Chamber Muscle


Tim Carney highlights an important dynamic in the shutdown showdown: the tension between the business lobby and the Tea Party movement. One is deeply embedded in subsidies and government contracts; the other is hostile to high levels of spending. And both of them have pull in the Republican coalition.

The spirit of subsidy

Business is so dependent on government that it has been reassuring Democrats that it wants to avert a shutdown and fiercely lobbying Republicans to strike a compromise.

Chamber of Commerce President Tom Donahue twisted the arms of GOP lawmakers this week and then met with Senate Majority Leader Harry Reid. Dow Jones Newswires quoted Reid saying that Donahue "told more than 100 Republicans yesterday at an event that they were making a huge mistake shutting down the government." Business Roundtable head John Engler personally lectured Boehner on keeping government running for the sake of government contractors….

The chamber's role as a counterpoint to the Tea Party has always presented a potential rhetorical problem for Democrats. The White House tried to make the 2010 elections about Republican coziness to the chamber and other corporate lobbyists, while today business interests are aligned with the White House.

The contradiction stems from the divergent agendas of the Tea Partiers and the U.S. Chamber of Commerce. The chamber supported Troubled Asset Relief Program, stimulus, cash for clunkers, green subsidies, and Obama's proposed new infrastructure spending—all of which The Tea Party opposed….

This demonstrates two points that should trouble anyone who shares the Republicans' professed belief in limited government. First, there is no powerful Washington constituency for serious spending cuts. Tax cuts and deregulation have their powerful champions, but federal frugality offers no concentrated benefits. This is part of why the GOP managed to cut taxes last decade while boosting spending. This is also why the Tea Party, wielding the threat to wage primary challenges against profligate Republicans, is so extraordinary and so important.

Second, the business-government coziness highlights a weakness in the U.S. economy. Businesses that serve government or rely on subsidies are not serving consumer demand, they are serving political demand. This makes the country poorer, as profits are less tied to giving people what they want and more tied to the ability to please politicians.

Whole thing here.