On the same day that Treasury Secretary Jack Lew urged Democrats to stand firm in demanding that Republicans allow a “clean” increase in the limit on federal borrowing, a coalition of business groups on Thursday banded together calling on Congress to “raise the federal debt limit without delay.”
Signed by the U.S. Chamber of Commerce, the American Bankers Association, the American Insurance Association and others, the letter said, “When Congress last debated this matter in the fall of 2013, markets clearly signaled the potential negative affects (sic) through increased interest rates and weakened investor demand for U.S. assets.”
The letter continued, “We urge you to again take the necessary steps to preserve our nation's financial standing in the world and help ensure that the American economy continues on its current path toward restored prosperity by eliminating the uncertainty as to whether or not we will incur an historic default and raising the debt ceiling.”
The letter, while addressed to “Members of Congress” is clearly directed at the GOP, whose radical right wing members have been threatening to delay a debt ceiling increase. There appears to be little appetite among Republican Party leaders for another debt limit showdown. The last time Republicans decided to engineer a confrontation over fiscal issues it resulted in the government shutdown last October, which was disastrous for the party’s public image.
However, Friday morning Washington Post reporter Robert Costa reported that there was still a hard core of House Republicans who remained determined to extract some sort of concession from Democrats on the debt ceiling.
Costa said that the group appears to be coalescing around elimination of the “risk corridors” in Obamacare. The risk corridors are a mechanism built into the law that limits both profits and losses for insurers participating in health insurance exchanges, and have been persistently characterized as a “bailout” by Republicans – a description experts familiar with the programs’ structure reject as false.
According to the Treasury Department, the nation will hit the debt limit on February 8, but will be able to avoid the need to borrow for several weeks through the use of the so-called “extraordinary measures,” which, in an age of recurrent debt limit battles, have actually become quite ordinary.
The Treasury’s current estimate of when the country would begin defaulting on its debts is the end of February, though it warns that the unpredictable nature of tax season, when the government suddenly faces billions of income tax refund payments, makes accurate prediction difficult.
The full list of groups that signed the letter to Congress is: the American Bankers Association, the American Insurance Association, the U.S. Chamber of Commerce, the Consumer Bankers Association, the Financial Services Forum, the Financial Services Roundtable, the Independent Community Bankers of America, the Investment Company Institute, and the Securities Industry and Financial Markets Association.
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