“Our Republican friends have to stop playing Russian roulette with the American economy,” Biden stressed during a virtual meeting with businessmen at the White House.
The president warned of “irreparable economic damage” if the United States reaches its debt limit, something that according to the Treasury Department will occur on October 18, unless Congress acts beforehand to allow them to issue more debt.
Treasury Secretary Janet Yellen explained at the same meeting that once that date has passed, the public coffers will have “very little cash, which will run out quickly,” and the United States “will probably face a financial crisis.”
Citibank, JP Morgan Chase and Bank of America participate
The virtual meeting was attended by the executive directors of Citibank, JP Morgan Chase and Bank of America; as well as stockbroker Nasdaq, multinational consulting services company Deloitte, microprocessor maker Intel, aerospace and military manufacturer Raytheon Technologies, and the AARP 50+ association.
“Defaulting on debt obligations would cause lasting damage to the credibility of the United States with respect to its investors and financial markets around the world,” Citibank CEO Jane Fraser warned during the session.
His JP Morgan Chase counterpart, Jamie Dimon, warned that a US default could lead to “complete catastrophe for the global economy”; while the president of Nasdaq, Adena Friedman, explained that “volatility” is already beginning to be detected in the markets.
The meeting took place shortly before the Senate carried out a first vote on the bill that the Lower House approved last week to suspend the debt ceiling.
Difficult voting
That Senate vote was expected to fail, because it takes 60 votes to go through, Democrats control only 50, and Republicans have refused to back the suspension of the debt ceiling proposed by Biden’s party.
The Republican opposition has proposed that the Democrats try to raise the debt ceiling only with votes from that party, through a legislative mechanism called “reconciliation”, which allows exceptional approval of projects with a simple majority.
That process is complex and could take about two weeks to resolve, according to experts on the Senate’s operation, so it would hardly be concluded before October 18, the deadline set by Yellen.
Democrats fear that if the Senate does not move this week towards a suspension of the debt limit, the financial markets will suffer and it will reach a situation similar to that of 2011, when the United States was on the verge of incurring suspension of payments and Standard & Poor’s lowered the country’s solvency score.