A default could cause the nation's credit markets to freeze, the value of the dollar to plummet and U.S. interest rates to skyrocket, according to the Treasury report released Thursday.
Treasury officials hope by laying out potential consequences they will be able to bring pressure on Congress to act. Treasury Secretary Jacob Lew has said he will have used up the extraordinary measures to avoid breaching the debt ceiling by Oct. 17. After that, the government will have around $30 billion of cash on hand.
The report looked at the disruptions caused to financial markets during a similar stand-off between the administration and Congress over raising the debt limit. It then made projections about what could occur if there were an actual default.
In August 2011, Congress eventually raised the nation's borrowing limit before a default occurred but only after a protracted debate. The politics that nearly led to a default prompted Standard & Poor's to cut the nation's credit rating by a notch.
"As we saw two years ago, prolonged uncertainty over whether our nation will pay its bills in full and on time hurts our economy," Lew said in a statement. "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."
More Nation & World Headlines
Pentagon OKs guns to protect stateside troops 3:48 p.m. Four Confederate flags left at MLK center, church in Atlanta Cincy police officer pleads not guilty in fatal shooting 3 hurt in emergency evacuation of Boeing MD-80 Will ‘Happy Birthday’ song be free to use soon? Cop indicted for murder in traffic-stop shooting Wing part a solid clue in hunt for missing Malaysian 777 Export-Import Bank excluded from highway bill
Our new comment system is not supported in IE 7. Please upgrade your browser here.