Obama tries to win business leaders’ support for increase in debt limit
President Obama, taking new steps to repair ties with the country’s business leaders and win their support for his economic agenda, dispatched his top aide to meet with chief executives on key issues — especially the need to raise the limit on federal debt and head off concern over a national default.
White House Chief of Staff Bill Daley, a former business executive and Obama’s chief emissary in the effort, urged Chicago business leaders in meetings Wednesday and Thursday to convey their own worries about the threat of default to Republican leaders in Congress.
“Their interests are aligned with ours,” Daley said in an interview amid sessions with leaders that included a Thursday breakfast with the Economic Club of Chicago.
CEOs are interested in “keeping some stability in our economy as it slowly moves forward to improve,” he said. “Any sort of chaos in the marketplace affects business, and that affects all of them.”
Although many business leaders want to see the issue of the debt ceiling resolved before the government hits its borrowing limit in mid-May, they’re wary of other parts of Obama’s plan for cutting the debt and deficit. The president’s solution involves balancing spending cuts with tax reform that, for some, means tax hikes.
But seeking an alliance with business leaders may be useful to Obama, bolstering impressions that he is a centrist and showcasing his willingness to cross the customary dividing lines of American politics in search of solutions. In the White House calculation, that advances the president’s policy goals as well as his political objectives.
The relationship has been stormy in the recent past, even after the epic battles over healthcare reform. Obama was so openly critical of U.S. Chamber of Commerce fundraising during the 2010 congressional campaigns that the organization’s president, Tom Donohue, accused the White House of running a “smear campaign.”
The organization still opposes the administration’s financial and environmental regulation policies, as well its approach to energy, which includes a recent proposal to abolish oil industry tax incentives.
Still, there has been a slight thaw in recent months. The administration and the Chamber of Commerce worked closely to promote the South Korean free-trade deal and other agreements in the works.
The administration’s position on the debt ceiling — and the addition of a tactician such as Daley — could bring Obama closer to the business community.
Daley’s voice “is going to be an important one in the process,” said Rob Nichols, president and chief executive of the Financial Services Forum, which represents CEOs of major financial institutions.
Nichols and his members have been meeting privately with members of Congress to convince them that not raising the debt ceiling is hazardous.
“The economic consequences of defaulting on our debt would be extremely harsh,” Nichols said, resulting in “a massive spike in interest rates.”
On his trip to Chicago this week, Daley readily acknowledged that the president and Congress must agree to cut spending. A resolve to get debt and deficit under control must accompany any decision to raise the debt ceiling, he said.
“Nobody thinks there will be a clean debt ceiling extension vote,” Daley said. “There probably shouldn’t be, without some changes [in spending]. The budget deficit is a real thing that has to be addressed.”
Many Republicans back the idea of approving a debt ceiling increase in small increments, setting up a series of votes over the coming year.
Daley said that procedure would erode confidence in U.S. securities. He said he also was asking business leaders, many of them Republicans, to tell their friends in Congress: “Don’t keep taking these things to the brink. That’s bad for us.”
The Republican counterargument is that Obama would be the one playing brinksmanship if he fails to cut spending to their satisfaction.
Obama’s political advisors expect, and even invite, a certain amount of friction with business, especially where it concerns transparency rules, healthcare and financial reform. In the end, they think, even the attempt to work with Republicans and business leaders helps the president.
