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Obama Asks Business Group to Sway GOP on Budget

Obama Asks Business Group to Sway GOP on Budget

By Alexis Simendinger - September 19, 2013

House Republicans are eager to dismiss President Obama, their party leaders in Congress, top corporate executives in the private sector, and the chairman of the nation’s central bank, who was appointed by a Republican president.

At least that’s the way it sounded Wednesday as Washington braced for another budget showdown this fall.

Unable to change the political incentives that inspire House renegades, Obama tried enlisting help from forces that in any other policy dynamic might hold some sway. Yet no one seemed able to talk House Republicans out of plans Wednesday to threaten a fiscal crisis as a technique to protest annual deficits and debt, and to fuel antipathy for Obamacare.

The president appealed to members of The Business Roundtable, hoping the nation’s leading corporate titans might lobby congressional Republicans to rethink this week’s game plan.

House conservatives hope to keep across-the-board cuts known as sequestration in place, defund the Affordable Care Act (or delay its implementation for at least a year), and force the administration to capitulate if it wants new borrowing authority this fall, which will be necessary by mid-October or early November to avert a default on U.S. obligations.

It promises to be the fourth round since 2011 of fiscal policy-by-chaos and brinksmanship, and Obama is responding with a stand-off of his own. He’s vowed to refuse to negotiate with lawmakers over the debt ceiling (a pledge he did not maintain in the past when compromise legislation was enacted). He’s also appealing to the public for support, a familiar page from his political playbook, and a strategy that has had marginal success.

Turning to allies in the business community to reason with fellow Republicans in Congress sparked a new round of lobbying, but the impact among House and Senate GOP firebrands and deficit hawks appeared minimal.

Obama plans to visit Missouri on Friday to tout his manufacturing and “investment” agendas during a visit to a Ford Motor Co. metal stamping plant near Kansas City, where he will again warn that Congress is playing with economic fire at a time when independent experts warn that growth and hiring are constrained by GOP-backed policies, including talk of shutdowns and indiscriminate spending cuts. The administration also maintained that trying to defund the Affordable Care Act would end up hiking deficits, not reduce red ink, because the law’s federal obligations live on regardless of available funds.

“You have never seen in the history of the United States the debt ceiling, or the threat of not raising the debt ceiling, being used to extort a president or a governing party and trying to force issues that have nothing to do with the budget and have nothing to do with the debt,” Obama complained to members of the business group.

“We have not seen this in the past,” he continued, “that a budget is contingent on us eliminating a program that was voted on, passed by both chambers of Congress, ruled constitutional by the Supreme Court, is two weeks from being fully implemented and that helps 30 million people finally get health care coverage -- we've never seen that become the issue around a budget battle.”

The Roundtable released a quarterly survey of its members Wednesday, underscoring why employers believe they are operating in challenging circumstances and remain hesitant to hire, expand, invest or bank on government policies over the long haul.

"Expectations for sales and capital investment both declined modestly in this survey," Roundtable Chairman Jim McNerney (pictured above with Obama) noted while explaining the responses.

The business group found that executives perceive the fights in Washington over the debt ceiling and a budget for the fiscal year that begins Oct. 1 as complications for economic recovery (41 percent said the battles have a “somewhat” negative impact, and 9 percent said disagreements this fall would introduce “much more negative impact”).

“Failure to resolve these issues and get it done in a timely way can only heighten the damage to the economy," Roundtable President John Engler, a former Republican governor, told reporters. "Gridlock in Washington is not a good thing for economic strength."

The U.S. Chamber of Commerce also weighed in Wednesday with a letter to lawmakers, seeking to head off a protracted end-of-year stalemate over the debt ceiling and the budget. The chamber said it advocated a three-month continuing resolution beginning Oct. 1 -- at existing spending levels that incorporate sequestration -- to bridge operations through the rest of the year.

“It is not in the best interest of the U.S. business community or the American people to risk even a brief government shutdown that might trigger disruptive consequences or raise new policy uncertainties washing over the U.S. economy,” chamber lobbyist Bruce Josten told lawmakers.

Entitlement spending and the ACA require congressional attention, Josten agreed, but the chamber argued that thoughtful legislative fixes would not be enacted under threat of crisis in such a brief period.

Separately, two leading economists added their voices to the siren’s chorus building once again in the nation’s capital. At a breakfast gathering sponsored by the Christian Science Monitor, Congressional Budget Office Director Doug Elmendorf told reporters that federal deficits are “falling rapidly,” which he said could afford “some running room” to policymakers to achieve policy changes that could take effect over time.

He said unemployment continues above 7 percent because demand in the economy has remained weak, and he acceded that certain government spending programs contribute directly to consumer demand.

The latest CBO projections, released Tuesday, “show that the federal budget is a very important problem, but not necessarily an urgent one in the sense that interest rates the government is currently paying are quite low and the deficit is falling now,” he said.

Across town, the Federal Reserve, which has helped keep interest rates at record lows as the economy continues to recover, announced it will leave its bond-buying program in place for the time being, believing a continued boost is needed.

Ben Bernanke, whose second term as chair of the nation’s central bank ends in January, told reporters that Fed governors discussed the policy climate on Capitol Hill before deciding to maintain the cushion.

“A government shutdown, and perhaps even more so a failure to raise the debt limit, could have very serious consequences for the financial markets and for the economy,” Bernanke warned. “The Federal Reserve's policy is to do whatever we can to keep the economy on course. And so, if these actions led the economy to slow, then we would have to take that into account, surely. So this is one of the risks that we are looking at as we think about policy.”

Bernanke said the Fed’s powers to offset a “debt-limit shock” would be “very limited.” Echoing worries raised by the president and business leaders, the Fed chair delivered an unmistakable message:

“I think it's extraordinarily important that Congress and the administration work together to find a way to make sure that the government is funded, public services are provided, that the government pays its bills and that we avoid any kind of event like 2011, which had, at least for a time, a noticeable adverse effect on confidence and on the economy.”

In other words, the White House and lawmakers must deal, not delay.

Alexis Simendinger covers the White House for RealClearPolitics. She can be reached at asimendinger@realclearpolitics.com. Follow her on Twitter @ASimendinger.

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