WASHINGTON – In 2010 and again in 2012, companies on Main Street and Wall Street did just about everything they could to help Republicans win elected office in Washington.
But this week, many of those Republicans ignored pleas from corporate America and let the government shut down, potentially harming a fragile economy and causing more of the uncertainty that businesses dread.
The decision to shut down the government because Democrats would not make major changes to President Barack Obama’s health care law underscored the fading influence of traditional business interests in the Republican Party — and the rising influence of more confrontational and conservative tea party groups that encouraged Republicans to embrace the shutdown strategy.
“While I don’t think the Affordable Care Act is in the best interest of the country, I also don’t think it is in the best interest of the country to shut the government down,” said Harold Jackson, executive chairman of Buffalo Supply, a Colorado medical equipment company.
Jackson, who sits on the board of the U.S. Chamber of Commerce and leans Republican, said he thinks the GOP has given in too much to the demands of hard-core conservatives.
“I still think it’s pretty much a tea party minority that is causing the ruckus, and we will continue to try to make them come around to our way of thinking,” he said.
The experience of the Chamber of Commerce, one of Washington’s most powerful lobbying groups, may best illustrate the new tensions between Republicans and the business community.
The chamber spent more than $60 million in 2010 and 2012, helping elect tea party Republicans and winning GOP control of the House.
But while there have been signs of fraying in the relationship for several years, the GOP’s willingness to defy its strongest business supporters became clearest Tuesday with the government shutdown.
The chamber had led more than a hundred business groups in urging Congress to keep the government open.
“With the U.S. economy continuing to underperform, the federal government needs to maintain its normal operations,” a chamber-sponsored letter said Monday, hours before the shutdown. “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.”
A chamber spokeswoman played down the differences between Republicans and the trade group, saying businesses don’t back candidates based on a single issue. But other conservative groups were happy to highlight the new wedge dividing the chamber and the GOP.
The conservative Club for Growth, for instance, has been urging lawmakers to embrace a shutdown strategy, threatening to support primary challenges to lawmakers who would vote to keep the health care law in place.
“We are a pro-free-market organization. The chamber is a pro-business organization. Sometimes we share policy goals. Other times we do not,” said Barney Keller, communications director for the Club for Growth. “Fighting ‘Obamacare’ is one of those times.”
On Wednesday, the White House will attempt to exploit the growing differences between the business community and Republicans by inviting top Wall Street chief executives to a meeting with the president.
While touching on the shutdown, the meeting will be principally focused on the debt limit, which must be raised by mid-October to avoid a default on the national debt.
Although a shutdown is harmful to the economy, many financial firms have greater fear of a default, which could undermine the traditional U.S. role as the world’s financial safe haven.
Financial services executives, who supported Republicans by a wide margin in 2012, have been quick to back Obama’s position that the debt limit must be unconditionally raised.
“There is a very, very strong aversion from the business community” to Republicans’ brinkmanship over the debt limit, said Tony Fratto, a former Bush administration official who now consults on the financial industry.
Other companies are also warning of the consequences of brinkmanship. According to the Business Roundtable, a major business lobby, half of companies said the budget fight in Washington is likely to slow hiring.
“Gridlock in Washington is not a good thing for economic strength,” John Engler, a former Republican governor of Michigan and chief executive of the organization, said recently. “CEOs clearly remain very concerned about the large-scale economic uncertainty.”
T.J. Gentle, a political independent who owns a large furniture business in Chattanooga, Tennessee, and has voted for Obama and Republican Sen. Bob Corker, said the change in the Republican Party is a turn-off to many business-minded folks.
“I think what’s happened over time is that the voice of the fringes of the Republican Party has sort of taken over that business friendly doctrine that the Republican Party was traditionally associated with,” he said.
Ronald Weinberg, an investor involved in Republican causes in Ohio who is on the chamber board, said Republicans and business generally continue to agree on substance, but disagree on strategy. “I think there is a dichotomy of thinking in the Republican Party,” Weinberg said, “and my own view of it is to be more of a pragmatist toward problem-solving, and everybody has to engage in some kind of compromise.”