US business leaders’ biggest fear is a catastrophic debt default, according to a White House economic adviser.

America’s Business Leaders Fear Government Debt Default

What’s the Biggest Concern for American Business Leaders?

According to Lael Brainard, director of the White House National Economic Council, the biggest concern for American business leaders is not inflation or recession, but the looming threat of a “catastrophic” government debt default. Brainard told CBS’ “Face the Nation” that the country’s top business leaders have expressed their concern about the failure of lawmakers on Capitol Hill to avert a default of the nation’s debt.

What’s the Current Situation?

Talks about raising the U.S. government’s $31.4 trillion debt ceiling have made little progress in Washington. Biden and the Democrats continue to insist on a “clean” bill to lift the borrowing limit with no preconditions while House Speaker Kevin McCarthy (R-Calif.) and the Republicans have put forward a proposal that pairs lifting the cap by $1.5 trillion with $4.5 trillion in spending cuts.

What Are the Consequences of a Default?

A default would lead to higher borrowing costs for cars, mortgages, small businesses, and even the U.S. government. Various types of loans would become more expensive, and Wall Street has been growing increasingly nervous amid the debt ceiling standoff. Citigroup CEO Jane Fraser said that the negotiations on raising the ceiling are “more worrying” than previous episodes. JPMorgan Chase CEO Jamie Dimon said the bank is convening weekly meetings to prepare for what could be a major event that shakes markets.

What’s the Current State of the Economy?

Worries about the debt ceiling standoff come amid ongoing concerns about inflation and recession. The probability that the country will enter a recession within the next year has risen to 68.2 percent, according to the New York Fed, which is the highest level since 1982. A recent poll showed that most Americans believe that the country is headed for a recession—or has already fallen into one.

What’s the Solution?

While Biden has said he’s “absolutely certain” that the country will avert a default, time is running out to find a fix. It’s crucial for lawmakers to come to an agreement to prevent a catastrophic government debt default.