05.19.11

Democrats' Negotiator in Chief

Gene Sperling is White House point man for what may be the most delicate negotiations of the Obama presidency. Lloyd Grove reports on the latest turns in the debt-ceiling drama.

Gene Sperling—a key White House player in the bipartisan negotiations to raise the federal debt ceiling—is a devotee of the iron fist/velvet glove school of politics.

As President Obama’s top economic adviser, he had a hand in the recent presidential speech that trashed House Budget Committee Chairman Paul Ryan’s deficit reduction plan as a savage attack on old folks, college students, disabled kids and sick people, as well as an obscene gift to millionaires and billionaires.

Sperling loved that speech.

Ryan, not so much. An invited guest who sat in the front row at George Washington University during the speech, the congressman was at first surprised, then angry as he listened to Obama demonizing him and the House Republicans who voted near-unanimously for the Ryan Plan. As soon as the president finished, the Wisconsin Republican stalked out of the auditorium—obviously steamed at being blindsided and abused. Sperling chased him to the exit. “Mr. Chairman,” he called out as Ryan kept walking.

In his own sometimes timid way, Sperling is a master of knowing what works, not just politically but arithmetically,” says former NY Gov. Mario Cuomo

After watching this mini-melodrama unfold from his own seat, former Wyoming senator Alan Simpson, the Republican co-chairman of the president’s National Commission on Fiscal Responsibility, chided both Sperling and Obama. “I just said, ‘That was a bit harsh,’” Simpson recounts. “I thought it was tough on Ryan to have him invited there, sitting in the front row, and it set us back because it was just unduly rough. How can you talk about conciliation and bipartisanship…and then go out there and rip and snort and clobber the House Republicans? It seemed like sheer deviltry.”

First fist, then glove. A couple of days later, Sperling phoned Ryan to smooth things over. He explained that if White House aides had only known he was planning to attend, they would have warned him that it was going to be a hard-hitting polemic and he might prefer to stay away. Sperling said he felt badly. Ryan was mollified. When he ran into Sperling at a congressional dinner at the White House a couple of weeks later, the encounter was jocular. “I was looking for my seat, and saw it was three tables back, and I said to Gene, ‘It must be a nice speech tonight, because I’m not in the front.’ And Gene said, ‘We’re just going after your friends and family, not you personally.’ I thought that was pretty funny.”

Sperling, says a longtime friend, possesses a remarkable combination of talents that are perfectly suited to his current challenge. His immediate predecessor, Harvard economist Larry Summers, liked to say that he did policy, not politics--and developed a reputation, deserved or not, for not liking to do business with anyone whose IQ-range was lower than his (which pretty much excluded most members of Congress). But Sperling—a lawyer, not an economist, by training—is “as much a political animal as he is an economic animal—and he’s steeped in both,” says this friend, who asked not to be identified.

He’ll need all the skill he can muster if he is to succeed in what is surely one of the biggest challenges of his two-decade long career in Washington--the current series of confabs at Blair House, where Vice President Biden has convened congressional Democrats and Republicans (plus Sperling, Budget Director Jacob Lew and Treasury Secretary Timothy Geithner) to hammer out a long-term $4 trillion-plus deficit reduction compromise that will give Republicans sufficient cover with their Tea Party wing to vote yes on raising the debt ceiling.

If Sperling & Co. fall short, the U.S. government could default on its obligations, its credit rating will be downgraded, and the financial markets and the overall economy could face Armageddon. Time is not their side. On Monday, the government officially exceeded its borrowing authority, but through sleight of hand and book-cooking by the Treasury department, the drop-dead cut-off date to increase the debt limit has been extended until August 2. The opposing camps are far apart and seemingly immovable: the Democrats are resisting GOP proposals for draconian cuts on entitlements and other domestic spending programs, and the Republicans adamantly refuse to consider a tax increase of any kind.

But then, Sperling brings a lot to the challenge—particularly his knack for making personal connections with his adversaries, while doing everything he can to get his way. He’s a Clintonite who has managed to work his way into this president’s good graces, and defuse the misgivings of diehard Obama loyalists, after serving as an advisor in Hillary Clinton’s 2008 primary campaign. He’d worked in Bill Clinton’s 1992 presidential campaign, co-authoring Clinton’s populist economic manifesto Putting People First; was one of President Clinton’s chief policymakers and, from 1997 to 2001, was director of the National Economic Council.

And he’s such a public service junkie he cashiered the handsome living he made during the Bush presidency—speaking, writing, think-tanking, consulting, and running a girls’ education philanthropy for Goldman Sachs—to leap at the chance to rejoin government, taking Geithner’s offer to be his counselor at Treasury. From that perch, he managed to play a crucial role in nearly every one of Obama’s economic initiatives, from saving the auto industry to passing tax breaks for small business to last December’s controversial deal with the Republicans to extend the Bush tax cuts in return for a 2-percent reduction in the payroll tax and other benefits for middle and low income Americans. His contributions were so impressive Obama restored him to the National Economic Council job.

“At this point in his career, no one has more experience than Gene at actually crafting a deal that can work for everyone, and also that can protect the president if it fails,” says a former colleague from the Clinton White House. “If there’s a sentry on point who will get the early warning signal that a trigger might have been pulled that could lead to disaster, it will be Gene. I can imagine a ‘Guns of August’ situation”—a reference to the Pulitzer Prize-winning Barbara Tuchman book about how Europe’s miscalculations resulted in World War I—“where everybody stumbles into something. They can make a mistake.”

Rep. Chris van Hollen, the ranking Democrat on the House Budget Committee and one of the negotiators at Blair House, notes that “Gene has been through this before and he brings that historical perspective to the table, which is very important to all the players—obviously for the president and for the Democrats’ strategic and political perspective.” Van Hollen adds that Sperling’s mastery of the federal budget, and his talent for creative packaging, is also an asset. “There’s plenty of territory to cover in the search for common ground, and Gene is very skillful at identifying different ways to look at the same set of facts and making them appealing.”

Biden, whose role is less to haggle over details than to keep the conversation going, has recommended that the substantive discussion about taxes be put off to the end, lest the talks blow up from the get-go. But the day of reckoning will soon arrive. Geithner, whom Republicans characterize as the bad cop in the negotiations, sees a tax-hike on upper-income Americans as the only conceivable outcome “No!” the treasury secretary exclaims when I ask if preserving the Bush tax cuts for the wealthy is even a possibility. “It might take some time for people to come that realization.”

Sperling, by contrast, offers an argument, not a directive. "A deficit reduction plan that represents shared sacrifice can't have ordinary Americans feeling that they are being asked to take tough cuts just to finance tax relief for the most-well off," he says in a statement. “You can't ask for tough spending cuts affecting millions of Americans, and then say that every loophole, tax expenditure or revenue from even the most fortunate is off the table. They [the Republicans], obviously, strongly disagree." It’s revealing that a Republican leadership aide calls Sperling “an honest broker” in the Biden talks, in which House Majority Leader Eric Cantor is leading the anti-tax hike charge. "There is a real seriousness of purpose in the room,” Sperling says in another statement. “Everyone at the table comes prepared to battle for their views, but also trying to find areas of agreement."

(It’s a testament to the sensitivity of the negotiations—and the insular culture of the Obama White House—that Sperling declined to be quoted directly for this story. Some of Obama’s battle-hardened staff still regard the Clintonites with wariness—a fact that easily could have denied Sperling a top White House job.)

At five-foot-5 and verging on pudgy, the 52-year-old Sperling is the opposite of physically imposing (never mind that he’s an aging jock, a competitive tennis player who boasts a killer three-point basketball shot), and speaks in a slow, occasionally halting cadence that belies a diamond-bright intelligence. He is, by nature, a relentless workaholic, although in recent years, he’s tried to control that and other traits—including a short fuse—that drove some of his colleagues crazy. He’s making an effort to dress better and stay calmer—possibly the result of settling down and starting a family with television writer Allison Abner, whom Sperling met when he was a consultant on NBC’s The West Wing. They have a five-year-old daughter together and 16-year-old son from Abner’s previous marriage, plus an unshakeable bond with the college-age son of one of Sperling’s ex-girlfriends.

But he knows how to twist arms. “Gene has a gift for political persuasion, and that’s a very difficult art to master,” says former New York Gov. Mario Cuomo—from whose staff George Stephanopoulos recruited Sperling in late 1991 to the Clinton campaign. “In his own sometimes timid way, he’s a master of knowing what works, not just politically but arithmetically.”

Of course, the arithmetic has become much crueler since the Clinton administration. During Sperling’s last White House tour as NEC director, the gross domestic product was roaring ahead at 5 percent annual growth, unemployment was around 4 percent, and the federal budget was—amazingly enough—in the midst of four straight years of surpluses.

This time around, he’s confronting 2 percent growth (well below the historical average), 9 percent unemployment, $4-plus gas, a budget deficit approaching $2 trillion, and a fragile economy limping along almost three years after a meltdown of the country’s financial system triggered the worst recession since the Great Depression.

“Gene is a big reason why in the 1990s, America had record numbers of new jobs, four surplus budgets and 100 times as many people moving from poverty into the middle class as in the previous 12 years,” says Bill Clinton, who praises Sperling’s “ability to manage economic decision-making with a process that is fact-based, fair to those with different views, and expeditious.” Clinton adds: “And he's a big reason why I believe President Obama will be able to lead us out of our current problems to a new era of prosperity.”

The political environment is, if anything, more unforgiving. With a presidential campaign looming in the next election cycle, positions are seemingly rock-hard. Yet this could be Sperling’s moment to shine.

“The underreported story on Gene is that while he’s a true believer and can be a tough partisan, very few people have had as many good relationships across the aisle that have actually borne fruit,” says the former Clinton White House colleague. “To use a slightly strained analogy—but only slightly—he’s the Democrats’ Paul Ryan. They both come at things from true belief and passion, and real policy depth.”

Alan Simpson agrees, calling Sperling “a conciliator and a facilitator who will be a big help” in fashioning a compromise on the debt ceiling. Even Senate Republican Leader Mitch McConnell is a fan. When Sperling’s appointment was announced in January, McConnell called him “a pretty good choice.” “That pretty well sums it up,” McConnell says today. “I’m sure the president has confidence in him, and that’s why he’s there.”