President Biden on Wednesday tried to ramp up pressure on Republicans to raise the debt ceiling, hosting banking and financial industry leaders who warned that even a delay in increasing the government’s borrowing limit could cause economic chaos.
“The path Republicans offer would take us right to the brink and cause irreparable economic damage,” Mr. Biden said, calling their position “hypocritical and a little bit disgraceful.”
Citigroup CEO Jane Fraser said defaulting “is going to cause lasting damage to the credibility of the United States with investors and in financial markets around the world.”
“The ramifications are not limited to the markets,” she said. “It’s already beginning to cause some damage in the economy. It will hurt consumers. It will hurt small businesses.”
Republicans have pushed back, saying a higher borrowing limit would only encourage Mr. Biden and congressional Democrats to increase government spending.
If Congress doesn’t raise the debt limit by Oct. 18 — the date the nation runs out of money to pay its bills — the U.S. could default for the first time in history. That would cause economic havoc, the Treasury Department and economists say.
Mr. Biden urged Republicans not to block a procedural vote in the Senate on Wednesday on a House-passed bill to suspend the nation’s debt limit until December 2022. Republicans have threatened to block the measure, saying Democrats should act alone to escalate the debt limit.
“We’ll take the heat,” Mr. Biden said. “Let us do it. Let the Democrats vote to raise the debt limit without obstruction or any further delays.”
The White House meeting, which had a mix of virtual and in-person guests, included JPMorgan Chase CEO Jamie Dimon, NASDAQ chief Adena Friedman, Raytheon head Greg Hayes, Ms. Fraser, Intel executive Pat Gelsinger, and AARP chief Jo Ann Jenkins.
Treasury Secretary Janet Yellen, White House senior adviser Cedric Richmond, and Secretary of Commerce Gina Raimondo also attended.
The U.S. has 12 days to raise the cap on the maximum amount of money the government can borrow to pay its bills. Those bills cover previous government spending — including funding social programs, national debt, and service members’ salaries — but not future costs.
If the debt limit is not suspended or increased by Oct. 18, the U.S. could default on its debt for the first time in history. The financial leaders said that could trigger economic calamity.
A near-default could result in higher interest rates on auto and home loans as well as credit cards, they said.
The meeting Wednesday was another opportunity for Mr. Biden to escalate pressure on Republicans to back down from their threat to filibuster a bill proposed via regular Senate procedure to raise the debt limit.
Mr. Biden has upped his criticism of Republicans, torching them in a White House speech Monday.
Republicans want Democrats to address the debt limit through a special process known as reconciliation, which would only require a 50-vote majority and circumvent the need for GOP support.
Senate Minority Leader Mitch McConnell, Kentucky Republican, is pushing reconciliation to avoid having Republicans vote for a debt-ceiling increase, thus protecting vulnerable GOP lawmakers from primary challengers labeling them as careless spenders.
Democrats have argued that there isn’t enough time to act via reconciliation because it’s a much longer process. Mr. Biden and the Democrats, instead, are asking Republicans to help them raise the debt limit by not objecting to it.
Mr. Biden earlier this week told reporters he couldn’t guarantee the debt ceiling would be raised.
“No I can’t — that’s up to Mitch McConnell. … I can’t believe that that would be the end result, because the consequences are so dire. I don’t believe that, but can I guarantee it? If I could, I would, but I can’t,” he said.
Mr. Biden also floated the possibility of Senate Democrats allowing for a one-time tweak to Senate filibuster rules to address the debt ceiling, but it’s unclear if centrist Democrats would go along with that proposal. Sen. Joe Manchin III of West Virginia said Wednesday he wouldn’t support such a move.