In Debt Limit Debate, No Big Push From Big Business

April 13, 2011

Peter Overby

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The U.S. Treasury will officially hit its credit limit around May 16 for the 10th time in 10 years. If House Republicans prolong the fight over raising the debt ceiling past that date, government officials and Wall Street investors agree that it would cause financial chaos.

"This chatter about not meeting our obligations, I just don't understand it," JPMorgan Chase CEO Jamie Dimon said late last month during an event at the U.S. Chamber of Commerce. Dimon is one of the few business leaders who's been outspoken on the issue.

"It's a moral obligation to ourselves and anyone who owns U.S. debt," he said. "They should know the United States is good for its money, period."

Martin Regalia, chief economist for the U.S. Chamber of Commerce, agrees that there's no other option but to raise the debt limit. The Chamber is lobbying Congress and educating lawmakers about what it could mean if that doesn't happen: higher interest rates, financial uncertainty and damage to the nation's fragile economy.

Regalia says the ramifications of a default — or even a close call — can be an eye-opener for lawmakers. "It's no reflection on them that they don't fully understand the nuances of a budget process that I don't think anyone fully understands."

Political Leverage

But it's not just recently elected Tea Party Republicans who want to push the debt limit envelope. House Majority Leader Eric Cantor told CNN on Wednesday that promoting possible additions to the debt ceiling bill are aimed at controlling federal spending.

"There are all kinds of different measures that are being considered here on Capitol Hill to make sure we put the brakes on spending."

And on Tuesday, Cantor unveiled a new twist in strategy: He said House Republicans intend to stage the debate after the official deadline of May 16. That's a gray area — several weeks in which Treasury says it can jury-rig techniques for paying the bills.

Cantor sees more political leverage there, while financial analysts predict that's when fear will start driving up interest rates.

But as much as business lobbyists talk about the fear of uncertainty, there's little sense of urgency on this one. The Financial Services Roundtable supports a higher debt ceiling, but it isn't even taking the basic step of sending lawmakers a letter about it. The Business Roundtable hasn't gotten to the issue yet, a spokesman said.

At the National Federation of Independent Business, a powerful lobbying voice for small business, a spokesman said they are not actively involved in the debt limit issue.

To Steve Bell of the Bipartisan Policy Center in Washington, that doesn't make sense. "I've gotta tell you that, especially for smaller business, any increase in interest rates — or anybody who gets nervous in the bond market and starts to ask for higher rates to buy our debt — that's really going to hurt lending."

Bell says business as a whole is taking a big risk by not pressing Congress to fix the debt limit.

"I find it a mystery," he says. "Perhaps they're afraid of offending the majority in the House or the Senate. Perhaps they figure [the debt limit bill is] going to pass no matter what, so they're not going to get involved to protect themselves from any unintended consequence." Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.