Bernanke: Default on Debt Would Increase Deficit

WASHINGTON (AP) — Federal Reserve Chairman Ben Bernanke says lawmakers would end up increasing the federal deficit if they fail to raise the nation's borrowing limit in time to avoid a default.

Republicans have held up an increase in the borrowing limit after expressing concerns of growing spending that has widened the federal deficits. But Bernanke says a failure to boost the borrowing limit would amount to a "self-inflicted" wound. That's because it would drive up interest costs on the $14.3 trillion debt and reduce government revenues by slowing economic growth.

The government hit its borrowing limit in May. The Treasury Department says it will default on its debt if the limit is not raised by Aug. 2.