US should raise debt ceiling as soon as possible: Jack Lew

Jack Lew, U.S. Treasury Secretary.
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U.S. Treasury Secretary Jack Lew warned Congress on Tuesday that waiting until the last minute to raise the nation's limit on borrowing could lead to irrevocable damage to the economy. He added that Congress should raise the debt ceiling as soon as possible.

"We cannot afford for Congress to gamble with the full faith and credit of the United States of America," Lew told the Economic Club of Washington, a business forum.

Lew said the Treasury can never be certain how much money will enter and leave public coffers on any given day, and repeated a warning he made last month that the nation would run dangerously low on cash in mid-October.

(Read more: Obama: I will not negotiate about raising the debt ceiling)

As that date approaches, the risk would also rise that investors could lose confidence in the government and might stop reinvesting in U.S. government dent.

What are the odds of a government shutdown?
What are the odds of a government shutdown?

"If U.S. bond holders decided that they wanted to be repaid rather than continuing to roll-over their investments, we could unexpectedly dissipate our entire cash balance," Lew said in prepared remarks.

(Read more: Why a US recovery may send Treasurys, dollar crashing)

Lew said it would be "unworkable" to prioritize payments if America had to default on its obligations.

"There is no way of knowing the irrevocable damage such an approach would have on our economy and financial markets," he said.