07.13.11

Business Lobby Pleads for Deal on Debt Ceiling Amid Political Chaos

After holding its fire for weeks, America’s biggest business lobby pushes Congress to reach a debt deal, warning the consequences without one are too devastating.

America's most influential business lobby is wading into the thicket of the debt-ceiling negotiations, pushing the Tea Party wing of the Republican Party that has been holding out on compromise to take whatever actions necessary to avoid America defaulting on its debt.

"We believe it is vitally important for the U.S. government to make good on its financial obligations and to put its fiscal house in order," wrote the Chamber of Commerce in a letter signed by nearly 500 American CEOs that was sent to the White House and all Capitol Hill offices. "Now is the time for our political leaders to put aside partisan differences and act in the nation's best interests. We believe our nation's economic future is reliant upon their actions and urge them to reach an agreement."

The high-profile signers included Tom Donahue, the influential chairman of the Chamber of Commerce; Robert Koch, CEO of Koch Enterprises; and James Gorman, president of Morgan Stanley.

The message highlights a new fracture among conservative leaders, many of whom have pushed for Republicans to oppose a debt-ceiling increase without assurances from the White House that a deal would not include tax hikes.

But seeing the urgency of reaching an agreement, some Republicans have lowered their standard to ensure that a deal is reached prior to the hard August 2 deadline the White House has set.

Long an opponent of President Obama's position in the talks, Senate Minority Leader Mitch McConnell on Tuesday suggested a backup plan that would allow Obama to raise the debt ceiling at a smaller increment but with approval from only about one third of Congress.

The statement came with intense blowback from some wings of the Republican Party that have urged the GOP to stand strong against the Democrats' negotiating position in hopes of extracting larger concessions from Democrats. The Heritage Foundation, the conservative advocacy group, said it was shocked at McConnell's idea and disappointed it had not been consulted prior to the Republican leader's statements.

The message highlights a new fracture among conservative leaders, many of whom have pushed for Republicans to oppose a debt-ceiling increase without White House assurances that a deal would not include tax hikes.

"We think it's a total walkback of the GOP position and gives up leverage to Democrats with their overspending policy," said Mike Needham, chief officer of Heritage's policy wing, Heritage Action. "It's critical that Republicans be seen as fighting hard for real change. The backup plan would be incredibly demoralizing to GOP grassroots."

Even if McConnell's plan were to become the framework of a deal, the remaining question is how much of the House Republican caucus would support the proposal, even with the lower vote threshold. Over several days of frequent talks between parties, GOP House leaders led by Rep. Eric Cantor have appeared to harden their opposition against any new forms of government revenue included in a final package.

The White House has not directly engaged McConnell's proposal, saying simply that it was still focused on a larger package that leaders could agree upon.