Congress Nears Deal On Payroll Tax Cut; Interview With National Economic Council Director Gene Sperling
YELLIN: Cafferty is here now with the "Cafferty File." Hi, Jack.</s>JACK CAFFERTY, CNN CONTRIBUTOR: Hello, Jess. Mitt Romney grew up in Michigan. His father, George, was the president of American Motors, later, the governor of the state. Two weeks from today, there is a very real chance Mitt Romney could lose the Republican primary in his home state. Now, it's one thing to lose in any of the other 49 states, but it's another thing entirely if you lose your home state where your dad was the governor. Michigan is a state especially hard-hit by the recession and chronic unemployment, higher than the national average. We came within an eyelash of losing the domestic automobile industry, which was born and almost died in Detroit. So, if there's ever a place where a wealthy Republican who seems out of touch with the common man might have a problem, it's Michigan, and Mitt Romney's got a problem there. Polls show him trailing Santorum, 33 to 27 percent. In an attempt to connect with Michigan voters, Romney's out with an op-ed piece in today's Detroit news. In it, he calls himself a son of Detroit and says that American, quote, "got in my bones early," unquote. He also defends an op-ed piece he wrote back in 2008 called "Let Detroit Go Bankrupt," in which he suggested that managed bankruptcy would have been preferable to a government bailout of America's car companies. Maybe so. But without the bailout, a lot of the people Romney is looking for support from today probably wouldn't even be around. Romney insists things in Detroit got worse after President Obama's intervention. He writes that the government should sell-off its auto stock and turn that money over to the taxpayers. So, here's the question. How big a deal will it be if Mitt Romney loses his home state of Michigan? The answer is it will be a big deal. Go to CNN.com/CaffertyFile and post a comment on my blog or go to our post on the SITUATION ROOM's Facebook page. Remember back in -- when was it? Al Gore lost the state of Tennessee. It's not good. You lose the home state. It's -- they put that big "L" right here on your forehead.</s>YELLIN: Well, if he loses Michigan, it could be a game changer. We'll see.</s>CAFFERTY: Yes.</s>YELLIN: I don't know about the "L."</s>YELLIN: Thanks, Jack. Just saying. I know. House and Senate negotiators are nearing a sweeping deal that includes an extension of the payroll tax cut and jobless benefits. This comes just a day after house GOP leaders dropped a demand that any extension of the tax break be offset by spending cuts. Just a short while ago, I spoke with the director of the White House economic council, Gene Sperling, about this and the president's new budget.</s>YELLIN: Gene, thanks for being with us. First of all, look, the Republican agreement to extend the payroll tax cut without paying for it was a huge concession on their part, but there's still a lot more that the Democrats want to get done, the extension of unemployment insurance payments, for doctors who accept Medicare. How optimistic are you that Republicans in the House will negotiate with Democrats on anything this year?</s>GENE SPERLING, DIRECTOR, WHITE HOUSE ECONOMIC COUNCIL: Well, look right now, we have a chance to get something done that would matter which, as you said, extending the payroll tax cut for 160 million Americans, that as we know is an extra $40 and a paycheck for the typical family. It means a lot, particularly, in this economy. And again, the extension of unemployment insurance where people are out pounding the pavement everyday, still looking for work. You put the two of those together. They're not only good for millions of American families. Most economists estimate that that would mean an extra 500,000 jobs for this year. That gives a lot of momentum --</s>YELLIN: -- are you concerned that, now, there will be so much animus nothing more will get down on unemployment insurance, for example?</s>SPERLING: You know, I think since the beginning of this negotiation, there's always been an understanding that we were trying to take care of three things -- extending the payroll tax cut, making sure the 2.5 million Americans did not get denied unemployment benefits in the next two months, which is what would happen if it wasn't extended, and making sure we don't undermine Medicare by cutting the payments to the doctors, the Medicare recipients rely on. It's always been the goal to fix all three of those together. And that's very much what we expect, and we think that the Republican and Democratic leaders alike understand that that has always been the goal.</s>YELLIN: Yes or no, are you confident all three will get done?</s>SPERLING: You know, I am confident. I think it just would be so difficult for anybody politically, no less economically, or values wise, to justify not extending benefits for people who are out there looking for work in what's still a tough labor market.</s>YELLIN: OK. Turning to the budget that the administration just released yesterday, Republicans are slamming that budget. Listen to what Mitt Romney today -- he said today.</s>VOICE OF MITT ROMNEY, (R) PRESIDENTIAL CANDIDATE: I think it is an extraordinary dereliction of duty to continue to forecast and plan for trillion dollar deficits. It's inexcusable.</s>YELLIN: The bottom line, Gene, the president did promise to cut the deficit in half during his first term. In four years, this budget does not deliver on that. Isn't this a broken promise he'll have to defend on the campaign trail?</s>SPERLING: You know, I think when people look at what's happened, they see the debts are coming down. I think anybody who's being fair and objective would know that it turns out that the economic hole we were in when we first made projections is way deeply larger than we could have expected. Everyone knows there's been unexpected hits from Europe, from higher gas prices. All that said, this president is still on track to cut the deficit in half over five years. So, one-year adjustment with all the economic circumstances this phase (ph), and most importantly, this deficit puts us back on a path to bringing the debt down. After 2014, the debt is a percentage of our economy, comes down and stabilizes. That is the number one thing that markets, investors look for to ensure that they feel confident in making long-term investments in the United States.</s>YELLIN: Gene Sperling at the White House. And GOP leaders are scheduled to meet with members at the House of Representatives at the top of the hour. My colleagues on the Hill are monitoring all the action, and we will bring you the news when it happens. And young boys told their suicide vests would spare their lives but kill others. They were let go by the U.S. last year, but now, they're back and under arrest. And we'll go aboard a U.S. navy ship as it's trailed by Iranian boats. How Americans could get caught in the middle of a showdown over Iran's nuclear program.