lobbying

Who's missing from debt talks? Corporate America.

July 28, 2011: 11:25 AM ET

The business lobby has entered the debt ceiling debate at the 11th hour with only a whimper, considering the stakes of a default for corporations.

By Tory Newmyer, writer

John Boehner

John Boehner

FORTUNE -- If the specter of a default has spooked corporate America, you wouldn't know it by watching their hired guns in Washington over the last several weeks.

Aside from sending a handful of letters urging Congress to act, the big business lobby has mostly hugged the sidelines as the partisan standoff over the debt limit crisis intensified. That appears poised to change, now that there are only five days to go until the Treasury Department says it will run out of money to pay all the federal government's bills.

With Speaker John Boehner (R-Ohio) set to put his plan for a debt ceiling hike to a vote in the House today, the heaviest-hitting trade associations are finally piping up and urging their member companies to rally behind the proposal. On Wednesday evening, a broad collective of those groups -- including the U.S. Chamber of Commerce, the National Association of Manufacturers, the Business Roundtable, and the National Association of Home Builders -- cosigned a letter to Members of Congress endorsing the plan. And officials with those groups said this time, they will be following up with an aggressive, coordinated lobbying effort to try to muscle the package through a jumpy House Republican conference.

But considering the stakes -- business types in Washington agree a default would be calamitous -- the failure of the business lobby to engage more forcefully earlier has even some veteran K Street hands scratching their heads. "If you look at the totality of the communications and the lobbying efforts, this has been uncharacteristically quiet," says one. "It's been a minimalist approach, and I'd have expected the business community to be much more vocal."

Representatives of the groups are quick to dispel that point. The Chamber, for example, has spent months organizing lobbying visits to skeptical lawmakers to explain the gravity of the threat. And NAM has been "talking about this issue for almost a year," says Dorothy Coleman, the group's vice president of tax and domestic economic policy. But the commitment barely registers against the eight-figure sums the groups regularly dole out for more parochial causes.

Doubting a default

There have been at least a few factors at work keeping big business groups from mounting a concerted campaign to sound the alarm.

For the most part, they've rested on the assumption that Congress would figure out on its own how to extend the federal government's borrowing authority without seriously flirting with default. Ken Bentsen, a former Democratic Congressman from Texas now lobbying for the Securities Industry and Financial Markets Association, said his group only started asking member companies to focus on the issue last week. "It's unthinkable you'd really default, and our members are just coming to grips with the fact that if we don't act, this could really happen," he says.

There was a similar dynamic three years ago, when the stunning failure in the House of the first attempt to pass the Wall Street bailout sent a relatively complacent business lobby into what one banking lobbyist called a "no-huddle hyper-drive blitzkrieg."

"We all expected that to pass, too, and when it didn't, we lit it up," this lobbyist said. The Chamber, NAM, the Financial Services Roundtable, and the BRT, which represents top CEOs, all got in on the act, launching a cooperative push with the Bush administration and Congressional leaders to round up votes, in part by generating constituent pressure on wobbly lawmakers. "The effort was extraordinary," says Joanna Schneider, of the BRT. "We talked to Secretary Paulson every day, we had CEO conference calls with the Secretary every day, and we made a massive effort for all the CEOs, particularly where they had large employment centers, to make calls."

Lobbyists for the major trade groups point to other reasons they've taken a largely hands-off approach so far. Several noted that until this week, there was no specific, credible proposal for them to help push. Presumably, the lack of legislative text wouldn't prevent the groups from bankrolling, say, a major advertising campaign to educate voters about the stakes. Those types of campaigns are hardly uncommon.

But the argument points to what has been perhaps the most powerful motivator in keeping big business mum: fear of what could end up in whatever package makes it into law. As long as tax hikes remained on the table as a means of trimming the deficit, industries that could see their bottom lines bitten wanted to reserve the right to object.

Indeed, it's not that there's been no active lobbying on the debt ceiling by corporate interests. From April through June, more than 140 outfits reported lobbying work on the issue, according to a review of disclosure reports by the Sunlight Foundation. The vast majority appears to have engaged to protect narrow tax privileges, or even seek new breaks. Blue Cross Blue Shield, Oracle (ORCL), Exxon Mobil (XOM), Pfizer (PFE), Devon Energy (DVN), Northrop Grumman (NOC), and Wal-Mart (WMT) all reported at least monitoring the talks. Some no doubt felt more threatened than others. With President Obama making a refrain of the charge that Republicans want to protect a tax break for corporate jet owners at the expense of seniors and middle-income earners, the National Business Aviation Association launched an effort to defend the provision as a job-creator.

"They're all for shared sacrifice as long as they're not the ones sharing," says Bill Allison of the Sunlight Foundation.

Or, as one Republican lobbyist describes the investment by K Street's power-players: "They couldn't have done less if they tried, spent zero dollars and no cents. And it's because they're gutless. They've not done anything because they don't want to pop their heads above ground and get their heads taken off."

With any direct changes to entitlement programs and the tax code likely to be left out of the package, the coast is now clear for the big business groups to jump in. And there's nothing like an impending economic Armageddon to marshal their focus. But when this scare subsides, and the big business lobbies go back to pressing for specialized treatment under the guise it serves a greater economic good, it will be worth remembering where these special interests stood when that cause was imperiled.

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