Even former GOP treasury secretaries reportedly tried to get Mitch McConnell to help avoid a debt default. He refused.

Mitch McConnell
Senate Minority Leader Mitch McConnell. Alex Wong/Getty Images
  • Former Treasury secretaries Henry Paulson and Steve Mnuchin met with Mitch McConnell on the debt ceiling.
  • They failed to persuade him to help Democrats raise the ceiling and avoid a debt default.
  • Pressure is mounting on Democrats to figure out a solution as the government’s money is likely to run out in October.
  • See more stories on Insider’s business page.

Treasury Secretary Janet Yellen has repeatedly warned Congress of the dangers of failing to raise the debt limit before the US government runs out of money, prompting former Republican Treasury secretaries to step in and echo Yellen’s concerns – to no avail.

The Washington Post reported on Wednesday that former GOP Treasury secretaries Henry Paulson and Steve Mnuchin met with Senate Minority Leader Mitch McConnell to attempt to resolve the debt ceiling standoff between Democrats and Republicans, according to people familiar with the conversations. Prior to the meetings, McConnell had been vocal about his refusal to help Democrats raise the limit on the amount of money the government can borrow, and despite attempts from Paulson and Mnuchin, the Senate Minority Leader’s stance did not change.

The consequences of a federal default on debt it owes for money already spent could be a loss of six million jobs from the American economy and $US15 ($AU21) trillion in US household wealth, nearly double the unemployment rate to 9%, according to an analysis released Tuesday by Moody’s Analytics.

According to the Post, both Paulson, who worked closely with McConnell in 2008 to address the economic recession, and Mnuchin expressed their concerns about the dangers of default, but both secretaries told President Joe Biden’s administration following the meetings that McConnell still believed Democrats had to go at it alone in raising the debt ceiling.

Insider reported on Monday that after Democratic leadership announced the House would be voting on a bill that included both government funding and a debt-ceiling suspension, McConnell immediately struck the bill down, saying Republicans “will not support legislation that raises the debt limit.”

“Democrats do not need our help,” he said.

Even though the House passed the bill on Tuesday night on a party-line vote, it is almost certain to tank in the Senate given McConnell’s pledge to torpedo the measure.

Yellen told Congress earlier this month that the government’s money would likely run out in October because of financial uncertainty caused by the pandemic, placing pressure on Democrats to find a way to avoid a default given Republicans’ refusal to help, citing the Democrats’ $US3.5 ($AU5) trillion social-spending bill as “irresponsible spending.”

But Speaker of the House Nancy Pelosi continues to insist a debt ceiling raise should be bipartisan.

“The debt limit is a shared responsibility, and I urge Congress to come together, in that spirit, on a bipartisan basis as it has in the past to protect the full faith and credit of the United States,” Pelosi wrote in a Sunday letter.