Republicans Are No Longer the Party of Business
T.J. Gentle, chief executive officer of Smart Furniture, an online custom furniture maker in Chattanooga, employs 250 people, has seen sales grow 25 percent this year, and was planning another round of hiring—until Republican hard-liners forced the federal government to close on Oct. 1. Gentle is the embodiment of moderate, business-minded pragmatism: He voted for President Obama and Tennessee’s Republican Senator Bob Corker, splits his donations between the parties, and prefers divided government as a check on partisan excess. Like his plan to hire more workers, this too may change as a result of the shutdown. “It’s as if House Republicans are playing suicide bomber with the U.S. economy,” he says. “As a businessman, it defies all reason and logic.”
Smart Furniture and countless other businesses are already feeling the impact of the shutdown. The Federal Housing Administration, which backed one-third of all mortgages last year, has furloughed employees, a move that will slow loan approvals and house purchases. “That directly affects the construction and materials industries,” Gentle says, “but it also affects us, since the purchase of a new home is the No. 1 trigger for buying furniture.”
Larger businesses, which often tilt more heavily toward the GOP, are no less frustrated. It’s hard to find any organization more closely affiliated with the Republican Party than the U.S. Chamber of Commerce. In 2012 the business trade group spent $35,657,029 on federal elections, according to the Center for Responsive Politics. Of that, $305,044 was spent on behalf of Democratic candidates. Last year the Chamber went further to help Republicans than it ever had by running ads directly against candidates: It spent $27,912,717 against Democrats and only $346,298 against Republicans.
BLOG: The Shutdown’s Ripples Are Already Frustrating Small Businesses
All that money ensures a careful hearing when the Chamber wants something from Republicans—but it doesn’t guarantee they’ll listen. On Oct. 1, House Republicans ignored the Chamber’s pleas to keep the government running. The shutdown is costing the U.S. economy $300 million a day, according to IHS (IHS), a global market-research firm, and it’s only the latest sign suggesting that the old adage, “Republicans are the party of business,” no longer holds true. From the austerity imposed by sequestration to the refusal to reform immigration laws to the shutdown and now, as appears likely, another debt-ceiling showdown when U.S. borrowing authority expires on Oct. 17, the GOP’s actions have put a strain on one of its most valuable partners: the business community.
With no clear resolution in sight, those partners are getting antsy. “A government shutdown is economically disruptive and creates even more uncertainty for the U.S. economy,” says R. Bruce Josten, the Chamber’s executive vice president of government affairs. “We are disappointed this has happened, and we urge Congress and the administration to work together immediately to find a path forward on the [continuing resolution] and debt limit to remove any threat to the full faith and credit of the U.S. government.”
Over the past several years the series of budget crises engineered by Republicans to extract concessions from Democrats has damaged economic growth by reducing spending and increasing uncertainty. “We estimate that fiscal drag from federal government policies was 1 percent last year and 1.8 percent this year,” says Dean Maki, chief U.S. economist for Barclays (BCS). “We do believe that there has been an effect on both investment spending and hiring the past few years because of the uncertainty over the events in Washington.”