Congress urged to hike debt limit above $12T

Six of Washington’s biggest business lobbies are urging lawmakers to boost the nation’s debt limit above $12.1 trillion as the economy confronts historic mountains of red ink.

The associations said in a letter on Thursday that it is “critical to ensuring global investors’ confidence in the creditworthiness of the United States, that Congress approve the administration’s request for a higher debt limit.”

{mosads}The letter was sent to Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.). The associations behind the letter are the Business Roundtable, The Financial Services Forum, The Financial Services Roundtable, National Association of Homebuilders, National Association of Manufacturers and U.S. Chamber of Commerce.

The letter puts the business lobbies at odds with House and Senate Republicans who have criticized Democrats for pursuing policies that lead to great deficits. The 2009 deficit is expected to hit $1.6 trillion.

The $700 billion financial rescue package passed in October and the $787 billion fiscal stimulus package have contributed to higher deficits, though eroding tax revenues and the overall recession — which began in December 2007 — have also played a major role.

The House earlier this year took action to raise the debt limit to $13 trillion.

Treasury Secretary Timothy Geithner said that without a boost the U.S. government could nearly default in mid-October, when the nation’s debt is expected to exceed the limit.

Still, the business lobbies said that long-term deficits and debt must be reduced.

“We wish to emphasize that we share the secretary’s view that the current level of federal debt is unsustainable, and that the trend of large annual budget deficits must be reversed if the nation’s long-term economic security is to be ensured,” the associations wrote.