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Democrats Reach Out to Lobbyists for Help on Debt Talks

Lobbyists are typically the ones asking favors of Congress, but when it comes to the debt limit, the tables have turned.

With a continuing stalemate in bipartisan White House talks, Democrats have been amping up the pressure on Wall Street and K Street to get off the sidelines of the debt and deficit reduction debate, but so far, they say they’ve gotten little more than lip service on the need to avoid a default.

Pressure from the White House and top Democrats appeared to bear some fruit Tuesday, when more than 450 CEOs signed a letter — organized by the U.S. Chamber of Commerce, the Financial Services Forum and other lobbying groups — warning against a default.

Chamber President and CEO Thomas Donohue, in a statement announcing the letter, said that an “unprecedented default on the nation’s bills would have dire consequences for our economy, our markets and Main Street Americans.”

The U.S. Chamber and other business groups have been meeting for months with freshman Republicans and others on the need to raise the debt limit.

But Democratic Senators said business groups need to do a much better job making the case to the public, which still largely opposes any debt limit increase.

So far, the television ad war has been dominated by conservative groups opposed to a debt ceiling increase or demanding extraordinary measures, such as a balanced budget constitutional amendment, that Democrats say have zero chance of passage.

“We need business leaders, businesses large and small, to understand that failure to extend the debt ceiling will raise interest rates and hurt our economic recovery,” Senate Majority Whip Dick Durbin (D-Ill.) said. “If they can deliver that message in communities and cities across America, I think it could make a difference.”

He added, “A letter is fine, a press release good, but we need much more from the business community to help us.”

Sen. Sherrod Brown (D-Ohio), who is up for re-election next year, said the business community should air some television ads of its own on what will happen without a debt limit increase.

“They need to talk specifically about what it will do to the middle class, to Main Street and to the economy, and they should do it on television. They ought to do it in mailing. They ought to do it in every possible public way they can,” he said.

Brown charged that the business community has remained quiet because it doesn’t want to criticize the Republicans it helped elect. Businesses have been gambling on the idea that an acceptable deal will be reached before the nation hits the debt ceiling, he said.

Some business lobbyists defended their efforts, noting that corporate America has said it favors raising the debt limit multiple times.

A source who worked on the letter said privately that the missive is the tip of a larger, behind-the-scenes lobbying effort to educate Members of Congress, particularly freshman Republicans, on the perils of not raising the debt ceiling. The U.S. Chamber of Commerce’s R. Bruce Josten and other top business lobbyists have been privately meeting with Members for months, the source said.

But the business lobby has two problems that might prevent it from an all-out campaign complete with advertisements and grass-roots mobilization.

For one, K Street has been working all year to court freshman Republican Members on some of the business community’s signature priorities, such as passing three free-trade agreements, so it doesn’t want to attack them publicly on the debt debate.

Additionally, the business community does not speak with one voice on the debt issue. While Wall Street and Main Street businesses agree — in theory — that defaulting on the nation’s debt would be disastrous for the economy, when it comes to how the debt debate is resolved, each industry and each company is looking out for No. 1.

“Primarily clients are looking at, ‘OK, how is this going to potentially affect me, and how am I going to shore up my situation?’” said one downtown lobbyist who represents multiple business clients. “They have shareholders that are worried. Instead of everybody all joining hands and saying, ‘Here’s what we need to do for the good of the nation,’ they’re just all about me.” This lobbyist noted that the same thing is going on around Capitol Hill, where politicians are worried about their own re-election prospects.

Several K Street sources noted that even though the U.S. Chamber has invested millions of dollars on issue and political advertising campaigns on other debates, the big business group cannot put its resources behind a deal until its membership has seen the agreement. Some companies, which might be targeted for funding cuts or tax increases, would not want their lobbying groups pushing for it.

Dorothy Coleman, vice president of tax and domestic economic policy for the National Association of Manufacturers, which signed on to Tuesday’s letter, said that her group has made it clear for a year that the federal government must meet its debt obligations.

“That said, our members are always concerned about the deficit and our spending problem,” she said. “Consequently, we definitely think that you need to look at discretionary spending and mandatory spending.”

But NAM, Coleman added, is firmly against any business-tax increases. The Senate, for example, has already voted to kill an ethanol industry tax subsidy, and Democrats are targeting other tax credits, such as those for corporate jets, for inclusion in any debt and deficit reduction deal.

Coleman said that it’s “premature” to speculate about whether the business community would launch any ads or publicly step up the pressure on Members to vote for the debt limit increase. She also defended the business community’s letter as being a major step.

“When you get almost 500 people to put their name on a letter asking Congress and the White House to avoid a default, I think that’s a pretty strong statement,” she said. “We’re going to continue to talk to the Hill and the administration about these issues. We’re working with a very tight timetable.”

But one GOP lobbyist dismissed the business letter as getting little notice on Capitol Hill.

“I think these letters, they get thrown away,” this lobbyist said. “If they really want to get Members’ attention, they need to key vote it or something. It’s not like they’re spending millions of dollars on an advertising campaign to educate Americans. They’re doing what they’re asked to be doing. Now they can say they wrote a letter.”

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