A conservative activist group backed by the industrialist Koch brothers is urging Republicans to show restraint during US debt-ceiling negotiations, representing a shift in position by the usually hardline Americans for Prosperity (AFP).
The move by the influential group underscores concern that a political stand-off over extending the US’s borrowing limit, which many Republicans are pushing for at the end of February, would diminish public support in the long term for sharp cuts in government spending, AFP’s goal.
The activist group opposed an agreement that raised the debt ceiling in 2011 because it said the deal did not go far enough to cut spending.
“We’re saying calibrate your message. Focus on overspending instead of long-term debt,” said AFP president Tim Phillips. “Focusing on debt makes the messaging more difficult.”
He warned that a long fight over the $16.4 trillion (€12.3 trillion) debt ceiling could hasten a “grand bargain” between US president Barack Obama and Republican speaker John Boehner.
AFP opposes any such compromise because it would raise taxes as well as cut spending.
“Our number-one priority is to stop government overspending. The debt limit is a symptom of that but if debt becomes the be all and end all, it becomes easier for liberals to push a combination of future spending cuts that are not enforceable and immediate tax increases,” he said.
While Mr Phillips said Republicans ought to push for as many cuts to the budget as possible, conservatives should stop short of being labelled “hostage takers”. The change comes amid heightened fears among big business about the impact of dysfunction in Washington.
‘Paralysis’
Walmart US chief executive Bill Simon lamented the paralysis in the capital as he pledged yesterday to source an additional $50 billion of products from domestic manufacturers over 10 years. “We can’t break that gridlock that exists in Washington, but we can break the paralysis of waiting for something to happen,” he said.
Broken down to $5 billion a year over a decade, the Walmart target is equal to about 2 per cent of its US sales in its past year.
Mr Obama has taken a more aggressive posture on the debt ceiling this year than in 2011. He said this week that he would not negotiate over the borrowing limit and that Republicans should not expect a “ransom”.
The change does not mean AFP seeks compromise on other fronts. Mr Phillips said the group would urge members of Congress to support $1.2 trillion in cuts set in motion in 2011. Both sides want to replace these cuts, which take effect in March, with other cuts or tax increases, but Mr Phillips said Republicans should not waiver on their opposition to tax increases. – (Copyright The Financial Times Limited 2012)
