White House National Economic Council Director Gene Sperling delivers… (Chip Somodevilla/GETTY…)
Just before 1:30 p.m. Aug. 3, a frustrated President Obama gathered Gene B. Sperling and the economic team in the White House and told them to design a jobs package he could offer the American public.
Obama had spent much of the year locked in negotiations with Republicans over the national debt, with little to show for the effort but a sagging approval rating. He had wanted to argue publicly for ideas to create jobs, but hesitated in the midst of negotiations. Liberal critics reprised a familiar critique of the Obama White House: that it too often bows to political constraints and forfeits what’s right for what’s possible or easy.
With his aides in the Roosevelt Room, Obama was clear about his vision for the jobs plan: “No self-censorship based on what’s politically possible or legislative handicapping. I want to hear the best ideas that you all think will make a difference and are worth fighting for.”
Sperling proceeded to create the $447 billion American Jobs Act, which led to a new, confrontational and decidedly more populist stage of the Obama presidency.
It was a clarifying moment after years of economic debates that had gripped Obama’s White House.
Sperling, 53, the director of the National Economic Council, has been at the center of these debates, just as he was in the Clinton administration. Like the Democratic presidents he has served, Sperling has wrestled with the competing demands of idealism and realism, liberal orthodoxy and financial markets.
This has meant knowing when the president should fight for exactly what he thinks is right and when he should adjust policy to work within legislative constraints. And it has meant balancing the urge to use government spending to create jobs and invest in public programs with the imperative to curb the nation’s debt.
“Gene is deeply committed to a traditional, Democratic, FDR perspective on policy issues,” former Treasury secretary Robert Rubin said in an interview. “But he has a deeply internalized sense of the severe risk that an unsound fiscal regime presents with respect to markets and financial crises.”
In the view of many liberals, the Obama White House has too often struck the wrong balance: The 2009 stimulus was too small; the 2010 deal that extended upper-income tax cuts was too generous to the rich, and the 2011 embrace of deficit reduction was the wrong priority.
But with the American Jobs Act, which proposed heavy government spending and middle-class tax cuts to boost the economy, those critics have been largely silenced. In fact, many on the left cheered the president’s proposal.
“I think you’re always torn between two fundamental balancing acts. One is between your ideal policy and what are the practical achievements you can do to help people. And the second balance is progressive policies that invest in a growing middle class, in a more just economy and the need to establish the trust in government that comes from being fiscally responsible,” Sperling said in an interview. “You try to keep your sense of basic values and why you’re here and just work your heart out through each tough trade-off to try to get it right.”
This story — about how Sperling and the White House have managed that balancing act — is based on interviews with current and former administration officials and others familiar with the deliberations. Some declined to be named in discussing internal deliberations.
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The economic debates that have consumed the Obama White House can be traced back to January 1993 in the Arkansas governor’s mansion. Two weeks before President-elect Bill Clinton was inaugurated, Sperling sat debating whether to sacrifice principles of Clinton’s campaign — a traditional liberal agenda that included universal health care and spending on education and job training — to curb the growing national debt.
Rubin, then a top Goldman Sachs executive and Clinton adviser, argued that reducing the debt was crucial to maintain the confidence of international bond markets. The other “Bob R.,” Robert Reich, an old friend of Clinton’s and a liberal academic, wanted the president-elect to stand by his campaign promises.
Sperling, who had worked as a research assistant to Reich in the early 1980s, leaned in his direction. But Clinton was convinced that debt reduction was an imperative that would require sacrificing parts of his agenda.
Rubin, who became head of the NEC, tapped Sperling as his deputy. Reich served as labor secretary. “He viewed the two of us as his mentors,” Reich said. “He expressed some stress about being pulled in those directions.”