White House Warns of 'Shock Waves' Across Globe if U.S. Defaults on Debt

The White House warned of "shock waves" being sent across the globe if the United States defaults on its national debt—days ahead of the Oct. 18 deadline.

If the borrowing limit isn't extended, the White House Council of Economic Advisers cautioned in a new report that it could set off a series of financial crises that the U.S. may not be able to handle.

"A default would send shock waves through global financial markets and would likely cause credit markets worldwide to freeze up and stock markets to plunge," the report said. "Employers around the world would likely have to begin laying off workers."

The report, first obtained by The New York Times, warned that a potential recession could be even worse than the 2008 financial crisis, as many countries are still struggling with the COVID-19 pandemic.

For more reporting from the Associated Press, see below.

Debt Ceiling Vote
Senate Majority Leader Chuck Schumer will try again on Wednesday to advance a debt-ceiling suspension bill that Republicans have vowed to block via the filibuster. Above, a view of the U.S. Capitol at dawn on Wednesday morning Oct. 6, 2021 in Washington, DC. Drew Angerer/Getty Images

President Joe Biden is escalating his campaign to get Congress to lift the federal debt limit, hosting business leaders at the White House Wednesday.

The moves come amid indications Democrats may change Senate filibuster rules to get around Republican opposition.

Biden will host a number of CEOs — including the heads of banks like Citi, JP Morgan Chase and Bank of America — to underscore the severe ramifications if the government runs out of money to cover its bills.

Congress has just days to act before the Oct. 18 deadline when the Treasury Department has warned it will run short of funds to handle the nation's already accrued debt load.

The Senate, meanwhile, is scheduled to vote Wednesday on whether to take up a bill to suspend the debt limit, but Republicans are again expected to block it.

To get around the GOP standoff, Biden indicated in off-the-cuff comments Tuesday Democrats are weighing a procedural change.

"It's a real possibility," Biden told reporters outside the White House.

Getting rid of the filibuster rule would lower the typical 60-vote threshold for passage to 50. In the split 50-50 Senate, Vice President Kamala Harris can break a tie, allowing Democrats to push past Republicans.

The topic was broached during a private Democratic Senate lunch session Tuesday as senators were growing exasperated with Republican Leader Mitch McConnell's refusal to allow a simple vote on the debt limit. Instead, McConnell is forcing Democrats to undertake what they view as a cumbersome process taking days, if not weeks, that will eat into their agenda.

With Republicans putting up hurdles to the vote, Democratic senators have been discussing a range of options — including a carve-out to the chamber's filibuster rules. But invoking a filibuster rules change seems unlikely, in part because all Democratic senators would need to be on board.

At his weekly press conference, Senate Majority Leader Chuck Schumer, D-N.Y., did not embrace — or reject — the idea of changing the filibuster for this one specific issue.

Instead, Schumer simply repeated what he, Biden and others have said — that Republicans should " get out of the way" and allow Democrats to pass the measure that's already been approved and sent over from the House.

"The best way to get this done is for Republicans to just get out of the way," Schumer said. He said the burden to stand aside is on McConnell's shoulders.

McConnell, though, wants to force Democrats to use the process he favors, which gives Republicans ample time to remind voters about the unpopular vote.

"They've had plenty of time to execute the debt ceiling increase," McConnell said about the Democrats. "They need to do this --- and the sooner they get about it, the better."

Once a routine matter, raising the debt limit has become politically treacherous over the past decade or more, used by Republicans, in particular, to rail against government spending and the rising debt load, now at $28 trillion.

The fact is, both parties have contributed to the debt and the nation has run a deficit most years for decades.

The filibuster has been up for debate all year, as Biden and his allies consider ways to work around GOP opposition to much of his agenda.

Biden has not backed earlier calls to end the filibuster for other topics — namely voting law changes. But Tuesday's comments could signal a new phase.

At least one Democrat, Sen. Joe Manchin, D-W.Va., sounded resistant Tuesday. He and Sen. Kyrsten Sinema, D-Ariz., have raised objections to ending the filibuster on other topics this year.

Joe Biden National Debt
President Joe Biden is escalating his efforts to get Congress to agree to raising the national debt ceiling limit. Above, Biden delivers remarks on his "Build Back Better" agenda during a visit to the International Union Of Operating Engineers Local 324, Tuesday, Oct. 5, 2021, in Howell, Mich. Evan Vucci/AP Photo

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