NEW YORK (CNNMoney) -- Now is the time to figure out how to rein in deficits, but even if lawmakers can't come to an agreement by early August, they will need to raise the debt ceiling, Treasury Secretary Tim Geithner said Tuesday evening.
"It simply is not an option for Congress to evade the basic responsibility to protect America's creditworthiness," Geithner said at the Harvard Club in New York City.
The country's debt hit the debt ceiling on Monday. Geithner told Congress he would create room for the government to continue borrowing by suspending investments in federal retirement funds and taking other steps. (Debt ceiling: What you need to know)
But Geithner said he'll only be able to buy lawmakers time until Aug. 2, at which point the country will not have enough money coming in to pay all its legal obligations in full and it will not be allowed to borrow to make up the difference.
Some Republican lawmakers have said that the United States would not be in default if Geithner simply continues to make interest payments on outstanding bonds.
Geithner couldn't disagree more. He's noted on several occasions that failing to meet all legal obligations in full could be catastrophic for the economy and could cause markets to lose confidence in the country's reputation for always paying what it owes on time and in full.
During the Harvard Club event he allowed that no one can say for sure what would happen specifically come Aug. 2 if lawmakers don't raise the $14.3 trillion debt ceiling isn't raised.
But, Geithner said, "we're not going to experiment with it. We're the United States of America. You've got to be kidding. Out of the crisis we just came out of?"
At the same time, Geithner signaled his optimism that lawmakers could cut a respectable deal that would constitute a serious downpayment on debt reduction and raise the debt ceiling at the same time. (Coburn pulls out of Gang of Six)
"We do not have the option of leaving this problem to another day," Geithner said. "We won't be able to resolve decades of ideological divide. But we can get something serious done."
By "something serious" he meant a framework for debt reduction like the kind President Obama proposed that establishes a path for declining deficits in the next several years, along with spending cuts and an enforcement mechanism.
While Republicans have said adamantly that raising taxes is off the table, Geithner said that a spending-cuts only regimen would hurt the poor and elderly and undermine the core responsibilities of government.
But since time is short, it's important to "lock in as much as we can" now, he said, and "leave open where the balance will come from" -- such as defense spending cuts and revenue increases.
One thing he doesn't envision happening between now and Aug. 2, however, is a serious deal on corporate tax reform. He did say, however, he "would like to take a run at [that] ahead of the election" and once the debt ceiling drama is out of the way.
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