More than 140 leaders of the biggest US companies, including Goldman Sachs, Pfizer and KKR, have urged the White House and congressional leaders to strike a deal to raise the debt ceiling and avoid a “potentially devastating scenario”.
In an open letter to President Joe Biden and the Republican and Democratic leaders from both the House and Senate on Tuesday, executives from a wide range of leading businesses and investment firms warned a failure to raise the debt ceiling could have “disastrous consequences” for the US economy.
“We write to emphasise the potentially disastrous consequences of a failure by the federal government to meet its obligations,” the signatories wrote. “Absent a resolution, the government is likely to run out of money as soon as June 1. Action to end the pending debt crisis is necessary now.”
The letter was organised by the Partnership for New York City, a group co-chaired by Albert Bourla, chair and chief executive of Pfizer, and Rob Speyer, president and chief executive of Tishman Speyer, the real estate group. It was signed by executives representing broad swaths of corporate America from companies including airline JetBlue, glasses retailer Warby Parker and media group Condé Nast.
The letter came just hours before Biden was set to meet the four top members of Congress — Republicans Kevin McCarthy and Mitch McConnell and Democrats Chuck Schumer and Hakeem Jeffries — to try and make progress on a potential deal to raise the debt ceiling and avert default.
The White House is pushing for an agreement ahead of the president’s previously scheduled trip to Japan for the G7 summit.
John Kirby, a spokesperson for the White House National Security Council, said on Tuesday that Biden would fly to Japan on Wednesday as planned, but was “re-evaluating” the rest of his trip, which included planned visits to Papua New Guinea and Australia, in light of the debt ceiling crisis.
Congress bears responsibility for lifting the federal government’s borrowing limit, but Republicans and Democrats remain at odds about the path forward. Republicans have sought to tie a higher debt ceiling to strict budget cuts, while Democrats want the borrowing limit to be raised without condition.
The White House began formal talks with congressional leaders last week in an effort to reach a deal before the Treasury runs out of money and is unable to meet its obligations. Janet Yellen, the Treasury secretary, has said the so-called x-date could come as soon as June 1.
Speaking at a banking industry event earlier on Tuesday, Yellen said the debt ceiling debate would have “significant implications” for US businesses, as well as the “broader domestic and global economy”.
“In my assessment — and that of economists across the board — a US default would generate an economic and financial catastrophe,” she said.
People familiar with the negotiations said at the weekend that a bipartisan deal was beginning to take shape, with any potential agreement focused on a cap on federal spending for several years. A possible deal might also include reforms to the permitting process for big projects, and new work requirements for those claiming welfare benefits, they said.
But Republican leaders have struck a more bearish tone in public in recent days and insisted the two sides remain “far apart”.
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