WASHINGTON– Treasury Secretary Timothy Geithner said Tuesday that there will a global economic crisis if Congress fails to increase the U.S. debt limit.

“The consequences of that would be catastrophic to the United States,” Geithner told a Senate appropriations subcommittee. “It would make the crisis we went through look modest in comparison.”

The United States is set to reach the federal debt ceiling by May 16.  The Treasury has an emergency procedure to secure more borrowing time before the nation would reach default.

Geithner said it would be “a reckless, irresponsible act to this country” if Congress does not raise the debt ceiling, as it has done in the past..  It is “inconceivable” that Congress will not act in time, he said.

Thousands of businesses would fail and unemployment would rise dramatically as a result of default, Geithner said.  It would also cut critical payments to senior citizens.The consequences of default would reverberate around the world.

“You will shake the basic foundations of the entire global financial system,” Geithner said.

International confidence in U.S. treasuries and assets would be lowered if the U.S. is unable to meet its financial obligations.  Global confidence in the U.S. is high but the nation must continue to earn the world’s trust, Geithner said.

Geithner said that if he were in China’s position, he would still loan the U.S. money. The nation must prove itself everyday though, he added.

Avoiding a looming government shutdown is critical for the continued growth of the U.S. economy, he said. If Congress does not pass a funding agreement this week, the government would shut down on Friday. President Barack Obama hosted leaders from both political parties in a closed-door meeting Tuesday at the White House in an attempt to end the stalemate.

Reaching a budget agreement for the upcoming fiscal year is an important way for the world to continue to earn the confidence of foreign investors, Geithner  said.

The fragile U.S. economic recovery would be threatened by a government shutdown, Geithner said, because the confidence of businesses and the housing market would be shaken by Congress’ failure to reach a budget agreement.  The U.S. has made a dramatic recovery from the worst days of the 2008 economic crash and that progress cannot be threatened, he said.

The U.S. is looking to find a way to cut the deficit over time, and the Obama administration is also working on a corporate tax plan to make America more competitive, he said.  The plan is to work with members of Congress and businesses to reform the existing tax code.