Business leaders back Obama, not GOP, on debt ceiling

Updated
Business leaders back Obama, not GOP, on debt ceiling
Business leaders back Obama, not GOP, on debt ceiling
Ezra Klein/Washington Post

If you only listen to rhetoric out of DC, you might think Republicans and the business community are the closest of allies. It’s the GOP, the argument goes, standing up for America’s private sector against those rascally Democrats and their big government, “anti-business” agenda.

But when it comes to Republicans holding the debt ceiling hostage, the caricature is turned on its head. In this crisis, GOP leaders couldn’t care less what the nation’s “job creators” want or believe, and it’s the business community rallying behind President Obama.

Greg Sargent flagged a terrific example yesterday.

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.

The Financial Services Roundtable carries considerable weight, but it’s worth noting that it’s not alone on this issue. As we discussed in November, the Financial Services Forum and the Securities Industry and Financial Markets Association are also pushing Republicans to be reasonable. Soon after, the Business Roundtable also sided against the GOP hostage strategy.

We’re not talking about MoveOn.org urging Republicans to be responsible; we’re talking about corporate lobbyists and industries that tend to keep GOP offices on speed dial. To understate matters, these folks are accustomed to having Republicans take their fears seriously.

Which leads to the obvious next question: are Republicans prepared to ignore their own corporate base? Recent history offers some clues.

It’s often overlooked, but in April 2011, before the original Republican debt-ceiling crisis had begun in earnest, House Speaker John Boehner (R-Ohio) reached out to financial industry leaders, asking how much time he had to screw around with the debt ceiling before doing serious, lasting damage to the economy. He was told that “even pushing close to the deadline – or talking about it – could have grave consequences in the marketplace,” and top Wall Street executives and lobbyists quickly urged Republicans to steer clear of such reckless nonsense.

The House Speaker proceeded to ignore everything he heard.

A month later, in May 2011, 62 leading U.S. business groups, including the American Gas Association, the Telecommunications Industry Association, and the National Association of Manufacturers, all pleaded with Congress to end the standoff and raise the debt ceiling.

Republicans ignored them and intensified the crisis.

Two months later, in July 2011, a “sprawling coalition” of Wall Street and Main Street business leaders sent a letter, “signed by hundreds of senior company executives and groups including the U.S. Chamber of Commerce and the Business Roundtable,” pleading for an end to the hostage standoff.

Republicans ignored them, too.

As I wrote at the time, I long assumed that the fiasco would reach some kind of tipping point – Republicans would start to do real harm to the economy, at which point some very wealthy, very powerful people, who hire very effective lobbyists and write very big campaign checks, would pick up the phone and deliver a very clear message to the GOP: Enough.

But if that happened behind the scenes, it didn’t make much difference. Congressional Republicans – literally, all of them – kept ignoring business leaders, and kept pushing the nation closer and closer to the brink, confident that Obama would be the adult who wouldn’t allow lawmakers to crash the economy on purpose.

Eventually, the president, unwilling to let Republicans shoot the hostage, accepted a bad deal, and the debt ceiling was raised, but not before GOP officials inflicted severe damage on the country.

And so, we find ourselves right back where we were. If business leaders intend to have more influence than they did in 2011, they’re going to have to pick up their game.

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Business leaders back Obama, not GOP, on debt ceiling

Updated