Tim Geithner Warns On Debt: 'We Are Running Out of Time'

WASHINGTON -- With members of Congress stuck squabbling over a debt agreement, Treasury Secretary Tim Geithner bluntly warned them Thursday that time is nearly up.

"We have looked at all available options, and we have no way to give Congress more time to solve its problem," Geithner said at a Capitol Hill news conference. "We are running out of time."

The Treasury secretary has warned that the United States won't be able to pay all of its bills after Aug. 2 if Congress doesn't raise the cap on its $14.3 trillion debt ceiling.

And the consequences would be catastrophic, Geithner has warned, starting with interest rates spiking on U.S. debt and the government having to decide who it won't pay, from senior citizens to the unemployed, to government contractors and whole branches of government. Many economists fear it would spark a new recession.

"The eyes of the country are on us, and the eyes of the world are on us and we need to make sure we stand together and send a definitive signal" that the nation will avoid default, Geithner said, adding that the nation also has to "take advantage of this opportunity to make some progress in dealing with our long-term fiscal problems."

Geithner's words of warning came as the rhetoric on each side ticked up, and hope for a bigger deal seemed to be fading. Negotiators seemed to be shifting more towards an offer by Senate Minority Leader Mitch McConnell to leave matters in the hands of the White House, at least for shorter-term debt hikes, with Congress exercising limited veto authority.

Senate Majority Leader Harry Reid told reporters those talks were going forward, but stood by the Geithner line on time.

"We are already feeling consequences," Reid said, pointing to threats of bond raters to downgrade the U.S. debt and increasing anxiety among the population.

"This debate is not about new spending. This is about bills that are due for pre-existing obligations," Reid said, citing funds for troops, seniors and kids. "If we don't reach an agreement, we'll have less than two-thirds of the funds we need."

"There is no wiggle room," Reid warned, blaming a small cadre of ideologues in the GOP for blocking a deal. Democrats have particularly singled out House Majority Leader Eric Cantor.

Republicans argue that there can be no tax hikes in a debt deal, and have insisted on deficit reduction solely through cutting spending.

Talks are set to resume at the White House Thursday afternoon, but Speaker John Boehner has already indicated he will not go to Camp David over the weekend to move the process forward. The administration has warned a deal needs to be done by July 22 to get it through Congress in time.