CHICAGO — Business leaders are growing exasperated with Washington. And they say the dysfunction in the political system is holding them back from hiring and investing.
A new sort of risk to growth is emerging, not from the kind of economic forces that led to the recent recession but from elected officials’ inability to agree on how to deal with them. This angst in the executive suite is reflected in this month’s uptick in lobbying by business groups eager to see a deal on the federal debt ceiling, in surveys showing falling confidence among business leaders — and, in the American heartland, by the deepening frustrations of corporate chiefs.
Senate Majority Leader Harry Reid challenged Republicans to back his competing legislation, arguing that the no-tax, government-cuts proposal was just what they wanted. (July 26)
In interviews in this great industrial capital, senior executives in the area said they lack confidence that political leaders can execute the basic nuts and bolts of governing, as exemplified by the brinkmanship over raising the debt ceiling. Indeed, the frustration over the political climate and Washington’s seeming inability to solve problems appears to weigh more heavily in their minds than any specific government policy.
The executives are hostile to President Obama and his agenda and say higher taxes would damage their business prospects and make them less inclined to invest and hire. But in contrast to congressional Republicans’ claims that any tax increases would stop job creation in its tracks, many executives say they could tolerate somewhat higher taxes if they were part of a broader plan that offered clarity on the nation’s future policies, particularly one heavy on spending cuts.
“What are the rules of the game going to be in the long term?” said Lyle Heidemann, chief executive of the 5,000-store hardware chain True Value. “What our retailers would like to have is consistency and predictability. We can handle decisions we don’t agree with, but that’s easier than not knowing what the decision is going to be.”
For example, he said, several True Value franchisees have sold their stores in the past year — even though they would have preferred to hold on to them for a few more years — because they feared that the 15 percent capital gains tax will rise at the end of the year, when it is scheduled to expire.
The loss of confidence in Washington seems to be a driver of a more fundamental lowering of expectations in the nation’s executive suites. The Conference Board, a business research group, found in its most recent survey of chief executives that 43 percent expected economic improvement in the next six months, down from 66 percent at the beginning of the year.
The groups that represent businesses in Washington, including the U.S. Chamber of Commerce and the Business Roundtable, have been urging Congress to raise the debt ceiling to avoid the risk of a default or downgrade of the U.S. credit rating, even as many newly elected Republican members of the House — who received support from business interests when running — are reluctant to vote for such a measure. A group of major business groups sent a letter to the president and every member of Congress two weeks ago, imploring them to raise the debt ceiling.