Updated: 3:05 p.m. ET
Treasury Secretary Timothy Geithner announced to Congress on Monday that the U.S. government had hit its $14.3 trillion debt limit, and that the federal government would now begin a "debt issuance suspension period," according to the Hill.
In a letter to congressional leaders, Geithner said he would be reducing government investments in two federal employee pension funds - the Civil Service Retirement and Disability Fund and the Government Securities Investment Fund - as part of a series ofto keep the government from defaulting on its loans through August 2.
Still, Geithner warned Congress that failing to act quickly to raise the debt ceiling would result in catastrophe.
"I have written to Congress on previous occasions regarding the importance of timely action to increase the debt limit in order to protect the full faith and credit of the United States and avoid catastrophic economic consequences for citizens," he wrote. "I again urge Congress to act to increase the statutory debt limit as soon as possible."
If Congress does not approve an increase to the debt ceiling, the federal government could default on its bonds for the first time in history, much of the government would shut down, and Social Security and Medicare checks would likely see delays as a result of the government's inability to make payments to agencies. Even approaching the August 2 deadline without raising the ceiling could destabilize markets.
House Speaker John Boehner and other Republicansthey will not vote for the increase unless Democrats agree to spending cuts greater than the amount of the increase.
"Listen, I understand what the president was saying about jeopardizing the full faith in credit of the United States," said House Speaker John Boehner in an interview that aired on CBS' "Face the Nation" on Sunday. "I'm ready to cut a deal today."
"We don't have to wait until the 11th hour," he continued. "But I am not gonna walk away from this moment. We have a window of opportunity to act. Because if we don't act, the markets are gonna act for us. Our creditors are gonna act for us."
In a statement on Monday, Boehner reiterated this pledge: "As I have said numerous times, there will be no debt limit increase without serious budget reforms and significant spending cuts - cuts that are greater than any increase in the debt limit," he said.
"Americans understand we simply can't keep spending money we don't have. Spending-driven deficits, record debt, and the threat of tax hikes are smothering our economy with uncertainty and making it harder for small businesses to hire new workers," he added.
Sen. Marco Rubio (R-Fla.) said that hitting the debt ceiling marked "a sad day for our nation" and that America was "heading toward a Greece-like day of reckoning."
"We are at a defining moment in our nation's history, and we must begin to implement fiscal reforms immediately," Rubio said, in a statement. "We must fundamentally reform our tax code, overhaul our regulatory structure, enact spending and debt caps, pass a balanced-budget amendment and save our entitlement programs so they don't bankrupt themselves and our country. If we fail to accomplish these necessary goals and simply raise our borrowing limit yet again, the world will know America is not serious about tackling this problem. The result will be devastating and our nation's exceptionalism will be in jeopardy."
Senate Majority Leader Harry Reid (D-Nev.), however, warned lawmakers on Monday that choosing not to vote for an increase to the debt limit would lead to "disaster."
During remarks on the Senate floor, Reid said "we would be out of our minds" not to raise the debt ceiling -- and that Republicans were using the issue as political leverage.
"They're looking at this choice through a political lens not an economic lens," he argued. "They are willing to risk the strength of our economy just to make a political point."
But, he warned, "we can't afford to play these political games and trigger a default crisis that will lead to a catastrophe."
Vice President Joe Biden has been working with a bipartisan team of lawmakers to try to hammer out a deal for raising the debt limit - but the Wall Street Journal reports that the talks remain in the early stages.
This is not the first time the U.S. government has reached its debt limit: twice during the Clinton administration, in 1995 and 1996, Democrats and Republicans similarly struggled to reach a deal. Ultimately, lawmakers did come to an agreement.