The US should not be “playing games” with the debt ceiling, the JP Morgan chief executive, Jamie Dimon, warned warring US political factions on Thursday as a heated row over the federal borrowing limit reached a crisis point.
“We should never question the creditworthiness of the US government. That is sacrosanct and it should never happen,” Dimon said on Thursday in an interview on CNBC. “This is not something we should be playing games with at all.”
Dimon’s comments came as the US treasury department announced later Thursday it would take steps to keep paying the federal government’s bills as the US hit its $31.4tn debt limit as expected.
In a letter addressed to the Republican House speaker, Kevin McCarthy, the treasury secretary, Janet Yellen, said the department will suspend new investments in the civil service retirement and disability fund, as well as the postal service retiree health benefits fund until June.
Yellen warned that moves were subject to “considerable uncertainty” if Congress does not pass a bill to increase the borrowing limit. Last week, she had sought to head off an impasse over the US’s borrowing that if breached could begin to seize up debt repayments and send shock waves throughout the US and global economies.
“Failure to meet the government’s obligations would cause irreparable harm to the US economy, the livelihoods of all Americans and global financial stability,” Yellen told Congress.
She said that the Biden administration would try to keep the country under that debt cap and able to finance its operations as long as possible by using “extraordinary measures” that involves shifting money and suspending investments in savings plans for government workers.
In theory that could give lawmakers until June to come up with a solution, but Yellen also warned that the US treasury “is not currently able to provide an estimate of how long extraordinary measures will enable us to continue to pay the government’s obligations”.
Political wrangling over US treasury debt, which has doubled in a decade, is a traditional battlefield for political parties. Since 1960, politicians have moved to raise, extend or revise the debt limit 78 times.
The White House maintains that the ceiling should be increased without conditions and will not negotiate on the issue. Republicans are urging a “debt prioritization” plan that would seek to avert default.
“We’re not going to default on the debt. We have the ability to manage servicing and paying our interest. But we similarly should not blindly increase the debt ceiling,” Representative Chip Roy, a leading conservative Republican, told Reuters.
But Dimon, regarded as America’s most powerful and most forthright banker, warned against playing political football with the issue.
“Of course Democrats will blame the Republicans and Republicans will blame the Democrats,” Dimon told CNBC. “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.”