The current standoff between President Barack Obama and Republicans leaders is different from the 2008 financial crisis because this crisis is "self-inflicted," former Treasury Secretary Hank Paulson told CNBC Thursday.
"The most basic function of Congress is to pass a budget," he said in a " Squawk Box " interview, exactly five years since then-President George W. Bush signed the Troubled Asset Relief Program (TARP) financial bailout program into law.
Republicans leaders and the president not only need to come together to fund the government and end the shutdown, but they must reach agreement to increase the debt ceiling before the mid-October deadline, he said. Paulson said it often takes a crisis like the government shutdown to get something difficult and unpopular done.
Paulson told CNBC that he hates the whole concept of the debit limit-calling it a "flaw in our system."
President Obama sought to raise the stakes in a CNBC interview on Wednesday-saying that Wall Street needs to be genuinely worried about what is going on in Washington.
But Paulson said that he hopes it doesn't take another financial crisis to get these budget problems solved.