The ongoing negotiations between the Biden administration and Republicans in Washington to reach a deal on raising the federal government's debt ceiling has left the nation dangerously close to potentially defaulting on paying its bills, causing the U.S. Chamber of Commerce to sound the alarm that a default would be disastrous for America's economic backbone.
The organization warned this week that if a resolution is not reached by the early June deadline, "the repercussions could be devastating for small businesses," pointing out the high likelihood of a recession, a worsening credit crunch due to surging interest rates, even higher inflation and a weaker dollar in the instance of default.
A closing sign posted in a small business door, Queens, New York. The U.S. Chamber of Commerce warned this week that a U.S. debt default would be "devastating" for American small businesses. ((Photo by: Lindsey Nicholson/UCG/Universal Images Group via Getty Images) / Getty Images)
"It is impossible to overstate the negative consequences that would occur if the United States were to default on its debt," Chamber Executive Vice President Neil Bradley wrote in a post on Tuesday. "We have become more concerned that there could be a first ever default on the federal government's debt because of the short timeframe and the increasing risk of miscalculation."
Treasury Secretary Janet Yellen reiterated Wednesday that default could happen as early as June 1, meaning just days remain for the White House and GOP lawmakers to come to an agreement on raising the debt limit in what has been a prolonged standoff.
US House Speaker Kevin McCarthy, a Republican from California, right, speaks to members of the media alongside Representative Patrick McHenry, a Republican from North Carolina, after a meeting with US President Joe Biden at the White House in Washing (Getty Images)
Republicans, who control the House, have promised to raise the borrowing limit only in exchange for deep spending cuts. President Biden and his fellow Democrats, who control the Senate, prefer a "clean" debt ceiling bill without spending cuts.
Both sides claim default is not an option, but pressure is mounting in the absence of an agreement just one week from the deadline. Once a deal is cut, it will take a day or two to get it in proper legislative form, and then it must move through both the House and Senate before making it to the president's desk.
President Biden, during a meeting with House Speaker Kevin McCarthy (not pictured), in the Oval Office of the White House on May 22, 2023. (Photographer: Yuri Gripas/Abaca/Bloomberg via Getty Images / Getty Images)
That means there isn't much that small businesses can do but urge the White House and lawmakers to strike a deal, according to the Chamber.
The organization is recommending small business owners reach out to their representatives in Congress to stress the importance of reaching an agreement and is warning members to "[make] sure your business is prepared to navigate the changing economic landscape."
FOX Business' Megan Henney and FOX News' Chad Pergram contributed to this report.