U.S. Treasury Secretary Timothy Geithner predicted Congress will raise the debt limit by the Aug. 2 deadline, warning that not doing so would harm the economy.
Geithner, speaking Thursday at the Clinton Global Initiative conference on job creation hosted by former President Bill Clinton in Chicago, said an agreement in Washington on a long-term, deficit-reduction plan, coupled with an increase in the debt ceiling, would give taxpayers confidence in the economy, the Chicago Tribune reported Friday.
"They [Congress] will act. They'll do the right thing," Geithner said.
If Congress fails to act, an increase in interest rates and borrowing costs are likely, leading to more joblessness, business failures, he said.
"[It] will be unthinkably damaging to the economy -- much more damaging than even what we faced in that dark period of '08 and '09," he said.
Geithner said not raising the debt ceiling would deepen a lack of confidence in Washington, the Tribune said.
"I think part of the cloud over the country, the uncertainty over the country today, is [whether] our political system [is] up to managing the problems we have to face," he said. "Until the American political system is able to demonstrate it can come together and put in place a long-term [plan] for us to get ahead of this fiscal problem, nothing is possible for the economy."
Geithner called for comprehensive corporate tax reform, saying the U.S. had an "unfair system" with the tax burden of individual businesses determined "by the quality of your lobbyist."
He dismissed speculation he would leave the Obama administration after a debt-ceiling plan is reached, the Tribune said.
"I'm going to be doing this for the foreseeable future," Geithner said.