The Hill News

A short-term default on government debts would do "irrevocable damage" to the American economy, according to Treasury Secretary Timothy Geithner.

In addition, failing to raise the debt limit and forcing the government to miss payments on some obligations would "likely push us into a double dip recession," he warned Friday in one of the administration's bluntest warnings yet on the dangers of inaction.

In a letter sent to Sen. Michael Bennet (D-Colo.), Geithner painted a bleak picture of what would happen if Congress were to fail to raise the $14.3 trillion debt limit in time. A government default would hurt an already weak housing market, drive down household wealth by hitting 401(k) accounts and pension funds, and actually increase the government's debt burden by driving up costs.

Read more...