The United States will avoid defaulting on its debts because opposition lawmakers have ruled out such a scenario but any deal will likely involve some longer-term tax increases, says Treasury Secretary Tim Geithner.

"Despite what you hear, people are moving closer together. You've seen the leadership of the Republican party in the Senate and the House definitively take default off the table as levers for a deal," Geithner tells CNBC.

"In public, each of them, Senator McConnell, Senator Kyl, Speaker Boehner and Majority Leader Cantor have each said that default is not an option."

The Obama administration wants Congress to lift the government's $14.3 trillion debt ceiling in order to avoid defaulting on its debts.

Credit ratings agencies have said the country could lose its AAA rating if it defaults.

Both sides are still working hard on long-term issues to narrow gaping deficits, with sticking points remaining.

Some Republicans are opposed to what the government calls hikes in revenue, which they see as tax hikes, while Democrats are opposed to spending cuts.

Still, Democrats are not taking longer-term tax hikes off the table.

"As the president has said we want to have a comprehensive plan that brings our long-term fiscal position back towards balance so that our overall debt burden is falling as a share of the economy over time," Geithner says

"That's going to require comprehensive, across-the-board savings in all functions of government, but it's also going to require through tax reforms some modest changes in revenues so that we are not sustaining tax breaks for the most fortunate 2 percent of Americans."

"There's been no deficit-reduction deal in American history that didn't have a balanced package with some revenues as part of the deal."

Default, Geithner says, would not only devastate the U.S. economy, but would also throw the world into a recession.

"If the United States of America were to default, it would be catastrophic for the American economy, for the American financial system and for the average American people," Geithner says.

"It would be a substantial, unfair tax on all Americans, and it would bring the world economy again — because of the critical role we play in the global economy — to the edge of recession."

Other members of President Obama's team have expressed confidence the government will avoid default, including White House budget director Jack Lew.

"As we approach it, more and more (members of Congress) seem to be coming to it," Lew says according to Reuters.

"There will be a fringe that believe that playing with Armageddon is a good idea. But I don't think that's where a majority will be."