Can Retailers Get Pols to Stop Playing Chicken in Debt Ceiling Negotiations?
The nation’s largest retailers are calling on Congress and the Biden administration to quickly hash out a deal on the national debt limit and avoid having the U.S. fall into default.
“Retailers have managed their way through demand shocks, workforce disruptions, supply chain bottlenecks and waves of organized retail crime. What they crave more than anything is a period of relative calm and certainty after three-plus years of managed chaos,” Michael Hanson, senior executive vice president for public affairs at the Retail Industry Leaders Association (RILA), said in a statement emailed to media outlets.
“There are principled men and women serving in government in both political parties who understand the country cannot continue to prosper if we continue to govern from the edge of a cliff, budgeting from crisis to crisis without meeting our long-term obligations and setting a course of stability,” he added. “We urge the country’s elected policymakers to iron out an agreement that gives businesses the certainty they need to make the capital investments necessary to grow the economy and our workforce.”
The debt limit or ceiling puts a cap on the amount of debt the federal government can hold. The Department of Treasury reached its limit ($31.4 trillion in January) and has been undertaking “extraordinary measures” to avoid a situation where the government can no longer pay all its debts. The Treasury now says that Congress has until early June before that happens.
The nonpartisan Congressional Budget Office warns that if the “debt limit is not raised or suspended before the extraordinary measures are exhausted, the government would be unable to pay its obligations fully. As a result, the government would have to delay making payments for some activities, default on its debt obligations, or both.”
Congress last approved the debt ceiling on December 16, 2021, the last of three times it was raised during the previous administration. Members of the Republican majority in Congress are threatening to withhold approval for raising the debt ceiling unless the Biden administration approves significant cuts to the federal budget. Democrats have said they are willing to negotiate on the federal budget as part of the normal budget and appropriations process.
A meeting yesterday between House Speaker Kevin McCarthy and President Joe Biden failed to produce results. The two leaders are scheduled to meet again on Friday.
DISCUSSION QUESTIONS: Should retail leaders urge Congress to approve a new debt ceiling without preconditions to not risk default without agreeing on spending cuts? What would a default mean for the U.S. economy, consumers and the retail industry?
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13 Comments on "Can Retailers Get Pols to Stop Playing Chicken in Debt Ceiling Negotiations?"
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Founder, CEO & Author, HeadCount Corporation
Retail leaders could certainly add their voices, but I’m not sure it will help. The leaders of the political parties full-well understand the potential catastrophic impact of default — the country has been here many times in the past. There is no economic or rational business argument that can dissuade governmental leaders from this path they are on. A default anytime is bad; a default in today’s environment would be catastrophic and leave permanent damage to the U.S. economy – including retailers and everyone else.
Principal, Retail Technology Group
Everyone should voice their opinions to their representatives. Many — if not most — Congresspeople have forgotten that they represent over 300 million people and seem to voice only their personal opinion and push their personal agenda.
Managing Director, GlobalData
Retail leaders should urge people in Congress to cooperate, but their words will likely fall on stony ground! Failure to reach an agreement would be very chaotic and, if prolonged, would likely cause a slowdown in the economy if federal wages and other bills go unpaid. That’s unhelpful for everyone, especially during this more fragile economic period.
Co-founder, RSR Research
Any sane person or entity would encourage allowing the debt ceiling to rise without preconditions. The relationship between the debt ceiling and future spending is somewhere between slim and none. But the thing has a political life of its own, and the entire populace and every entity in the country could ask Congress to knock it off and it wouldn’t happen. Everything is weaponized these days.
That doesn’t mean we shouldn’t start, as a country, to have some rational discussions around where we are headed and how future spending should look–but in the current environment, that would also be unlikely.
I really wish we could return to an era of rational debate and discourse, but we sure as heck aren’t there. It’s a pity, really.
Retail Industry Strategy, Esri
Should they? Absolutely. Will it help? Congress isn’t listening to their constituents at the moment, nor to the economists or any other experts who are all pretty aligned on this issue. I wish them well.
Managing Partner, Advanced Simulations
No — retail leaders should stay out of this. There is too much risk of angering one side or the other and they have little to add to the conversation.
Founding Partner, Merchandising Metrics
Functioning democracy should not be an oxymoron.
Principal, Cathy Hotka & Associates
Retailers can remind the Congress that the debt ceiling isn’t about new spending — it’s about paying for what we already bought. And they can remind them that deliberately crashing the economy would cost them dearly at the polls.
Founder, CEO, Black Monk Consulting
Principal, Retailing In Focus LLC
Retailers, like lobbying interests from other industries, can speak up all they want but this drama plays out on a regular basis with (hopefully) predictable results. Playing games with the debt ceiling to gain leverage on future spending hasn’t done much to curb the deficit so far, because both parties enjoy spending when it’s their turn to do so. I hope forecasts of catastrophe are not examples of “crying wolf” because the two parties haven’t jumped off that cliff–yet.
Industry Consulting, Retail, CPG and Hospitality
Retail leaders and every constituent in the country should provide input. Our republic and constitution are founded on the principles of checks and balances but, over the last 30 years, it seems our administrations have lost sight of this and now we’re in a real pickle. Our political leaders need to come to the negotiating table and act as adults, not squabbling buffoons, and make tough decisions that put our country’s finances on the right track.
CEO, The Customer Service Rainmaker, Rainmaker Solutions
Retail voices may help, but politicians don’t even listen to their constituents.
Overseer of Order
If retailers stopped paying their Chamber of Commerce, NFIB, and SBA, dues, I’ll bet there would swiftly be a loud voice telling these Congressional imbeciles to do their jobs.