The Treasury Department warned of catastrophe that could plunge the nation into the worst recession since the Great Depression if Congress fails to raise the debt ceiling.
“A default would be unprecedented and has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, and U.S. interest rates could skyrocket, potentially resulting in a financial crisis and recession that could echo the events of 2008 or worse,” the Treasury said in a press release.
“In the event of a default, the U.S. economy could be plunged into a recession worse than any seen since the Great Depression,” the department said.
Even brinkmanship without a default could cause interest rates to rise and the loss of trillions of dollars in household wealth.
“Postponing a debt ceiling increase to the very last minute is exactly what our economy does not need — a self-inflicted wound harming families and businesses,” Treasury Secretary Jacob J. Lew warned in a statement.
The Treasury also warned that the government shutdown would exacerbate the economic hit from a default.
President Barack Obama, however, has repeatedly said that he will not negotiate a deal to raise the debt ceiling, insisting that Republicans not hold the debt hostage to other demands.
Vice President Joe Biden waits to conduct a mock swearing-in ceremony with Sen. Brian Schatz, D-Hawaii, in the Capitol's Old Senate Chamber, December 2, 2014. Schatz was sworn in to serve the remainder of his term since he was appointed to the seat after Sen. Daniel Inouye, D-Hawaii, passed away.