If Starbucks' CEO Howard Schultz is any gauge on the corporate zeitgeist, businesses around the country have had enough of Washington politics and they're not going to take it anymore. (Well, some of them anyway). Schultz is not alone in saying that there is a profound lack of trust in the U.S. congress to prescribe policies to help the economy and reduce the deficit. He said the debt debate and subsequent budget bill a disappointment, to put it mildly.
Schultz was on CNBC "Squawk on the Street" Tuesday morning calling on businesses to follow his lead and stop all political contributions until Republicans and Democrats commit to working together. CNBC ran a poll asking if American business leaders should stop contributing to both parties until they showed some signs of bipartisanship. Out of the more than 3,300 people that responded, an impressive 89% said they agreeed with Schultz, that the best way to send a message to congress was for big business donors to simply stop donating money to these guys.
"The debt debate was an ideological debate and the result of the debt ceiling issue was a complete failure," he said. "They're supposed to represent Americans not their ideology. I'm not a politician and I am not here to prescribe policies, but I am a business man who employs over 100 thousand people and people are hurting. We want to see Congress working together to solve these serious problems in this country. I don't want to be a bystander anymore. I want Congress to get back to work and I recommend businesses stop political contributions," Schultz said.
The political infighting between mainstream Republicans, hard right anti-tax, anti-Fed Tea Party Republicans and Democrats led Standard & Poor's to ultimately downgrade U.S. credit for the first time in its history to AA+ from AAA. The S&P cited distrust in the political parties to solve fiscal deficits, and the two parties inability to make at least $4 trillion in budget cuts. The bill called for around $2.4 trillion in cuts.
Samarjit Shankar, managing director at BNY Mellon in Boston, says that on the policy side, Washington political intransigence is closing the door on U.S. options to heal the economy. That puts the Federal Reserve as the white knight in the economy. "They, too, have very few arrows left in their quivers," Shankar told Forbes on Monday.
Monetary policy is not always the silver bullet anyway, the Bank of England governor Mervyn King said Monday. That means legislators actually need to make decisions rather than acting out their own version of Jersey Shore DC. Congress needs to set the record straight on policies -- whether that is a new highway bill, or tax reform closing corporate loopholes -- in order for companies can plan for long term investments. Yet, any word of more spending gets Republicans calling for trials of treason, and any threats of reforming entitlement programs has Democrats telling retired persons that they are no longer going to get their Social Security checks and may even lose their health care.
"Business leaders are not all that worried about regulation," says Richard Soultanian of NUS Consulting Group, an energy consulting firm advising U.S. multinationals and retailers on energy prices. "No one I talk to is worried about new regulation. They are not going to turn down a big order because of a closed tax loophole, or a tax increase. What they are worried about is seeing deep down into their business pipeline and seeing that it's not great. They are looking at the U.S. economy and seeing it's not great."
There are a lot of reasons why the U.S. economy is not great: deleveraging; high unemployment; stagnant wages. Howard Schultz at Starbucks is just wondering where the leadership is. It's not the U.S. government that is bankrupt. The country is actually quite rich. But Washington on the other hand..."Washington is bankrupt. One of our strongest foreign policies was to have a strong domestic economy. And we don't have that anymore so the world is losing confidence in the U.S.," Schultz said.
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