JPMorgan Chase CEO Jamie Dimon on Thursday urged Congress not to risk a debt ceiling crisis, warning that it would wreak havoc on the global economy.
His comments come as the federal government begins taking “extraordinary measures” to prevent the U.S. from defaulting on its debt. When those efforts to free up cash run out in around six months, Congress will need to raise the debt limit or risk an economic catastrophe.
“We should never question the creditworthiness of the United States government. That is sacrosanct. It should never happen,” Dimon said on CNBC’s “Squawk Box” on Thursday.
House Republicans under Speaker Kevin McCarthy (R-Calif.) insist they won’t vote to raise the debt limit unless it is coupled with spending cuts. But Democrats and the White House say they will not go along with spending reductions, setting up a collision course.
“Of course, Democrats will blame the Republicans and Republicans will blame the Democrats. I don’t care who blames who. Even questioning it is the wrong thing to do. That is just a part of the financial structure of the world. This is not something you should be playing games with at all,” Dimon said.
A default could upend the global economy, as the U.S. dollar is the world’s dominant reserve currency and companies and governments around the world rely on U.S. treasury bonds. Americans would likely face significantly higher interest rates and government programs would lapse.
White House economic adviser Brian Deese said Thursday that the U.S. will suffer economic damage simply by getting close to the debt limit deadline, noting that a top rating agency downgraded the federal government’s credit rating after the 2011 debt ceiling fight that nearly resulted in a default.
“The bedrock of U.S. economic stability, and frankly global economic stability, is the commitment that the United States honors the obligations that it already made,” Deese said on CNN. “Even just the specter that the United States might not honor its obligations does damage to the economy.”