At the same time, House leaders were discussing the possibility of agreeing to raise the $16.7 trillion federal debt only if President Obama's signature healthcare initiative is held up or dismantled.
"The drawn-out dispute over the debt ceiling [in 2011] caused business uncertainty to jump, consumer confidence to drop, financial markets to fall and economic growth to falter," Lew told the Commonwealth Club of California in Milpitas, near San Jose.
Besides Standard & Poor's downgrading the government's credit rating for the first time in history, the three major U.S. stock indexes and markets around the world experienced their most volatile week since the 2008 financial crisis, with the Dow Jones industrial average plunging 635 points, or 5.6 percent, in one day.
The U.S. Government Accountability Office estimated the delay in raising the debt ceiling increased government borrowing costs $1.3 billion in 2011, and the Bipartisan Policy Center extended GAO estimates, finding the delay would ultimately increase borrowing costs $18.9 billion.
"We cannot afford a repeat of what happened in 2011," Lew told the non-profit, non-partisan educational organization.
Besides higher borrowing costs, "all payments across the government, including Social Security and payments to our military and veterans, would be at risk," Lew said.
"It is important to note that the debt limit has nothing to do with new spending," Lew said. "It has to do with spending that Congress has already approved and bills that have already been incurred. Failing to raise the debt limit would not make these bills go away. It would, though, have disastrous effects for our nation."
Senior Republican aides told The Washington Post House leaders are considering making demands related to the Patient Protection and Affordable Care Act, also known as Obamacare, as part of any agreement for raising the debt limit.
"Obamacare is one of many things we can pursue on debt limit," an aide told the newspaper.
A spokesman for House Speaker John Boehner, R-Ohio, told The Financial Times: "There is growing consensus that the law is not ready for prime time and is being implemented unfairly, so we'll keep looking at ways to delay and dismantle it. No decisions have been made about what vehicles to use to do that."
The White House, which has said it will not negotiate on raising the debt limit, said Thursday Republican plans were "disappointing but hardly surprising."
"We have seen Republican members of Congress and their advisers repeatedly suggest that the full faith and credit of the United States is a useful point of leverage for them to accomplish a political goal," White House spokesman Josh Earnest said.
"Setting aside the fact that that political goal is denying access to healthcare coverage to millions of Americans, it's just wrong," Earnest said.
"The full faith and credit of the United States of America is not a bargaining chip. And it is the responsibility of the Congress to pass legislation that will allow them to pay the bills that they've already racked up. They should do that without drama and without delay when they return from the August recess," he said.