One of President Joe Biden’s top economic advisors has admitted that American business leaders are becoming increasingly fearful that the federal government will default on the U.S. national debt.
Lael Brainard, director of the White House National Economic Council, said Sunday that U.S. business leaders’ chief concern is the looming threat of a “catastrophic” debt default rather than inflation or recession.
On Sunday, Brainard told CBS’s “Face the Nation” that the country’s top business leaders have told her that the default is their biggest concern.
However, Brainard insists that lawmakers on Capitol Hill would be to blame for a failure to avert a default on the nation’s debt, rather than the Biden administration.
Brainard served as vice chair of the Federal Reserve before being appointed by Biden to lead the White House economic advisory panel.
Meanwhile, discussions about raising the massive U.S. $31.4 trillion debt ceiling have made little progress in Washington D.C.
Biden and the Democrats continue to insist on a “clean” bill to lift the borrowing limit with no preconditions.
But House Speaker Kevin McCarthy (R-CA) and the Republicans have put forward a proposal that pairs lifting the cap by $1.5 trillion with $4.5 trillion in spending cuts.
“When I talk to CEOs, to business leaders around the country, they tell me that things are actually going very well,” said Brainard.
“But their biggest concern is that Congress might fail to prevent default and that would be catastrophic.
“It would lead to higher borrowing costs for cars, for mortgages, for small businesses, even for the U.S. government,” she said, echoing concerns raised by other Biden administration officials that a default would lead borrowing costs to surge and be a major headwind for the economy.
Last week, Rohit Chopra, the director of the Consumer Financial Protection Bureau (CFPB), told CNN that various types of loans would, in the event of a default, become more expensive.
“It’s a big worry,” Chopra told the Biden-friendly outlet.
“Every family should be concerned.”
Wall Street, too, has been growing increasingly nervous amid the debt ceiling standoff.
Citigroup CEO Jane Fraser said that the negotiations on raising the ceiling are “more worrying” than previous episodes.
JPMorgan Chase CEO Jamie Dimon also warned the bank is convening weekly meetings to prepare for what could be a major event that shakes markets.
“The closer you get to it, you will have panic,” Dimon told Bloomberg TV last week.
“Markets will get volatile, maybe the stock market will go down, the Treasury markets will have their own problems.”
Despite Biden stating that he’s “absolutely certain” that the country will avert a default, time is running out to find a fix.
Worries about the debt ceiling standoff come amid ongoing concerns about inflation and recession.
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