Many business leaders don't like the prospect of another nail-biting showdown over the debt ceiling, because they think it would be could very bad for business, the market, and broader economic confidence. But they don't want to take sides, either, and that could be why legislators appear to feel that they don't need to listen to them.
"I was very frustrated when we went to debt ceiling before," says Tom Wilson, a member of the Fix the Debt campaign. "We've got to start talking about this." During December's fiscal cliff debate, the Business Roundtable was reportedly prepared to endorse a proposal that would have made it much harder for Congress to block a debt-ceiling increase.
It's not just the possibility of default that scares businesses: Leaders like Honeywell CEO David Cote say they aren't too keen about the idea that conservatives have proposed of breaching the debt ceiling, then avoiding default by having the Treasury Department prioritize interest payments. "I'm a big believer that anything that makes you potentially look fiscally irresponsible is not a smart thing to do," said Cote, another Fix the Debt member, when asked about the prioritization idea.Â Some Wall Street investors are equally wary of the idea, predicting that markets would be spooked about breaching the debt ceiling even if the government kept its obligations to bondholders.
At first glance, their arguments seem to echo the Democrats who've blasted Republicans for trying to use the debt ceiling as leverage for spending cuts. But the business leaders who've been most vocal about fiscal issuesâ€”including those from the Fix the Debt campaignâ€”say that debt-ceiling brinksmanship is a bipartisan problem.
"I think they're both right. I think the president is right in saying we can't not pay for bills, and Republicans are right in saying you can't borrow money you can't pay back," says AllState's Wilson. As bad as the prospect of default would be, Wilson says the failure to enact major deficit reduction would also be destructive. "The market will perceive stopping paying on government debt negatively. I also think market will perceive lack of progress [on deficit reduction] negatively," he says, stressing the need to avoid default "either today or in 10 years."
Cote similarly believes that both parties need to be reasonable in their demands over the debt ceiling. He believes the vote serves as a useful "annual or 18-month reminder" of the nation's borrowing. He hopes for a deficit reduction package that is "another couple of trillion" more than the $1.5 trillion target that Obama has set. "The thing I don't like is either side trying to hold it hostage, or we will help the country commit financial suicide," says Cote. "You'd like to see a rational discussion."
The approach reflects the unfailingly bipartisan message that the Fix the Debt coalition is trying to send and the long-standing tendency of business groups to hold partisanship at an arm's length. In the lead-up to the 2011 debt ceiling, the Business Roundtable issued a letter pleading for legislators to avoid default. But it also affirmed the Republicans' argument for using the vote as leverage for spending cuts. "The debt ceiling trigger does offer a needed catalyst for serious negotiations on budget discipline but avoiding even a technical default is essential," the group wrote.
But thus far, the business leaders' message that both sides just need to "come together" has failed to result in the two sides, well, coming together. Norm Ornstein, a scholar at the American Enterprise Institute, believes that the business community's relentless bipartisanship is at the heart of their lack of evident influence: "A group that basically says it's everybody's fault gets nowhere," Ornstein says. "By bending over backwards [to be bipartisan] and ignoring reality here, you marginalize yourself and take pressure off from the side that's obdurate here."
That said, the White House is still aggressively trying to court CEOs in the debt-ceiling debate: Honeywell's Cote was among the business leaders on a conference call that the senior White House official held on Monday. But it's unclear what impact the business community will have on the fiscal debate this time around. In fact, it looks like the most politically significant development couldÂ come from within conservative circles themselves, not from bipartisan outsiders, as a growing number of GOP loyalists and allies have voiced criticism and concern about using the debt ceiling as a flashpoint.