Joe Biden & Janet Yellen Meet with Business Leaders on Debt Limit: Transcript October 6

President Joe Biden: (05:17) Hello folks. Please, sit. I want to thank... You can take these off while we're speaking. I want to thank our participants that are here as well as those who are on Zoom. And this is to state the obvious important and important get together. And I'm going to make some brief comments, maybe ask a few questions, and then we'll yield and go down the road here and maybe we can, all of us both virtually as well as in person here, we can hopefully make some progress. I want to thank the secretary of treasury, Secretary Yellen, Commerce Secretary Raimondo, I see her on the screen there, it's good to see you, and the leaders of some of America's most important businesses and institutions, the American Association of Retired Persons, the AARP, Bank of America, Citibank, Deloitte, Intel, JP Morgan, NASDAQ, the National Association of Realtors and [Raytheon 00:06:38] for joining me today to talk about the need to raise the debt limit. We haven't failed to do that since our inception as a country. We need to act. President Joe Biden: (06:48) These leaders know the need to act. The United States pays its bills. It's who we are, it's who we've been, it's who we're going to continue to be, God-willing. That's what's called the full faith and credit, the United States. Let me be clear, raising the debt limit is paying our old debts. It has nothing to do with new spending or what may be coming this year or other years. It has nothing to do with my plans on infrastructure, of building back better, both of which are paid for but they're not even in the queue right now. It's about paying for what we owe and preventing a catastrophic event occurring in our economy. President Joe Biden: (07:28) I'm glad these leaders are here to talk about the real world impact this is going to have on people and on our position in the world. Today's discussion won't be partisan, it shouldn't be. Raising the debt limit is usually bi-partisan. Let me speak for myself here. I want to be clear so the American people understand what's going on. There's a Senate vote today to raise the debt limit. Traditionally, it needs only 50 votes. We were informed by our Republican friends that they had... President Joe Biden: (08:03) ... [inaudible 00:08:00] by our Republican friends that they had to be all Democrat votes, they weren't going to help. Said, okay, we'll provide 50 votes. The definition and the Democrats, we have the votes. The Democrats are willing to step up and stop this economic catastrophe if Senate Republicans will just get out of the way. But our Senate Republican friends are planning to block the vote to raise the debt limit by using the procedural power called the filibuster. To say that in plain English, it means you have to have 60 votes when there's a filibuster, 60 votes, a super majority instead of 50 to get anything done. It's not right and it's dangerous. The reason we have to raise the debt limit is in part because of the policies of the previous administration which incurred nearly $8 trillion in bills in four years, some of which Democrats voted for. More than a quarter of all the debt now outstanding. We had to raise the debt limit three times when Donald Trump was president, and the Republicans moved to raise it each time, and each time the Democrats supported the effort to raise the debt. But now, Republicans won't raise the debt limit despite being responsible for what the debt limit, why it has to be raised, for the bills that are outstanding. They won't raise it enough, then we're going to be defaulting on a debt that would lead to self-inflicted wounds that risk the market tanking and wiping out retirement savings and costing jobs. Defaulting on the debt, which Secretary Yellen said could happen at any day after October the 18th, that's when we run out of money, means that social security benefits will stop, salaries to service members will stop, benefits to veterans will stop and much more. President Joe Biden: (09:54) The failure to raise the debt will undermine the safety of the United States Treasury securities, threaten the reserve status of the dollar as the world currency that the world relies on, downgrade America's credit rating, and result in a rise in interest rates for families, talking about mortgages, auto loans, credit cards. My friends, and they are many of my friends, the Senate Republicans position I find to be not only hypocritical but dangerous and a bit disgraceful, especially as we're crawling our way out of a pandemic that cost America 700,000 lives thus far, and we're still battling it. Our markets are rattled, America's savings are on the line. The American people, your savings, your pocketbook are directly impacted by this stunt. It doesn't have to be this way. My Republican friends need to stop playing Russian roulette with the US economy. If they don't want to do the job, just get out of the way. We'll take the heat, we'll do it. We will do it. Let us do it. President Joe Biden: (11:03) Let the Democrats vote to raise the debt limit without obstruction or any further delays. House Democrats have already passed the bill that would do that, raise the debt limit and keep the government functioning. It's sitting in the United States Senate right now where Democrats with no help from Republicans have the votes today to pass the debt limit. The path Republicans offer would take us right to the brink and cause a reparable economic damage in my view. So let's vote and end this mess today. That's the only way to eliminate the uncertainty and risk that will remain for American families and our economy if we don't. President Joe Biden: (11:44) Over more than 200 years, America's built this hard earned reputation of the strongest, safest, and most secure investment in the world. And that's why the United States is the financial rock the world looks to and trusts. Now in one cynical destructive partisan ploy, just for politics, our Republican friends are teetering on the brink here. They're threatening to boot that all away. Now it's a meteor headed to crash into our economy. We should all want to stop it, stop it immediately. This shouldn't be partisan, and I'm thankful for the leaders who share the urgency on why we need to act and we need to act now. Many of them are here with me. Not next week, now. Look forward to hearing from their perspectives and we'll now get this meeting started with my colleagues permission. President Joe Biden: (12:45) I'd like to start off if I may with a question for Jane Fraser, the CEO of Citi. By the way, congratulations on your award. You run one of the largest banks in America and what impacts are you seeing or do you think you'll see from this obstruction? What does it mean for the small businesses and everyday people if we renege on the debt here? Jane Fraser: (13:11) Thank you, Mr. President, for inviting us all to talk about this critical issue. As a head of the bank, I don't have insight on what the right legislative solution is, but I can tell you that from an economic perspective, we need to resolve this issue very quickly. Every day of delay right now comes at an increasing price as we've begun to see in the markets already, starting last Friday. America simply cannot default on the debt because the US treasury market is the bedrock of our financial system domestically and globally, and defaulting is going to cause lasting damage to the credibility of the United States with investors and in financial markets around the world. But as you say, the ramifications are not limited to the markets. It's already beginning to cause some damage in the economy. It will hurt consumers, it will hurt small businesses, and it's not an exaggeration to say that even small distortions in the treasury market can cost taxpayers tens of billions of dollars over many years. Jane Fraser: (14:21) Consumers can be burdened with higher borrowing costs very quickly, whether they're putting something on a credit card or they're getting a mortgage, and for the small businesses trying to recover from the pandemic, this comes at a very critical time. So we just can't wait to the last minute to resolve this. We are, simply put, playing with fire right now and our country has suffered so greatly over the last two years, the human and the economic cost of the pandemic has been wrenching and we don't need a catastrophe of our own making to undermine the progress that is underway. So we really urge the administration and Congress to do what's necessary to resolve the situation for the good of our economy, for the good of our country. Thank you, Mr. President. President Joe Biden: (15:11) Well, thank you, and you make a very good point that we're, God willing, I think we're just about to begin to turn the corner again on the pandemic. And an awful lot of small businesses, tens of thousands of them, have acquired significant debt. We provided significant relief as well, but it's just an incredibly complicating feature. I'd like now, with her permission, I'd like to ask Adena Friedman, the CEO of NASDAQ, whether she'd be willing to give us her thoughts. And thank you for taking the time, Miss Friedman, to talk to us. Adena Friedman: (15:55) Well, Mr. President, thank you very much for the opportunity to address the current situation. We are starting to experience elevated volatility in the markets, which can be... Speaker 2: (16:03) ... To experience elevated volatility in the markets, which can be partially attributed to the uncertainty that's been introduced by the delay in approving the extension of debt limit. We would expect that a continued delay in extending the debt limit would further destabilize the markets. And when we consider the broader economic cost of the uncertainty, and certainly a possible default, we would, as Jane mentioned, see higher borrowing costs for consumers and small businesses, as well as delays and much needed payments to, to major social programs such as Social Security and Medicare. Speaker 2: (16:33) So when we look at this, these delays, and certainly a default, would mean that hardworking Americans will ultimately bear the burden. So as you mentioned, the extending the debt limit simply allows the payment of obligations that have already been made by the US Government, therefore voting to extend the debt limit is an important bipartisan action to reinforce the full faith and credit of the United States. And we urge that we urge action as quickly as possible. So thank you. President Joe Biden: (16:59) Let me ask you the DEFCON 10 question. If we don't, we default even for a day or two, what do you think the impact on the market will be? Speaker 2: (17:13) I think that we would expect that investors really just don't handle uncertainty well, and I think that investors, and certainly as we know, there are hundreds of millions of investors that are involved in the markets today that have put their hard earned savings into the markets. And we would expect that the markets will react very, very negatively if we actually get to a point of a DEFCON 10 type of situation with the default. President Joe Biden: (17:41) What does that do to people's retirement accounts? Speaker 2: (17:47) Yeah. I think we have to realize that well over half of the adult Americans have money in the stock market either directly or indirectly, and so those savings accounts, those retirement accounts, the pensions, they'll all experience a significant sharp drop in their values, which of course makes them feel less certain about their ability to manage their lives and their savings and plan for retirement. President Joe Biden: (18:11) Well, thank you. I don't mean thank you for the result, but thank you for explaining to people who are watching us how consequential this is. I see our old buddy, Jamie Dimon up there at JP Morgan. Jamie, excuse me for calling you Jamie. Mr. CEO, it's good to see you. Why from your perspective do we need to raise the debt limit immediately before October 18th? Jamie Dimon: (18:46) Mr. President, thank you. You can call me Jamie. That's fine. And appreciate you having us all here, Mr. President. Anyway, there are five quick points I want to make. Number one is really a morality point. We all teach our children that we're supposed to meet our obligations. I don't think the nation should be any different. Number two, we should never even get this close. There are huge economic costs already being born by companies and lawyers trying to figure out what this means if something like this ever happens. Jamie Dimon: (19:14) It's already affecting the stock market, etc. as you heard from some of the folks here. Number three, we should get rid of the debt ceiling. We don't need to have this kind of brinkmanship every couple years. Number four, an actual default, an actual default would be unprecedented. The things we know that it would do are very bad and it could be potentially far worse. The effects would be cascading. So day one would be bad, but the cascading effects in the ensuing weeks could go anywhere from a recession to a complete catastrophe for the global economy. Jamie Dimon: (19:48) And I don't know why anyone would take a chance like that. And number five, America's role in the world is essential. We are the bedrock. The American Treasury is the bedrock. Our credit ability, we're being washed right now by allies and unfortunately our enemies. Our credibility is absolutely essential. Trust in America and the US dollar and the financial system is critical to the world economy and eventually actually world peace. So this is a time I think we should show American competence, not American incompetence. President Joe Biden: (20:19) Well, I'm glad you raised that last point. Because when I got back from the G7 and subsequently with a number of virtual meetings with my colleagues and heads of state, I know Brian Moynihan knows about this as well. We are not only being measured in terms of our strength and our reliability based upon the size of our military and/or the physical strength that we possess, but it's on whether or not we can function. There's a great debate going on and I'm not exaggerating this. All of you deal internationally. President Joe Biden: (20:58) There's a great debate going on whether or not in the 21st century, in the second quarter of the 21st century can democracies function with things moving so rapidly? And I can tell you a couple of the folks I've spent a lot of time with of late, Mr. Putin and Mr. Xi Jinping, they really believe that autocracies are the only way forward because they can act quickly and decisively. It's not a joke. And we're seeing effects of this around the world. And I don't know. It's understandable why the average American wouldn't understand what the consequences of this will be for American security and the willingness of other countries to follow our lead. President Joe Biden: (21:42) We have always led the world, not just by the example of our power, but the power of our example. And that's going to be called in to severe question. I mean, for real, for real and has consequences that are real. Jamie, what does further delay mean for a company like yours and the family you serve, even if we just go on right up to the brink? Jamie Dimon: (22:11) We start on Monday. We're going to start reviewing all our contracts, repo, cloud requirements. There will be huge demands of people selling treasuries, wanting financing to treasuries, interest rates will start going up. It'll get worse as we get close to the brink. And as you said, it'll hurt not big companies, and we don't worry about that. We do worry about that it hurts the average American, and we don't want that. President Joe Biden: (22:36) Well, I thank you. We're going to get to everybody, but I'm going to yield to the director of the Office of Public Engagement, former chairman of the Black Caucus in Congress, Cedric Richmond. Cedric. Cedric Richmond: (22:49) Thank you, Mr. President. I just quickly yield to your great treasury secretary, who is an expert on this for comments on what she thinks the ramifications are and where we're headed. So with that, Secretary Yellen. Secretary Yellen: (23:06) Thank you, Cedric. Thank you, Mr. President. And let me thank the business and community leaders who have joined us here today. I wish we could be meeting to discuss another topic, finding solutions to climate change or how to better invest in the future of our economy, but the urgency of the debt limit situation demands immediate attention. And I want to be clear about my position. First, this is an urgent matter. It must be resolved immediately. Treasury will exhaust its extraordinary measures if Congress has not acted to raise or suspend the debt limit by October 18th. Secretary Yellen: (23:48) After that point, we expect treasury would be left with very limited cash that would be depleted quickly. And as we've seen in the past, and as this group knows, even delaying action can cause harm to business- Secretary Yellen: (24:03) Even delaying action can cause harm to business and consumer confidence, raise borrowing costs, disrupt financial markets and cause a downgrade of the US credit rating. Secretary Yellen: (24:13) Second, let me be clear. This would be a catastrophic outcome and this catastrophe would occur on two dimensions. The first relates to the financial system and macroeconomy. If Congress does not take action to raise the debt limit, Treasury's cash balance will reach an insufficient level to pay the nation's bills and America would default for the first time in history. And default will call into question the full faith and credit of the United States. Our country would likely face a financial crisis causing interest rates to rise quickly and restricting access to credit. Our fragile recovery would be thrown into reverse. We would likely experience a recession. Millions of jobs would be lost and the pain we'd endure will pass the resolution of the crisis. Secretary Yellen: (25:09) The second catastrophe would be born by all the Americans who directly receive any sort of payment from the federal government. Every Social Security beneficiary, every family receiving a Child Tax Credit, every military family waiting for a paycheck, or small business owners receiving a federal loan, they're all at risk. Millions are without sufficient savings to forego an expected check and for these households and businesses, the would be devastating. Secretary Yellen: (25:44) To take one heartbreaking example, millions of seniors who depend on Social Security for their support would have to make awful choices such as deciding whether to pay rent or buy groceries. And the same goes for parents of young kids expecting a Child Tax payment. Hopefully it goes without saying, this is not only bad for people, it's equally devastating for American companies. For decades our country has earned a reputation for being a welcoming and a reliable place to do business. We respect the rule of law. We honor our debts and this reputation has benefited us in many ways, including the ability to keep interest rates low and for the dollar to serve as the world's reserve currency. Secretary Yellen: (26:36) Ultimately these benefits have helped us lead in the world economy and become a more prosperous nation. And yet today we are staring into a catastrophe in which we surrender this hard earned reputation and force the American people and American industry to accept all the pain, the turmoil, and the hardship that comes with default. It's unnecessary and it must be avoided at all costs. Congress must address the debt limit immediately. Thanks. I look forward to continued conversation. Cedric Richmond: (27:16) Thank you, Secretary yelling and Mr. President, as we heard earlier from Jane, about half of adults have money in the stock market either directly or indirectly. And we know that 50 million people rely on their Social Security checks to make ends meet. So I'd now like to turn it over to Jo Ann Jenkins. Jo Ann Jenkins: (27:44) So thank you Mr. President, for the opportunity to speak to the impact of not raising the debt ceiling on our members in particular, and then nearly 65 million people across this country who rely on service and security.