Why big business failed to stop its worst nightmare in D.C.

For all the talk of how big business is supposed to run Washington, it's been pretty useless in preventing something that's unequivocally bad for business: A government shutdown and all the chaos that comes with it. But it's not for lack of fretting.


Chamber of Commerce fail. (Nicholas Kamm/AFP/Getty Images)

About two years ago, the United States came frighteningly close to defaulting on the national debt, prompting the S&P to downgrade the U.S.'s credit rating. That's a warning sign that America's business community understands. CEOs faced up to the prospect that Washington gridlock had gotten to the point where Congress might actually be a danger to the economy.

"The enormity of that crisis was so profound, we just could not believe that things could possibly be that bad," remembers Paul Stebbins, chairman of World Fuel Services. "We're all clueless, we're out to lunch, and this is scary stuff."

So a group of CEOs got together with some ex-legislators and tried to move Washington in the ways that had always worked for them before. They formed a group, raised some money, hosted some fly-ins and started to make noise about how important it was to address the ballooning national debt though a big, bipartisan deal.

But this outfit, with the very straightforward name Fix the Debt, wasn't supposed to be your typical industry-focused advocacy campaign, or even like legacy umbrella groups like the Chamber of Commerce and the Business Roundtable. By using their credibility to make a grand bargain on taxes and entitlements the country's top economic priority, the idea went, chief executives could provide cover for legislators to disappoint the interest groups that might lose out from such a deal.

"Fix the Debt has arguably accumulated everybody who is anybody in Washington’s wonky, 'let’s get real' set about federal debt and deficits," gushed the Christian Science Monitor after the group's bushy-tailed launch. Former senator Sam Nunn summed up the basic ambition: “The middle of America is going to have to rally and they're going to have to support people who are willing to work together."

But for all of Fix the Debt's efforts, the grand bargain never happened, and Washington is in worse shape than ever. Now, the government is actually shut down — an outcome Republicans and Democrats avoided in 2011 — and there's another debt-ceiling deadline fast approaching. CEOs are left wondering why their voices seem to have gone unheard.

"Each of the permutations leads to a greater sense of disbelief that anything's going to happen, and a sense of fatigue," says Carl Camden, CEO of the temporary staffing firm Kelly Services. "So I see an increasing silence of the broader business community. I'm not certain that anybody's listening."

"It's the first time in memory that the business community has been so openly ignored," vented Committee for Economic Development CEO Steve Odland.

That feeling of neglect speaks to deep changes in the economic and political landscape since the financial crisis. Business leaders, after years of strong-arming legislators to get the small things they wanted, are at a loss for how to deal with the political reality they helped create.

——

Historically, Congress has been a reasonably pliable beast for American business. If you need a specific bit of language inserted into a spending bill, your friendly local representative can probably get that done for you, with the help of a fundraiser or two. Likewise, if an industry want to head off nettlesome regulations, a congressional coalition can usually be raised to oppose them.

Business's Washington presence has been, in recent decades, optimized towards those kinds of requests. There was little thought of the economic dangers from some more fundamental political breakdown.

"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," Stebbins notes.

Congress has been changing in ways that would make it harder for business to push collectively for large, ambitious reforms. Committees were weakened, meaning more big-ticket items are routed through party leadership and become subject to the whims of the election cycle. And earmarks were eliminated, making it more difficult to win votes by offering favors to recalcitrant legislators.

"You can't sit down with members and say, 'We need your vote, tell me what I can do to make this an easier vote for you, are there things that are unrelated to this that are helpful in your district?' " says one business trade group lobbyist who asked to remain anonymous. "That's a killer, in my opinion. All the criticisms of Tom Delay and the old style, that worked."

The next fundamental shift came with the rise of the Tea Party, which abhorred the bailouts of the auto industry and big banks. Their emissaries in Congress bear no affection for corporations that depend on public investments in things like education, research and infrastructure, talking instead about small-business owners. The antipathy is mutual.

"The Tea Party comes in and it isn't a case of being responsible," says Greater Washington Board of Trade Director Jim Dinegar. "They don't want to spend a dime, they want to reduce, reduce, reduce. It's a very effective and destructive third party that doesn't play well with others."

At the same time, big business torpedoed moderates that had backed Obamacare and financial regulatory reforms, helping a band of hard-core free-market conservatives take back the House in 2010.

"It's easy to look back on that and say, 'Wouldn't you rather have an Allen Boyd than Steve Southerland?' " ponders the business trade group lobbyist. "But at the time, you're playing in a much bigger global political environment than you can control. And you're between the devil you know and the devil you don't know."

A contributing factor is that few of America's biggest businesses are purely American anymore, having taken full advantage of free trade and lower labor costs around the world. That has two effects. First, since they've offshored or automated much of their workforces, it's harder to tell a legislator that Washington dysfunction is hurting jobs in their district. And second, their stake in America isn't as large as it used to be: If business conditions deteriorate at home, they can invest more heavily in Brazil or China instead.

All that adds up to a Congress that's much less subject to exhortations from the business community to walk itself back from the brink.

 ——

One strategic reason that business groups haven't made much headway in this latest political conflagration is that even though Republicans have basically abandoned them, they've refused to defect to the Democrats, which might be the fastest way of breaking the deadlock. And urging both sides to just play nice increasingly just looks like wishful thinking.

Part of that stems from a fear of stepping into the middle of a political war. The Business Roundtable said that even though its member CEOs are gravely worried about the effect of Washington gridlock on the economy, they declined to specify what exactly they'd like to see. And even though most will say that the debt ceiling shouldn't be held hostage to the fate of Obamacare, some still sympathize with the hard-right GOP desire to put it off.

"The delaying part, there is actually some merit to it," says Odland, of the Committee on Economic Development. "And I'm actually surprised that the Senate and the House don't go along with it."

Fix the Debt has also stayed studiously nonpartisan, in part because its strength stems from its broad membership of both Democratic and Republican business leaders. They've refused to throw their weight against either party, or even particular politicians. Many think that's the cause of their weakness: They're occasionally loved, but never feared. That may have to change, says Maya MacGuineas, the group's director. 

"There is a question to what extent any effort to succeed is going to have to focus on supporting and not supporting candidates," MacGuineas says. "That will probably have to be part of the pressure that is put on politicians, unfortunately."

In the meantime, the state of affairs is enough to make even the most idealistic advocacy group adjust its expectations.

"I don't think the political system seems capable of going big at this point," MacGuineas says. "So what we're thinking is, how are we going medium? 'Go medium' might replace 'go big' as a rallying cry."

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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