WASHINGTON, Oct 10 (Reuters) - U.S. Treasury Secretary Jack Lew said on Thursday that gridlock in Washington was hurting the U.S. economy and urged Congress to raise a cap on government borrowing to keep America from defaulting on its debt.
The country's political dysfunction has already led the government to partially shut down, which is sucking money out the economy by delaying payments to many federal workers.
The economic drag could grow much severe later in the month if the United States begins to default on its obligations after it hits a $16.7 trillion ceiling on its debt.
'We now face a manufactured political crisis that is beginning to deliver an unnecessary blow to our economy,' Lew told a Senate hearing.
Lew said uncertainty over the possibility of default was already weighing on financial markets.
He also said it would be 'irresponsible' for the government to try to prioritize its payments so that bondholders would continue to be paid should Washington not have enough money to pay all its bills.
He warned lawmakers that after Oct 17 the government might miss payments on pensions and health care for the elderly, as well as salaries for the nation's soldiers.
(Reporting by Jason Lange; Editing by Chizu Nomiyama) Keywords: USA FISCAL/LEW
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