Analysis: Down-to-wire debt deal tests corporate ties

Retail Reuters

By Kim Dixon

Continue Reading Below

For months, influential groups such as the Chamber of Commerce implored recalcitrant lawmakers to reach agreement on a plan to raise the nation's borrowing limit well before an August deadline to avoid spooking markets and provide certainty to the economy.

But of nearly 90 first-term Republicans in the House of Representatives, about a third voted against the deal that was ultimately passed by both houses of Congress and signed into law by President Barack Obama on Tuesday.

Business lobbyists and executives in Washington say they do not expect any major drop in donations to those Republicans, who are traditional allies of big business.

"I don't think it is practical to say you are going to penalize those individual members who didn't think that the plan went far enough," said Brian Walsh, president of the American Action Network, a conservative group that spent $26 million to influence the 2010 elections in which Republicans won a majority of the House and made big gains nationwide.

After a bitter debate, the final vote on raising the country's $14.3 trillion borrowing limit came on Tuesday -- the day the Democratic Obama administration said it would begin running out of funds to pay its bills.

Continue Reading Below

"You've got everything from what is the future of the health care legislation, taxes and revenue coming," Walsh said. "This debate isn't over. It is just the beginning."

The Chamber of Commerce urged lawmakers to back Republican House Speaker John Boehner's initial attempt to agree on a debt ceiling increase, which failed in large part due to defiance by nearly two dozen hard-line Republicans.

The chamber spent nearly $33 million on election ads during the 2010 election cycle backing mostly Republicans, including many followers of the fiscally conservative Tea Party movement.

That is the most spent by any group outside the Democratic and Republican national committees, according to the Center for Responsive Politics, which tracks political donations.

Still, like many groups, the chamber rates and endorses lawmakers based on a set of key votes. Most typically rate very high or very low, making choices stark, said Rob Engstrom, vice president for political affairs of the Chamber of Commerce.

"There is no buyer's remorse. The next vote is always the most important vote."

BEFUDDLEMENT

To be sure, there is frustration.

The business world craves moderation and there are some extreme members of Congress who may not be worth courting, said one business leader based in Washington who requested anonymity so he could speak freely.

"There was definitely befuddlement on the part of large industrials, manufacturing and large financial companies over some of the comments by some members of the Tea Party who said default is not a big deal," the executive said.

Lawmakers who say they will refuse to raise the debt ceiling under nearly any condition might not be worth courting.

"They have taken themselves out of the game," the Washington business leader said.

Although leaning decidedly Republican, many businesses hedge their bets by donating to both parties. And corporate funds will keep flowing on a targeted basis. Much depends on which party is in power.

Several first-term Republicans with key spots on congressional panels such as the House Financial Services Committee are being flooded with donations from the financial sector, according to the Center for Responsive Politics.

In the end, it may be that business is put in the tight spot liberals dismayed with Obama find themselves in. Where else can they go?

"There is probably a feeling that you can't live with them and you can't live without them," said Ken Gross, a Washington attorney for financial companies. "There is too much risk in retribution at this junction because so much can be undone."

(Editing by Bill Trott)

What do you think?

Click the button below to comment on this article.