When he got on stage, Sperling acknowledged that Ryan’s plan reined in the debt at a faster pace. But, he added, the Republican plan included significant spending cuts, in particular, to Medicaid, the health insurance program for the poor.
“You can’t say to anybody who would be affected by that that we have to do that . . . that we have no choice,” Sperling said. “The fact is that all of the savings would be unnecessary if you were not funding the high income tax cuts.”
“From a policy perspective, from a values perspective, we should be very deeply troubled,” he added later.
For the moment, liberals cheered Sperling’s defense of social programs such as Medicaid. But in fact, many were upset with him and the White House at the time. Obama had entered a series of negotiations with Republicans to tame the debt over the long term.
Liberals complained that Obama was abandoning a more urgent matter: spending to lower unemployment. The jobless rate hovered above 9 percent. Millions of Americans were facing foreclosure.
In reality, Sperling and the White House wanted a combination of short-term stimulus with a long-term plan to curb borrowing. But it was a trick to stake out that position.
“The strategic approach may well have been to try to preempt on deficit reduction, so the president could get out ahead of the Republican message,” Reich said. “The danger, of course, is that in doing so, the president may seem to be endorsing and legitimizing the Republican message instead of advancing a sharply different set of ideas.”
As 2011 dragged on, Sperling was torn. Obama was clearly frustrated that he could not hit the road to campaign for ideas to reduce unemployment. And Sperling was developing those ideas — even giving a lengthy presentation in early June at a quiet White House retreat at the National War College.
But even if a new economic plan was needed, Obama’s team decided it was too risky to announce one. If he made proposals while budget negotiations were under way, Obama reasoned, he could undermine those talks.
“Anytime you’re locked in a confidential negotiation,” Sperling said, “you are to some degree sacrificing your ability to fully speak your heart and mind for the sake of trying to focus on getting one very important thing done.”
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In early August, Obama finally reached a deficit reduction deal with Republicans, though it did not achieve as much as he had wanted.
Days later, Sperling presented Obama and his top aides economic forecast after economic forecast showing that U.S. economic growth was rapidly slowing. Unemployment probably would be stuck around 9 percent. The government needed to pump hundreds of billions of dollars into the economy to create jobs — and fast.
In the internal discussions, Obama’s political strategists, led by David Plouffe, presented the risks of unveiling a big economic stimulus package. Although they supported taking any steps necessary to help the economy, they noted a bigger package would be easier for critics to attack. It also couldn’t be sold as simply a big “stimulus” because using that word became problematic when unemployment charged higher after Obama’s first stimulus in 2009. Each component of the plan had to have a defined purpose.
Plouffe, joined by budget director Jack Lew, argued that the White House would also have to simultaneously announce a plan to pay for the stimulus through tax increases or spending cuts down the road.
Sperling, however, consistently argued for making the stimulus as big as possible.
“His view was we need to do things that will create demand and boost employment right away,” Plouffe said. “Gene was always very insistent that there’s a black-and-white mathematical assessment about what needs to be done for the economy.”
After Sperling unveiled the basic outlines of the stimulus plan, Obama asked whether he had omitted any proposals because he thought they had no chance of passing.
Sperling said he was unsure if they should include a program to provide aid to states and municipalities — specifically to prevent teacher layoffs — because the legislative team had made so clear they would not pass.
Obama wanted to include those ideas anyway.
“The best ideas,” the president told Sperling, “like [preventing] teacher layoffs, are the ones with the biggest connection between short-term job creation and our long-term agenda.”
Sperling felt liberated.
“It was invigorating because we had spent a summer of painful bargaining over what was achievable to avoid a default and a potential economic meltdown and now we were engaging in a back-and-forth with the president on what he felt was the best and smartest policies to jump-start jobs,” Sperling said.