U.S. business leaders Tuesday urged Congress and the White House to reach a deal to raise the federal debt ceiling and reduce the deficit in order to avoid dire economic consequences and set the stage for a stronger recovery.
After spending months quietly lobbying behind the scenes for an increase in the $14.3 trillion debt limit, a coalition of business groups from Wall Street to Main Street publicly called on Republican and Democratic leaders to set aside their differences and work together for the good of the United States.
"Now is the time for our political leaders to act," said a letter to President Barack Obama and every member of Congress that was signed by more than 450 business leaders and groups including the powerful U.S. Chamber of Commerce and a number of Fortune 500 companies.
"It is time to pull together rather than pull apart," the letter said.
The U.S. Treasury has said Congress must raise the debt ceiling, which caps how much the United States can borrow, by Aug. 2 or face an unprecedented default. But Republicans and Democrats, including Obama, have been wrangling over a deal to slash America's budget deficit, which Republicans demand before agreeing to raise the borrowing authority.
The White House has warned that an agreement must be in place by July 22 to give Congress enough time to act.
In their letter, business leaders warned that even a technical default would not only throw financial markets into disarray but also increase the cost of mortgages, auto loans, credit cards and student loans.
"The debt ceiling trigger does offer a needed catalyst for serious negotiations on budget discipline but avoiding even a technical default is essential. This is a risk our country must not take," the letter said.
Up to now, businesses have largely relied on lobbying efforts to persuade members of Congress, especially Republican freshmen in the House of Representatives, to agree to a debt ceiling hike.
But Tuesday, the business community called on political leaders to make the necessary difficult choices for a plan to substantially reduce long-term U.S. deficits and stabilize the national debt as a percentage of gross domestic product.
"The resulting plan must be long-term, predictable and binding. As businesses make plans to invest and hire, we need confidence that, in the absence of a crisis, our government will not reverse course and return to large deficit spending," the letter said.
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