WASHINGTON (AP) — President Joe Biden enlisted top business leaders Wednesday to push for immediately suspending the federal debt limit, saying the approaching Oct. 18 deadlines creates the risk of a historic default that would be like a “meteor” that could crush the economy and financial markets.
At a White House event, the president shamed Republican senators for threatening to filibuster any suspension of the $28.4 trillion cap on the government’s borrowing authority. He leaned into the credibility of corporate America — a group that has traditionally been aligned with the GOP on tax and regulatory issues — to drive home his point as the heads of Citi, JP Morgan Chase and Nasdaq gathered in person and virtually to say the debt limit must be lifted.
“It’s not right and it’s dangerous,” Biden said of the resistance by Senate Republicans. “So let’s end this mess and vote today.”
His moves come amid talk that Democrats may try to change Senate filibuster rules to get around Republicans. But Sen. Joe Manchin, D-W.V., reiterated his opposition to such a change Wednesday, likely taking it off the table for Democrats.
Business leaders echoed Biden’s points about needing to end the stalemate as soon as possible, though they sidestepped the partisan tensions in doing so. Each portrayed the debt limit as an avoidable crisis.
“We just can’t wait to the last minute to resolve this,” said Jane Fraser, CEO of the bank Citi. “We are, simply put, playing with fire right now, and our country has suffered so greatly over the last few years. The human and the economic cost of the pandemic has been wrenching, and we don’t need a catastrophe of our own making.”
The financial markets have been yet to fully register the drama in Washington, though there are signs that they are getting jittery, said Adena Friedman, CEO of the Nasdaq stock exchange.
“We are starting to experience elevated volatility in the markets, which can be partially attributed to the uncertainty that’s been introduced” by the delay in suspending the debt limit, Friedman told the president.
Ahead of the meeting, the White House warned that if the borrowing limit isn’t extended, it could set of an international financial crises the United States might not be able to manage.
“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. “Employers around the world would likely have to begin laying off workers.”
The recession that could be triggered could be worse than the 2008 financial crisis because it would come as many nations are still struggling with the COVID-19 pandemic, the report said. It was first obtained by The New York Times.
Congress has just days to act before the Oct. 18 deadline when the Treasury Department has warned it would quickly run short of funds to handle the nation’s already accrued debt load.
The Senate, meanwhile, is scheduled to vote Wednesday on whether to take up a bill to suspend the debt limit, but Republicans are again expected to block it. To get around the GOP standoff, Biden indicated in off-the-cuff comments Tuesday Democrats are weighing a change to Senate rules.
“It’s a real possibility,” Biden told reporters outside the White House.
But Manchin, who has for months resisted pressure from liberal activists to change the filibuster so that Democrats can advance legislation on other issues such as voting rights, appeared unmoved.
“I think I’ve been very clear,” Manchin told reporters. “Nothing changes.” He implored Senate Majority Leader Chuck Schumer and GOP leader Mitch McConnell to work together to resolve the impasse.
Getting rid of the filibuster rule would lower the typical 60-vote threshold for passage to 50. In the split 50-50 Senate, Vice President Kamala Harris can break a tie, allowing Democrats to push past Republicans. But to succeed in changing the rules, all Democratic senators would need to be on board.
The topic was broached during a private Democratic Senate lunch session Tuesday as senators were growing exasperated with Republican Leader Mitch McConnell’s refusal to allow a simple vote on the debt limit. Instead, McConnell is forcing Democrats to undertake what they view as a cumbersome process taking days, if not weeks, that will eat into their separate agenda.
At his weekly press conference, Senate Majority Leader Chuck Schumer, D-N.Y., did not embrace — or reject — the idea of changing the filibuster for this one specific issue.
Instead, Schumer simply repeated what he, Biden and others have said — that Republicans should “ get out of the way” and allow Democrats to pass the debt measure that’s already been approved and sent over from the House. He said the burden is on McConnell’s shoulders.
McConnell, though, wants to force Democrats to use the process he favors, which gives Republicans ample time to remind voters about the unpopular vote. He sought to frame the Democrats as flailing, while insisting they play by his rules.
“These are the leadership skills of people who spent two-and-a-half months doing nothing, and then complain they’re short on time,” McConnell said Wednesday on the Senate floor.
Once a routine matter, raising the debt limit has become politically treacherous over the past decade or more, used by Republicans, in particular, to rail against government spending and the rising debt load.
Both parties have contributed to the debt, and the nation has run a deficit most years for decades.
The filibuster has been up for debate all year, as Biden and his allies consider ways to work around GOP opposition to much of his agenda.
Biden has not backed earlier calls to end the filibuster for other topics — namely voting law changes. But Tuesday’s comments could signal a new phase.