Shutdown straining ties between businesses, GOP

The ongoing federal government shutdown is straining the oft cozy relationship between the business community and the Republican Party.

And the growing possibility that the country could soon default on its debt is only adding to the tension.

Arizona's GOP congressmen -- U.S. Reps. Matt Salmon, David Schweikert, Trent Franks and Paul Gosar -- tout their pro-business credentials. But they are part of a conservative group of Republicans in the House of Representatives that is continuing to play hardball on a budget deal, much to the business community's chagrin.

Republicans see the federal government's current crisis as one of their few opportunities to win concessions on issues key to their base from Democrats who control the U.S. Senate and the White House. They include cutting government spending, reforming taxes or entitlements and, until recently, as they've moved to new tactics, gutting the health-care law.

Business leaders around the country and in Arizona say that they support those goals but that they fear the economic consequences of the stalemate, now in its 12th day.

"The country is still pulling out of its toughest economic downturn since the Great Depression. Why take any chances that federal government actions could reverse some of the positive economic progress we've made over the last three years?" said Glenn Hamer, president of the Arizona Chamber of Commerce and Industry.

Instead, Hamer thinks Republicans should agree to a "clean" continuing resolution that would end the shutdown and put federal employees back to work with no strings attached. And President Barack Obama, he said, should commit himself to cutting the nation's debt in exchange for a debt-ceiling increase.

The stalemate in Washington has continued, though talks between the two parties took on new urgency Friday with the possibility of a federal default just five days away. House Republicans were offering to pass short-term legislation that would avert the default and reopen the government as part of a framework that would include cuts in benefit programs.

But White House spokesman Jay Carney said late Friday that the president would not accept a stopgap deal that would put the nation back on the brink in six weeks.

Arizona impact

In the two weeks that the federal government has ceased doing business, some industries, including Arizona's vital tourism economy, are being hit hard.

National-parks advocates estimate close to $1 billion in visitor spending nationwide has been lost in the 12 days since parks closed. Arizona has lost 132,000 visitors and $13 million in tourism dollars at Grand Canyon National Park. Nearly 7,000 jobs are affected, from furloughed park staffers to tour guides with no visitors to show around, according to a report from the Coalition of National Park Service Retirees.

The defense industry, which is also critical to Arizona's economic health, has suffered, with government contracts put on hold. Lockheed Martin, for instance, has furloughed hundreds of workers.

"We are bearing a disproportionate brunt of the effects of the partial shutdown," Hamer said.

As a result, many of the same business groups to which Arizona Republicans have close ties are publicly pressuring the House GOP to put an end to the political brinkmanship. For example:

The head of the American Bankers Association said defaulting on the country's $17 trillion debt could cost hundreds of billions and ordinary Americans would suffer. "Using the debt ceiling as leverage in the deficit debate is unwise and dangerous," the association president said. The bankers association is a top donor to Schweikert.

The National Federation of Independent Business sent a letter to lawmakers, calling on them to avoid default. Gosar touted the federation's campaign endorsement last year.

The U.S. Chamber of Commerce called reopening the government and raising the debt ceiling "must-pass legislation." During Salmon's bid to return to Congress in 2012, he pointed to awards from the chamber as proof he was pro-business.

Honeywell's chief executive was more blunt than most business leaders, who continue to call on both sides to compromise. "It's clearly this faction within the Republican Party that's causing the issue right now," CEO David Cote told theNew York Times. Honeywell is Franks' top donor, according to the Center for Responsive Politics.

Despite the business groups' views, Schweikert and Gosar believe fears of a default-related catastrophe are overblown. Franks did not respond to several requests for an interview, but he also has said Democrats are exaggerating debt-limit consequences.

Salmon believes Republicans must use the debt ceiling as leverage because he doesn't trust Democrats to compromise on things like reforming Social Security and Medicare.

Election impacts?

Recent polls indicate Republicans' popularity during the shutdown has tanked, causing political experts to speculate about a backlash against conservative members in the next election. A survey by Gallup indicated the GOP's favorability is at its lowest point since 1992, and an NBC News/WallStreet Journal poll said "tea party" favorability is at an all-time low of 21 percent.

Sen. John McCain, R-Ariz., called the results "devastating."

In some parts of the country, tea-party Republicans are now facing more moderate campaign challengers propped up by the local business establishment.

But so far, Arizona's Republican House members appear safe in next year's midterm elections. Each represents a solidly GOP district and, despite the heartburn they're giving business leaders, none faces a campaign opponent.

Gosar said feedback from his constituents in rural northern Arizona is increasingly supportive of Republicans holding the line.

"They are ticked off at this president and this administration and the U.S. Senate," the Prescott Republican said. "At first, they were about 60-40 telling us to hang tough. Now, it's up to about 90-10."

Salmon said he's listening to his constituents, who on two telephone town halls backed him overwhelmingly.

"We are supposed to represent the feelings and thoughts of our constituents," he said.

Who speaks for business?

Arizona Republicans are proud their views aren't in line with "big business" groups like the U.S. Chamber.

Schweikert said the chamber benefits from federal spending programs that conservatives oppose, like the bank bailouts during the recession, which conservatives believe helped big businesses at the expense of the overall economy.

"This is the post-stimulus and post-bailout world," Schweikert said.

Salmon said he appreciates the chamber's input on raising the debt ceiling but thinks business groups should focus on the long-term goal that conservatives are pushing for: a long-term cut in government spending to reduce the country's overall debt.

"We're hearing from Big Business America saying, 'Do this now.' I'd like to hear them put the same pressure on (Senate Majority Leader) Harry Reid and the Democrats," he said.

Gosar said he would not support any bill that raises the debt ceiling without also delaying the health-care law for a year or doing something else to significantly reduce government spending and regulation.

He said conservatives are trying to help the economy.

"Anytime you're holding and restraining government, as we're trying to do, you're enabling investment in the private sector," he said.

Eric Herzik, chairman of the political-science department at the University of Nevada-Reno, said the debate is part of a split in the Republican Party.

"In the past, the Republicans were the party of business, the Chamber of Commerce, the banks, even Main Street businesses," Herzik said.

"(But) during the Bush administration, you got this division between Big Business/Wall Street and the little guy," he said, as stimulus programs that continued under the Obama administration fueled frustration among tea-party Republicans.

"They look at what happened and say, 'The little guy didn't get treated as well as the big guy,'" Herzig said.

He said groups like the Chamber of Commerce are caught in the middle, because they represent businesses of all sizes. "The chamber used to be kind of the touchstone for Republicans. Now, the tea-party Republicans are saying, 'No, you don't speak for business. We do,'" Herzig said. "And the chamber is saying, 'Who are you?'"

Patrick Kenney, a political-science professor and director of the Institute for Social Science Research at Arizona State University, said most hard-line Republicans are in such safe districts that they are unlikely to lose their seats over the shutdown or debt-ceiling crisis.

In Arizona, for instance, he noted that Gosar is in a more Republican district than he was in in 2011, when he voted to raise the debt ceiling. He took heat for it last election and has since hardened his stance.

But Kenney said it may be risky for Republicans to dismiss the importance of the debt ceiling.

"Virtually all economists agree that this would injure our reputation around the world with the people who buy our bonds," he said. "Even if you can get by for a little while with some manipulation of the money, it's obviously not sustainable."

He said McCain and Sen. Jeff Flake, R-Ariz., who both opposed the Affordable Care Act, are taking more of a pragmatic approach than their ideological GOP colleagues in the House.

"I don't think they see the House Republicans' strategy as a winning strategy," Kenney said.

Flake has said it makes sense to use the debt-ceiling debate to force spending cuts, as Republicans did two years ago with the Budget Control Act.

But doubting the consequences of a default, as Schweikert and Gosar have, makes him "cringe."

McCain blamed his own party for the impasse in an interview with Fox News Friday, calling the motivation behind the shutdown a "fool's errand."

"The whole premise of shutting down the government was the repeal of 'Obamacare,'" McCain said. "That gave the opportunity for this to be terribly, awfully mismanaged and mishandled by the White House."

On the debt limit, McCain said Republicans could negotiate with the president on entitlements and tax reform.

"There are things that are achievable. Defunding Obamacare is not one of them," he said.

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