The United States could hit the legal limit on its ability to borrow as soon as March 31 and faces serious consequences unless Congress acts by then to raise it, Treasury Secretary Timothy Geithner said on Thursday.
"Even a short-term or limited default would have catastrophic economic consequences that would last for decades," Geithner said in a letter to U.S. Senate Majority leader Harry Reid that was issued by Treasury.
Geithner said it was hard to pin down exactly when the current $14.3 trillion ceiling on the debt limit would be pierced but urged Congress to act before the end of the first quarter.
"The Treasury department now estimates that the debt limit will be reached as early as March 31, 2011, and most likely between that date and May 16, 2011," he wrote.
He said Treasury could engage in extraordinary measures, such as suspending sales of state and local government securities, but preferred not to because it is disruptive.
He warned that failure by Congress to raise the debt limit, which would effectively put the United States into default on its obligations for the first time in its history, would have consequences "potentially much more harmful than the effects of the financial crisis of 2008 and 2009."