United States President Joe Biden is meeting the leaders of major US companies as he seeks to build support in Congress to raise the country’s debt limit, a move top US officials say is needed to avoid a potential recession.
Biden is scheduled to meet at the White House on Wednesday with the heads of large US banks Citigroup, JP Morgan Chase and Bank of America, along with the CEOs of major associations, the AARP, Realtors, and the Nasdaq stock exchange.
“Our markets are rattled. America’s savings are on the line. The American people – your savings, your pocketbook – are directly impacted by this,” Biden said in remarks at the start of the meeting.
“It doesn’t have to be this way. My Republican friends need to stop playing Russian roulette with the US economy.”
The president, who is struggling to win congressional approval of his agenda, is calling on Republicans to allow a bill drafted by Democrats that would suspend the US debt limit to pass.
Failure to lift the US debt ceiling would rattle financial markets worldwide and could trigger a global recession, US officials have warned. “We are steering into a catastrophe,” US Treasury Secretary Janet Yellen said.
“In America, we have always kept a basic promise. We pay our debts on time, without exception,” Senator Chuck Schumer, the Democratic majority leader of the Senate, said on Wednesday.
“It’s long been a key to our economic success and our standing in global markets across the world,” said Schumer, who has orchestrated a showdown with Republicans in the Senate later on Wednesday.
Republicans in that chamber, objecting to Democratic spending and tax plans, are using procedural rules known as the filibuster to block a bill that would suspend the legal limit on the issuance of US debt.
Democrats, who hold 50 seats in the evenly divided Senate, would need 10 Republicans to vote along with them to allow the bill to come up for a vote.
“The majority has known for three months that show votes like this would go nowhere,” Senate Republican leader Mitch McConnell said on Wednesday. Democrats are “playing petty politics” and have “failed to govern”, McConnell said.
“They want to turn their failure into everybody else’s crisis,” he added.
Yellen has said the US government would run out of cash by October 18 if the debt ceiling is not increased. That means the US would be unable to pay Social Security benefits to the elderly or interest on existing debt.
“A default would send shock waves through global financial markets and would likely cause credit markets worldwide to freeze up and stock markets to plunge,” the White House Council of Economic Advisers said in a new report.
The Bipartisan Policy Center on Wednesday forecast that unemployment benefits due October 20 could be delayed and federal salaries for civilian employees due October 29 could be pushed back, as well. Medicare payments to doctors also could be delayed.
Nevertheless, bond rating firm Moody’s Investors Service said on Tuesday it expected Washington will raise the debt limit.
Democrats have other options to secure an increase in the debt ceiling.
One route that Schumer has called risky and complicated would involve amending the budget and passing a debt ceiling increase on only Democratic votes.
That could take about two weeks to accomplish, using the October 18 deadline set by Yellen. McConnell signalled on Wednesday that Republicans would allow the budget procedure to proceed more quickly.
“To protect the American people from a near-term Democrat-created crisis, we will also allow Democrats to use normal procedures to pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels into December,” McConnell said in a statement.
Another option that Biden said on Tuesday is “real possibility” would be for Democrats to change Senate rules to take away the filibuster and allow the debt ceiling increase to pass.
Democrats have been discussing whether to end the filibuster in this session of Congress in order to overcome Republican opposition on voting rights.
Senate rules generally require 60 votes to end debate on legislation and allow a vote on passage, but there is an exception for the annual budget.
Congress last raised the debt limit in 2019 under former President Donald Trump.