By Kevin Bogardus - 07/07/11 12:17 AM EDT
Major business groups are urging lawmakers to reach a deal as soon as possible to raise the debt ceiling, reflecting fears that the country is drawing perilously close to default.
The groups are gathering signatures for a letter that tells lawmakers and President Obama that the time has come to increase the debt ceiling. The document, which was obtained by The Hill, says defaulting on the nation’s debt would throw the stock market into “disarray.”
“A default would risk both disarray in those markets and a host of unintended consequences. The debt-ceiling trigger does offer a needed catalyst for serious negotiations on budget discipline, but avoiding even a technical default is essential. This is a risk our country must not take,” the letter says.
The letter also says that political leaders in Washington must make “difficult choices” in order to cut the deficit. Moreover, it says, the plan should be “binding.”
“Our political leaders must agree to a plan to substantially reduce our long-term budget deficits with a goal of at least stabilizing our nation’s debt as a percentage of GDP — which will entail difficult choices. The resulting plan must be long-term, predictable and binding. As businesses make plans to invest and hire, we need confidence that, in the absence of a crisis, our government will not reverse course and return to large deficit spending,” the letter says.
In an introductory message to the letter, Jay Timmons, NAM’s president and CEO, said a failure to raise the federal government’s borrowing authority could threaten the economic recovery. He said the business group is circulating the letter in order to urge Congress and the White House “to reach an agreement on these issues as soon as possible.”
In addition, Timmons asked the group’s corporate members “to share this letter with your supplier community and encourage them to sign on to the letter” and their association members “to share this with their own member companies and encourage them to sign on as well.”
NAM sent the letter to its member companies late last week, according to Erin Streeter, a spokeswoman for the business group. She said it is likely to go to Capitol Hill and the White House next week.
The letter follows another missive from the business community in May that asked lawmakers to raise the debt ceiling. Sixty trade associations signed that letter to leaders in the House and the Senate that said it was critical to raise the $14.3 trillion borrowing limit.
Other business groups said they would add their support to the new letter. The U.S. Chamber of Commerce plans to sign on, though a spokeswoman said it’s up to Obama and Republicans to resolve their differences on what the debt package should include.
“The negotiation, its parameters and length are up to the negotiators. Our principal concern is in getting to an agreement that avoids default,” said Blair Latoff, a spokeswoman for the Chamber.
The Financial Services Roundtable also plans to sign on to the letter, according to Scott Talbott, the trade association’s senior vice president of government affairs.
The letter has gone through several drafts. Some have been wary of signing on to the letter because of worries that its language could signal to lawmakers that tax subsidies and credits are fair game in order to reach a debt-ceiling deal.
People familiar with the talks said one draft suggested said that all options should be on the table to reach a debt-ceiling deal. Though more ambiguous, the phrase “difficult choices” in the most recent copy of the letter has also raised eyebrows on K Street, since it is being interpreted by some as opening the door to ending tax subsidies or raising tax rates.
The White House has called for a mixture of cutting spending and closing tax loopholes to help pare down the debt. Republicans have been leery of dealing with tax loopholes in the debt deal, though House Majority Leader Eric Cantor (R-Va.) on Wednesday signaled some flexibility on the issue.