Policy

K Street Ups Pressure for Congress to Raise Debt Limit

“We’d like this to be resolved quickly”

Treasury Secretary Steven Mnuchin has urged Congress to address the debt limit soon, but lawmakers have not yet set a schedule, prompting concern among business and financial services groups. (Bill Clark/CQ Roll Call file photo)

Wall Street and K Street haven’t hit the panic button just yet, but lobbyists for financial services and business groups are increasing their pressure on lawmakers to swiftly extend the debt limit and fund the government without drama.

Their main focus is on the debt limit, which the Trump administration has asked Congress to increase by this fall. Without an increase — or suspension — lawmakers would jeopardize the nation’s ability to pay its bills. Even just debating the debt limit can cause global stock market losses, and an actual breach of the nation’s borrowing authority carries potentially catastrophic consequences.

“We’d like this to be resolved quickly,” said Rob Nichols, president of the American Bankers Association and a former Treasury official during the George W. Bush administration. “The whole brinksmanship around the debt ceiling rattles the markets and is counterproductive.”

Breaching the debt limit, Nichols added, would be “absolutely unfathomable,” jeopardizing the value of the dollar, which is a favored global currency.

Robert Bixby, executive director of the budget-focused group Concord Coalition, noted that his organization’s message to lawmakers is: Don’t make it into a crisis.

Still, lawmakers have used the debt ceiling as a bargaining chip in negotiations before, including in the fall of 2013 during a partial government shutdown that led to warnings from the three major credit-rating agencies. And although they’ve indicated it is a priority, lawmakers haven’t offered a concrete timeline for addressing the matter.

The Treasury Department has been using extraordinary measures to pay the nation’s bills since the debt limit extension expired on March 15.

House Majority Leader Kevin McCarthy said Friday that his most up-to-date information was that those measures would run out in October. The California Republican did not elaborate on whether his chamber planned to address the matter before its planned August recess, as Treasury Secretary Steven Mnuchin and White House budget director Mick Mulvaney have urged.

“We’ve been here before, and the thoughtful heads have prevailed. And so we’ll be monitoring this very, very closely and will mobilize and organize as needed,” Nichols said.

Business and ideological interest groups say they are also monitoring congressional debate to fund the government when the new fiscal year begins Oct. 1. Though lawmakers have held hearings and some markups on the fiscal 2018 appropriations bills, they are unlikely to finish their work on time.

While a government shutdown carries its own economic consequences, especially in the nation’s capital, it is less worrisome to Wall Street and big business interests than the debt limit debate.

“To me, I don’t think it’s a good leverage point because it’s a trigger that can’t be pulled or should never be pulled,” Bixby said. “If you want to shut down the government over appropriations, that’s one thing. It doesn’t look good, but needlessly endangering the nation’s credit worthiness is really irresponsible.”

Bixby said he’d like to see Senate Majority Leader Mitch McConnell, who announced his chamber would delay its August recess by two weeks, use the additional time in session to explain the debt limit to the nation’s citizens.

McConnell, a Kentucky Republican, has pledged to extend the debt limit and said last week: “Ideally, we would deal with the debt ceiling before the August recess.” And business interests are making it clear to congressional leaders that they shouldn’t leave the debt limit discussions in limbo.

“We’ve certainly been talking to folks specifically about the debt limit and the need to get it done with no drama, no threat of default,” said Neil Bradley, senior vice president and chief policy officer at the U.S. Chamber of Commerce, and a former high-level House GOP leadership aide.

Bradley and others working on the issue point out that when lawmakers extend the debt limit, they are allowing the Treasury Department to pay its existing bills and are not approving new spending.

“These are obligations that have been incurred, and the last thing we need in the economy is a self-inflicted wound,” Bradley said.

Kellie Mejdrich and Jennifer Shutt contributed to this report.

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