More CEOs Get Impatient with the Government Shutdown

Starbucks CEO Howard Schultz is asking his fellow chief executives to push for an end to the gridlock in Washington, saying there needs to be a return of civility over partisanship. Alcoa CEO Klaus Kleinfeld compares the threat that the US might refuse to raise the debt ceiling to a “giant Taser” that will freeze confidence in the world economy, not just the U.S.

Could Big Business turn away from the GOP, its natural political base? A number of CEOs and trade association groups are growing more restless with the Republican party’s Tea Party wing.

Some warn that a default could spur a shift in the relationship between the corporate world and the Republican party. Long aligned by mutual self-interest on deregulation and lower taxes, the business lobby and Republicans are diverging not only over the fiscal crisis, but on other major issues like immigration reform, which was favored by business groups and party leaders but stymied in the House by many of the same lawmakers now leading the debt fight.

Not many CEOs have expressed specific intentions as yet, but evidence of continued frustration is everywhere. In a letter posted on the company’s web site late Monday, Starbucks CEO Howard Schultze said he is “utterly disappointed by the level of irresponsibility and dysfunction we are witness to with our elected political leadership.” He said that he had talked with other corporate leaders who agree it is “our responsibility to address the crisis of confidence that is needlessly being set in motion.”

“In uncertain moments such as these, it is time for us as citizens and business leaders to remind our employees and customers that we stand with them. Perhaps through these actions, we can remind the Congress and the President of their duty to put citizenship over partisanship for the sake of our country and the world at large.”

No stranger to controversy, Schultz has also taken high-profile positions on several controversial issues that have little to do with Starbucks’ business. He didn’t offer a solution to the stalemate that has led to a shutdown of the federal government and raised the risk that the government could default on its debt later this month. He did say, “I don’t pretend that both parties are equally to blame for this crisis,” although he added “But, I do think they are equally responsible for leading us to a solution.”

He said that Starbucks is “planning actions in the coming weeks to galvanize our customers, inspire our people and encourage the communities we serve to come together to take care of each other.”

The Starbucks leader has opined about the federal budget and debt ceiling gridlock in the past. In December 2011, as Congress debated the so-called “fiscal cliff,” he asked employees at its approximately 120 D.C.-area stores to write “Come Together” on coffee cups when serving customers. At the time he said, “I believe we all have a responsibility to send our elected officials a respectful but potent message, urging them to come together to find common ground.”

Klaus Kleinfeld, chief executive of aluminum –maker Alcoa, warned that the disputes in Washington were hurting confidence not just in the US but globally. The economic recovery after the financial crisis had been slow, but was “well under way”, he told the Financial Times. It was now threatened by the risk that the US might default on its debts. “The longer it goes on, the more impact it will have. Congress and the US administration need to find a solution,” he added. There was no shortage of proposals around for securing the US government’s finances, but “to play with this giant Taser is irresponsible.”

Joe Echevarria, CEO of Deloitte, the accounting and consulting firm, told the New York Times, “I’m a Republican by definition and by registration, but the party seems to have split into two factions.”

At the other end of the spectrum, small company leaders are growing even more frustrated, according to a report by the Financial Times. The temporary lay-off of about two-thirds of the staff at the Small Business Administration – the government department that guarantees small business loans – has stalled new applications, closing the door to young companies. Such loans are not only an important source of financing for small businesses but also a crucial vote of confidence that can be used to lure other lenders to take the risk on new companies,” writes FT’s Camilla Hall.

“Through the shutdown we’ve had an option for funding completely cut off,” says Mr Baltz, co-founder of a two-year old start-up, INDMUSIC. “Institutional funding is not easy to come by, nor are people jumping to invest in a music company. We need to have as many options open to us as possible.” Funds provided by the SBA account for a fraction of overall small business lending, but the loans – which can offer longer maturities and slower amortization for companies – allow businesses to diversify their lending sources.

The FT reports that SBA staff furloughs have shut down most SBA projects including the SBA’s loan guarantee programs, surety bonds and business development program, according to a plan posted on its website ahead of the shutdown. It is still providing disaster loans, it says. The impact of an SBA backlog may also be felt at banks with substantial small business portfolios.




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