Biden calls on CEOs of banks, AARP to raise debt ceiling 12 days before deadline

President Joe Biden will step up his call for Congress on Wednesday to address the debt ceiling in a meeting with some of Wall Street’s top CEOs and stress that delaying an increase in the borrowing limit risks a first failure of the United States and an almost certain economic calamity.

Nine CEOs are expected, including JPMorgan boss Chase Jamie Dimon, Intel executive Pat Gelsinger, Nasdaq chief Adena Friedman and Raytheon frontman Greg Hayes. AARP Chief Jo Ann Jenkins, Citi CEO Jane Fraser and Deloitte Executive Punit Renjen are also on the guest list.

Biden will be joined by Treasury Secretary Janet Yellen, Commerce Secretary Gina Raimondo and Senior White House Advisor Cedric Richmond.

The group will discuss the “urgent need for Congress to take immediate bipartisan action to address the debt limit and avoid the default of US government financial obligations and the economic catastrophe that would follow,” according to a statement from the White House. The president will also blame the drama on Republicans’ obstruction of a generally routine legislative process.

The White House meeting, which will include a mix of virtual and in-person attendees, marks a new level of urgency in the administration’s efforts to avert what economists see as a guaranteed economic crisis. Congress has just 12 days – until Oct. 18 – to suspend or lift the debt limit before the United States defaults on its debt for the first time, according to Treasury Department estimates.

Yellen and other economists say failure to pay a single interest payment could trigger a dramatic rise in interest rates across the country, weaken the US dollar and threaten the greenback’s status as a currency world reserve.

“Financial markets would lose confidence in the United States, the dollar would weaken and stocks would fall,” the White House Council of Economic Advisers wrote on Wednesday, adding that the US credit rating would almost certainly be downgraded and stocks would fall. interest rates would go up for a lot. consumer loans, including auto loans and mortgages.

“These and other consequences could trigger a recession and a credit market freeze that could affect the ability of US businesses to operate,” the council wrote.

The default could also delay social security checks for some 50 million seniors and postpone the incomes of members of the US military.

Yellen told CNBC on Tuesday that she “would fully expect” a default to lead to a recession. Raising or suspending the debt limit allows the Treasury Department to resume regular payments to U.S. bondholders for expenses that lawmakers have already authorized.

JPMorgan Chase said Dimon was due to share his thoughts at the meeting, but did not provide further details.

Wednesday’s meeting also likely represents an opportunity for Biden to implore the private sector to keep the pressure on Republicans in Congress to back down on their threat to obstruct a proposed bill through due process.

The president has stepped up in recent days his criticism of the GOP for blocking a vote on the debt ceiling by threatening to obstruct any bills to increase or suspend the limit by the usual margin of 60 voice. The White House said Wednesday that Biden plans to repeat the criticism during his meeting with CEOs.

“The president will detail the Republican obstruction that got us to this point, with the GOP refusing to do the right thing in fulfilling its bipartisan responsibility to tackle the debt limit,” the White House said. “The President will also reiterate the cost of any delay – with every day of Republican obstruction and political games increasing the risk that even a narrowly avoided default will result in more costs for middle-class families.”

Republicans want Democrats to tackle the debt limit through a special budget process known as reconciliation that only requires a 50-vote majority and bypasses the need for GOP support.

It likely appeals to Minor Senate Leader Mitch McConnell, R-Ky., Who hopes to consolidate and expand Republican seats in the 2022 midterm election. debt, McConnell may shield the caucus from major challengers in the hopes of labeling incumbents as reckless spending.

“I implore them once again not to play Russian roulette with the US economy,” McConnell said at a press conference on Tuesday. “They have to do it, they have the time to do it and the sooner they do it the better, to make sure the markets and the American people know that, as usual, the US government will never do. fault.”

When asked how forcing budget reconciliation to raise the debt ceiling is easier than Republicans not filibustering and allowing the same 50-vote majority vote, McConnell said he couldn’t be sure that no member of his caucus would object to unanimous consent.

“It would require getting the consent of every Republican to lower the threshold to 51. I can’t imagine that happening,” he said. “And the reason that wouldn’t happen is that we’ve been emphasizing for the past two months that they should be doing it. And that’s the way to do the job.”

If Republicans maintain their threat, Democrats could ultimately be forced to include a debt ceiling increase in a reconciliation bill.

Democrats are already trying to raise billions of dollars in climate and anti-poverty spending through a reconciliation bill and are likely to create a second such bill to push through an increase in the limit before the deadline for the October 18.

Democrats may not like this option because reconciliation forces them to increase the limit instead of suspending it. Suspensions allow the government to issue new debts for a certain period of time rather than capping them at a certain dollar amount.

Tying Democrats to a huge dollar figure – the product of spending and tax cuts approved by both sides – could look bad in the 2022 midterm election.