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Treasury Sec. Lew warns of "irrevocable damage" to the economy if debt limit is not raised

Treasury secretary Jacob Lew told Congress they must raise the debt ceiling limit before the U.S. runs out of borrowing ability on Oct. 17, warning that a failure to do so could lead to "irrevocable damage" to the nation's economy and financial markets.

Lew had a message for lawmakers who have suggested that it is possible to let the deadline lapse without serious consequences. "The United States should not be put in a position of making such perilous choices for our economy and our citizens. There is no way of knowing the irrevocable damage such an approach would have on our economy and financial markets," he said. Later, he added, "It is irresponsible and reckless to insist that we experience a forced default to learn how bad it is."

Lew was testifying before the Senate Finance Committee about the consequences of defaulting on the debt. The committee's chairman, Sen. Max Baucus, D-Mont., introduced a bill with Senate Majority Leader Harry Reid, D-Nev., that would raise the debt limit through the end of 2014.

Sources have told the Associated Press that House Republican leaders are weighing a short-term increase in the debt limit to buy more time for negotiations. It is still unclear what length of time the bill would cover, or what conditions might be attached.

What are the consequences of a U.S. default?

Thursday, President Obama is scheduled to meet with Senate Democrats and House Republicans to discuss the standoff, but there's no guarantee the talks will produce any momentum. House Republicans announced that they would only be sending a small group of negotiators for their meeting Thursday, consisting of the elected leadership of the House GOP and a few committee chairmen, rather than the entire conference.

"Nine days into a government shutdown and a week away from breaching the debt ceiling, a meeting is only worthwhile if it is focused on finding a solution," explained Brendan Buck, a spokesman for House Speaker John Boehner, R-Ohio. "It is our hope that this will be a constructive meeting and that the president finally recognizes Americans expect their leaders to be able to sit down and resolve their differences."

In return, the White House chastised Boehner for the response. "President Obama is disappointed that Speaker Boehner is preventing his members from coming to the White House," said White House spokesman Jay Carney in response to the Republicans' decision. "The President thought it was important to talk directly with the members who forced this economic crisis on the country about how the shutdown and a failure to pay the country's bills could devastate the economy."

Carney also repeated that the only way a "real discussion" will happen is if the GOP first passes bills to fund the government and raise the debt ceiling without any conditions. During a meeting with House Democrats Wednesday evening, the White House said Mr. Obama expressed his desire to negotiate a broader budget agreement once the government is reopened and the borrowing limit raised.

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