President Barack Obama’s top economic adviser, Gene Sperling, challenged Republican congressional leaders to put an offer on the table in fiscal- cliff talks and defended Obama’s debt-reduction proposals as concrete and detailed. Sperling spoke in an interview with Bloomberg Television’s Julianna Goldman on “Political Capital with Al Hunt,” airing this weekend.
(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)
JULIANA GOLDMAN: Hello. I’m Julianna Goldman, in for Al Hunt this week. We begin the show with Gene Sperling, White House National Economic Council director and a key principal negotiator on the fiscal cliff.
Gene, thank you so much for the time. So the White House made its opening offer this week. Tim Geithner went up to the Hill. But what he proposed was largely what’s already been in the president’s budget. You guys knew this would be dead on arrival. So how can you take these negotiations seriously with this kind of offer?
GENE SPERLING: Well, because what Tim was showing -- Secretary Geithner -- was making clear is that the president does have a strong and balanced plan to have over $4 trillion in deficit reduction, that it is a plan that includes significant spending cuts, it does ask for rates to go up for the most well- off, to raise well over $1 trillion in revenues, and it has significant entitlement savings.
They should recognize that the president has a very detailed plan, that it would bring our deficit and debt down as a percentage of our economy, and is -- and is balanced.
But it’s a negotiation. If they have other ideas, if they have a different way of doing the composition of those spending cuts or those savings, it’s for them now to come forward with their plan, with their details, so that we can start working quickly to getting an agreement.
GOLDMAN: So when you have Republicans essentially saying that this was a non-starter, how can you say that we’ve made progress this week?
SPERLING: Well, remember, the president has put forward a detailed plan.
GOLDMAN: Well, was there progress this week?
SPERLING: Well, I think there’s progress in the sense that you’ve got the president’s point person, Secretary Geithner, going up, saying, here is a detailed plan, it adds up, it would bring our debt and deficit down. It’s a framework that I think would have a lot of support from the American people. I think it would have a lot of support from the business community.
The president’s made clear, he’s willing to listen to other ideas. He’s never been a “My way or the highway” type of person. But at this point, rather than simply complaining, they need to now step up and come forward.
The president, you know, has made clear a few things. Number one, you have to have a plan in which -- including the significant spending cuts and entitlement savings -- you’re going to have rates go up on the most high-income, most fortunate Americans, to be part of a balanced deal. He’s also made clear that the era of threatening defaults is over.
GOLDMAN: But doesn’t throwing the debt ceiling into this just complicate talks?
SPERLING: Not at all. You know, what every business leader says to us is that what’s so important is to make sure that you have this type of agreement and you create some of the economic -- you reduce the economic uncertainty that gives them the confidence to start moving cash off the sidelines into investment and job creation.
If you had an agreement in December and those same job- creators, business leaders, think that every three to six months we’re going to go through this debacle, this ritual of people threatening the default of the United States as a way to get their way in a budget agreement, that will not achieve the type of economic certainty that I think everybody wants.
And so, again, I think there’s lots of ways to debate on the budget, but Democrats and Republicans should all come together and say now that the era of threatening the default of the United States is over. That should not be part of our budget negotiations going forward.
GOLDMAN: Well, you’re also asking for an extension of the payroll tax cut, unemployment benefits. Are those non- negotiable?
SPERLING: Well, I think what the president believes a balanced plan is that’s good for economic growth is that, in the context of an overall $4 trillion plan, you could still have room to do a little more to help jobs, to help middle-class families in the immediate term so we give this recovery more momentum. I think that’s good for jobs. It’s good for growth. I think it will also in the long run be good for the deficit, to get this recovery going.
We’ve mentioned things in the president’s American Jobs Act, things like infrastructure.
GOLDMAN: But this is the first time you’re -- you’re saying that you want to see the payroll tax cut extended.
SPERLING: Well, I think what we want to do is see things that will strengthen middle-class families and make sure that we are getting momentum in this recovery. The sweet spot of a strong fiscal deal is one that gives you confidence that you’re going to strengthen the recovery in the short term and bring down long-term deficits in the long term, while still making room to invest in our competitiveness. And we’ve always had in our plans, the American Jobs Act, things like extending unemployment insurance, infrastructure, the payroll tax.
So the important thing is that that, that those type of measures need to be part of a strong plan that’s good for growth in the short term, good for growth in the long term.
GOLDMAN: Now, on the spending side, you’re asking for $400 billion in entitlement cuts, but we all know that . . .
SPERLING: Can I just say . . .
GOLDMAN: Savings, savings. Entitlement savings. But we all know that $800 billion . . .
SPERLING: Oh, no, no, I’m not, I’m not . . .
GOLDMAN: . . . in savings was on the table in the summer of 2011. So why are you starting at the halfway point?
SPERLING: That was, unfortunately, misreported in a lot of newspapers. Just to be clear, on spending savings, you already have locked in $1 trillion, actually, $1.1 trillion in discretionary savings and interest savings from the negotiations, the Budget Control Act last year, very significant. You have hundreds of billions of more spending savings that are coming from ending the war in Iraq and Afghanistan.
On top of that, the president’s budget puts forward $600 billion in entitlement savings, about $350 billion in health entitlement savings, such as in Medicare, and another $250 billion. That together with the revenue you’d raise from raising rates on the highest-income Americans also reduces significant spending in interest.
So this is a plan that’s very balanced. It’s strong on spending cuts. But, listen, we are in divided government. We know there has to be back-and-forth and compromise. So if they disagree on the -- what the components of or the form or shape or even size of our spending cuts, they should come forward with a specific offer, and then we can have that discussion.
It doesn’t have to be public. It could be private. But it’s time for them to say, here’s what our counteroffer is.
GOLDMAN: Well, we have less than a minute left, but I want to ask you on rates, is there any daylight for the White House in raising the rates between what they are now and the Clinton- era levels for the top earners?
SPERLING: You know what? The president has said is there’s no way he’s extending rates at the current Bush level. We’ve made very clear that rates have to go up, that while limiting deductions for high-income Americans can be part of an overall revenue solution, it’s actually part of the president’s current plan, you can’t get there just by limiting deductions. If you do that, you will inevitably force the need to raise taxes on middle-class Americans simply to not raise rates on the most fortunate. That’s not something the American public supports. That’s something President Obama has clearly been against. That was a key issue in this election.
So the president’s been pretty -- been quite strong. Again, the president -- you know, if they have specific ideas they want to put forward, they should do so. The president’s always been clear. He’s willing to review specific ideas they put forward, but he’s been very clear, rates have to go up, and he’s also been quite clear in saying that the rates that existed under President Clinton, we know from past, the past, are consistent with an era of strong job growth, strong small-business growth, and strong productivity.
GOLDMAN: All right. Gene Sperling, thank you very much. Hopefully we’ll be able to talk to you more between now and whenever we do get that deal.
SPERLING: We’d be happy to. Thank you.
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