Tension among the country’s leading business lobbies has become more pronounced this week as competing groups jostle for attention from Capitol Hill and the White House over their favored approaches to resolving the ongoing deadlock over tax and spending policy.
On Wednesday, President Obama is set to meet the chief executives of a dozen leading U.S. corporations to try to garner high-powered business backing for his effort to forge a deficit-reduction deal that could avert the “fiscal cliff,” the year-end deadline when drastic spending cuts and tax increases go into effect.
The West Wing meeting is coming just as Washington’s business and trade associations are grappling with the results of the 2012 election, in which many business-backed candidates were defeated despite record spending by groups such as the U.S. Chamber of Commerce, which was not invited to the White House.
One business group that has quickly gained attention from the White House is the Campaign to Fix the Debt, a relatively new organization that includes some of the chief executives meeting with Obama this week. The group has raised more than $40 million to support the broad goals of a bipartisan presidential commission led by former Clinton administration official Erskine Bowles and former Republican senator Alan Simpson, who produced a plan for deficit reduction and fiscal reform in 2010.
The group is expected to launch a million-dollar ad campaign in newspapers and transit billboards in Washington and other cities Tuesday, the same day Congress returns for a post-election session focused on the fiscal cliff. The group’s spending could grow dramatically in coming weeks.
While the general principles of the Campaign to Fix the Debt do not provoke argument, the statements of some chief executives and the advocacy of Simpson-Bowles solutions have alarmed some business organizations.
“Any serious reform must include significantly more in spending reductions than in revenue,” said Jade West, who manages a Washington business group called the Tax Relief Coalition. She said the current version of proposed Bowles-Simpson changes “does not achieve that objective.”
In addition, West said any deal that would end the George W. Bush-era tax cuts would result in a stern response from her members, which include the U.S. Chamber of Commerce and hundreds of small businesses. “That would be unacceptable,” said West, senior vice president at the National Association of Wholesaler-Distributors.
At the U.S. Chamber, officials are pushing for reductions in spending on federal entitlement programs such as Social Security and Medicare.
The Chamber is planning to submit a letter to all members of Congress on behalf of another broad coalition that will emphasize the need for entitlement reform. Using data from the Congressional Budget Office and the agency that runs Social Security, the letter will make the case that the “nation’s entitlement programs are unsustainable,” said R. Bruce Josten, a Chamber executive vice president.
The letter, Josten said, will urge lawmakers to extend all the expiring tax rates, provide alternative-minimum-tax relief and find replacements for automatic spending cuts set to go into effect. The letter also calls for Congress to act next year to enact comprehensive tax reform and to systematically restructure entitlement programs over time.
While the Chamber and the Tax Relief Coalition expressed wariness of tax increases, the Business Roundtable is working informally with the Campaign to Fix the Debt. The roundtable, which represents other leading U.S. corporations, has been pushing for, among other things, a reduction in corporate tax rates. It will launch its own public education effort Tuesday aimed at Capitol Hill.
And yet another group, the Business Industry Political Action Committee, which encourages businesses to get involved in politics, has been in touch with the Fix the Debt campaign and will discuss the effort during a board meeting scheduled for late this week.
The factions in the business community are forming over the competing priorities of major corporations and smaller businesses, which can be subject to different tax rates.
Chief executives of big corporations have argued for a reduction in the overall corporate tax rate, which they say could be paid for by closing loopholes and broadening the tax base. But many small-business executives fear that could mean an increase in their taxes as the rate for large corporations goes down. Many of these smaller firms are “flow-through corporations,” whose profits are passed along to owners and then taxed at normal income tax rates.
Some anxious business lobbyists said they fear a repeat of the business efforts to cooperate with the White House on health care. The Business Roundtable, for example, met frequently with the White House, providing early support for a national health-care overhaul. They negotiated some favorable provisions for their members, but smaller businesses felt that their interests were not protected.