The debt ceiling battle on Capitol Hill is pitting corporate America against congressional Republicans in a test for business groups that have historically aligned with GOP lawmakers on economic issues.
Senate Republican leaders are digging in on their opposition to raising or suspending the debt limit, prompting sharp warnings from lobbying groups that represent some of the biggest U.S. corporations.
The stakes are high in the standoff between Democrats and Republicans. Defaulting on the debt — or even coming dangerously close to doing so — could undermine the nation’s credit rating and upend the global financial system, posing a major risk to company stock prices and corporate bonds.
“The United States of America defaulting on its obligations is not an option; we are counting on Congress to take the necessary steps to address the debt limit,” said Neil Bradley, executive vice president and chief policy officer at the U.S. Chamber of Commerce, the nation’s largest corporate lobbying group.
House Democrats on Tuesday unveiled a bill to suspend the debt limit until after the 2022 midterm elections. While the measure is expected to pass the House, Senate Minority Leader Mitch McConnell (R-Ky.) is privately whipping his caucus to vote down the measure when it comes to the upper chamber.
Republicans want Democrats to “own” the debt ceiling hike by including it in their $3.5 trillion reconciliation bill, which can pass the 50-50 Senate with a simple majority. But Democrats are insisting on a bipartisan vote to raise the limit, noting that it won’t be included in their reconciliation package, which may not be ready by the time the U.S. nears a default sometime in October. A bipartisan measure would require 60 votes to pass the Senate.
The risky strategy pits Republicans against corporate America, whose leaders are urging Congress to raise or suspend the debt limit as soon as possible given the likely financial turmoil that would ensue.
A coalition of groups representing investment firms and banks, including Morgan Stanley and Bank of America, warned congressional leaders in a letter last week that a default would damage the nation’s credit, make it harder to pay down debt and pummel financial markets that rely on U.S. Treasury bonds.