Some of America's leading CEOs are beating a familiar path to Washington to support a stopgap bill to raise the U.S. borrowing limit and avert a government shutdown, warning lawmakers that the specter of the first debt default in the country's history and a credit downgrade is damaging the economy.
The business leaders, all members of a group called “Fix the Debt,” said they went to Capitol Hill last week with a simple message for Republicans and Democrats, but it is the same as the one they delivered in budget standoffs of 2011 and 2012.
“Engage in whatever political machinations you wish, but do not default,” said Honeywell International Inc Chief Executive David Cote. “Don't throw away a credit history built up since George Washington.”
For these corporate leaders, it's a bit like the movie “Groundhog Day
,” where the main character lives the same day over and over, wondering whether there is a way out of the scene.
What Does a U.S. Government Shutdown Mean?
Large parts of the federal government need to be funded each year to operate
If Congress cannot agree on how to fund them, those parts of the government shut down
During a shutdown, federal workers are separated into excepted and non-excepted employees
Excepted must continue to work, and will be paid when Congress funds the government again
Non-excepted are furloughed and not guaranteed to receive back-pay
Parts of the government dealing with national security and public safety and those with independent funding like the Postal Service continue to operate
Other parts shut down, including National Parks, the EPA and the processing of visa and passport applications
The last government shutdown lasted 21 days and ended on January 6, 1996
The U.S. government faces the possibility of a partial shutdown of operations on Oct. 1 as Congress struggles to pass an emergency spending bill. Republicans in the U.S. House of Representatives want a one-year delay in the Oct. 1 start of the Affordable Care Act, or Obamacare, President Barack Obama's signature healthcare legislation, in return for raising U.S. borrowing authority by enough to let the Treasury borrow through the end of 2014.
Even though many of the CEOs believe federal spending is excessive and the deficit puts U.S. economic health at risk, they want Congress to pass an emergency measure.
On Friday, the U.S. Chamber of Commerce and 235 other business groups joined the push. In a joint letter to Congress, they urged lawmakers to fund the government past the deadline and to “act expeditiously to raise the nation's debt limit.”
The letter also said, “It is not in the best interest of the employers, employees or the American people to risk a government shutdown that will be economically disruptive and create even more uncertainties for the U.S. economy.”
The “Fix the Debt” group calls for any short-term debt deal to be followed by fiscal reform to reduce the deficit. The CEOs insist that avoiding a shutdown cannot be the final goal and say a comprehensive bipartisan agreement on politically sensitive tax and spending reforms is needed.
They concede it will be tough to achieve in the deeply divided and gridlocked Congress.
“There's plenty of different plans; what we haven't done is land on one that everybody buys into,” said Bob Moritz, chairman of PricewaterhouseCoopers LLP.
Honeywell's Cote, Tenneco Inc. CEO Gregg Sherrill and Paul Stebbins, executive chairman of World Fuel Services Corp., plan to take an even bigger group of chief executives to Washington in October.
“It's not for us to articulate precisely what the negotiated settlement should look like,” Stebbins said. “But we're telling them that the dysfunction is doing deep damage to the country and to the world's perception of us.”
With current funding scheduled to expire at the end of September and the government fast approaching the $16.7 trillion debt limit imposed by Congress earlier this year, Stebbins said the group urged lawmakers to pass the continuing resolution and not delay Obamacare.
“It's just reckless to try to hold it hostage - to hold the whole country hostage - because you don't like a law,” Stebbins said.
Separately, Goldman Sachs Group Inc's CEO Lloyd Blankfein said that although he was optimistic an agreement to raise the debt ceiling would ultimately pass, concerns that Congress would fail to act in time were hurting markets and the economy.
“Saying we'll blow up the credit rating is not responsible,” Blankfein said on Wednesday on a panel of the Clinton Global Initiative in New York.
NYSE Euronext CEO Duncan Niederauer, however, said markets have so far taken little notice of the debt ceiling debate.
Niederauer said that anxiety over a potential government shutdown is “the only thing that's stopping the U.S. economy from really being unleashed in a positive way.”
The last close-call on a government shutdown in December 2012 and early 2013 dealt a blow to small-business confidence, hurting lending and job growth, said Richard Hunt, head of a trade group called the Consumer Bankers Association.
Hunt told reporters on Wednesday that experienced lawmakers understand the implications of shutting down the government, but some newer members do not seem to realize how wide-ranging the effects could be.
“Some of these people who just got elected believe they are here to save the country, and they're not worried about a two- or three-day shutdown,” Hunt said. “So we need to make sure we have adults in both parties right now.”