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U.S. President Barack Obama delivers remarks on the government funding impasse at M. Luis Construction, a local small business in Rockville, My. (JASON REED/REUTERS)
U.S. President Barack Obama delivers remarks on the government funding impasse at M. Luis Construction, a local small business in Rockville, My. (JASON REED/REUTERS)

Shutdown to slowdown? How Washington’s mess is hurting business Add to ...

“American big business has lost control of the Republican Party,” said Mark Mizruchi, a sociologist at the University of Michigan and author of The Fracturing of the American Corporate Elite.

It’s no surprise that investment, a crucial driver of any economy, would suffer if the party that has traditionally supported corporate interests stopped listening to CEOs.

Corporations are still highly effective in wielding influence on company-specific or industry-specific issues, Prof. Mizruchi said. But “there’s tremendous ineffectiveness on anything that requires broader collective action.”

A distaste for Obamacare

Polls suggest the majority of Americans blame Republicans for the budget impasse. And given the Republican leadership’s unsuccessful attempt to avoid the shutdown, the key players are those tied to the Tea Party. Politicians such as Mick Mulvaney from South Carolina and Tom Graves of Georgia say they were elected to take on a policy that violates the small-government principles in which they and their voters believe. Closing the government and the hypothetical threat of default are minor obstacles in the path of their cause.

For outsiders, especially Canadians, where state-sponsored health insurance is a birthright, the Tea Party stand often is dismissed as beyond reason. But the story of Tracie Sanchez, who owns Lima Pallet Co. Inc. – a maker of wooden shipping pallets in Lima, Ohio – might explain some of the objections business people have about Obamacare.

When the world economy descended into a deep recession in 2008, Ms. Sanchez says she was faced with a choice: She could fire people or stop providing their health insurance. She chose the latter, and the company survived.

Now, Lima Pallet’s sales have nearly rebounded to where they were before the financial crisis. In fact, Ms. Sanchez thinks she could be doing better. She would like to add a second shift, or even buy some adjacent land to expand. She toyed with purchasing a couple of struggling competitors. But she says she can’t do any of it.

Her current head count is 49 – more than the 30 or so people she employed before the recession. But adding one more person to her staff would force her to insure each of her full-time workers under a condition of the Affordable Care Act. The cost of health insurance, she claims, is greater than what she would make from expanding.

“Whoever in Washington decided that 50 is small business I have no idea,” Ms. Sanchez said. “I could put on a second shift tomorrow if I could go over 50 employees and not have to have health care. It’s frustrating.”

When Republicans call Obamacare a “job killer,” this is what they mean. The distaste for the program isn’t unique to the Tea Party clan; it is pervasive among Republicans. Mr. Obama and the Democratic Party pushed their unique approach to universal health care through Congress when they controlled both houses after the 2008 election.

Democrats feel that was their right after winning a broad mandate. Republicans think their opponents violated the American tradition of legislative compromise. While polls are harsh on Republicans for triggering the shutdown, they essentially are split on whether Obamacare is a good policy. Unlike Mr. McNeel, Ms. Sanchez has no problem with the Republican Party’s tactics. “I’m hoping they stand their ground,” she said.

Mr. Obama told CNBC this week that this time is different. “This time I think Wall Street should be more concerned,” he said.

That might have been a cynical call for traders to put some more heat on Congress. Recent history shows lawmakers sometimes need a sharp fall in equity prices to focus their minds.

But it might also have been a legitimate warning. After years of waiting for the gridlock to end, the old ways of doing things in Washington may be over.

“People keep asking, ‘When do we get back to the normal legislative process?” said Stan Collender, an expert on the federal budget and a partner at Qorvis Communications. “And I keep telling people: This is the new normal.”

Mr. Danner said the same thing. “The question is, `What’s the new normal?’ ” he said. “We don’t want to keep doing this. Maybe if you keep knocking your head against the wall, you discover that it doesn’t feel so good.”

But Mr. Danner isn’t counting on that. He said he and other trade associations are considering getting involved in primary campaigns by backing business-friendly candidates seeking party nominations in districts that are one-party bastions.

If Mr. Danner goes ahead with that plan, its guaranteed “business-friendly” will mean a willingness to co-operate. “A good many of the people we are talking about these days, the interests of business or small business are not their top priority,” he said. “We’re not only about just trying to make a rhetorical point.”

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