Business leaders dread debt-limit battle

The Treasury Department estimates the government will exhaust its borrowing capacity by Oct. 17, which is just three weeks away. 


Lobbyists have been pushing Congress to raise the debt ceiling without drama or delay, but say the chances of that happening are shrinking with every passing hour. 

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“The [continuing resolution] is the junior varsity issue, while the debt ceiling is the varsity issue regarding the long-term impact on the economy,” said Scott Talbott, senior vice president for public policy for the Financial Services Roundtable, which represents big names on Wall Street. 

“If the debt ceiling is not raised, we could see an increase in interest rates and a credit downgrade,” Talbott said.

GOP lawmakers have made clear they will seek concessions from Democrats in return for a hike to the $16.7 trillion borrowing limit. But President Obama and Democrats have vowed that Republicans will not “extract a ransom” for paying the government’s bills.

The Obama administration is trying to rally the business community behind the president’s call for a “clean” debt-ceiling increase free of other policy changes.

Treasury Secretary Jack Lew has been making the rounds with trade associations to talk about the debt ceiling.

Lew recently met with officials from the Financial Services Roundtable, the U.S. Chamber Commerce, the American Bankers Association and the Independent Community Bankers of America, according to a Treasury spokesman. The secretary also sat down with a group at Morgan Stanley hosted by former deputy Secretary of State Tom Nides.

“The secretary continues his outreach to business leaders to discuss the state of the economy and the need to avoid self-inflicted wounds like a failure to raise the nation’s debt limit,” said the spokesman.

The president has been courting business support as well, and is scheduled to meet Wednesday with the captains of Wall Street that are members of the Financial Services Forum.

Among the Wall Street CEOs expected to attend are Jamie Dimon of JPMorgan Chase, Lloyd Blankfein of Goldman Sachs and Brian Moynihan of Bank of America. 

Obama also spoke to the Business Roundtable two weeks ago. 

“You have never seen in the history of the United States the debt ceiling or the threat of not raising the debt ceiling being used to extort a president or a governing party, and trying to force issues that have nothing to do with the budget and have nothing to do with the debt,” Obama told the trade group. 

Despite the White House outreach to business, some lobbyists said they’re not sure how much sway the industry has in the conflict between Republicans and Democrats. 

“Our interest is regular order, keeping things moving. We have a big agenda and having Congress at loggerheads with the White House isn’t good for our agenda,” said David French, senior vice president for government relations for the National Retail Federation.

“I’m not sure what we say or do really changes the outcome. We are clear in that we don’t like this. I think the chamber on down through the business community doesn’t want this.” 

The chamber helped organize a letter with more than 250 industry groups that urged lawmakers to fund the government and raise the debt limit. That followed a similar letter from the Chamber of Commerce alone that was sent to the House on Sept. 18. 

The government shutdown has already begun to affect companies, according to lobbyists.

“We have already heard from lodging owners and operators that their reservations are down later this week. People are changing their travel plans because they might not be able to get into national parks,” said Vanessa Sinders, senior vice president of government affairs for the American Hotel & Lodging Association. 

“It’s concerning that Congress and the president have not been able to reach an agreement to fund the government. It doesn’t bode well for future negotiations on the debt ceiling or anything else,” Sinders said.

Business groups are worried that the economy could enter a tailspin if the debt ceiling is not raised and the government defaults. 

“It is absolutely critical to manufacturers. This is about the full faith and credit of the country,” said Aric Newhouse, senior vice president for policy and government relations for the National Association of Manufacturers. “The idea of not dealing with the debt ceiling would send the wrong signal to manufacturers and to the world.”

Lobbying pressure will only increase as the debt ceiling deadline of Oct. 17 draws closer. 

“The level of concern will go up as we get closer to that date,” Talbott said.