The Budget

Obama's Top Economic Adviser Tells Democrats They'll Have to Swallow Entitlement Cuts


Sperling

Photograph by Chip Somodevilla/Getty Images

Sperling

(Updates with White House response, in paragraph 12)

This morning, Gene Sperling, director of the White House’s National Economic Council, appeared before a Democratic business group for what was billed as a speech about the economy after the shutdown, followed by a Q&A session. The White House didn’t push this as a newsmaking event, so it didn’t get much billing. But I went anyway, and I was struck by what Sperling had to say, especially about the upcoming budget negotiations that are a product of the deal to reopen the government.

In his usual elliptical and prolix way, Sperling seemed to be laying out the contours of a bargain with Republicans that’s quite a bit different that what most Democrats seem prepared to accept. What stood out to me was how he kept winding back around to the importance of entitlement cuts as part of a deal, as if he were laying the groundwork to blunt liberal anger. Right now, the official Democratic position is that they’ll accept entitlement cuts only in exchange for new revenue—something most Republicans reject. If Sperling mentioned revenue at all, I missed it.

But he dwelt at length—and with some passion—on the need for more stimulus, though he avoided using that dreaded word. He seemed to hint at a budget deal that would trade near-term “investment” (the preferred euphemism for “stimulus’) for long-term entitlement reform. That would be an important shift and one that would certainly upset many Democrats.

Here’s some of what Sperling had to say. He led off with the importance of entitlement cuts. (All emphasis is mine):

“Sometimes here [in Washington] we start to think that the end goal of our public policy is to hit a particular budget or spending or revenue metric—as if those are the goals in and of itself. But it’s important to remember that each of these metrics … are means to larger goals. … Right now, I think there is among a lot of people a consensus as to what the ingredients of a pro-growth fiscal policy are. It would be a fiscal policy that—yes—did give more confidence in the long run that we have a path on entitlement spending and revenues that gives confidence in our long-term fiscal position and that we’re not pushing off unbearable burdens to the next generation. That is very important.”

That’s a vague, guarded, jargon-y Washington way of saying, “We’re going to have to accept entitlement cuts—get used to it.” Then came the justification, which was the weakness of the economic recovery:

“You have to think about this as part of an overall pro-growth, pro-jobs strategy. Also, there’s no question that right now we still need to give this recovery more momentum. We cannot possibly be satisfied with the levels of projected growth when we are still coming back from the worst recession since the Great Depression.

Sperling repeatedly drew a distinction between a deal that “hits a particular metric” and one that is “pro-growth,” leaving no doubt that the White House favors the latter. I took “hits a particular metric” to mean “secures X amount of dollars in new tax revenue.” Sperling’s clear implication was that that’s not something the White House is concerned about.

Here’s how he summed up the prospects for a budget deal before year’s end:

“We could have an economic growth strategy where we had a more pro-jobs, pro-recover fiscal policy right now that included—that did not have this harmful sequester. We could have more savings that were on both the revenue and entitlement side that were long-term and would help in the future. And we could make sure that we’re making room for the things that almost everybody thinks we need to do more of”—that is, investments in infrastructure and research and development.

None of what Sperling said was entirely new. Rather, it was what he chose to emphasize (and not emphasize) that struck me. Afterward, Sperling took a grand total of one question from the audience. I hustled after him to ask if was really proposing an entitlement-cuts-for-stimulus budget deal. Sperling smiled a little awkwardly and said something about how he’d love to negotiate with me. (Not sure what that was about.) But he didn’t rule a deal that cut entitlements without additional tax revenue, even when I asked him a second time.

In an e-mail responding to this article, White House spokeswoman Amy Brundage wrote, “Gene was reiterating what our position has been all along: that any big budget deal is going to have to include significant revenues if Republicans insist on entitlement reforms. And any budget deal needs to have first and foremost the goal of creating good jobs for middle class families and growing the economy—that’s our north star in any budget deal, big or small.”

Green_190
Green is senior national correspondent for Bloomberg Businessweek in Washington. Follow him on Twitter @JoshuaGreen.

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