Wall Street to GOP: Don't Mess Up Debt Ceiling Vote
The Wall Street Journal reports:
During a recent series of meetings and fund-raisers, top Wall Street executives and lobbyists have urged Republicans to resolve the debt-ceiling debate quickly or risk turmoil in the bond market.
In the sessions, House Speaker John Boehner (R., Ohio) explained the politics of the vote to investors, telling them Republicans won't approve an increase in how much the U.S. can borrow without a long-term deficit-reduction plan, according to people familiar with his remarks. In turn, the executives said delaying a resolution could unnerve skittish credit markets.
Rep. Spencer Bachus (R., Ala.), chairman of the House Financial Services Committee, said executives he met in New York Sunday and Monday warned of the "negative implications" of failing to extend the debt ceiling. Mr. Bachus said his role as chairman required him to make the point to fellow Republicans that letting the matter drift into the summer could hurt markets.
The U.S.'s borrowing limit, a precise number set by Congress, has become central to Washington's debate over spending and debt. The House GOP has said that it won't vote to raise the limit, currently $14.294 trillion, without a commitment from the Senate and White House to pare spending.
President Barack Obama acknowledged as much in an interview with the Associated Press on Friday. Mr. Boehner is "absolutely right that it's not going to happen without some spending cuts," he said. He also warned that failure to raise the debt limit "could plunge the world economy back into recession."
Top financial executives have also called White House and Treasury, raising similar alarms, administration officials say.
The White House suggested this week a committee of lawmakers be formed to negotiate a deficit-reduction target and ease passage of a debt-limit increase, though it isn't clear if such a body would have enough congressional support to be viable.
The government has said it would reach its borrowing limit on May 16 and risks defaulting on its debt on July 8 without fresh funds to pay interest on existing debt. Some lawmakers think the debate could continue past May 16 without causing too much damage.
The Obama administration has indicated it might take until late June to reach a broader deal. Republicans have an incentive to push the matter as long as possible in order to extract White House concessions.