Over 140 CEOs sent President Joe Biden and Congressional leaders an open letter on the potential major devastation the economy could face if a debt ceiling agreement isn't reached. Josh Silverman, CEO of Etsy, spoke with Cheddar News to explain his reasoning why he joined in on the letter.

<div class="block">Over 140 CEOs sent President Joe Biden and Congressional leaders an open letter on the potential major devastation the economy could face if a debt ceiling agreement isn&#39;t reached. Josh Silverman, CEO of Etsy, spoke with Cheddar News to explain his reasoning why he joined in on the letter.</div>

Closing Bell

Etsy CEO on the Consequences if Debt Ceiling Agreement Isn't Reached

More than 140 ceos of American companies sent President Biden and leaders of Congress an open letter on the potential major devastation the economy could face if Biden and Congress can't reach an agreement to raise the debt ceiling avoiding a default. I'm joined by one of the chief executives. Now, Josh Silverman, the CEO at sea. Josh, thanks for joining. Thanks for having me. I appreciate it. Why was it important for Etsy to be a part of this open letter to Biden and Congress warning them of the impact of a potential default? Well, with that, see, we represent about six million micro businesses. These are largely businesses of one making things from their home and selling them to about 100 million buyers and over 80% of them are women and uh you know, the consequences of America defaulting on its debt couldn't be more serious for small businesses all around the country. This is not a Washington problem. This isn't one problem. And so we thought it was really important to add our voice to the others so we could speak on behalf of these small businesses. Well, I know certainly wall street applauding the progress that we've seen today that we're still not officially at a deal, but the open letter cited that 2011 was the closest that the US came to defaulting on its debt. What were the repercussions? Etsy's business faced in that scenario in 2011 was a very young business in 2011. We, we're, you know, a much bigger business now, but the repercussions we imagine are first that the cost of capital is gonna go up for everyone and small businesses like Etsy sellers, you know, they've got mortgages to pay, they've got often take out debt in order to fund their business. And so that's going to make it unaffordable for them to fund their business to pay their rent on there. Maybe the shop that they have, the cost of supplies are going to go up and then of course, consumers that are already facing so many struggles with inflation, consumers are going to be really hurt and consumers are going to be able to spend less and what's bad for consumers is bad for small business. So, you know, we think the consequences for the country are just too serious to be played around with. We're really encouraged by the progress that we're hearing from Washington and we think this is a problem that absolutely must get solved. The US has always avoided a default but the concerns still linger out there. The President and House Speaker mccarthy both recently expressing optimism about reaching a deal to avoid default but has Etsy already seen its business impacted amid the risk of default. You know, we across the country, you know, have seen inflation and other issues that are, that are, that are hitting the economy. There's plenty of headwinds hitting consumers. We haven't announced anything or reported anything since our most recent earnings report. But what I can say is that the consequences of not reaching a deal would be serious. And I think long lasting for the United States people need to trust that the United States will pay its bills. We can and should have a conversation around what future spending we're going to make as a country. And that's the job of Congress and the job of the president to come together and talk about what future spending we want to make. But paying our bills for the debt we've already incurred, that's just essential. And people need to trust the fact that the United States will always pay its debts. Josh, specifically for sea, how would a default impact your business? Well, I think a default would be terrible for the US economy. It'd be terrible for small businesses. It would be terrible for consumers. And I think those impacts would be lost long lasting. And if it's terrible for everyone, I think it's fair to include Etsy. And that why would it be terrible because interest rates would rise, the cost of debt would rise, the cost of capital would rise. That means your rents are gonna go up. That means your supply costs are gonna go up. That means consumers who are already struggling with inflation are gonna have a lot more problems with inflation and I think unemployment would rise. So people are going to have a lot less money to spend and things are going to become more, more expensive. The US government is going to become more expensive to fund because the interest rates for debt for the US are going to rise. And that means uh deficits rise. So it's bad. And by the way, you know, trust is, is, is is hard to earn and easy to break. And so losing people's confidence in the US debt this time might have lasting consequences for years to come coming. Certainly at a precarious time, what other actions is Etsy taking to prepare itself for a potential default. You know, we're always being very careful with the investments that we make to make sure we're investing to drive our sellers growth. Um But we're doing it in a very responsible way. How does every dollar we invest go as far as it can to make sure that our sellers are supported. We're bringing them buyers, we're bringing them business so that they can grow their business. And you know, our, our business model, we're fortunate that we don't have things like warehouses and lots of capital outlay. So we can uh we have a capital light business and, and we think that's great. Uh I'm not really here speaking to you because I'm uh speaking on behalf of Etsy shareholders, although I care about them. I'm really concerned about Etsy sellers. All right, Josh Silverman, CEO of Etsy. Josh. Thank you so much.