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July 27, 2011 8:45 AM Waiting for Big Business to lower the boom

By Steve Benen

About three months ago, House Speaker John Boehner (R-Ohio) reached out to financial industry leaders, asking how much time he has to screw around with the debt ceiling before doing serious, lasting damage to the economy. He was told that “even pushing close to the deadline — or talking about it — could have grave consequences in the marketplace,” and top Wall Street executives and lobbyists quickly urged Republicans to steer clear of such reckless nonsense.

That was in April. Boehner and his caucus ignored the warnings, and next week, the United States, by Republican design, is expected to exhaust its ability to pay its bills.

Josh Marshall noted late yesterday that we may well reach a point at which “Wall Street/business interests,” among others, “come off the sidelines” to tell Republicans, especially in the House, that the game is up.

On a personal level, this has long been my hope. For quite a while, the only thing that’s stopped me from panicking over the Republicans’ debt-ceiling fiasco is the likelihood that some very wealthy, very powerful people, who hire very effective lobbyists and write very big campaign checks, would pick the phone and deliver a very clear message to the GOP: Enough. Raise the debt ceiling. Now.

That hasn’t happened, at least not in large numbers. While some in the private sector have weighed in carefully, most Big Business leaders are afraid to get dragged into a partisan fight. Others simply assumed their intervention wasn’t necessary. But with a ticking financial time-bomb set to go off, more are coming off the sidelines.

Wall Street has tried to ignore the threat posed by Washington failing to raise the debt ceiling. No more.

Business executives stepped up appeals this week for political action, worried that the nation faced a crisis, and prepared contingency plans in case the stalemate persists. […]

The potential consequences give business leaders a responsibility to warn Washington policymakers about the real-life implications of failing to raise the debt ceiling, said Larry Zimpleman, chief executive of Principal Financial Group.

By all accounts, business leaders don’t much care which solution is approved. The U.S. Chamber of Commerce threw its support to the Boehner plan yesterday, then added that it could also support other rival plans, too.

The point is, the resolution of the crisis is what matters. Big Business doesn’t care how Congress raises the debt ceiling; the industry just wants it done.

“Right now, at this moment, there’s nothing more important for financial stability than coming to an agreement that will both lift the debt ceiling and put us on a sound fiscal path,” Rob Nichols, president of the Financial Services Forum, a trade association of the chief executives of Goldman Sachs, JP Morgan Chase and other large financial firms, told the LA Times.

A New York Times report added, “The chamber and other business groups have pressed with increasing urgency for Congress to raise the maximum amount that the government can borrow. They have cataloged the consequences of default at meetings, parties and dinners and over drinks.”

So far, Republicans don’t care — or at a minimum, care more what the right-wing base believes than what the “job creators” believe. With business leaders apparently stepping up more aggressively now, it’ll be worth watching to see if Republican attitudes shift at all. Our economy may depend on it.

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.

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  • Rob on July 27, 2011 8:53 AM:

    When,not if, the US Government defaults on its legal obligations next week and stops making Social Security retirement benefit payments (not if because default is just what the criminally ignorant Republican majority in the House has intended from the beginning if it could not get 100% of whatever its extreme right and super ignorant wing constituents demand and this time -finally- Obama won't cave in) I will commence a class action lawsuit on behalf of the 37.5 million Social Security retirement benefit recipients and seek punative damages due to the \"willfull failure\" of the US Government to make the payments as required by law. We shall see who actually believes in 'law and order' at that point.

  • BruceK on July 27, 2011 8:55 AM:

    The problem is that a plurality of the House caucus seems to be made up of borderline sociopaths. The consequences of their actions aren't real until they hit them, personally.

    They won't react to "if you don't get this done, the country is going to go off a cliff."

    They need to hear "if you don't get this done, you, personally, will no longer have a political career, and you, personally, will be a pariah from sea to shining sea, beyond any hope of redemption, and you, personally, will be reduced to scrambling for work in an economy that you, personally, are turning into a wasteland."

    I don't know if there's anything less that will budge them.

  • c u n d gulag on July 27, 2011 8:56 AM:

    I had another horrible thought -
    What if the Kabuki isn't between the Democrats and the Republicans, but between Republicans and Corporations?

    What if our Galtian Overlords have figured out that they can withstand the hit over the next few weeks, months, years, if they then get what they want afterwards:
    -A desperate work force willing to work any hours under any conditions at any age for any pay - with no breaks or benefits or any kind.
    -Privatization, or rather, Profitization, of safety net programs.
    -Elimination of financial and business regulations.
    -Elimination of envorionmental regulations.
    -Low, or no, taxes.
    Etc., etc., etc...

  • Matt McIrvin on July 27, 2011 9:01 AM:

    I'm thinking that a substantial number of them may actually want default, because they're Tea Partiers at heart and really want Obama and the Democratic Party destroyed more than they want a strong economy.

    I think progressives make a mistake when they talk about the country being in thrall to sociopathic large corporations, when they really should be concentrating on the very, very rich human beings who run these corporations. Astronomical CEO compensation even at failing firms demonstrates that the leadership of these companies care more about rich-guy class solidarity than about the health of their own companies. If the corporations all go down, these guys will all be fine; they've got loads of money. It's the little people who will suffer, from the loss of private-sector jobs and from the renewed rounds of "government is broke" austerity that will undoubtedly follow. Maybe the leaders are willing to take the hit to get Obama.

  • EdgewaterJoe on July 27, 2011 9:04 AM:

    SOMEBODY stands to make money if the Governmnt defaults. We know one of them is Eric Cantor. I'd Ike to know who else would and if any of those forces are lined up with the Tea Party.

    If the Suicide Squad is a cult, who bankrolls them?

  • dr. bloor on July 27, 2011 9:05 AM:

    The nauseating irony here is that these supposedly rational, grown-up Masters of the Universe won't change their campaign contributions one whit during the next election cycle. Obama and the Dems will be seen as waging class warfare, while the Khmer Rouge-wannabes who have taken over Congress will be seen as "the party of big business."

  • Steve on July 27, 2011 9:06 AM:

    Some say "crisis," others say "opportunity." It's like Enron's Jeffrey Skilling said, "I've got smart guys who can always figure out how to make money."

  • DAY on July 27, 2011 9:07 AM:

    There's some serious ignorance, abroad in the land. The governor of Florida was on CNN earlier, saying default's no biggie, we'll just cut spending!

    When the gal with the dimples tried- 4 times- to get him to address the 40% short fall, saying that the money had ALREADY been spent, he stood pat: "Just spend less."

    BruceK is right- they need to know how it will personally affect them.

  • walt on July 27, 2011 9:08 AM:

    I know a millionaire/business owner who told me he hopes the government defaults. Really, these guys ingest the same Ayn Rand garbage as Tea Partiers. Many of them are ideological loons (see: Koch brothers), and others are just politically tone deaf. I wish it were probable that there was a distinct class of responsible conservatives who pay the bills. I'm just not sure this class exists.

  • bob h on July 27, 2011 9:21 AM:

    The Chamber of Commerce is surprised that if you play Russian Roulette, as they did when they helped install the Tea Partiers, sometimes there is a real bullet in the chamber?

  • SW on July 27, 2011 9:22 AM:

    It's the President's job ro work around them, not enable them. When you have a two year old who is throwing a tantrum, you don't take off your close, smear yourself with shit and roll on the ground and start screaming with them.

  • ComradeAnon on July 27, 2011 9:22 AM:

    With the rating agencies now saying there have to be substantial cuts, it's in the bag. Business has amassed a few trillion, the economy isn't going anywhere anytime soon under the best of things. Whats a few more bad years? Business will be able to pick up assets for pennies on the dollar. And if they do reach an agreement, business will still come out smelling like a rose and the tea baggers will all have happy endings. Boner has absolutly nothing to lose here. It's a win-win situation.

  • Chotard on July 27, 2011 9:31 AM:

    This is slow motion succession that is about have a tipping point with Perry in the wings to lead it. It's about destroying the social compact that American has operated under for the last 80 years. It is about the feudalism of the South rising again under the banner of Christianism; and global corporate overlords laying waste a society built on diversity, equality and economic justice or at least aspiring to. The only possible way to win this game is to call it what it is.

  • Danp on July 27, 2011 9:34 AM:

    What if the Kabuki isn't between the Democrats and the Republicans, but between Republicans and Corporations? - c u n d gulag

    Well, here's two clues. 1) Despite the rhetoric, the markets haven't moved much. 2) According to the NYT, their discussions have been at parties and other social events. Doesn't really sound like they're at war, does it?

  • Bob M on July 27, 2011 9:42 AM:

    "SOMEBODY stands to make money if the Governmnt defaults."

    The vast majority are longs only who will get hurt. The impasse is now in difficult area where no one really knows the outcome. Not a great feeling to be in the market facing this risk.

  • Steve M. on July 27, 2011 9:55 AM:

    What if our Galtian Overlords have figured out that they can withstand the hit over the next few weeks, months, years, if they then get what they want afterwards

    I'm with gulag. And if that's not universally true, I think plenty of others are just living in a world of absolute moral hazard -- they're not really worried because they think if the economy collapses they'll be made whole. They always are, aren't they? Don't they always come out on top?

  • tom in ma on July 27, 2011 10:16 AM:

    The GOP politicians on the Hill are suicide-bombers. They don't care about their career. And they are completely expendable to the super-wealthy that are bankrolling them. They can be replaced at the drop of a hat with some other guy they pick out of the bar at the country club. The usual rules of self-interest that govern politics are not in effect anymore because GOP politicians put party over electoral self-interest.

  • Frank Wilhoit on July 27, 2011 10:21 AM:

    If the cash balance of the United States Treasury drops to zero, ALL commercial lending will halt immediately. Once physical stockpiles of fuel are exhausted, EVERYTHING will stop. There will be no vehicles on the roads, no food in the stores, no electricity. At that point the military will step in -- unless they, too, are pursuing the politique du pire.

  • bob h on July 27, 2011 10:21 AM:

    George Soros is reported today to have $25 billion of his own money under management. Why doesn't he take $1 billion of it and start a super-PAC devoted to restoring sanity to the US Congress? As a parting gift to the nation, and probably in his own financial self-interest?

  • Jon on July 27, 2011 10:33 AM:

    Yeah, I kept waiting for the big name business interests and other rational poobahs to step in during Bush II's reign of error also. I was sorely disappointed. Apparently, they've let the dogs off the leash and don't intend to call them back.

  • clevergirl on July 27, 2011 1:19 PM:

    Is it possible that Republicans simply welcome default, a downgrade, and/or an increase in interest? That they are perfectly willing to weaken both federal and state governments as it forwards their interests?

    And, if that is the case, at what point are they committing high treason?

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