Debt Ceiling Rumble: Business vs. the Tea Party
Policy + Politics

Debt Ceiling Rumble: Business vs. the Tea Party


For a while it looked as if the Tea Party and business leaders were singing from the same hymnal: shrink government, repeal Obama’s health care law, rely more on the private sector, reduce regulations, lower taxes, and restrain government spending.

Last fall, the U.S. Chamber of Commerce and the financial services industry together contributed about $20 million to GOP midterm candidates affiliated with the Tea Party movement, according to calculations by The Public Campaign Action Fund, a left-leaning group that advocates public campaign financing. Everything seemed copacetic.

But relations have grown testy in recent days as the nation faces the prospect of a first-ever default on U.S. debt beginning next Tuesday, as the two sides fiercely lobby for opposite outcomes. Business leaders are freaking out  that a default could send an already troubled economy into another tailspin while some Tea Party leaders oppose raising the debt ceiling under almost any circumstance.

“It’s not an outcome difference, but there’s a pretty significant difference of opinion in terms of the process of getting there,” David Winston, a GOP strategist, told The Fiscal Times. “Some within the Tea Party are trying to get quite a bit of their agenda done right this second, using the debt ceiling. The business community wants to be more careful about how they use this device, and err on the side of caution, even if they do eventually want to go in the same direction.”

Earlier this week, U.S Chamber of Commerce and financial industry trade organizations, including the Financial Services Roundtable, sent a letter to all House members endorsing House Speaker John Boehner’s bill to increase the debt limit, which Boehner was forced to pull off the floor last night after he failed to round up enough freshmen votes. "This legislation is critical. Default on debt obligations is not an acceptable option," the chamber wrote, cautioning members of Congress that it would watch their votes closely.

FreedomWorks Chairman Richard K. Armey  , the former House majority leader and a Tea Party backer, called congressmen from Texas and urged them to vote no on a debt ceiling increase. Mark Meckler and Jenny Beth Martin, the co-founders of Tea Party Patriots, traveled to Washington to belittle the spending cuts in Boehner’s bill as “fake” and “phantom.” And during a lunchtime speech at the National Press Club yesterday, Rep. Michele Bachmann the Minnesota Republican who is running for president and heads the Tea Party caucus in the House, repeated her assertion that the country would not suffer in the event of a default.

“I don’t believe for a moment we will lose the full faith and credit of the United States,” said Bachmann, “I am committed to not raising the debt ceiling.” She has previously argued that the Treasury would be left with enough cash for critical needs while the rest of government would be subjected to “tough love.”

In a recent speech in Atlanta, Chamber of Commerce CEO Tom Donohue sternly warned freshman that if they failed to vote to raise the debt ceiling “we’ll get rid of you,,” meaning business political action committtes would turn off the contribution spigot for House members faced with reelection next year.

Hundreds of business leaders sent a letter to President Obama  and every member of Congress two weeks ago, urging them to put aside ideological differences and swiftly negotiate a deal to raise the debt ceiling or risk devastating financial markets. Many of the signers have also deployed lobbyists to meet privately with Republican House freshmen to warn them about the severe consequences of not raising the debt ceiling.

“A growing chorus within the business community has been very clear on the absolute need to increase the debt ceiling—taking a pragmatic approach to what’s at stake, and not only what can happen but what will happen,” said Charles Kolb, President of the Committee for Economic Development, a group of corporate executives and researchers.

For many of the 87 House Republican freshmen  , this is their first time working on an issue that has an impact on financial markets, Kolb noted. “One has to recognize that there is an international financial system. One can’t wish that away,” he said, adding that he’s confident that assuming conservative freshman recognize the dangers of a default, they will “do the right thing and not allow the U.S. to default.”

Meanwhile, Tea Party groups say even with discretionary spending cuts, raising the debt ceiling is simply unconscionable and will give lawmakers a free pass to spend taxpayer dollars recklessly. “The only real way to force spending cuts is if there is no money. There is no getting back to financial stability without that pain, ” said Mark Meckler, national coordinator and co-founder of the Tea Party Patriots. However, he said he’s not surprised business has begun lobbying to raise the nation’s borrowing limit.

“Parts of the business community benefit immensely from government spending, so they’re happy to have the government borrow so that many goes into their coffers,” he said. “They have a profit motive.” His group, displeased with the level and scope of the $917 billion of initial spending cuts in Boehner’s proposal  , is joining forces with like-minded groups to wage war, with rallies, a social networking blitz, and threats to conservative lawmakers who vote for it. Their preference is a more draconian “Cut, Cap and Balance” approved by the House but rejected by the Democratic-controlled Senate, which includes about $111 billion in immediate spending cuts and a Balanced Budget Amendment to the Constitution.

“Voting for the ‘Cut, Cap, and Balance,’ plan won’t save you from the Tea Party’s wrath if you ultimately vote for a cheap giveaway of more debt,” said Tea Party Nation founder and CEO Judson PhillipsTea Party Nation has taken to calling any member who votes for Boehner’s plan or a Democraticx altenrative in the Senate s as a “RINO”, or Republican In Name Only.

“The House controls the purse strings right now and at some point somebody there has to man up and say ‘what are we going to do to fix this problem long-term,’” said Amy Kremer, chairman of the Tea Party Express. “Boehner’s plan doesn’t go far enough. We will continue to push for bigger, bolder steps, and aren’t going to settle for some watered-down deal, regardless of what business says.”