Will Big Business Pressure the Tea Party Into Raising the Debt Ceiling?

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The U.S. Chamber of Commerce called in response to my post yesterday on the ongoing debt-limit negotiations. In the piece, I linked to a quote from Chamber chief Tom Donohue, who during an event in Atlanta on Monday appeared to warn the House Republicans vowing to vote against a debt-ceiling hike: “We’ll get rid of you.”

Chamber spokesman J.P. Fielder says the quote was accurate, but that it was taken out of context. “Tom took questions during Father/Son Day at the Atlanta Rotary Club. There was a bit of pleasant and humorous banter going back and forth toward the end,” he wrote in an e-mail, explaining that the comment was “jocular.”

I asked Maria Saporta, the reporter who attended the event and wrote the piece, if this was true. “Yes, I think it’s fair to say he was being playful in making the point that when push comes to shove, the debt ceiling would be raised,” she told me. According to Saporta, after praising John Boehner’s handling of his conference Donohue noted, “We’ve got a lot of new people pounding their chests,” threatening to shut down government. Donohue then issued what both Saporta and the Chamber seem to characterize as a light-hearted remark, rather than a direct threat.

Still, as Greg Sargent wrote: “Man, that is one telling joke.”

The GOP’s business and Tea Party factions have been on a collision course for some time, and the debt-limit vote could be the moment of impact. A band of House Republican freshman consider it the last chance to deliver on their campaign promise to rein in government spending. They also see it as a moment of leverage, and to a large extent they’re right. The looming threat that a cadre of freshman conservatives will vote no and send markets into a tailspin has already caused Democrats to abandon their push for a “clean” vote. Any increase in the U.S.’s borrowing limit will be paired with significant spending cuts, just as the GOP wanted. But at the same time, the House Tea Party wing’s leverage is limited; if they make good on their threat, they could spark massive financial upheaval, dash Republican claims to be rational stewards of the economy, and invite the ire of the party’s business base. Which is where the Chamber of Commerce comes into play.

D.C.’s heavyweight big-business lobby has been pushing for a debt-limit hike for some time. On May 16 Bruce Josten, the Chamber’s executive vice president for governmental affairs, sent a letter to Congress warning that “failure to raise the debt limit by [August 2] would create uncertainty and fear, and threaten the credit rating of the United States.” The letter concludes by urging Congress to get the job done “as expeditiously as possibly.” In other words, to eschew the bluster and last-minute negotiating that are Congressional hallmarks.

At the same time, the Chamber wants to downplay the fact that this goal more closely aligns with the Obama Administration than with many Congressional Republicans. When I asked what the Chamber hoped the final product of the negotiations would look like, Fielder referred me to the letter, which notes that “the current and projected levels of government deficits and debt are unsustainable in the longer-run.” In essence, the Chamber wants an increase in the borrowing limit to be paired with significant spending reductions that “reverse the long-run trend in government borrowing.” Different people have different definitions of “significant,” but the Democratic negotiators in the Biden group have already agreed to more than $1 trillion in cuts.

While Donohue’s public threat may have been “jocular,” the powerful business lobby may begin bringing real pressure to bear on reticent Republicans behind closed doors, especially as time to cut a deal that raises the debt ceiling runs out.

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