‘Shame on us’: How businesses brought the debt limit mess onto themselves

September 29, 2013

On Friday, we noted that CEOs of major American companies are not a little exasperated at what's going on in Washington. Some of them, though, recognize that they were part of the problem to begin with. World Fuel Services chairman Paul Stebbins -- a Georgetown government major who now runs a company ranked 74 on the Fortune 100 -- didn't need much prompting to describe how things went wrong, how corporate guys are withholding money from PACs that aren't part of the solution, and why they'd rather pay more taxes to make the uncertainty go away.

World Fuel Services' Paul Stebbins is trying to get Washington to care. (C-SPAN)
World Fuel Services' Paul Stebbins is trying to get Washington to care. (C-SPAN)

Lydia DePillis: So you were involved with Fix the Debt from the very early stages. Did anything come out of the first round of alarm-raising?

Paul Stebbins: Let's start with the basic fact that business was part of the problem. In August of 2011, I was meeting with the Business Roundtable in D.C., and most business guys were running around the world being busy running their corporations and not paying a lot of attention in a general way. The idea was, much as you may not like Washington, eventually they'll get in a room and make a decision, and you may or may not like it, but things will function. That was the case up until the August of 2011. And when 2011 hit and the President and the Speaker of the House were not able to come to an agreement, and we basically threatened the full faith and credit of the United States, the business community freaked out. Because the enormity of that crisis was so profound, we just could not believe that things could possibly be that bad.

I'll tell you, I just showed up to a dinner in Washington and I was sitting next to Saxby Chambliss, Mark Warner, Mark Udall, Alice Rivlin, Lindsey Graham, Bob Corker, Kay Hagan, Jeanne Shaheen, Olympia Snowe, Susan Collins, and they're all saying, 'we're in real trouble. This thing is really, really bad and we don't have a way out of the box.' So we engage, we raise a lot of money, and the most interesting thing that came out of it -- the business world, it's not unlike Congress, getting 150 senior business people to coalesce around anything is quite extraordinary in its own right. So it elevated out of the realm of the provincial business interests into a larger sense of citizenship.

We have a higher duty of care to engage this issue. It is grossly reckless to watch the long term business trajectory of the U.S. to be at such risk. And we are part of the pathology that got us here. We've all had our K Street lobbyists who are part of the problem. You've got the classic narrative: Progressives say, 'fat cat CEOs want to throw grandma into the snow, and all their special tax interests.' And then you've got the Club for Growth that thinks we sold them out.

The business community is fundamentally pragmatic. There's a sense of, 'can't we get in a room and just fix this thing.' Now, the problem with that is that CEOs are kind of naive. You come to Washington, you think you've got all this great data -- debt to GDP ratio, and what the interests rates will be, $12 trillion in net debt, Medicare's bankrupt in 13 years, Social Security's gone in 20, okay, we get all that, so why can't we fix it?

The reality is, you go over to Capitol Hill and you say to some guy, 'why can't you guys get in a rom and fix this thing?' And they nod at you very politely and say 'that was very nice of you to come, thank you for your input, you can go home now.' Because their reality is, the Club for Growth is telling every single Republican member of Congress 'we're going to raise $5 million to beat you in a primary if you even mention the word revenue.' And AARP is telling every Democratic member of Congress, 'if you even mention the word entitlement reforms, which is all that throw grandma into the snow stuff, we're going to raise $5 million and beat you in a primary.' And what makes a politician's life worth living? Reelection. So the CEOs had a bit of naiveté about the political realities of what makes it so hard for a lot of well-intentioned people to actually get to yes.

The thing that got the business community catalyzed is you cannot have this reckless, nihilistic, fundamentalist, ideologically driven governance. That ultimately, advocacy can't trump governance.

So we did a lot of work to bring to bear pressure, and to also provide political cover for those who were really trying to do the right thing. And I could name a lot of people on the Hill who are trying to do the right thing. But then you get into a political cycle which was very difficult during the presidential campaign, because it's all about what side you're on, and don't you dare mention this, don't you dare mention that.

And by the way, immigration, education, energy, infrastructure, frozen. Nothing's happening. So when the US has the opportunity to be growing at 3 percent-plus GDP, we're dithering around at 1.8 percent, an I'll tell you what, at 2 percent GDP, large corporations aren't going to hire, because you're just treading water. And what a shame, because you've got Europe is a basket case, they've got 10 years of disaster ahead of them. China's a mess, financially. And and the US could be blowing the doors off it, but the worst enemy is us. This is self-imposed. So shame on us.

I'm an entrepreneur, I started my company in my 20s, and it's now a Fortune 74 company with $40 billion in sales. I'm not just a Harvard MBA guy. I'm the American dream, and it never occurred to me that my board of directors would be talking about risk analysis, and the U.S. government would be one of those risks.

LD: But wait, was there ever really a happy time when everything worked smoothly in Washington? 

PS: When I worked in Congress, for a guy named Tim Wirth, back then, if you were a young freshman Congressman, and you picked up the sword and argued with the Speaker of the House, your parking space would be in Anacostia, you'll be on the dog catcher committee, you'd you would get no money from the party, so you better sit down, shut up, and listen, because you don't know anything, you're low on the totem pole. Now today, John Boehner, if he tries to punish one of these firebrands coming out of the conservative wing of his caucus, they wear it as a badge of honor. Look, I had the chairman of the Energy and Commerce committee, Fred Upton, tell me that he got into an argument with one of these young guys on his committee about the defunding of Affordable Care Act. Well the argument was 'look, Energy and Commerce had 50 hearings on that bill. Like it or not, it passed. The president signed it. The Supreme Court upheld it. So you don't get to pick a bill you don't like and link it to the entire financial well being of the United States.' Well the response is, 'I didn't come here to govern.' Well what did you come here for? What did you come here for? To burn it to the ground?

So when you talk about getting back to the fife and drum and getting back to American roots, are you kidding me? This is so antithetical to everything that America has been about.

So there's a sense in the business community that this is just appalling. You don't get to default on the United States. I've got 70 offices in 26 countries. I've got CEOs and government leaders around the world who take me aside privately and say 'what on earth are you doing over there? If you can't get this right, how the hell are we going to get this right?'

And all this stuff about China and India and Brazil? Baloney. We are still 24 percent of the world's GDP and we are the flywheel that drives all those other economies. And we are out to lunch.

LD: So now having realized your naivete, are you going to play the same game as the Club for Growth and AARP and fund candidates who agree with you?

PS: We made a decision which was, how do you maintain any integrity as Fix the Debt? Nobody took it seriously at the beginning. Nobody gave a damn. You are no threat. But when the CEOs actually got together and then it became a broader national organization, when the thing began to actually have an impact, boy, then the knives came out. So Paul Krugman in the New York Times: 'you fat cat CEOs, this is just a big lie, we'll grow our way out of this, you're trying to destroy the country and protect your tax exemptions.' And then on the other side, we had people come out and say, 'you fat cat CEOs, you're trying to destroy the Republican ethic.' It was unbelievable. So we never contemplated that we would take on these massive interest groups that would say 'you think you're going to stick your head up and play in this game, we'll knock you into next week.'

[More explanation of how crazy the situation is]

LD: But you didn't quite answer my question. Will Fix the Debt start trying to back or destroy candidates in primaries? 

Why wouldn't Fix the Debt run the biggest Political Action Committee and only fund people who talked about it in the middle, and not in the extreme? Let's say you took that approach. There's a lot of practical reality why that's difficult to do. I also think it would undermine the very basic tenet of Fix the Debt, which is we are not in the professional advocacy business. We are trying to build a national conversation around the important things that speak to the future of the country. And we are trying to encourage leadership. And yes we understand you have pressure from these advocacy groups, but we'd like to provide cover for you, and not punish you for doing the right thing. So there's no way we're going to become the Koch Brothers overnight. That's just not what this is about.

So it's very frustrating, but one of the things the  business people are starting to do is cut off the PACs, saying 'well, sorry, we're not giving you any money. Unless you've got something you can say about the debt, we're not giving you any money.' That's the way you fight back. You start withholding.

Any by the way, you educate your employees. You do town hall meetings, and explain to everybody in your company what this means. And I don't care who you vote for. But as a citizen, please engage in this conversation. Please call whoever you vote for and tell them this is important.

LD: You mentioned corporate tax reform. But there, we're in this dance where the Republicans and Democrats can't agree on whether it should raise revenue. Are you really okay with getting rid of all your tax exemptions and paying more?

PS: Absolutely. Absolutely. All these guys have been public saying 'I don't give a damn what my ultimate taxes are, fix it.' I have been in meetings where very prominent names you would know very well in the business domain have taken very loud and vociferous exception with Chairman Dave Camp and Senator Baucus saying 'just fix the damn thing, because your lack of doing anything is far more dangerous than any exemption I could possibly save.' Please take the exemptions, because it's the absence of knowing what to do. Business is about long term planning, and the cost of capital is a huge factor in your competitive ability. And the cost of capital's going to be related to the long term fiscal viability of the United States. With $1.1 trillion in debt, I'm competing with the government for the capital, and that's not good. So there is a business community that doesn't give a damn about the revenue neutral thing, because we need more revenue! Period. You can't get to the solution. You need to have it. It's a fact.

LD: The town hall idea is interesting. Are you really getting regular people to care about this issue? 

[More about education and outreach]

I go to colleges, I'm going to Central Florida in a couple of weeks, I'm going to sit on a panel and tell everybody in that room, 'tell everybody in your dorm to be out there, and you should be furious at me. You should be livid that we have done this to you.' Talk about Facebook and Twitter. Twitter can start a revolution in Egypt, and we can't get our own debt fixed? Are you kidding me? And unfortunately, it gets misdirected into Occupy Wall Street, which becomes a kitchen sink full of every disgruntled something, as opposed to an intellectual core. You want an intellectual core for Occupy Wall Street? 'Fix this debt. I'm the future of this country, and you've screwed me.'

Are we naive? Do we think this gets done in 10 minutes? No. Am I going to give up because of that? No. Am I more angry than I was a year ago when I first went to that first dinner? You betcha.

LD: You're a constituent of Senator Marco Rubio. Have you gone and told him all this? 

PS: Our group has, and we're very unhappy with Mr. Rubio. I think he has shown a very unfortunate lack of courage and leadership on this issue. And he seems much more interested in his career, namely a run for President at some point, than he is in fixing this kind of an issue, and I find that profoundly disappointing.

As a strategist all my life, I think about root cause. It's not about the debt, per se, it's about what it represents. It's our failure to invest in education, invest in infrastructure, responsible development of energy resources, both renewable and otherwise, all these things are critical. Our failure to get to this means we continue to displace the investments we should be making in our future. And that's criminal. We don't have the right to do that.

Businesses tended to think of Washington as a necessary evil that you just had to deal with. Versus, this is the kind of thing that is putting the experiment of the United States of America at risk, and we can't just sit back and pretend that's not happening. We have to actually get involved, and by the way part of getting involved is acknowledging that our indifference was part of the problem.

That is a very important journey for many of these people. When you go to the CEO Council, look at some of those names. That's amazing. That is amazing. And believe me, there's people who've raised lots of money for conservative Republicans, and people who've raised lots of money for President Obama, but they're on that list for the exact same reason.

I'll tell you a story. Bob Zoellick was in Australia, and the foreign minister took Bob aside and said, 'Don't you realize, America is one debt deal away from being great again.' Think about that. Because the whole world is watching the most important experiment in self-governance in the world, and can you do this. And if you could, can you imagine what signal that would send the world.

This interview has been lightly edited for clarity and length. 

Lydia DePillis is a reporter focusing on labor, business, and housing. She previously worked at The New Republic and the Washington City Paper. She's from Seattle.
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