Businesses backed GOP lawmakers who spurned them on default

Correction: An earlier version of this story incorrectly listed the total number of lawmakers who voted against raising the debt ceiling as 161. It was 162. This version has been corrected.

The lawmakers who voted against raising the debt ceiling last week count among their biggest donors the country’s most powerful banking lobby and companies such as Honeywell and AT&T — not just the activist conservative groups that have roiled the Republican Party.

The American Bankers Association gave more money over the past two election cycles to GOP lawmakers who in effect voted to allow the United States to default on its debt than those who voted against that scenario.

The ABA contributed $2.2 million to lawmakers who ultimately ignored the group’s warnings, second only to the Club for Growth and just ahead of Koch Industries, both of which are leading sources of funds for conservative candidates.

The numbers, revealed in a joint analysis by The Washington Post and the Center for Responsive Politics, illustrate the key role that big business donors played in supporting lawmakers who would later spurn one of the business community’s most emphatic requests not to vote for a default by the United States.

“Business lost this round” with Republicans, said Sheila Krumholz, executive director of the Center for Responsive Politics, which has analyzed donation patterns from last week’s vote. “It remains to be seen whether this produces any real change among business donors.”


Many GOP members rejected the advice of business donors

Some lobbyists said the arrangement between businesses and the lawmakers will not be easy to untangle because the groups have been investing for so many years in Republicans and their current leadership.

The chief lobbyist for the U.S. Chamber of Commerce, Bruce Josten, said the debt-ceiling roll call would be only one of many factors considered by the Chamber when it decides which candidates to support in 2014.

“Everyone has their own number one issue, and in the Chamber’s membership, again unlike any other association, we have a lot of members with a lot of different number one issues,” Josten said.

Similarly, Scott Talbott, senior vice president for policy at the Financial Services Roundtable, said: “This vote will be a factor in the future before we make contributions, though it will not necessarily determine the outcome.”

The Chamber made the roll call a “key vote,” meaning it will be used to determine future endorsements of candidates. The Club for Growth and Heritage Action did the same from the other side.

But trade groups and businesses may find it hard to hold lawmakers fully accountable.

Lawmakers such as House Financial Services Committee Chairman Jeb Hensarling (R-Tex.) voted against raising the debt ceiling — a position that, if adopted, would have been likely to result in a default. But they are also considered important allies in traditional business fights against higher taxes and stronger financial regulation.

Lobbyists say they are also aware that some of the Republicans may have voted against raising the debt ceiling to give themselves political cover from angry tea party constituents, knowing there were enough votes to avoid a default.

The final tally showed that 162 Republicans, including potential presidential candidates such as Rep. Paul Ryan (Wis.) and Sen. Marco Rubio (Fla.), felt enough political pressure to vote against raising the debt ceiling despite dire warnings from business.

Hedge funds and major banks

Although public attention during the 16-day shutdown focused on financial support flowing from groups such as the Club for Growth and Heritage Action, the new analysis shows that banks, investment houses and other mainstream business interests also funded the Republicans who played a role in the latest brush with a default by the United States.

At financial services firms, including hedge funds and major banks, contributions totaled more than $26 million over the past two election cycles to the Republican lawmakers who voted against a deal to reopen the government and avoid a first-ever debt default.

Employees and the political action committee of Goldman Sachs, which didn’t comment for this article, gave $1.06 million from 2009 to 2012 to the group of GOP lawmakers who voted against the deal. At Bank of America, which also declined to comment, contributions totaled $1.03 million. Hedge funds gave $1.7 million.

Although the ABA gave more to Republicans that voted against raising the debt ceiling, overall, financial-services firms contributed more to Republicans voting to lift the ceiling.

Before the vote to raise the debt ceiling last week, the president of the ABA was worried about politicians even threatening to default on the debt.

“It compromises the integrity, the certainty. It is going to dramatically raise interest rates,” Frank Keating told Bloomberg TV, adding: “This is just completely mad, as far as most of the community bank people are concerned, and I’m sure their customers and clients.”

Yet the ABA and financial-services companies have been pouring in support for some of the lawmakers who helped instigate the government shutdown and standoff over the debt ceiling.

James Ballentine, the ABA’s executive vice president of congressional relations and political affairs, said in a written response to questions that the banking lobby would review all of its contributions in 2014 “in a thoughtful and deliberative manner. “ But, he added: “We go through this process every election.”

Sen. Ted Cruz (R-Tex.), whose 21-hour floor speech helped spark the crisis and who voted against the debt-ceiling deal, received $786,157 from financial services companies — more than the $705,657 he received from the Club for Growth. Cruz’s wife works at Goldman Sachs, whose PAC gave $5,000 to her husband in 2012.

Employees and political action committees at Honeywell, the manufacturing conglomerate, contributed nearly $2.1 million to last week’s naysayers while providing slightly less to yes-voting Republicans. At AT&T, contributions reached $1.9 million for no-voting members and $2.1 million for those voting “yes.”

Honeywell spokesman Rob Ferris said in a statement, “Honeywell’s political action committee supports those who support the policies that are most important to our business.” AT&T did not reply to a request for comment.

Club for Growth and Koch

The top donor to pro-default lawmakers overall was the Club for Growth, which gave $3.2 million. The third-biggest source of funds was Koch Industries, owned by billionaire brothers Charles and David Koch, with $2.1 million.

Club for Growth backed more of those who voted “no” to the deal than Republicans on the other side.

Koch industries has supported the election of many of the newer, more hard-line members, although the company took pains in recent days to say that it did not necessarily support the strategy of using a government shutdown or a default to pursue the defunding of the new health-care law.

Also on the list of entities supporting lawmakers effectively voting in favor of a debt default were trade associations such as the National Beer Wholesalers Association, which gave $1.8 million to Republicans who voted no and $1.5 million to those voting yes.

Rebecca Spicer, the beer group’s vice president for public affairs and communications, said the organization would continue to decide whom to support by looking “at each race individually and listening to beer distributors.”

Several Republican Party business allies said the dispute would encourage corporate money flowing to party primaries where it has seldom appeared in the past.

“This vote will create opportunities for mainstream Republican challengers to tea party candidates,” said one leading GOP fundraiser, who requested anonymity because of his position in the investment world.

Still, he said the episode is unlikely to motivate major Wall Street and corporate donors to abandon their overall support for the GOP. “They have zero alternative with Democrats,” he said.

Jia Lynn Yang is a staff writer at The Washington Post who covers policy and business. Before joining the Post, she worked at Fortune magazine.
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