Damage unthinkable if US debt cap not hiked-Geithner

CHICAGO, June 30 (Reuters) - It would be "unthinkably damaging" if the U.S. Congress does not raise the debt ceiling, U.S. Treasury Secretary Timothy Geithner said on Thursday.

Interest rates would rise, the United States would have to pay more to borrow money, stocks would fall, savings would be depleted and more people would be out of work, Geithner said.

"It will be unthinkably damaging to the economy," Geithner, speaking with former President Bill Clinton at the final session of a two-day Clinton Global Initiative conference in Chicago focused on jobs. "We really have no option to go into a period where we don't pay our bills ... Congress has no choice but to pass this."

The U.S. Treasury already has hit the existing $14.3 trillion legal limit on the country's debt and has warned the debt ceiling needs to be raised by Aug. 2 to avoid a default on the nation's obligations.

Fears of a technical default have been rising after budget negotiations between Democrats and Republicans fell apart in Washington earlier this week.

"I am sure that our Congress will do what it has always done in the past" and raise the debt ceiling, Geithner said.

Geithner spoke following reports he is considering stepping down later this year, but people familiar with his thinking said on Thursday he will not make any decision until after U.S. debt limit negotiations conclude.