Republicans ignore calls from business community to raise the debt ceiling now and pass reforms later

United States Chamber of Commerce President and CEO Thomas Donohue delivers his annual State of American Business address in Washington January 10, 2013. REUTERS/Gary Cameron
United States Chamber of Commerce President and CEO Thomas Donohue delivers his annual State of American Business address in Washington January 10, 2013. REUTERS/Gary Cameron
Chris Moody
·Political Reporter

Business leaders are increasingly warning Republicans that their refusal to lift the nation's ability to borrow more money could badly damage the economy, but the GOP, under ferocious pressure from conservatives to force budget concessions from President Barack Obama, are standing their ground.

The U.S. Chamber of Commerce and other groups have actively engaged lawmakers for weeks and say that while they agree with the need for reforms, the top priority should be avoiding the default that a failure to OK another debt ceiling increase would bring.

“Our top lobbyists are continuing to talk to scores of members of Congress and their staff urging them to address this and stop kicking the can down the road,” U.S. Chamber spokeswoman Blair Latoff Holmes told Yahoo News. “It is up to lawmakers and the administration to find common ground and reach a deal that will fund the government and raise the debt limit to avoid default. We will continue to make that case to everyone who will listen.”

But this time, Republicans aren’t listening to the business community.

In September, the Chamber joined more than 250 business associations and advocacy groups urging House Republicans to avoid a government shutdown and pass a bill that Obama would sign to raise the debt ceiling. Republicans ignored them by refusing to back down from a demand to delay a key piece of the president’s health care law, which resulted in a government shutdown. Now, with less than 10 days left to raise the debt ceiling, they are poised to ignore pleas from the business community again.

The potential consequence of not raising the debt ceiling could be far more disastrous than a temporary pause in government services.

On Tuesday, House Republicans emerged from a private conference-wide meeting in the Capitol basement and announced they still do not intend to pass a “clean” debt ceiling hike — one with no strings attached — as Obama demands. The president has said multiple times that he will not negotiate on the debt limit. (It is widely believed among Republicans that he’s bluffing.) They want to tie broad spending cuts and budget reforms to the vote.

While business groups acknowledge that major bills like the debt ceiling have historically offered opportunities for major reform, they are pressing lawmakers not to take their negotiations past the Oct. 17 date set by the Treasury Department that could risk default.

“In the back and forth of legislative wrangling, Congress and the administration should not lose sight of the fact that both the continuing resolution and the debt ceiling are and remain must-pass legislation, and that the debt ceiling specifically must pass on a timely basis to avoid inflicting substantial and enduring damage on the U.S. economy,” R. Bruce Josten, the Chamber's executive vice president for government relations, told Yahoo News.

At best, groups like the Chamber would prefer that Congress pass a debt limit increase now and deal with budget reforms later. But many House Republicans think they would lose any leverage they have if Obama gets an increase without some GOP priorities attached.

“I don’t believe this president has any intention of negotiating in good faith after the fact,” New York Republican Rep. Chris Collins, a member of the Small Business Committee, told Yahoo News. “He has to come to the table now and negotiate.”

Others accuse business groups of wanting it both ways: asking Republicans to stem the growth in federal debt, and then asking them not to when Republicans think they have the chance.

“It’s kind of interesting, the business community demands that we work on balancing the budget and getting our entitlement spending under control and then when we actually get down to a point where there’s a little brinkmanship, they’re the first ones who say we need to back away,” Louisiana Republican Rep. John Fleming told Yahoo News. “They need to decide among themselves what they want from their government.”