Gene Sperling: Sequester ‘Stupid,’ Default a ‘Fundamental Danger’

Top Obama economist takes on “default deniers.”

National Journal
Patrick Reis
Oct. 10, 2013, 6:54 a.m.

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Amer­ic­ans ap­pear to have shrugged off the se­quester, but they wouldn’t es­cape the pain of a de­fault, a top White House eco­nom­ic ad­viser said Thursday.

“I think this is of a dif­fer­ent mag­nitude. This is a dif­fer­ent or­der of po­ten­tial harm,” said Gene Sper­ling, the head of Pres­id­ent Obama’s Na­tion­al Eco­nom­ic Coun­cil, said of com­par­ing de­fault to the se­quester or the cur­rent gov­ern­ment shut­down.

“The se­quester is very, very stu­pid policy…. A shut­down … it’s hurt­ing real-life people, real-life chil­dren,” Sper­ling said. “Neither of them risks hav­ing a fright­en­ing glob­al eco­nom­ic event where things un­wind and we are not there with the ca­pa­city to re­spond.”

Sper­ling is the latest in a string of ad­min­is­tra­tion of­fi­cials and busi­ness lead­ers work­ing to con­vince the pub­lic that de­fault could pre­cip­it­ate an eco­nom­ic crisis, a no­tion that con­gres­sion­al Re­pub­lic­ans have labeled as alarmism.

If the ad­min­is­tra­tion is go­ing to con­vince the pub­lic of the debt-ceil­ing ur­gency, they’ll have to over­come the per­cep­tion that the White House over­sold the im­pacts of the se­quester’s across-the-board dis­cre­tion­ary spend­ing cuts.

Ac­cord­ing to the latest United Tech­no­lo­gies/Na­tion­al Journ­al Con­gres­sion­al Con­nec­tion Poll, only 23 per­cent of re­spond­ents have “seen any im­pact of these cuts” in their com­munit­ies or on them per­son­ally, while 74 per­cent said they had seen no im­pact from se­quest­ra­tion.

Sper­ling main­tained that the se­quester is dam­aging, say­ing it was clip­ping growth in the gross do­mest­ic product by a half point and costs hun­dreds of thou­sands of jobs, but he said de­fault would be far worse, both in terms of its im­me­di­ate im­pact and its long-term dam­age to the coun­try’s fin­an­cial repu­ta­tion. 

Sper­ling earli­er this week said the ad­min­is­tra­tion is open to a short-term in­crease in the debt ceil­ing, giv­ing Re­pub­lic­ans and Demo­crats a win­dow to strike a lar­ger deal on the budget and pos­sibly tweaks to the health care law. And Na­tion­al Journ­al re­por­ted Wed­nes­day that a grow­ing group of GOP law­makers were mulling le­gis­la­tion to push back the debt lim­it for four to six weeks.

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