Business leaders anxious about upcoming debt-ceiling discussions.

Business Leaders Warn Against Defaulting on U.S. Debt

High-Stakes Meeting Between President Biden and Congressional Leaders

As the U.S. faces the possibility of defaulting on its obligations as soon as June 1, U.S. business executives are urging both parties to reach an agreement. The Business Roundtable, an organization of chief executives of major U.S. corporations that advocate for pro-business policies, issued a stern warning, stating that the cost of a default or even the possibility of one is too high.

The Consequences of Defaulting on U.S. Debt

A default would deliver a severe blow to the economy, leading to widespread job losses, decimated retirement savings, and higher borrowing costs for families, businesses, and the government. Failing to raise the debt limit would also threaten the U.S. dollar’s central role in the global financial system to the benefit of China.

Urging for Substantive Negotiations

The Business Roundtable urged both the White House and congressional leaders to commit to substantive negotiations on an agreement that can pass the House and Senate. The group supports one in four American jobs and almost a quarter of the country’s gross domestic product, according to its website.

The Cost of Default is Too High

“The cost of a default, or even the threat of a default, is simply too high,” said Business Roundtable CEO Joshua Bolten. The U.S. Chamber of Commerce issued a similar warning last week, noting that default on the federal government’s debt “would be catastrophic for the U.S. economy.”

The Importance of Paying Bills

“The U.S. economy and global financial system are all underpinned by the idea that the U.S. government—unlike others around the world—always pays its bills. Investments in U.S. debt are considered ‘risk-free,’ which means the federal government pays less to borrow money,” the group stated.

Defaulting would mean that the U.S. government no longer always pays its bills. Treasurys would no longer be risk-free. Interest rates for the government and everyone else would rise, leading to a catastrophic impact on the U.S. economy. It is crucial for both parties to reach an agreement to avoid such a scenario.

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