Lawmakers are at an impasse on how to pass a continuing resolution (CR) to fund the government, which has been shut down for a week. They are also working against an Oct. 17 deadline for raising the nation's borrowing limit. 

Treasury and the White House have warned that if the limit is not lifted, the government could default on its debt, leading to a recession. 

“Congress told the government to spend more money than we had … but now Congress is threatening to run out on the bill,” Warren said. “If that strikes you as bizarre, it is.”

But some Republicans, such as Sen. Rand PaulRandal (Rand) Howard PaulPentagon: War in Afghanistan will cost billion in 2018 Overnight Finance: Senators near two-year budget deal | Trump would 'love to see a shutdown' over immigration | Dow closes nearly 600 points higher after volatile day | Trade deficit at highest level since 2008 | Pawlenty leaving Wall Street group Rand Paul calls for punishment if Congress can't reach a long-term budget deal MORE (R-Ky.), have said the credit limit doesn’t need to be raised because enough revenue is generate to pay the interest on U.S. debt.

Warren said a U.S. default could bring on a “world-wide recession.”

“We can make a mistake and then back up and fix it,” Warren said. “A default on our national debt is not one of those things. … We are playing with the lives of every American.”

House Republicans have demanded that repealing parts of ObamaCare be included in a debt ceiling increase and Senate Republicans have called for major entitlement reform to reduce spending. President Obama has demanded that Congress sent him a "clean" debt ceiling increase.

It's unclear where the fight will go from here as each side becomes more entrenched.