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Washington (AFP) – A U.S. debt default would have dramatic economic repercussions and be “deeply damaging” to financial markets, Treasury Secretary Jack Lew warned lawmakers Thursday a week before a deadline to raise the nation’s borrowing limit.

With the clock ticking toward a potentially catastrophic default that would see the United States fail to pay all its bills for the first time in its history, President Barack Obama was to meet his fellow Democrats as well as Republicans in separate White House meetings in a bid to forge a path out of the crisis.

But all eyes were first on Lew, who trooped up to Capitol Hill to deliver a stark message to Congress: end the political impasse and act immediately to avoid “self-inflicted wounds” and potential financial disaster.

“If Congress fails to meet its responsibility, it could be deeply damaging to the financial markets, the ongoing economic recovery, and the jobs and savings of millions of Americans,” Lew told the Senate Finance Committee.

Washington has been locked in stalemate, with Obama and Republicans unable to agree on how to fund government.

Failure to agree on a budget led to the first government shutdown in 17 years on October 1, the beginning of fiscal year 2014. Now the nation careens toward another, potential hammer blow, and Lew warned it would be a “grave mistake” if the U.S. Treasury is not provided with new borrowing authority that would allow it to pay all its bills.

“It is important for Congress to reopen the government, raise the debt ceiling and then work with the president to address our fiscal problems,” Lew said.

Lew warned of the “potentially catastrophic impacts of default, including credit market disruptions, a significant loss in the value of the dollar, markedly elevated U.S. interest rates, negative spillover effects to the global economy, and real risk of a financial crisis and recession that could echo the events of 2008 or worse.”

Rising interest rates would flood through all aspects of the economy and impact every American household, and the stock market could tumble.

Lew said the fiscal impasse was already “beginning to deliver an unnecessary blow to our economy,” in the form of rising interest rates and market volatility reaching its “highest level of the year.”

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