The nonpartisan National Small Business Association added a new question this summer to its survey of more than 1,100 small-business owners, and it vaulted immediately to the top of the group's To Do list for Congress and the Obama administration. "The No. 1 thing small businesses want policymakers to do is end the partisan gridlock and work together," the NSBA found.
Good luck with that.
As Washington heads toward an autumn of fiscal deadlines, government-shutdown threats, and the specter of default, the business community is reaping the whirlwind. Dozens of House and Senate conservatives, many of them tea-party populists, have been elected since 2010 with help from the U.S. Chamber of Commerce, the National Federation of Independent Business, and other business interests.
Now these same lawmakers—described by one business lobbyist as "economic fundamentalists" for their aversion to compromise—are a chief reason for holdups and breakdowns on bills that traditionally are bipartisan, as well as on big issues where deals may be within reach. All of which puts the business sector in an interesting squeeze: fighting many Obama policies tooth and nail, but also bemused and in some cases frustrated by the way some presumed congressional allies are handling their jobs.
"You don't really know what they're going to do or why," says NSBA President Todd McCracken, a 20-year Washington veteran. "It used to be there were not many rewards for obstruction. Now there are no consequences."
Susan Eckerly, senior vice president of federal public policy at the NFIB, says House Speaker John Boehner "has his hands full" with some 60 rebellious tea-party Republicans. "They are really bucking Boehner," she says. "It's going to be really hard for him to control them. That's a new phenomenon in Congress." And not one her group could do much about, if it came to the point of wanting to do something. Some of the tea-party lawmakers are NFIB members, Eckerly says, and incumbents win automatic support for reelection if they score 70 percent or better in NFIB vote ratings.
For businesses, the stakes amid all this disruption are enormous. They are keenly interested in tax reform and immigration reform. They would like to see more federal spending on infrastructure and less on entitlements, and less federal regulation across the board. They don't like brinkmanship on budget and debt issues, or the more routine dysfunction that has stalled transportation and agriculture legislation important to both parties and much of the private sector. And as most business groups have made crystal clear, they really, really don't like the Affordable Care Act, better known as Obamacare.
Yet there is little to no business support for the latest tea-party-driven crusade to block any funding bill that includes money for the health care law, even if it means the government would shut down when the fiscal year ends Sept. 30. Bruce Josten, executive vice president for government affairs at the U.S. Chamber of Commerce, calls that "not the politically astute thing to do." Bill Miller, senior vice president in charge of outreach to Congress and the administration at the policy-oriented Business Roundtable, says his group considers that strategy unrealistic and is now focused on trying to shape ACA regulations.
The NSBA and the more conservative NFIB, the only business group to join a multistate lawsuit against the ACA, would prefer that Congress address individual provisions that are problematic for their small-business constituents. "We'd love to see repeal, obviously. But given the legislative arithmetic, it would be better to focus on the most onerous parts for small business," says Eckerly. As for the defund faction, "It's a great way for them to raise money, but it's not going to happen."
CEOs and business lobbyists have sat down with lawmakers to explain what it means to them—and the economy writ large—for Congress to be so polarized and paralyzed. Miller says it's been useful for new lawmakers who ran against "crony capitalism and bad government" to get "the perspective of people who make big bets on America."
Josten recounts his talks with newbie conservative members who promised in their campaigns to reduce the size, cost, and reach of the federal government, and also promised not to compromise their principles. He brings up the idea that "Pledge No. 2 may be sabotaging your ability to achieve Pledge No. 1." Their response? "Some people get it, and some people don't," he says, and some people don't care, because their top goal is maintaining an identity separate from the bipartisan establishment that increased the size of government and the national debt.
Some seasoned business lobbyists say most lawmakers who arrive clutching pitchforks phase out of firebrand mode over time. But that shift could take a while, especially among Republicans, because dozens of House districts remain overwhelmingly conservative, and more than a few senators fear primary challenges from the right. For now, Josten says, "you've got a bunch of people who don't even know what a conference committee is." In some cases, that's because they are blocking those committees, where House and Senate differences are hashed out.
If there's a person who embodies the political evolution of the capital, it's the Roundtable's Miller. He spent the 1990s as chief of staff to then-Rep. Connie Morella, a moderate Republican from a Maryland suburb. The U.S. Chamber of Commerce then hired him to lobby the Tuesday Group, at the time a relatively large and influential group of House GOP moderates. Miller later built the chamber's political operation and ultimately played a central role in electing tea-party conservatives in 2010. When the results were in, he recalls warning more than once that based on the anti-establishment, antigovernment campaign rhetoric he had heard, "the relationships are going to become much more complicated and complex" between lawmakers and the business community.
If there's an issue that symbolizes those complications, it's infrastructure. Roads, rail, ports, bridges, airports, broadband—who doesn't love infrastructure? Especially in a time of high unemployment, low interest rates, and regular reports about how our infrastructure is "crumbling." Yet, despite supporters ranging from Obama and the AFL-CIO to the Chamber of Commerce, there has been no infrastructure infusion in the past few years. Miller was partial to an infrastructure bank proposed by then-Sen. John Kerry, D-Mass., that would have leveraged private funds, but it languished with only Democratic backing. Did Miller try to get some Republican cosponsors? "Yes. And we were never able to."
Since then, Republicans have reacted negatively to a new Obama proposal to cut corporate taxes and use a onetime "transition fee" on repatriated corporate earnings for infrastructure projects. Miller, meanwhile, is now interested in a House infrastructure bill introduced with bipartisan support. But business groups did not mount a full-court press on earlier measures—far from it—and there is no concerted campaign for this one as yet.
McCracken says businesses have wound up "getting caught up in the culture of Washington, setting aside those things that seem to be politically difficult." Even infrastructure falls into the difficult category because it's viewed in federal budgetary terms as incurring an expense rather than as creating an asset. McCracken says that avoidance syndrome must end, and he thinks it just might. The precedent he cites is Fix the Debt, a bipartisan debt-reduction advocacy group backed by scores of corporate leaders.
"There was a sense that this is a weird political time and we'll get past it," he says. "Now, there's the realization that maybe this is the new normal, and we should do something to shake it up." The next few months will offer many tests of his theory—and his optimism.
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