As the U.S. hit its debt limit on Friday, a leading business group urged Congress to act quickly to raise it to avoid damaging the economy.
The Business Roundtable sent a letter to House and Senate leaders Thursday night warning that “urgent action is required” to prevent a potential default as the Treasury Department was set to begin so-called extraordinary measures to extend the nation’s borrowing authority.
“Any default by the federal government on its debts would cause devastating, long-lasting effects for all Americans,” wrote AT&T Inc. Chief Executive Randall Stephenson, the group’s chairman, and United Technologies Corp. Chief Executive Louis R. Chenevert, chairman of the organization’s tax and fiscal policy committee.
“Further, prolonged inaction that takes the government up to the precipice would foster uncertainty, dampen consumer and business confidence, risk higher borrowing costs, and could have immediate consequences on hiring and investment,” they said.
Congress suspended the $16.7 trillion debt limit in October as part of the deal to reopen the federal government after the partial shutdown. The suspension was slated to end Friday.
On Saturday, the debt limit will reset to the current U.S. debt, which is about $17.3 trillion.
At that point, the Treasury Department will begin a series of measures designed to extend its borrowing authority. But Treasury Secretary Jacob J. Lew has warned those moves only will allow borrowing until the end of the month.
The first measure was set to begin at noon EST Friday: a suspension of the sale of state and local government series securities.
This will be the ninth time in the past 20 years that the Treasury Department has suspended the sale of the securities to avoid breaching the debt limit. To buy more time last year after the debt limit was technically hit in May, the department suspended the sale of the securities for five months.
This year’s debt-limit showdown takes place at a time when the federal government is paying out tax refunds, limiting the amount of time extraordinary measures can buy, Lew said.
The Business Roundtable letter comes after other nine other groups, including the U.S. Chamber of Commerce and the American Bankers Association, wrote to lawmakers last month with a similar plea to raise the limit.
Business groups are concerned about the effect on an economy still struggling to recover from the Great Recession. Friday’s disappointing jobs report — the second in a row — highlighted those worries.
The Business Roundtable said it wanted Congress and the White House “to tackle the root causes of America’s unsustainable debt.” But the group said Congress needed to take “deliberate and prompt action” to raise the debt limit and “preserve the full faith and credit of the United States.”
House Republicans are looking for what they say are modest concessions in exchange for voting to raise the debt limit, but President Barack Obama has insisted that he will not negotiate over an increase.
“I think that we’re still looking for the pieces to this puzzle, but listen, we do not want to default on our debt, and we’re not going to default on our debt,” House Speaker John Boehner, R-Ohio, told reporters Thursday.
He emphasized that House Republicans wanted something in exchange for agreeing to raise the limit. But Boehner said it was unclear what would be enough to get many Republicans, who oppose more federal borrowing, to agree to raise the limit.