Sperling: GOP will cave on taxes after seeing ‘pain’ caused by sequester

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A senior White House official says congressional Republicans who see the damage caused by billions in automatic spending cuts will eventually agree to raise taxes.

Gene Sperling, director of the National Economic Council and assistant to the president for economic policy, said that Republicans will eventually "choose bipartisan compromise over an ideological position," on Sunday on ABC's "This Week." 


"As this pain starts to gradually spread to communities" hit by $85 billion in cuts "more Republican colleagues who are concerned about this harm to their constituents will choose bipartisan compromise on revenue raising tax reform with serious entitlement reform," said Sperling. 

"They'll choose this bipartisan compromise over what is an ideological position that every single penny of deficit reduction going forward must be on the middle class or seniors or children, and that there can't be one penny that comes from closing loopholes or tax expenditures," he added.

The automatic across-the-board cuts took effect on Friday after congressional leaders and President Obama were unable to broker a last-minute replacement deal. 

Democrats are calling for new tax revenues in any deal to replace the sequester, while Republicans insist that only other targeted cuts and entitlement reforms be included.

The White House launched an aggressive media blitz in the days before the cuts began, warning of the real world consequences and the effect on taxpayers. Obama accused Republicans of allowing the cuts to occur to protect tax breaks and loopholes for wealthy individuals and corporations.

But Republicans say that they allowed tax hikes in January’s “fiscal cliff” deal and that the focus should now be on spending reductions.

On Sunday, Sperling called it unreasonable that Republicans are refusing to allow "one dime" in deficit reduction through tax hikes. 

He called the $85 billion in cuts which went into effect "very harsh," but said they were designed to be onerous to "force both sides to go back to the table to finish the grand bargain."

In an interview on CNN’s “State of the Union,” Sperling said President Obama spent most of Saturday working the phones in search of a bipartisan compromise to stave off sequester spending. 

"He's making those calls to see where there might be a coalition of the willing, a caucus for common sense and trying to build trust," he said.

Obama is reaching out to Democrats who understand "we have to make serious progress on long-term entitlement reform" and "Republicans who realize that if we have that type of entitlement reform they'd be willing to have tax reform that raises revenues to lower the deficit."

Many congressional Republicans and business groups, including the U.S. Chamber of Commerce, have been pressing lawmakers to overhaul entitlements and the tax code. 

Sperling cautioned though the sequester does not change policies on that front. 

"They say they're for long-term entitlement reform," Sperling said on CNN's "State of the Union." "This sequester doesn't do anything to help long-term entitlement reform."

Sperling added that the largest concern with sequestration is job losses. The Congressional Budget Office (CBO) has said that upward of 750,000 jobs could be lost this year, at a time of persistently high unemployment and a sluggish economic recovery. 

"What exactly worries me about this type of sequester is that
it's going to hurt that progress of lowering the unemployment rate," Sperling said on CNN. 

"I talk to CEOs of major companies all the time, who are telling me they are putting projects on hold precisely because of this sequester and dysfunction in Washington."

Sperling, who was involved last week in a highly publicized verbal battle with well-known journalist Bob Woodward, also said he hoped they could mend their relationship. 

He called Woodward a "legend" in the news business and although he hasn't talked to him since the dust up called their relationship "very friendly and respectful" on the whole. 

Woodward accused Sperling of threatening him in an email exchange over a story he wanted to write about Obama's handling of sequestration negotiations. 

The Washington Post reporter then backed off the statement saying he didn't feel threatened.