U.S. corporations press Republicans for debt deal

Fri Jul 15, 2011 5:08pm EDT

* American businesses increasingly concerned about impasse

* House Republicans unconvinced of need to raise debt cap

* Top U.S. Chamber of Commerce lobbyist "frustrated"

By Tim Reid and Rachelle Younglai

WASHINGTON, July 15 (Reuters) - Wall Street, big corporations and business groups are mounting an increasingly frantic lobbying campaign to persuade Republicans to raise the debt limit as fears of a national default grow.

Despite an Aug. 2 deadline to increase the $14.3 trillion debt ceiling, Congress and the White House are nowhere close to a deal that would prevent the U.S. Treasury from running out of money to pay certain government bills.

Lobbyists and trade groups for companies such as JPMorgan Chase (JPM.N) and Caterpillar (CAT.N) have been courting fiscally conservative Republicans all over the country, trying to convince them of the need to take action to stave off a default and financial mayhem that would ensue.

Republican Representative Michael Grimm, who was elected in 2010 and is a member of the House of Representatives' Financial Services Committee, said he has met with senior officials with Wall Street banks, including Goldman Sachs (GS.N) and Bank of America (BAC.N), and major hedge fund managers, insurers, realtors and small business owners.

Although the meetings were scheduled because of his position on the House committee, Grimm said the tenor of the conversations have changed.

"The difference is that before, we had these meetings, we would discuss the (committee) issues, and at the end of the meeting we would talk about the debt limit," he said. "Now it's the reverse. It comes to the forefront of every conversation. It is really consuming the debate."

The U.S. Chamber of Commerce, the country's biggest business lobby, helped spearhead a massive lobbying campaign that started at the beginning of the year. The Chamber and a broad coalition of business and trade groups already sent lawmakers a letter in April warning of dire consequences if America's borrowing limit was not increased.

This week, lawmakers received a similar letter signed by 470 top business leaders including Morgan Stanley's James Gorman, and the CEOs of huge companies such as Deere & Company, General Mills and Honeywell International.

But for all their efforts, the majority of Republicans in the House remain unconvinced.

"My view has not changed very much," said Kansas Representative Mike Pompeo. "I am even more convinced that we can't raise the debt ceiling without changes in our spending pattern," Pompeo said after speaking to a major credit rating agency about the perils of not improving the nation's fiscal condition.

FEARS GAIN GROUND

The U.S. budget deficit is forecast to reach $1.4 trillion for the fiscal year 2011 and the country's public debt is at $14.3 trillion, prompting the major credit rating agencies, Standard & Poor's, Moody's and Fitch Ratings, to warn of potential downgrades.

Republican Representative James Lankford said he also will not agree to raise the debt cap without deep spending cuts.

Lankford, a member of the House Budget Committee, said he has held numerous meetings with about 30 to 40 people in recent months, including U.S. Treasury officials, former Treasury officials, business people and economists.

He said the meetings had taken place all over Washington and in his home state of Oklahoma. A Lankford aide said the meetings had increased in frequency because of the looming deadline.

"There is not a place I go now where this is not the conversation," Lankford said.

The fear that lawmakers will be unable to reach a deal has gained ground outside of Washington and Wall Street.

At a meeting in Indiana on Thursday about a dozen business leaders met with the General Services Administration head Martha Johnson and told her that the debt impasse in Washington was stoking worries among companies across the region.

"It's creating a meaningful degree of instability," said Stephen Russell, the chief executive of Celadon Trucking, who gives the Chicago Federal Reserve input about the economy on a regular basis. Russell said the business community's fears have increased over the past few weeks amid the warnings of a U.S. credit downgrade.

Even lobbyists have grown increasingly apprehensive that Congress will not act on time. Bruce Josten, executive vice president for government affairs at the Chamber of Commerce, has held "dozens" of meetings on Capitol Hill.

Last week he spoke to 30 members of the Senate Democratic Steering Committee, followed by a session with the Republican leadership and their staff.

Asked if he was frustrated that the deadline was so near with no sign of a deal, Josten said: "I'm frustrated with a whole bunch of folks."

(Editing by Paul Simao)