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McConnell supports debt limit extension as Biden, business leaders urge action

By Jonna Lorenz
1/8
McConnell supports debt limit extension as Biden, business leaders urge action
President Joe Biden participates in a meeting in the Eisenhower Executive Office Building in Washington, D.C., on Wednesday with business leaders about the debt ceiling.  Photo by Samuel Corum/UPI | License Photo

Oct. 6 (UPI) -- Senate Minority Leader Mitch McConnell said Wednesday he would support an extension of the debt limit into December as business leaders joined President Joe Biden in urging action.

Lawmakers have been locked in a partisan standoff over efforts to suspend the debt ceiling before Oct. 18, when officials say the government will begin to default on financial obligations, which is unprecedented.

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"This will moot Democrats' excuses about the time crunch they created and give the unified Democratic government more than enough time to pass standalone debt limit legislation through reconciliation," McConnell said in a statement.

President Joe Biden met on Wednesday with leaders from some of the nation's largest banks and businesses in a bid to form a strategy to raise the U.S. debt ceiling.

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Biden warned that defaulting on the debt would halt Social Security payments, salaries to service members and benefits to veterans, along with undermining the safety of treasury securities and threatening the reserve status of the dollar, leading to a downgrade of America's credit rating and resulting in a rise in interest rates.

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He called the position of Senate Republicans who are blocking efforts to raise the debt ceiling "not only hypocritical but dangerous and a bit disgraceful," noting that the debt limit was raised three times during the Trump administration with support from Democrats. Biden called on Republicans to "stop playing Russian roulette with the U.S. economy."

Among those meeting with Biden are JPMorgan Chase CEO Jamie Dimon, Intel CEO Pat Gelsinger, Nasdaq CEO Adena Friedman, AARP CEO Jo Ann Jenkins and Citi CEO Jane Fraser.

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Treasury Secretary Janet Yellen, Commerce Secretary Gina Raimondo and White House senior adviser Cedric Richmond also attended.

The group discussed efforts to raise or suspend the debt ceiling before Oct. 18.

"I can tell you that from an economic perspective we need to resolve this issue very quickly," Fraser said. "Every day of delay right now comes at an increasing price as we've begun to see in the markets already."

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She said defaulting on the country's financial responsibilities would cause lasting damage to the credibility of the United States with investors.

"We just can't wait until the last minute to resolve this," Fraser said. "We are, simply put, playing with fire right now."

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Friedman said markets are experiencing elevated volatility because of the uncertainty and delays in resolving the issue will further destabilize them.

"Investors really just don't handle uncertainty well," she said.

Dimon said the crisis is a moral issue.

"We all teach our children that we're supposed to meet our obligations," he said. "I don't think the nation should be any different."

He said the country should never get this close to the debt ceiling, which has caused "huge economic costs" for companies. He urged lawmakers to get rid of the debt ceiling to stop this recurring problem.

"An actual default would be unprecedented," Dimon said. "The things we know that it would do are very bad, and it could be potentially far worse. The effects would be cascading. So, Day 1 would be bad, but the cascading effects in the ensuing weeks could go anywhere from a recession to a complete catastrophe for the global economy. I don't know why anyone would take a chance like that."

He said the country's allies and enemies are watching, and the crisis could affect world peace.

Yellen said that even delaying action can cause harm to businesses and consumer confidence and defaulting could throw the fragile economic recovery into reverse.

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"For decades, our country has earned a reputation for being a welcoming and reliable place to do business," Yellen said.

"We are staring into a catastrophe in which we surrender this hard-earned reputation and force the American people and American industry to accept all the pain, the turmoil and the hardship that comes with default," she said. "It's unnecessary, and it must be avoided at all costs. Congress must address the debt limit immediately."

Democrats in Congress have made multiple attempts to suspend the debt ceiling, but they have been blocked by Republicans.

The impasse may push Senate Democrats to alter the chamber's filibuster rules to pass a bill to raise the debt ceiling.

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