An ‘Avoidable Crisis’: GOP Leaders, Business Groups and Top Economists Demand Republicans Stop Playing Games With Debt Ceiling

September 22, 2021

From the Speaker’s Press Office:

One of President George W. Bush’s Treasury Secretaries compared lawmakers who refused to raise the debt ceiling to “terrorists.”  Former Speaker John Boehner once said holding the debt ceiling hostage is “insanity.”

Just two years ago, Minority Leader McConnell said “America can't default.  That would be a disaster.”  Even Minority Leader McCarthy once warned Republican hardliners about the consequences of defaulting on our debt.

That’s why Democrats put country over party and helped President Trump and a Republican-controlled Congress raise the debt ceiling before and after the Republican Tax Scam added $2 trillion to the debt.

Now, as Minority Leaders McCarthy and McConnell welcome a disaster they both know is coming, Republican luminaries, former Treasury Secretaries, business groups, and top economists are joining the growing chorus of Americans demanding that they stop putting politics over the health of the U.S. economy.

Hank Paulson and Steven Mnuchin, Treasury Secretaries for Presidents Bush and Trump

Paulson met with McConnell in his office in the U.S. Capitol last week and discussed the debt limit standoff, two people familiar with the exchange said. Paulson primarily listened to McConnell’s views on the matter as the Senate GOP leader made clear he was not bluffing about Democrats having to raise the debt limit without Republican support. Paulson expressed in the meeting a high degree of concern about the dangers and likelihood of a federal default and its implications for the global economy, the people said. Paulson worked closely with McConnell and other lawmakers in 2008 to address the financial crisis.

Mnuchin called McConnell the week of Sept. 6 amid intensifying fears about the debt limit standoff, two other people familiar with the matter said. Mnuchin and McConnell discussed the legislative mechanics of how the debt limit would be lifted, as well as the difficult negotiations with Democrats over the debt ceiling under Trump in 2018. Mnuchin made clear his concerns about the consequences of default. (Washington Post)

A Bipartisan Group of Six Former Treasury Secretaries

Six former U.S. Treasury secretaries urged congressional leaders to raise the federal debt limit without delay, saying that a default would cause "serious economic and national security harm" and that delay would also be detrimental.

"Even a short-lived default could threaten economic growth. It creates the risk of roiling markets, and of sapping economic confidence, and it would prevent Americans from receiving vital services," the six former secretaries said in the letter, released by Treasury. "It would be very damaging to undermine trust in the full faith and credit of the United States, and this damage would be hard to repair."

Those signing were Democrats Jacob Lew, Timothy Geithner, Lawrence Summers, Robert Rubin and Michael Blumenthal. Republican former secretary Henry Paulson also signed. (Reuters)

The U.S. Chamber of Commerce

The debt ceiling battle on Capitol Hill is pitting corporate America against congressional Republicans in a test for business groups that have historically aligned with GOP lawmakers on economic issues.

Senate Republican leaders are digging in on their opposition to raising or suspending the debt limit, prompting sharp warnings from lobbying groups that represent some of the biggest U.S. corporations.

The United States of America defaulting on its obligations is not an option; we are counting on Congress to take the necessary steps to address the debt limit,” said Neil Bradley, executive vice president and chief policy officer at the U.S. Chamber of Commerce, the nation’s largest corporate lobbying group. (The Hill)

Business Roundtable

The Business Roundtable, which represents the CEOs of some of the nation’s largest companies, separately sounded the alarm that a default would saddle the federal government and private companies with significantly higher borrowing costs.

“Failure to lift the U.S. federal debt limit to meet U.S. obligations would produce an otherwise avoidable crisis and pose unacceptable risk to the nation’s economic growth, job creation and financial markets,” Business Roundtable CEO Joshua Bolten and Walmart CEO Doug McMillon wrote in a letter to congressional leaders.

Republican opposition to raising the debt limit underscores the divide between GOP lawmakers and corporate America that has only grown in recent years. (The Hill)

Moody’s Analytics

Mark Zandi, chief economist at Moody’s Analytics, found that a prolonged impasse over the debt ceiling would cost the U.S. economy up to 6 million jobs, wipe out as much as $15 trillion in household wealth, and send the unemployment rate surging to roughly 9 percent from around 5 percent.

Lawmakers in both parties agree that the debt ceiling must be raised to avoid economic calamity, but their standoff over how to do so has intensified. Despite increasing the national debt by close to $8 trillion under President Trump, Republicans have been adamant that they will refuse to help Democrats increase the debt ceiling in opposition to President Biden’s spending plans. The Department of Treasury has said it will exhaust its “extraordinary measures” to pay the U.S. obligations sometime in October, giving lawmakers little time to act to head off calamity. (Washington Post)