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Bloomberg: ‘Embarrassed’ Corporate Leaders Quiet on Fight

-By Mark Drajem

August 1, 2011- With the U.S. government on the verge of a historic default, the country’s largest business lobbying group took to the halls of Congress last week to press lawmakers to support the Panama Free-Trade Agreement.

The U.S. Chamber of Commerce sponsored a “door knock,” with 80 members handing out Panama hats to tout a trade deal with a nation that has a smaller economy than Akron, Ohio. To critics, the Chamber event illustrates what has been a deafening silence from U.S. executive suites on the gridlock in Washington over raising the federal $14.3 trillion debt ceiling.

“They haven’t done nearly enough to sound the alarm,” said Jim Kessler, vice president for policy at Third Way, a Washington research group that describes itself as advocating “moderate policy” and has executives from Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS) on its board. Executives “think this is all Washington theater, and it will all get done in the end.”

The Chamber, which last week began to issue almost daily pleas for the debt ceiling to be raised, today urged lawmakers to approve the package worked out by President Barack Obama and congressional leaders and passed by the House. The Senate may vote as early as tomorrow. In the months before the weekend compromise, company lobbyists and executives had mostly steered clear of the fight.


At a closed-door meeting with Chamber lobbyist Bruce Josten last month, Democratic Senators Mark Begich of Alaska and Mark Warner of Virginia upbraided the group and its member companies for not twisting arms hard enough to get a compromise package worked out, according to two people familiar with the discussion who spoke on condition of anonymity because the meeting was private.

Begich contrasted the lobbying, television advertisements and political giving the Chamber invested fighting off health- care legislation in 2009 and 2010 with its “wishy-washy” approach on the debt ceiling.

“I’m amazed,” Begich said in an interview July 27. “They spent millions saying that health care would be the end of all business in America, but the end of all business in America is in five days from now.”

On the debt debate, corporations have kept their lobbying money on the sidelines. Of the 10 companies with the largest lobbying expenditures in 2011, two said they were lobbying on the debt ceiling during the first six months of this year, according to disclosure forms filed with the Senate: insurer Blue Cross/Blue Shield, the third-largest lobbyist, and drugmaker Pfizer Inc., the ninth-largest.

Buffett, Cote

None of the other companies mentioned the issue. Together those 10 spent more than $90 million on lobbying from January through June, according to data compiled by the Center for Responsive Politics, a Washington research group.

With notable exceptions such as Warren Buffett, the billionaire chairman and chief executive officer of Berkshire Hathaway Inc., and David Cote, chairman and chief executive of Honeywell International Inc. (HON), CEOs generally have shied away from speaking out individually on the issue.

“It’s unfortunate that the business interests have not stepped forward as loudly as they should have,” Bill Daley, the White House chief of staff, said in an interview with Bloomberg Television July 26. “You’ve had a silence from the business community to the political establishment over the last number of years that’s been unfortunate.”

‘Embarrassed’ by Republicans

Warren Bennis, a professor of business at the University of Southern California who has written about corporate leadership for four decades, says CEOs may have been silenced by positions advocated by some Republicans, such as Tea Party enthusiasts who support an increase in the debt limit only if it’s accompanied by greater spending cuts than the increase and doesn’t raise taxes.

“They’re caught,” Bennis said in an interview July 29. “They tend to be Republican and they are embarrassed by what they see from Republicans,” Bennis said. “It’s a real stalemate and CEOs want to stay clear of it.”

After negotiations between Republicans and Obama broke down, chief executives of companies such as General Electric Co. (GE), BlackRock Inc. (BLK) and Citigroup Inc. (C) started to push harder for a breakthrough last week, mainly by signing group letters sent to Congress and the administration.

Goldman Sachs Chairman and CEO Lloyd Blankfein and JPMorgan Chase & Co. (JPM) chief Jamie Dimon were among 14 financial executives who signed a July 28 letter by the Financial Services Forum, a Washington trade group that represents the largest banks.



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