WASHINGTON — Corporate America’s warnings of financial catastrophe if Congress fails to raise the debt ceiling are falling on deaf ears among top Republicans in Congress, who have found themselves increasingly at odds with longtime party allies. long time.
Republicans, who for decades were closely aligned with the business community, have largely minimized the alarm bells sounded by business groups, corporate CEOs and Wall Street investors about the economic consequences of missing an early June deadline for action on Capitol Hill. Instead, many Republican lawmakers promise to seek spending cuts in exchange for passing legislation that would allow the US government to continue paying its bills.
The split over the debt ceiling is the latest example of the deep fissures that have formed in recent years between Republicans and corporate America, leaving some of the country’s largest companies with fewer and fewer allies. politicians in Washington at a particularly dangerous time for the economy.
“The importance and influence that many large business groups had at one point is no longer important to the far-right people that we saw in the fight for the presidency,” said a political consultant who asked not to be named because of his work with corporations. clients involved in the debt ceiling debate. “In recent years, the debt ceiling has become a boogeyman for the far right where they can rally their supporters and raise funds, and nothing the Chamber of Commerce or a Fortune CEO says 500 or anyone other than maybe Donald Trump is going to influence them.
The relationship between the Republican Party and business has been in turmoil since the Trump administration, when former President Donald Trump’s policies on trade and immigration clashed with those of the business community. Trump’s 2016 election also transferred power in the Republican base to voters who were often more interested in changing Washington than focusing primarily on tax cuts and deregulation.
“The electoral districts that the Republicans represent increasingly skew the working class and the poorest. Those districts want to upset the status quo and the establishment, which includes big corporations,” said Sam Geduldig, a partner at lobbying firm CGCN Group who previously worked for Republican lawmakers on Capitol Hill. “The establishment generally wants to preserve the status quo. So I think we’re having a class war, and it’s playing out against us in Congress.»
Tensions rose during the 2022 election cycle after several large corporations and trade groups decided to withhold donations to Republicans who voted against certifying the results of the 2020 presidential election, shifting money to moderate Democrats, he said. a Republican lobbyist who works for a variety of corporate clients. As business donations dwindled, Republicans made up the difference with grassroots and small-donor fundraising, coming close to severing the link between business and the GOP, the lobbyist said.
At the same time, many Republicans at the state and federal level have garnered support from their base by painting big corporations as villains for their positions on issues ranging from abortion access to racial and gender equality. In Florida, Gov. Ron DeSantis went after Disney when he criticized his proposal to ban discussion of gender and sexual orientation from kindergarten through third grade.
But perhaps the most visible form of the strained relationship between Republicans and the business community is on display in Washington, where Republican lawmakers have not hesitated to publicly reject the US Chamber of Commerce after it began increasing its donations to Democrats.
Nearly a quarter of donations from the influential group, which for years worked alongside Republicans on pro-business policy, went to Democratic candidates in the past two election cycles, up from just 4% in 2016. according to data compiled by campaign finance tracking website Open Secrets.
Republicans who have publicly attacked the Chamber of Commerce include Rep. Jim Banks of Indiana and Sen. Tom Cotton of Arkansas, who have characterized it as promoting “wake up” policieswhile House Speaker Kevin McCarthy, Republican of California, accused the House of having «sold» in 2020.
Neil Bradley, policy director for the Chamber of Commerce, said he is particularly concerned about the risk of the US government defaulting on its debt given that many Republicans are downplaying the consequences and the White House is signaling that the issue is not negotiable.
“Those two dynamics are raising a lot of concerns about how we manage to do what needs to be done, which is an increase in the debt limit before we default,” Bradley said. «One of the things we’re trying to do is make sure people understand that default is going to be catastrophic.»
The United States hit its legal debt limit on Thursday, prompting the Treasury Department to start using «extraordinary measures» to pay the federal government’s bills. Those special financial tools allow the government to meet its payment obligations until at least June 5, after which time Congress will need to act to prevent default, Treasury Secretary Janet Yellen said in a letter to lawmakers. .
Despite concerns about being able to sway House Republicans or bring the White House to the negotiating table, business associations plan a messaging campaign similar to the one they used during the last debt ceiling debate, in 2021, hoping to find a bipartisan solution that eludes Republicans unwilling to budge unless their spending demands are met.
“Business groups and the main economic agents in this country are going to continue to be very influential in reminding Congress once again of the dire consequences the US will face if the debt ceiling is not raised,” said the political consultant for corporate clients involved in the debt ceiling debate. “I think a lot of Republicans in the House, in the Senate, will understand that. They may not, for political reasons, speak out against some of their own caucus members, but they understand the risks and the consequences.»