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Biden, CEOs outline debt limit consequences ahead of looming deadline

The executives warned that even the threat of a default is enough to negatively affect the economy.

WASHINGTON — President Joe Biden met with business leaders Wednesday to warn of the disastrous economic impact on the country and the global economy if the U.S. hits its debt limit for the first time ever.

Shortly after the meeting began, Senate Minority Leader Mitch McConnell, R-Ky., announced that he would support extending the debt limit into December. McConnell's offer would be a short-term fix that would avert the government's Oct. 18 default deadline, but it would set up a similar showdown later this year. Democratic leaders have not said whether they would agree to his offer.

CEOs and other business leaders, who joined Wednesday's meeting both virtually and in person, warned that even the threat of a default is enough to negatively affect the economy, suggesting that the pressure for Congress to take more long-lasting action will remain high.

"From an economic perspective, we need to resolve this issue very quickly. Every day of delay right now comes at an increasing price," said Jane Fraser, the CEO of Citigroup. "We just can't wait until the last minute to resolve this. We are, simply put, playing with fire right now."

Biden called together the group of CEOs and other business leaders from some of the country's largest financial institutions as the White House has tried to ramp up pressure on Senate Republicans to back down from their promise to filibuster a bill that would extend the borrowing limit through December 2022.

"The Senate Republicans' position I find to be not only hypocritical but dangerous and a bit disgraceful, especially as we're crawling our way out of a pandemic," Biden said at the start of the meeting. "Our markets are rattled. America's savings are on the line."

The Treasury Department has said it would be unable to pay the country's bills if the debt limit is not raised or suspended by Oct. 18. Experts have warned that a default would have catastrophic economic impacts.

Biden had urged McConnell for days to drop the filibuster and let Senate Democrats pass the bill on their own. At least 10 Republican votes would be needed to break the filibuster. The House has already passed the bill.

"If they don't want to do the job, just get out of the way," Biden said Wednesday of Republicans, saying their commitment to block the bill was a "cynical, destructive partisan ploy."

Biden asked the CEOs and other business leaders to explain how defaulting would affect everyday life, as well as the global economy.

Nasdaq CEO Adena Friedman said there was already some volatility in the markets because of the uncertainty. Allowing the country to default would lead to higher prices for consumers and delays in payments to federal programs, such as Social Security, and it would hurt retirement accounts, she said.

"Hard-working Americans will ultimately bear the burden," Friedman said.

JPMorgan Chase CEO Jamie Dimon, who was once the chair of the Business Roundtable, an influential lobbying group, warned that the effects of a default could range from a nationwide recession to a "complete catastrophe for the global economy."

"I don't know why anyone would take a chance like that," he said. "This is a time, I think, where we should show American competence, not American incompetence."