Jamie Dimon gives stark warning about ‘playing games’ with debt ceiling
Ryan King
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JPMorgan Chase CEO Jamie Dimon implored Congress to put aside their differences and avert a debt ceiling crisis that could ravage the economy.
Republicans have been adamant that increasing the debt limit, which the United States hit Thursday, should be paired with spending cuts, drawing stiff opposition from the Biden administration. Dimon castigated the partisan fighting and plainly insisted the two sides shouldn’t be “playing games.”
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“We should never question the creditworthiness of the United States government. That is sacrosanct. It should never happen,” he told CNBC’s Squawk Box Thursday.
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Dimon underscored that the U.S. financial system is basically “the crux of the financial system of the world,” insinuating that a financial blow to the U.S. would have severe international ramifications.
“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 added.
Dimon also predicted that inflation would remain stubbornly high and that the Federal Reserve is likely to jack up interest rates further in response.
As forecast, the U.S. hit its $31.4 trillion debt limit on Thursday, forcing the federal government to enact “extraordinary measures” to continue making its payments. Given the roughly trillion-dollar annual deficit in the budget Congress approved last year, the government will soon have to prioritize spending if Congress refuses to lift the limit.
This could imperil U.S. funding interest payments on the debt. In the extensive history of fiscal showdowns, the U.S. has never defaulted on its obligations. Republicans have been keen on leveraging any lifting of the debt ceiling to secure concessions from President Joe Biden and the Democrats. Dimon’s remarks echo sentiments from many economists.
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“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,” White House economic adviser Brian Deese told CNN. “Even just the specter that the United States might not honor its obligations does damage to the economy.”
So far, there does not appear to be an end to the standoff in sight, but Senate Minority Leader Mitch McConnell (R-KY) voiced confidence the showdown will not spark a financial crisis.