By Alexander Bolton - 07/12/11 03:38 PM EDT
The nation’s biggest business associations warned President Obama and members of Congress Tuesday that failure to avert a debt default would jack up operational costs as well as mortgages, auto loans, credit card rates and student loans.
“A default would risk both disarray in those markets and a host of unintended consequences,” the groups wrote.
The U.S. Chamber of Commerce, the National Association for Manufacturers, Business Roundtable and Financial Services Forum signed the letter.
The business groups, which often side with the Republican Party in policy fights, urged the president and congressional leaders to agree on a comprehensive deficit-reduction plan, but notably did not urge policymakers to take tax increases or the elimination of special corporate tax breaks off the negotiating table.
“Our political leaders must agree to a plan to substantially reduce our long-term budget deficits with a goal of at least stabilizing our nation’s debt as a percentage of GDP — which will entail difficult choices,” they wrote. “The resulting plan must be long-term, predictable and binding.”
Senate Democratic leaders have pressed business leaders to pressure Republicans about the economic consequences of a default. Republican lawmakers have promised to block legislation to increase the national debt ceiling unless Democrats agree to larger spending cuts and entitlement reforms.
Business leaders on Tuesday called on both Democrats and Republicans to ratchet down their political rhetoric and strike a deal.
“Now is the time for our political leaders to put aside partisan differences and act in the nation’s best interests,” the groups said.
U.S. Chamber CEO Thomas Donohue warned: “An unprecedented default on the nation’s bills would have dire consequences for our economy, our markets, and Main Street Americans.”
John Engler, president of the Business Roundtable, said: “The business community in large numbers is saying to our leaders in Washington, ‘Do your job.’ ”
Engler said failure to raise the debt limit would “strike an immediate and serious blow to any economic recovery.”