Debt Deal: The White House's Perspective

President Obama and congressional leaders have settled on a deal to lift the federal debt limit. It involves deep spending cuts but no new taxes. The president said in a statement late Sunday that the compromise did not deliver him the deal he wanted. Congress must still vote on the legislation. Steve Inskeep speaks with David Plouffe, senior adviser to President Obama, on the White House's perspective on the debt deal.

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RENEE MONTAGNE, host:

This is MORNING EDITION from NPR News. I'm Renee Montagne.

STEVE INSKEEP, host:

And I'm Steve Inskeep.

The weekend agreement to raise the debt ceiling would ensure the federal government can pay its bills. Today, many Americans are looking closely at the terms. If Congress approves the deal announced last night, the government will reduce spending by a trillion dollars over a decade. A bipartisan committee will then negotiate more spending cuts. And if they fail, automatic cuts kick in, reducing both domestic programs and defense.

We're talking with many people this morning about the agreement, including White House political adviser David Plouffe, who is on the line.

Mr. Plouffe, welcome to the program.

Mr. DAVID PLOUFFE (Senior Advisor, White House): Morning, Steve.

INSKEEP: Paul Krugman's column in the New York Times this morning is headlined, quote, "The President Surrenders." Did he?

Mr. PLOUFFE: No, he didn't. First of all, the president believes, and I think most people in the country do, that we've got to start living within our means and significantly reduce the deficit. So this deal does a few things. It removes the cloud of uncertainty over our economy. As you know, many Republicans wanted us to re-fight this fight five or six months from now, which would be a bad thing for our economy and our country. It does lock in, as you said, a trillion dollars, roughly, in deficit reduction with more to come.

Now, it's important to remember that this congressional committee is not just looking at additional spending cuts. It's going to be looking at tax reform, raising money through revenues, entitlement reform. So this committee is very, very important. If the committee doesn't act, there is a process for some automatic spending cuts that would hit in '13. But it's important to remember, half of those cuts are coming out of defense, and low income programs like unemployment insurance, children's healthcare, Medicare beneficiaries are exempted.

INSKEEP: Well, I want to...

Mr. PLOUFFE: and cuts are done carefully, too.

INSKEEP: I'm glad that you mentioned that committee. We want to explain this to people, that over the next several months, this congressional committee - half Republican, half Democrat - is supposed to come up with an agreement. You've just said it's possible that tax increases of some kind or tax reform could be part of this.

But when House speaker John Boehner presented this plan to his members last night, he included a PowerPoint presentation which said, or seemed to say, the opposite. It says requires baseline to be current law - effectively making it impossible for the committee to raise taxes. Is it possible for this committee to raise taxes, as part of deficit reduction in the next few months?

Mr. PLOUFFE: Of course it is. And I'd say a couple of things about that. First of all, as you know, has been reported on your program and others, the president and the speaker of the House John Boehner were involved in various detailed discussions about a larger deficit reduction package. That included at least $800 billion in revenue. So the speaker of the House has already, I think, acknowledged that a long-term deficit reduction solution has to include revenue.

INSKEEP: But is it...

Mr. PLOUFFE: So, excuse me - this committee is going to be charged with coming up with additional deficit reduction. I think the areas that, because we've done a lot of domestic spending now, the areas that are going to have to produce a significant part of that deficit reduction are through tax reform and through entitlement.

INSKEEP: But I want to be clear on this because it'll be important to partisans on both sides of the aisle, Americans generally, I would imagine. Are the rules of this committee such that they can raise revenue if they choose to do so, if some bipartisan group of them choose to do so?

Mr. PLOUFFE: With 100 percent certainty. They are going to have a mandate to look at the entire federal budget and produce, hopefully, and I think hopefully the public - and the public at the end of the week here, last week, really played a big role, I think, in forcing compromise, by letting their leaders in Congress know that they had had enough.

INSKEEP: I want to ask another thing, Mr. Plouffe. If this committee comes through with its plan, there'll be the trillion dollars automatic in deficit reduction. There'll be something like $1.8 trillion more over a decade. That is a lot of money. But amazingly, the deficit projections are so bad that the financial markets had wanted something more like $4 trillion, even more, considerably more than this agreement would provide. You're not there.

Will there have to be more battles over the deficit?

Mr. PLOUFFE: Well, you know, the president laid out a plan a few months ago that was at four trillion. The House Republican plan was actually at four trillion. So there was agreement on the scale. There were some disagreement, obviously, on the complexion of it. So I think that - now, first of all, you've got to look at the deficit not just in the next 10 years - those are ten-year numbers. But does it also produce savings in the out years.

And that's really why the things like entitlement reform - now, our approach on entitlement reform is to make sure that we're protecting for the long-term things like Social Security and Medicare. Tax reform - we've got a tax code that's unfair, that's not progressive enough. So those are the things that do get you some savings in the next 10 years, but really make a difference in the out years.

INSKEEP: Mr. Plouffe, one other thing to ask about before I let you go here. Hendrik Hertzberg of The New Yorker magazine writes, quote, "He," meaning the president, "has allowed deficits and debt to supersede mass unemployment as the emergency of the moment."

Is it true, as many are contending, that reducing government spending at this time is going to harm a fragile economy and cause even more people to lose their jobs, might even raise the deficit?

Mr. PLOUFFE: Well, first thing. The first thing the president thinks about in the morning, obviously, and last when he goes to bed, is this economy. Smart deficit reduction, living within our means, giving confidence to the country and to the business community is part of that. But it's just part of it. So you have to do this carefully. The spending cuts here are phased in over time. And, you know, you see Republicans criticizing that. They wanted the spending cuts to happen much more quickly here. That's not responsible.

You also have to make sure things like education, college loans, college scholarships, research money - these are things that are protected in this deal.

INSKEEP: Um-hum.

Mr. PLOUFFE: So even while we're making spending cuts - and again, this is the progressive case for deficit reduction - if we can live within our means here, we still have the ability to make sure we are investing in the job creating things like education, like innovation, like research and development.

INSKEEP: All right.

Mr. PLOUFFE: So - and the other thing now that this debate is now - we still have to get this passed in the Senate and House obviously.

INSKEEP: OK, Mr. ...

Mr. PLOUFFE: But now that this debate is over, I think the debate here in Washington needs to focus squarely back on the economy and job creation.

INSKEEP: David Plouffe, thanks very much.

Mr. PLOUFFE: Thank you, Steve.

INSKEEP: Presidential advisor David Plouffe.

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