U.S. President Joe Biden is meeting Wednesday with some of America’s top business leaders to make the case that Congress must increase the government’s borrowing authority before October 18, when the U.S. expects to run out of money to pay its bills.
The White House said before the meeting that the executives “understand firsthand that a default would be economically devastating” for the United States — which has never defaulted on its financial obligations — and the world economy.
A default would risk millions of jobs and throw the U.S. into recession, “causing lasting harm to America’s economic strength by threatening the dollar’s status as the currency the world relies on and downgrading the U.S.’s credit rating,” the White House said.
Among those expected to meet with Biden, some in person and some virtually, are banking chief executives Jane Fraser of Citi, Jamie Dimon of JPMorgan Chase and Brian Moynihan of Bank of America. Others at the meeting include Greg Hayes, the CEO of Raytheon Technologies, Adena Friedman, president and chief executive of the Nasdaq stock exchange, and Pat Gelsinger, chief executive of the Intel technology company.
The White House is locked in a political stalemate with opposition Senate Republicans over how to increase the government’s borrowing authority beyond its current $28.4 trillion level to a specific amount or to suspend any limit until December 2022, a month past next year’s pivotal congressional elections.
With Republicans and Democrats each holding 50 seats in the 100-member Senate, Republicans so far have refused to abandon their ability to filibuster against the debt limit increase. It would require Democrats to secure 10 Republican votes to overcome a filibuster and bring the issue to a vote.
But Biden told reporters at the White House on Tuesday there was “a real possibility” that Democrats could abandon the long-standing filibuster tradition in the Senate for a vote on increasing the debt limit, while maintaining the filibuster for regular legislation.
Treasury Secretary Janet Yellen has warned Congress that the government will likely reach its borrowing limit by October 18.
The White House said that at the meeting with business leaders, Biden “will detail the Republican obstruction that has led us to this point.” He accused Republican party of “refusing to do the right thing by fulfilling its bipartisan responsibility to address the debt limit—even after adding $8 trillion” to the total under the administration of former President Donald Trump.
Senate Republican leader Mitch McConnell says that Democrats should increase the debt ceiling without any Republican support through a legislative procedure called reconciliation, which Biden and Senate Majority Leader Chuck Schumer have rejected as cumbersome and time-consuming.
“They have the time to do it,” McConnell told reporters Tuesday. “And the sooner they get about it, the better.”
Schumer accused Republicans of manufacturing a crisis as he announced a Wednesday vote on a bill to raise the debt limit already passed by the House of Representatives. Senate Republicans have already twice blocked Democratic attempts to extend the debt ceiling on their own by reserving their right to filibuster the legislative action.
“If Republicans want to vote ‘no’ [on Wednesday], if they really want to be the party of default, that’s their choice,” Schumer said on the Senate floor.
The U.S., virtually alone among world governments, imposes a debt ceiling, and has periodically increased it or suspended it for a year or two. It is tantamount to a credit card limit that consumers might face, a curb on how much they can increase their debt and a requirement to pay off debts already incurred.
But Republicans object to joining Democrats in increasing it now because they are opposed to Biden’s plans to spend $2 trillion or more to greatly expand the country’s social safety net to provide more government aid for families, students and health care benefits for older Americans.
Democrats say they would fully pay for the extra spending with higher taxes on corporations and the wealthiest individuals, not add to the country’s long-term debt total.
Coming too close to the borrowing limit has its perils. A debt ceiling dispute in 2011 that Congress resolved two days before the borrowing limit was reached caused stock prices to fall and the first-ever credit downgrade for U.S. debt.