AILSA CHANG, HOST:
Well, here we are in late April 2023. It has been months since the U.S. government reached its debt ceiling, the amount of money it can legally borrow to fund government programs. The Treasury is already using what it calls extraordinary measures to continue paying for Social Security, Medicare and the military. But it estimates that that will only hold until early June. And at that point, the government could default on its debt, and that could be economically disastrous.
MELISSA BLOCK, HOST:
Today the Republican House majority voted to raise the debt ceiling but only if there are big spending cuts and if major parts of President Biden's agenda are dismantled. For his part, the president insists that they raise the debt limit without any conditions. So how does this get solved? Gene Sperling has seen debt ceiling showdowns before. He was a top economic adviser to Presidents Clinton and Obama, and now he's back in the White House as coordinator for the American Rescue Plan. Mr. Sperling, welcome to the program.
GENE SPERLING: Thank you for having me.
BLOCK: The reality here is Republicans control the House, and they say President Biden has to negotiate with them. So why not do that?
SPERLING: Well, the truth is, when somebody says negotiate on the debt limit, that is a sanitized way of saying, I'm going to make you do what I want on my budget policies, or I'm going to put the United States into default for the first time in our history. And this has been a foundation of the United States - to have an immaculate, full faith and credit. And so what the president is saying is - you put out your budget, we've put out ours, let's have a debate. But no side, not Democrats or Republicans, should say I'm going to hold the full faith and credit of the United States hostage to you giving me what I want on my budget. You don't see President Biden doing that. He's not saying - do my child care proposal or I'm going to have the economy go into default. And most importantly, since 2011, when we went through this and it cost us 1.2 million jobs, no side, Democrat or Republican, nine times in a row, including three times under President Trump, have insisted on a budget policy to raise the debt. So three times under President Trump, Nancy Pelosi could have did that. She did not. Why? - because we realized nobody should say my way, particularly this extreme way, or we're going to put the country into default and probably cause a significant recession.
BLOCK: OK. If I may, in 2011, when there was another major confrontation over the debt limit, Republicans also controlled the House. Then, you were an adviser to President Obama, and the White House did make concessions. There were significant spending cuts, no? Was that a precedent that you set?
SPERLING: That was a lesson learned. We didn't want to do it. We let ourselves get drafted into it. And what happened? Because the Republicans even played brinksmanship with default - default brinksmanship - our consumer confidence went down 22%. People's pension plans - the value went down. Consumer confidence went down. And it's been estimated that we lost 1.2 million jobs, not because we went into default - because we avoided that - but just the brinksmanship.
So since then, ever since 2011, there have been nine increases. Three of them happened under President Trump. And my point is both Democrats and Republicans learned, do not hold - do not play default brinksmanship. When you have used your constitutional authority to spend funds, of course you have to pay them, and then you have a budget debate. So the president's saying, let's have a budget debate on our plan. But neither side, not Democrats or Republicans, should hold hostage the U.S. economy or our full faith and credit by saying my way or the highway. And these are very extreme proposals they have. It would cut things like cancer research and the border security preschool by half over 10 years. It's even worse that they're relying on such an extreme and one-sided policy and using that - and saying, my way or we will threaten to default...
BLOCK: Yeah.
SPERLING: ...Put the United States into default.
BLOCK: We only have about 20 seconds left. What do you see the picture being if this does not get resolved before the borrowing limit is reached in June?
SPERLING: Well, we have to. We have to - I mean, I think, first of all, there - a lot of Republican - moderate Republicans are walking the plank, taking very harmful votes that would really hurt their constituency, you know, significantly. And my hope is that people will come to their senses, will pass the debt limit. And then just as they say, we'll sit down and have a real debate about the president's agenda, which raises taxes on the most well-off and invest in care and work, and theirs, which is a much more regressive policy.
BLOCK: We'll have to leave it there. I apologize for cutting you off, but we are out of time.
SPERLING: No problem. Thank you.
BLOCK: Thank you. Gene Sperling, senior economic adviser to President Biden. Transcript provided by NPR, Copyright NPR.
