On Wednesday morning, one of the most influential business groups in Washington warned that a drawn-out confrontation over the nation’s debt would harm the economy and stall hiring, and that it must be avoided.
What happened over the next few hours made clear that the group’s warning is likely to be ignored — and that the traditions of influence in Washington, where a little pressure from a well-heeled corporate donor could help tip a debate or seal a deal, seem to have broken down.
The Business Roundtable, representing the nation’s biggest companies, released a report showing that nearly half of major companies will probably slow hiring because of the mayhem in Washington this fall as Democrats and Republicans clash over the budget.
John Engler, the chief executive of the trade group and a Republican former governor of Michigan, told reporters it would be “unthinkable” not to raise the government’s debt ceiling, which Congress must do as soon as next month to avert a default on federal obligations.
But Republicans, who benefited by a two-to-one margin from corporate contributions in the 2012 election, announced they would neither keep the government open nor raise the debt ceiling without concessions, in a direct repudiation of the business lobby’s message.
A few hours later, President Obama appealed to the Roundtable’s executives to use “your influence in whatever way you can” to pressure Republicans to strike a deal to avoid a shutdown or debt default. But the group had a somewhat surprising response: Politically, it’s not picking sides.
If it sounds confusing, it’s because the sequence of events scrambled the logic of political action. Ordinarily, a business group would simply follow self-interest. But the cautious Roundtable is leery of stepping into the dramatically polarized atmosphere of Washington.
The chaotic politics is characteristic of not only this fall’s budget confrontation but also a range of issues — including immigration and agricultural policy — in which traditional methods of engagement seem to be breaking down.
“All the major leading institutions have been brought into question by the populace out there and particularly the conservative populace,” said Bill Hoagland, a budget expert and former senior Republican Senate aide. “They just don’t have the same impact they used to have with the electorate, and that’s being reflected by the makeup of the tea party movement and some of the new conservative members in the Senate.”
On Wednesday morning, Business Roundtable executives warned that of all the issues, the prospect of a default is most worrisome.
“There’s no question the failure to reach agreement on the debt limit would have a significant impact on the U.S. economy, and we don’t want that — for our employees, for our investors and for the country,” said Jim McNerney, Boeing chief executive and Roundtable chairman.
Obama later came to the Roundtable’s meeting and made essentially the same point, saying he could not allow a question to arise about whether the country will pay its bills.
“What I will not do is to create a habit, a pattern, whereby the full faith and credit of the United States ends up being a bargaining chip to set policy. It’s irresponsible,” he said. “The last time we did this in 2011, we had negative growth at a time when the recovery was just trying to take off. And it would fundamentally change how American government functions.”
Obama then appealed for the support of the executives.
“It is going to be important for all of you, I think, over the next several weeks,” he said, “to understand what’s at stake and to make sure that you are using your influence in whatever way you can.”
But outside of encouraging both sides to compromise, Business Roundtable executives indicated they did not plan to intervene much more pointedly in the debate.
“Theoretically speaking, if we came down on one side or the other in today’s environment, that would negate any impact we’d have,” McNerney said. “And therefore I think we’ve got to pressure both sides to move to the middle.”