WASHINGTON — Business leaders are taking sides with Democratic President Barack Obama after failing to persuade their traditional Republican allies in Congress to avert a government shutdown.
Yet, the partial closing of the government and the looming confrontation over the nation’s borrowing limit highlight the remarkable drop in the business community’s influence among House Republicans, who increasingly respond more to tea party conservatives than to the Chamber of Commerce.
On Wednesday, Obama hosted 14 chief executives from the nation’s biggest financial firms for more than an hour of meetings. Moreover, the Chamber of Commerce has sent a letter to Congress signed by about 250 business groups urging no shutdown and warning that a debt ceiling crisis could lead to an economic disaster. They say that the policy disputes over health care and spending that are separating Democrats and Republicans should be debated later.
Summing up the Wall Street CEOs’ message on the White House driveway Wednesday, Lloyd Blankfein, chairman and CEO of Goldman Sachs, said:
“You can re-litigate these policy issues in a political forum, but we shouldn’t use threats of causing the U.S. to fail on its obligations to repay its debt as a cudgel.”
The divide between some GOP lawmakers and the corporate groups that have helped shape the Republican agenda in the past is partly a result of a legacy of the Wall Street bailouts of 2008-09 and a changing communication and campaign finance landscape that has weakened the roles of corporate donors and of the major political parties.
Interviews with House Republicans from all regions of the country demonstrate the corporate community’s waning clout. Most of these lawmakers say local business owners and chambers of commerce have not raised the potential economic downside of a government shutdown or debt default.
Rep. Ted Poe, R-Texas, like many of his colleagues, said the overwhelming message he hears from business owners is their dislike of Obama’s health care overhaul, which is at the center of Congress’ impasse and the government shutdown. Likewise, Rep. Steve Chabot, R-Ohio, said he mostly hears business owners complain “about the negative effects of ‘Obamacare’ upon their ability to do business and hire people.”
When Rep. Dana Rohrabacher, R-Calif., was asked if he had heard business groups express fears of a government shutdown’s economic impact, he replied: “No. And it wouldn’t make any difference if I did.”
Still, major business groups are raising alarms, citing the economic cost of a shutdown and warning of even more serious consequences if Congress doesn’t act quickly to raise the $16.7 trillion borrowing limit, which the government is expected to hit around mid-October.
The letter circulated by the Chamber of Commerce urges lawmakers to raise the debt ceiling “in a timely manner and remove any threat to the full faith and credit of the United States government.” It also acknowledges Republican fears over the unsustainable growth of major benefit programs such Medicare and Social Security and the need for a more business-friendly tax system.
But in a rejection of the tactics of House Speaker John Boehner, the letter urges Congress to pass first a short-term spending bill, then raise the debt ceiling, “and then return to work on these other vital issues.”
That advice is being ignored by the GOP-led House.
“There is an element of the more independent, tea party coalition Republicans that, frankly, don’t listen to very many people,” said John Engler, the former Republican governor of Michigan and now president of the Business Roundtable, one of the groups that signed the chamber letter. “They are on a mission, often defined on the basis of their view of the world, and they aren’t paying very much attention to what this means beyond maybe their own districts.”
Concerned, the Chamber of Commerce is preparing to participate in political primaries, protecting friendly lawmakers from conservative challengers. “Clearly we’re getting to a point where we need a Congress that’s going to be productive, proactive and create a stable environment for economic growth and job creation,” said Scott Reed, a Republican political consultant who is advising the chamber on its strategy.
A changing environment has given conservatives plenty of tools to challenge establishment Republicans by using new technology and social media to organize and mobilize highly motivated voters. Campaign finance laws have also given donors a greater playing field that is not limited to the political parties.
What’s more, the bank bailouts of 2008 and 2009 soured the public, which resulted in a new wave of populist Republicans in 2010 driven by a decentralized tea party movement that was not beholden to the GOP establishment.
As a result, said Kevin Madden, a former senior House Republican leadership aide and an adviser to Mitt Romney’ presidential campaign, the political parties, congressional committee chairmen and big donors no longer wield the clout they once did.
“Now it’s more of a bottom-up model, where you see these grass-roots organizations and grass-roots voters are now empowered and they feel they have a stronger voice,” he said. “There is less of an emphasis on the parties. They used to have much more outsize control over who the candidates were and what party discipline was. Now a lot of that is gone.”
Rep. Tim Huelskamp, R-Kan., emphasized that point. “I’m from a district that pretty much ignores Washington,” he said. “If you say government is going to shut down, they say, ‘OK, which part can we shut down?’”
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