehner, R-Ohio, said.