When it comes to preventing a weak economy from sliding backwards even more, an editorial from the New York Times today summarizes the way forward: “more near-term spending to stimulate the economy, more revenue to help pay for it, and a balanced approach to the long-term deficit by reducing health care costs and strengthening the tax base.”
This isn’t exactly a secret plan. Given the larger economic circumstances, it’s the painfully obvious solution. Economists prefer this approach. The financial industry prefers this approach. The White House prefers this approach.
And as the NYT editorial noted, business leaders prefer it, too. Now would be an excellent time for them to say so.
When the federal government was on the brink of default and the economy hung in the balance, the nation’s business leaders had a chance to step forward and push for a long-term solution. They could have supported a grand bargain that cut spending and raised tax revenue. They could have warned House Republicans that it was far too risky to use the debt ceiling for political leverage.
Instead, the United States Chamber of Commerce, the Financial Services Forum and other important players wrote a series of weak letters to the White House and Congress saying, in essence, “just don’t default.”
Business leaders had reason to worry. Unlike many Republican politicians who saw the standoff as political theater, or a chance to bring “big government” to its knees, they knew what default would mean for their bottom lines. But just avoiding that cataclysm is not enough. The economy is in profound trouble, and the political system is in desperate need of responsible voices promoting sound ideas for both growth and deficit reduction.
I can appreciate the alliance between Big Business and the Republican Party, and the corporate leaders’ expectation that the partnership will lead to looser regulations on everything from employee benefits to worker safety to pollution.
But that alliance is not unyielding. In 2009, the U.S. Chamber of Commerce, hardly a Democratic ally, strongly endorsed President Obama’s Recovery Act. It’s not because the Chamber is led by radical socialists, hell bent on destroying American capitalism; it’s because the Chamber realized the stimulus would prevent a depression. This realization was strong enough to lead the group to ignore the near-universal opposition to the effort by the Republican Party.
The business lobby was right and the Democratic agenda stabilized the economy, produced economic growth, and started creating jobs. But as the private sector has probably noticed, the Recovery Act has run its course, and as public investments stall, so too does the national economy. This isn’t a coincidence. Government intervention has helped prop up the economy, and as public resources run dry, growth is faltering. To get back on track, we’ll need more demand, more capital injected into the system, and more investments.
Big Business knows this. If they say so, it increases the odds of the parties striking a deal — short-term investment for long-term debt reduction.
Corporate leaders may love their Republican allies, but do they love the GOP more than their own profits? Is the business community willing to gamble its earnings on the preferences of a radicalized party that nearly pushed the nation into voluntary default, even when private-sector leaders begged them not to play the game?
The NYT added, “The chamber, along with the Business Roundtable and others, has urged greater government spending on rebuilding roads, bridges and the power grid. The chamber joined with the A.F.L.-C.I.O. in supporting the creation of an infrastructure bank, one of the White House’s top priorities to help kick-start the economy. We hope they back it up with real lobbying in Republican offices.”
The recovery may depend on it.