White House Official Discusses Debt Ceiling

Originally published on July 26, 2011 5:46 pm
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MICHELE NORRIS, Host:

Joining us now is one of the top members of President Obama's economic team. Gene Sperling is the assistant to the president for economic policy, and he's the director of the National Economic Council. So glad you're with us.

GENE SPERLING: Well, thanks for having me, Michele.

NORRIS: So we've heard Republican Jim Jordan saying that he believes House leader John Boehner's plan can't get enough votes from House Republicans, and John Boehner has said that Senator Harry Reid's plan, the one the president seems to prefer, is full of gimmicks. So from the White House perspective, where does that leave us right now?

SPERLING: Well, I think - we think we are at a stalemate, and I think that's why the president went and spoke to the nation yesterday to say that we have got to come to compromise, and we have to find a way to put a down payment on the deficit, come back and do more serious entitlement reform and tax reform. And at the same time, we need to take away the cloud of uncertainty that hangs over our economy because of the threat of the first default in the history of the United States.

NORRIS: So there's a lot of talk about compromise. The president used that word, that C-word, several times when he spoke to the nation last night, but we didn't hear him use the V-word, meaning veto. If the Republicans don't move on a long-term increase in the debt ceiling, if they don't give any ground on taxes, is the president willing to pick up his veto pen?

SPERLING: Well, our chief of staff, Bill Daley, spoke to that on Sunday and made clear the president was willing to turn away such a piece of legislation, but the reason why that isn't our focus this morning is because right now we don't see any piece of legislation coming to our desks because we do have stalemate. We have two bills, neither of which can make - to pass both houses and make it to the president's desk.

NORRIS: Gene, I want to clarify a few of the details that are in the plans that are right now on the table. John Boehner's plan is a two-step proposal that would raise the debt ceiling in a series of two votes. The first would raise borrowing authority enough to carry the government through early next year, and then, it would set up a second vote and probably a second acrimonious debate in 2012 just as the presidential campaign and the campaigns in the House and Senate are heating up. Was that the deal breaker, the timing of that second vote?

SPERLING: I think there's two things we find, you know, quite problematic. The first is what you just mentioned. For the first time in our country's history, we are seeing people using the threat of our country's first default as a bargaining chip or a forced form of leverage to get what they want in a budget agreement, but the president...

NORRIS: I hate to interrupt you, but...

SPERLING: ...is saying...

NORRIS: I hate to interrupt you, but the GOP says you're doing the same thing.

SPERLING: Oh, no. Absolutely not the case. What we are trying to do is remove the idea that the default of our government could ever be used as a bargaining chip or a threat for anyone to get their way in a budget agreement. The president believes that if you do what it's in the House plan, which is to just kick the debt limit down the road five, six months, we will once again be seeing the threat of default heavily weighing on markets, on economic confidence, and that's something the president simply can't accept.

NORRIS: The reason I interrupted you is because in listening to the senators and some of the House members today, they have been saying that the White House has essentially been playing Chicken Little with the warnings about a financial Armageddon, that as we get closer to this August 2nd date the markets at this point are still relatively calm. And you could read that as the markets assuming that reasonable heads will prevail and that all parties will work out a deal, or they're saying that the White House has perhaps exaggerated the threat of an economic crisis a bit to make the case. That's what your adversaries are saying. So what is your response to that, and also are you surprised that the markets have remained as calm as they are as we get closer to this date?

SPERLING: The president has been willing to support Harry Reid's plan, which would take away the threat of default, and he's willing to work with Republicans in any form of compromise that could help accomplish that goal.

NORRIS: Gene Sperling, thank you very much for your time.

SPERLING: Thank you.

NORRIS: Gene Sperling is the assistant to the president for economic policy. He's the director of the National Economic Council. Transcript provided by NPR, Copyright NPR.