ROBERT SIEGEL, HOST:
From manufacturing to infrastructure repair, to federal funding for early childhood education, the president announced several new initiatives last night. But, as Ari just said, the president also made this fiscal promise.
PRESIDENT BARACK OBAMA: Nothing I'm proposing tonight should increase our deficit by a single dime.
SIEGEL: Joining us now is Gene Sperling, who's director of the White House National Economic Council. Welcome to the program once again.
GENE SPERLING: Well, thank you for having us.
SIEGEL: And first question: Can the president really propose, for example, a new national entitlement to high-quality preschool for all 4-year-olds in the country without there being some new burden either on the federal budget or on the budgets of the states that would pay for it?
SPERLING: You know, the president's view is that we need to be bringing our deficit down and we need to be having both tax reform and entitlement reform that reduces spending. But that you do that for two reasons: one, to bring down our debt and deficit as a percentage of our economy, but you also do it to make sure that we have the room to do what's always made our country great, which is invest in our future, in education, and our children. And I think if you look at the economic evidence for high-quality pre-K, you have Nobel Prize winners who suggest that for every dollar we invest in high-quality preschool education, we save anywhere from $4 to $17 as a society in terms of higher wages, less juvenile delinquency.
SIEGEL: So what the president is really saying there is, over a span of a decade or so, you would realize benefits that would offset the costs, but there would be real costs of having an additional year of school for all children in the United States.
SPERLING: Absolutely. And we're not suggesting that just because investing in pre-K is wise and has a high return for society, that that doesn't mean we don't have to find specific measures that would pay for that and still reduce the deficit so that we have the extra savings to reach our goal of 4 trillion in deficit reduction and put ourselves on a sustainable and stable fiscal path.
SIEGEL: On spending, on entitlement spending, Republicans include, as a vital entitlement reform often, changing the way we calculate the consumer price index to the so-called chained CPI. Democrats in Congress typically recoil at this idea. Is it a proposal that the president is willing to entertain in order to reach an agreement with the Republicans on the Hill, if for no other reason?
SPERLING: Well, because this president is so serious about reaching bipartisan compromise and bringing our deficit down and ensuring that we do not have to use the options that some would choose to shut down the government, have a harsh sequester that hurts national defense or threaten default, he has been willing to go the extra mile to get a bipartisan compromise.
So while this president would strongly prefer to have any adjustment in the CPI, as you say, the consumer price index, in the context of a larger Social Security reform, he has said to the Republican speaker of the House that if it would be part of a larger agreement that would include tax reform that would raise revenue by cutting loopholes and expenditures on the most well-off, that he would be willing to agree to that because he has tried to say to everyone, in divided government, if we're going to make progress, we all have to be willing to compromise.
SIEGEL: Since the sequester would kick in at the beginning of March, barring some move to defer it from that time, is the president willing to entertain something like an agreement that would include the chained CPI within the next couple of weeks? And if so, why wasn't the State of the Union an appropriate moment for him to say I'm open to a change like that?
SPERLING: The president has made clear that the offer that he had with Speaker Boehner last December is still on the table. But let's be very clear: that was for a large agreement which would put our deficit and debt in a good place where it's coming down as percentage of our economy for the next decade - what is the most likely way for us to avoid unnecessary self-inflicted wound on our economy and our people right now is to delay the sequester long enough so that we can work together to get the type of larger deal that would include tax reform and, as the president said last night, sensible reforms to Medicare and entitlements that still protect the basic guarantee that is intrinsic to those programs.
SIEGEL: Just very briefly, in terms of the sequester and what's likely to happen, which do you think is most likely: a bipartisan agreement between now and March 1st that avoids the sequester, the sequester takes effect on March 1st, or there's an agreement that - that in some way defers that, kicks the can down the road, as they say? Which one of those three do you think is the most likely?
SPERLING: Good question. But I think I've given up on these type of predictions. I think that if members of Congress are listening to their constituents, they want us to reduce our deficit. They want to do so in a balanced way that asks the most well-off to also contribute and find some compromise. I wish I could tell you that was a certainty. I can't, but that's what should happen.
SIEGEL: Gene Sperling, director of the White House National Economic Council. Thank you very much.
SPERLING: Thank you for having us.