Under the debt ceiling agreement, the pause on student loan payments will come to an end. Gene Sperling, a Senior Adviser to President Biden, said the plan was for the pause to end, but overall, he doesn't think the resumption of payments will have a major macroeconomic impact.

Video Transcript

SEANA SMITH: President Biden and House Speaker Kevin McCarthy's bipartisan bill on the debt ceiling passing through the House, heading to the Senate. The race against the clock to get the bill to President Biden's desk is heating up with the June 5 deadline just four days away.

Here to discuss this and more, we want to bring in Gene Sperling, senior advisor to President Biden. Gene, it's great to see you here. So certainly a massive hurdle was cleared when the House did pass this bill, but now it's in the Senate right now where some defense hawks from the Republican side are warning that maybe they are going to tie up, delay the passage of this bill because of the defense spending that is included in this. How are you looking at that risk and what that could potentially do to the timeline of getting this deal done?

GENE SPERLING: Well, first of all, what you saw in the House of Representatives yesterday is that as members were educated on the substance of the bill, there was a broad recognition that we're in divided government right now, you know, nobody gets everything they want and that this was an honorable compromise. And you can't really under emphasize how important it is that this got a majority of Republicans and a majority of Democrats. I think that creates a lot of momentum going into the Senate. Now, whether it's the House or Senate, there's going to be people who object because, again, nobody got everything they want.

But I think that one thing you did hear a lot from the leaders, whether it was the president, whether it was Leader Jeffries, Speaker McCarthy, and, you know, Leader Schumer but particularly Leader McConnell was default is not an option. Default can't be on the table. Anyone who seeks to delay this bill knowing that Monday is the day that's at risk would be going outside that consensus that I think has already passed with a big majority on both sides on the Senate-- on the House of Representatives.

So of course we're going to take every obstacle seriously. We're always going to be guarded. But I think that there's a lot of momentum going into the Senate vote, and I think that while people will raise issues, I really do believe that there will be a supermajority of senators who will recognize that even with this bill's imperfections from each side that we've got to pass it and we've got to pass it swiftly and we've got to get to the president's desk so it is signed in advance of June 5.

PRAS SUBRAMANIAN: Hey, Gene, Pras here. So you mentioned compromise, and I wanted to bring up the work requirements for elderly people for the food stamps. I know that it was important for the right, but why was sort of your party willing to compromise on that particular issue?

GENE SPERLING: Well, remember what happened. The president took work requirements off the table for Medicaid 100%. This was an issue which was one that they felt there had to be something on. We would have preferred not to engage.

But what actually happens is they got a structural reform we would have preferred not do, which is extend the age from, instead of capping at 49 years old, to 54 years old. But what President Biden did is say, well, we have a couple of structural reforms we want. We want to exempt all veterans. We want to exempt homeless people. It doesn't make sense when someone's homeless to make them record how they're working 20 hours a week. We want to exempt people who have left foster care.

When you did both of those, they got a reform that we and most Democrats would have preferred did not happen, but we also got a reform that actually had the effect of meaning less people on net would lose-- would lose SNAP food stamps due to work requirements.

So it was a compromise, but, you know, they did get some of what they wanted in that reform. But the president who said that his principles was he wasn't going to increase overall poverty or hunger can say that, on the net, this program reduces hunger because actually less people in the end will lose SNAP due to-- due to work requirements.

So this was the toughest part, and it came down to the end. But again, I'll say over and over again, this is a compromise. We have divided government, and the reason you make these compromises is not because Speaker McCarthy or President Biden, you know, is not standing up for everything they want, but they recognize we're in divided government. We have to get a budget agreement. We cannot put the country at risk of default. And that means that nobody is going to get everything they want, and no one's going to look at that bill and see something that they would really strongly prefer not be in there.

SEANA SMITH: Gene, one of the things that is in this bill is the student-debt moratorium. That's going to be lifted. Those repayments are going to resume at the end of this summer. How do you see this impacting the economy? Because the risk here that consumers could pull back their spending even further given the fact that they are going to owe $200, $300, $400 a month in their student loans.

GENE SPERLING: Well, let's look at the big picture on student loans. The president has two major reforms. One was debt forgiveness for $10,000 for students, $20,000 for somebody who'd been on Pell Grants, and then second, a major reform to ensure that students do not ever have to have crushing debt, that they can pay a relatively low percentage of their income for student loans.

The president didn't give one inch on either of those. Obviously one of those measures is before the Supreme Court on the payment pause for student loans. You know, this has gone on for a while, and it's helped a lot of Americans, a lot of, you know, recent college students get through the pandemic. But at some point, we were going to resume payments. This pause couldn't go forever. And the president had said and the secretary of education had said that this-- we would resume by the end of the-- you know, by the fall.

And so our concession was simply just to put in law what we'd already stated. And people have to recognize how much the president stood by this provision, how long he extended it. But at some point, you know, this pause, you know, was going to end, and all we really did was agree to legislate what our existing policy was in terms of when that day was.

And on the economy overall, I mean, we just continue to see a very solid labor market. We see historically low unemployment. We see all groups benefiting from that. So no, I do not expect this to be a major macroeconomic event.

PRAS SUBRAMANIAN: Hey, Gene, real quick, just looking big picture with the debt ceiling, was there any chance that President Biden would act unilaterally in some sense to get the-- get something done in terms of not default? And lastly, do we even need the debt ceiling at all? Can we get rid of that? Is that really necessary for us?

GENE SPERLING: I mean, these are all good questions. And, you know, our focus right now is on passing the bill in the Senate, so I'm not going to speculate on new policy.

I think what we feel that is most important is that the debt limit never be used by any side, Democrat or Republican, to essentially extort their policy. It is not a terrible thing that somebody says, hey, as we pass the debt limit, let's try to work on our budget agreement at the same time. It's only-- the thing that was terrible-- and we saw it in 2011, and we feared it could happen in 2023-- is somebody puts out an extreme budget that they could never get through the normal democratic process and says you either do my way or I put our country into default for the first time ever and the economy into the recession.

So had Speaker McCarthy said here's the extreme bill that we passed in the House that really would have cut programs like cancer research and Head Start by half by the end of the 10 years, you know, we think outside the mainstream of what the public supports, had they gone and said we're going to tell you you do our extreme budget or we're going to put the country into default, I think that would have been absolutely impossible. And perhaps in that scenario, the president would have had to think hard about what to do.

But the President kept with a very strong view that default is not on the table. We're not negotiating about that, and in the end-- and that this was not about, we shouldn't be looking at exceptional measures or constitutional provisions. We should just do our jobs, and that is to have an honorable budget agreement, and that's what ended up happening.

So I think the president's constant pressure that default's off the table, that we're not negotiating on default, that nobody should use extreme positions, I think that prevailed. I think he reinforced that norm, and you ended up having a budget agreement that was consistent enough with what a divided-government agreement was that you actually saw 165 Democrats support it in the House and 149 Republicans.

SEANA SMITH: So we did get bipartisan support, but the standoff has raised some questions just about how we could potentially avoid being in a similar situation down the line. Gene Sperling, always great to have you, senior advisor to President Biden. Thanks.

GENE SPERLING: Thank you so much.