If Republicans continue with their debt ceiling brinksmanship, you’re likely to hear powerful GOP-aligned voices from the business community calling for Congress to cut the nonsense and raise the debt ceiling without delay. Even some Republicans and conservatives, such as Newt Gingrich and the Wall Street Journal editorial board, have warned this will compound the GOP’s political problem.
And here we go: The powerful Financial Services Roundtable — which is headed by former GOP presidential candidate Tim Pawlenty and represents nearly 100 of the largest financial service firms in the country — is set to increase pressure on Congress to raise the debt limit, warning that failure to do so will make the markets go “haywire.”
“We are in favor of raising it, and we will be encouraging policy makers to increase it,” Scott Talbott, the senior vice president for public policy for the Financial Services Roundtable, told me today. He added that the group was gearing up to communicate the demand for action to Congress, an effort that could include sending letters to every member. “We will communicate with the entire Congress,” he said.
Talbott said the markets would go nuts if the debt ceiling were not raised. Interestingly, he noted that the markets had remained relatively flat heading into the fiscal cliff deadline, and said he expected the same as the debt ceiling deadline looms, because the markets now expect Congress to get these deals done at the drop dead moment.
“The markets have baked in the fact that Congress will make the shot at the buzzer,” Talbott said. But he warned: “If they don’t make the shot, the first trading day after, the markets will go haywire.”
The Financial Services Roundtable is not the only major business group to want a debt ceiling hike; the Business Roundtable is also prepared to support legislation first championed by Mitch McConnell that would put an end to debt ceiling brinksmanship if it is introduced in Congress.
All of this creates an interesting dynamic, both among business and Republican leaders. The Financial Services Roundtable appears to be somewhat more aligned with Republicans than Dems. In addition to Pawlenty’s role as chief executive, the group’s PAC contributed far more to GOP candidates than to Dem ones in 2012, according to Open Secrets. And so the group, rather than focusing pressure solely on Republicans, will continue to communicate its demand for a debt ceiling hike to the entire Congress, and will continue to make the consequences of failure clear.
Meanwhile, on the GOP side, the increasing involvement from groups like these could exacerbate the split between the party’s Tea Party wing and its more pragmatic business wing, which is apparently far more aware than the Tea Partyers of just how dire those consequences might be.