WASHINGTON – US President Joe Biden on Monday urged House of Representatives Speaker Kevin McCarthy to take the potential for an unprecedented US debt default off the table, warning that it would result in skyrocketing credit card and mortgage rates.
“America is not a deadbeat nation. We have never, ever failed to meet the debt,” Mr Biden told a small business event at the White House.
He said the threat of default by some Republicans in Congress was “totally irresponsible” and that it was essential to take that threat “off the table.”
“It would lead to higher interest rates, higher credit card rates, mortgage rates would skyrocket,” Mr Biden said.
“The most immediate thing we can do is ensure continued reliance of our economy and the financial system. The most important thing we have to do in that regard is to make sure the threat by the speaker of the House to default on the national debt is off the table,” he added.
The US House of Representatives on Wednesday narrowly passed a Bill to raise the government’s US$31.4 trillion (S$42 trillion) debt ceiling that includes sweeping spending cuts over the next decade.
While the Bill is not expected to win Senate approval, Mr McCarthy hopes to lure Mr Biden into negotiations on cutting spending, even as the White House and congressional Democrats insist on a debt limit increase with no strings attached.
The US Treasury Department could run out of ways to pay its bills in a matter of weeks if Congress fails to act, and financial markets are already flashing warning signs. A 2011 standoff led to a downgrade of the government’s credit rating, which pushed borrowing costs higher and hammered investments.
Mr McCarthy, speaking during a visit to Jerusalem, said he was concerned about the debt ceiling, but that the only way to solve the problem was for Mr Biden to negotiate.
“We are going to have to come together to solve it,” he said. “I’m looking forward to the president changing his mind and negotiating with us.”