A sprawling coalition of Wall Street and Main Street business leaders sent an unmistakable message to lawmakers Tuesday: Enough squabbling. Get the debt ceiling raised.
The message, sent in a letter to President Obama and every member of Congress, puts pressure on GOP lawmakers, who have staked out an uncompromising stance against raising taxes in the partisan wrangling over the country’s borrowing limit.
Republicans rely heavily on corporations for political support and have regularly cited the opinions of these “job creators” in their opposition to new tax revenue. Many of the House GOP freshmen most opposed to a compromise were swept into office with the help of financial support from groups behind the letter.
But the business community, which has largely kept quiet on the issue until now, does not uniformly share the Republican orthodoxy on taxes, according to some lobbyists who helped craft the statement.
The letter conspicuously avoided any mention of tax revenue partly because of differences of opinion among executives over whether to compromise on taxes to get a deal done, said a senior industry lobbyist, who spoke on the condition of anonymity because the internal deliberations were private.
“The debt default would be exponentially more painful than anything else,” said another senior executive at a major business lobbying group.
The letter, signed by hundreds of senior company executives and groups including the U.S. Chamber of Commerce and the Business Roundtable, said that “it is critical that the U.S. government not default in any way” and urges lawmakers “to put aside partisan differences and act in the nation’s best interest.”
“The business community in large numbers is saying to our leaders in Washington, ‘Do your job,’ ” said Business Roundtable President John Engler, a former Republican governor of Michigan. “Failure to raise the debt ceiling would strike an immediate and serious blow to any economic recovery, and failure to make significant progress on long-term debt reduction will continue the uncertainty which is hampering our investment climate.”
Republican lawmakers had a muted response to the business groups’ warnings. A spokesman for House Speaker John A. Boehner (R-Ohio) said Obama was to blame for the standoff and pointed to a House Republican proposal to slash tax rates and transform Medicare into a voucher program.
“We already voted for a long-term deficit reduction plan,” Boehner spokesman Michael Steel said in a statement. “Since the president is asking for the debt-limit increase, we’d like to see such a plan from him — but haven’t.”
The developments underscore the increasingly awkward marriage between corporate leaders and the ambitious House GOP freshman class, which has joined the business lobby in opposing Obama’s health-care law and financial regulations but has shown no sign of budging on the debt ceiling. Boehner and other Republicans abandoned White House talks over the weekend aimed at formulating a “grand bargain” of spending cuts and revenue increases before an Aug. 2 deadline, when the country would default on its debt.
The differences over the debt ceiling present a problem for corporate donors, who helped create the House Republican majority by shifting their contributions away from Democrats last year. The Chamber, which is Washington’s biggest lobbying organization, also spent millions on advertising in support of GOP challengers.
The Public Campaign Action Fund, a liberal-leaning advocacy group that favors public financing of elections, calculates that the Chamber and the financial services sector together spent nearly $20 million on GOP midterm candidates affiliated with the conservative tea party movement. Those rank-and-file Republicans now form the backbone of opposition to any new tax revenue, including Democratic proposals to end loopholes benefiting hedge fund managers, corporate jet owners, and oil and gas companies.
Lobbying groups for Wall Street — a sector that would take a direct and devastating hit if the debt ceiling is not raised — have largely avoided public statements on the issue. That is in contrast to their vehement campaigning against parts of the Dodd-Frank financial regulatory bill, including the limits on the fees they can charge merchants for debit transactions.
Wall Street lobbyists and other business groups preferred private meetings with GOP members to educate them on the consequences of a default. Several lobbyists also met Monday afternoon with Treasury Secretary Timothy F. Geithner to repeat their concerns.
Some Democrats have criticized business leaders for failing to speak up forcefully in the debt-limit debate.
“Maybe business leaders think that this debate is just political theater and assume that a deal will emerge,” Sen. Mark Warner (D-Va.) wrote in an op-ed article in The Washington Post last week. “Maybe they don’t believe politicians who declare that they will never vote to raise the debt ceiling or casually rule out entitlement reform or a penny of additional revenue.”
In their letter, the business groups warned that even a “technical default” is “a risk our country must not take.”
“A great nation — like a great company — has to be relied upon to pay its debts when they become due,” the letter reads. “This is a Main Street not Wall Street issue. Treasury securities influence the cost of financing not just for companies but more importantly for mortgages, auto loans, credit cards and student debt. A default would risk both disarray in those markets and a host of unintended consequences.”