Chief executives from major financial institutions met with US President Barack Obama on Wednesday and warned of “adverse” consequences if government agencies remain closed and if lawmakers failed to raise the US debt ceiling by the middle of this month.
Congressional Republicans and the White House are in a stalemate over government funding, which has forced the first government shutdown in 17 years.
Republicans, seeking to stop Obama’s signature health care act, have tied spending bills for the fiscal year that started on Tuesday to defunding or delaying the law, a course rejected by the president and his fellow Democrats.
Photo: Bloomberg
The two sides are also at odds about an Oct. 17 deadline to raise the US borrowing limit.
Goldman Sachs chief executive Lloyd Blankfein, while stressing that the business leaders who met with Obama represented diverse political views, implicitly criticized Republicans for using their opposition to the healthcare law as a weapon that could lead to a US default.
“You can litigate these policy issues. You can re-litigate these policy issues in a political forum, but they shouldn’t use the threat of causing the US to fail on its ... obligations to repay on its debt as a cudgel,” Blankfein said.
While the government closure has already had repercussions from frustrated tourists turned away from national parks to canceled stops on Obama’s Asia trip, the deadline for raising the nation’s debt limit poses a much graver risk.
If Congress fails to raise the US$16.7 trillion borrowing cap, the US would go into default, likely triggering financial market shockwaves around the world.
“There’s no debate that the seriousness of the US not paying its debts ... is the most serious thing we have, and we witnessed that in August ’11 and you saw the ramifications: a slowdown in the economy,” Bank of America chief executive Brian Moynihan said.
The US came close to default during a similar political crisis in 2011. That standoff prompted a first-ever downgrade of the US’ credit rating.
Conservative Republicans have signaled they will take the same tactic on the debt limit this year as they did on government funding by seeking to dismantle or put off the health care law. The president has refused to negotiate over raising the debt limit. Business leaders made clear the financial world wanted to avoid the risk of the government not paying its bills.
“There is precedent for a government shutdown. There’s no precedent for default. We’re the most important economy in the world. We’re the reserve currency of the world,” Blankfein said.
Business leaders wanted Washington to understand “the long-term consequences of a shutdown ... certainly the consequences of a debt ceiling [not being raised], and we all agree that those are extremely adverse,” he said.
Meanwhile, United Technologies Corp says it may furlough more than 5,000 workers if the US government shutdown continues into next month.
The company said on Wednesday that its Sikorsky division, which makes Black Hawk helicopters, would be hit first. It expects nearly 2,000 employees, including those employed at facilities in Connecticut, Florida and Alabama, will be furloughed on Monday.
The Hartford, Connecticut-based manufacturer said it would halt some defense manufacturing because government inspectors themselves have been furloughed. That leaves it without the necessary federal approvals to make military products.
If the shutdown continues through next week, the furloughs would extend to its Pratt & Whitney and UTC Aerospace Systems division, bringing the total number of employees on hold up to 4,000. That number could exceed 5,000 if the shutdown stretches into next month.
United Technologies employs about 218,300. Of its annual revenue of US$57.7 billion in 2012, US$10.1 billion came from the US government.
“This is what happens when House [of Representatives] Republicans decide that political gamesmanship is more important than people’s jobs,” Connecticut Governor Dannel Malloy, a Democrat, said. “It’s unconscionable that so many working families would be unfairly put in this situation.”
Members of Connecticut’s Democratic Congressional delegation also called for House Republicans to end the budget impasse.
“These wounds are tragically self-inflicted and dramatize the cumulative and increasing destructive economic effects of the shutdown,” Senator Richard Blumenthal said.
US Representative Rosa DeLauro, whose district includes Sikorsky’s headquarters, said: “The political games must end to keep these hardworking men and women on the job, prevent further pain for working families and end the damage it is inflicting on our economy.”
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”