US officials call on Washington to stop ‘catastrophic’ debt default

More than 140 leaders of the biggest US companies, including Goldman Sachs, Pfizer and KKR, have urged the White House and Congressional leaders to reach a deal to raise the debt ceiling and avoid a “potentially catastrophic scenario”.

In an open letter Tuesday to President Joe Biden and Republican and Democratic leaders of both the House and Senate, executives from a wide range of major businesses and investment firms warned that there could be “disastrous consequences” for failure to raise the debt ceiling. . American economy.

“We write to emphasize the potentially devastating consequences of failure by the federal government to meet its obligations,” the signatories wrote. “In the absence of a resolution, the government is likely to run out of funds by June 1. Action is now necessary to end the pending debt crisis.”

The letter was organized by the Partnership for New York City, a group co-chaired by Albert Bourla, chairman and chief executive officer of Pfizer, and Rob Speer, president and chief executive of real estate group Tishman Speer. It was signed by executives representing wide swaths of corporate America, including airline JetBlue, eyewear retailer Warby Parker and media conglomerate Condé Nast.

The letter came just hours before Biden met with four top members of Congress – Republicans Kevin McCarthy and Mitch McConnell and Democrats Chuck Schumer and Hakeem Jeffries – to try to make progress on a possible deal to raise the debt ceiling and avert default .

Congress is responsible for lifting the federal government’s borrowing limit, but Republicans and Democrats are at loggerheads over the way forward. Republicans have sought to link the higher debt ceiling to stricter budget cuts, while Democrats want the borrowing limit to be raised without conditions.

The White House last week began formal talks with congressional leaders to reach an agreement before the Treasury runs out of money and is unable to meet its obligations. Treasury Secretary Janet Yellen has said the so-called X-date could come on 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 talks said over the weekend that a bipartisan deal was beginning to take shape, with any potential agreement centered on a cap on federal spending for several years. He said a possible deal could also include reforms to the permitting process for large projects and new work requirements for those claiming welfare benefits.

But Republican leaders have publicly struck a more bearish tone in recent days and insisted the two parties “stay away.”