By Rick Newman | Daily Ticker – Mon, Oct 14, 2013 12:22 PM EDT
Business leaders have been increasingly vocal in their displeasure with Congress over the ongoing federal shutdown. But so far, there’s one crucial thing they haven’t done: clamp off the campaign contributions that are the lifeblood of American politics.
Members of Congress love to wax patriotic about carrying out the will of the American people, blah blah blah. But money is the thing that really gets their attention. And the business lobby is where the money is. Business groups contribute more than 70% of the donations that fund political campaigns, according to the Center for Responsive Politics. With campaigns costlier than ever, that gives the business lobby considerable leverage in terms of getting their way with politicians.
So if business groups really became determined to end the government shutdown and the standoff over extending the federal debt ceiling, declaring a moratorium on campaign contributions ought to do the trick.
“All it would take are a few of the biggest hitters to pull back,” says Sheila Krumholz, executive director of the Center for Responsive Politics, which monitors campaign donations. “It would be extraordinarily hard to replace that lost money with other money.”
Big business is typically associated with the Republican Party, but business groups give to many candidates. During the 2012 election cycle, about 40% of the donations from business groups went to Democrats, who control the Senate and the White House and therefore oversee many matters business cares about. The rising influence of the Tea Party, and its penchant for disruptive tactics such as shutting down the government, has further weakened ties between business leaders and establishment Republicans (including House Speaker John Boehner) who seem unable to corral their rambunctious party mates.
Business groups often have differing agendas, since the oil industry faces different challenges than pharmaceutical firms, food companies or technology start-ups. But virtually all businesses tend to benefit from predictable government, reliable infrastructure and other factors that have been disrupted by the shutdown. So it’s a unique moment when businesses in general have one huge thing in common: A need to get back to business as usual.
If business groups decided to withhold campaign contributions until Washington resolved its budget issues, they could target Republicans or focus on House Republicans specifically, since the House is holding up a budget resolution. Most analysts think “clean” legislation to reopen the government and extend its borrowing limit--with no strings attached--would pass both the House and the Senate, if a vote was held. But Boehner and other House Republican leaders won’t bring such a measure up for a vote, fearing it might shatter the party’s unity, since some Republicans could join Democrats to pass such a bill against Tea Party opposition.
A moratorium on campaign contributions might not sway Tea Partiers, who tend run against the establishment and don’t usually rely on business donations anyway. But it could persuade other Republicans to break with their Tea Party allies and vote to reopen the government.
A more pragmatic approach, however, might be for business groups to suspend all contributions to Democrats and Republicans alike, taking a “work-it-out, nonpartisan approach,” as Krumholz says. For influential lobbying groups such as the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers, that would reduce the odds of making new enemies while showing seriousness about the need to deal with the budget impasse.
There’s already evidence that the shutdown and the threat of a default on U.S. debt, no matter how small, is hurting business. The shutdown has deflated consumer confidence, foreshadowing a cutback in spending that could cut into revenue at many companies. Financial markets are increasingly volatile, and stocks have been registering wild swings triggered by any sign of breakthrough or stalemate in Washington. On corporate earnings calls, CEOs and CFOs repeatedly express their reluctance to spend and invest amid so much political uncertainty.
If the fiscal follies in Washington do ultimately cause a new recession or other lasting damage, big businesses will survive better than most. Many big companies have stockpiled cash and streamlined operations to deal as effectively as possible with economic shocks. But robust profits depend on a healthy economy, not just on the ability to survive turmoil. The politicians don’t seem to have gotten the message yet.
Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.