Barack Obama Offers Social Security Cuts

President Barack Obama is trying to make congressional leaders to accept cuts to Social Security and the Medicare health program in a deal to raise the US debt ceiling, according to The Washington Post.

President Barack Obama delivers remarks on the status of efforts to find a balanced approach to deficit reduction during a statement in the James S. Brady Briefing Room, July 5, 2011. Photo: Chuck Kennedy/The Official White House

At a Thursday meeting with top House and Senate leaders, Obama plans to reason that a rare consensus has emerged about the size and scope of the nation’s budget problems and that policymakers should seize the moment to take dramatic action.

Barack Obama wants to move well beyond the $2 trillion in savings sought in earlier negotiations and seek perhaps twice as much over the next decade, Democratic officials briefed on the negotiations said Wednesday. Obama is proposing significant reductions in Medicare spending and is offering to tackle the rising cost of Social Security.

This move marks a major shift for the White House and could present a direct challenge to Democratic lawmakers who have vowed to protect health and retirement benefits from the assault on government spending.

The intensifying negotiations between the president and the speaker have Congressional Democrats growing anxious, worried they will be asked to accept a deal that is too heavily tilted toward Republican efforts and produces too little new revenue relative to the magnitude of the cuts.

Congressional Democrats said they were caught off guard by the weekend White House visit of Mr. Boehner — a meeting the administration still refused to acknowledge on Wednesday — and Senate Democrats raised concerns at a private party luncheon on Wednesday.

“Obviously, there will be some Democrats who don’t believe we need to do entitlement reform. But there seems to be some hunger to do something of some significance,” said a Democratic official familiar with the administration’s thinking. “These moments come along at most once a decade. And it would be a real mistake if we let it pass us by.”

“Depending on what they decide to recommend, they may not have Democrats,” Senator Sheldon Whitehouse, a Rhode Island Democrat, said in an interview. “I think it is a risky thing for the White House to basically take the bet that we can be presented with something at the last minute and we will go for it.”

The White House is now seeking a plan that would slash more than $4 trillion from annual budget deficits over the next decade, stabilize borrowing, and defuse the biggest budgetary time bombs that are set to explode as the cost of health care rises and the nation’s population ages.

That would represent a major legislative achievement, but it would also put Obama and GOP leaders at odds with major factions of their own parties. While Democrats would be asked to cut social-safety-net programs, Republicans would be asked to raise taxes, perhaps by letting tax breaks for the nation’s wealthiest households expire on schedule at the end of next year.

The administration argues that lawmakers would also get an important victory to sell to voters in 2012. “The fiscal good has to outweigh the pain,” said a Democratic official familiar with the discussions.

Obama has already spoken to House Speaker John A. Boehner (R-Ohio) about the possibility of building support for a more ambitious debt-reduction plan. Boehner spokesman Michael Steel would say only that no tax increases were on the table and that Mr. Bonheur had not agreed to the expiration of any tax cuts.

House Majority Leader Eric Cantor (Va.) told reporters that he is now willing to consider Democratic demands to end tax breaks for corporations, hedge-fund managers and owners of corporate jets, so long as the final deal does not raise tax rates or overall federal tax collections.

“If the president wants to talk loopholes, we’ll be glad to talk loopholes,” Cantor said at his weekly roundtable with reporters.

“We’ve said all along that preferences in the code aren’t something that helps economic growth overall. But listen, we’re not for any proposal that increases taxes, and any type of discussion should be coupled with offsetting tax cuts somewhere else,” he added.

Among the options for cutting taxes are a number of proposals that should appeal to Democrats, said Cantor spokesman Brad Dayspring. They include a White House proposal to temporarily reduce payroll taxes for employers, an idea aimed at propping up the sputtering economy.

Democrats also support an annual effort to subdue the alternative minimum tax, which would otherwise strike heavily at households in high-cost urban areas that tend to vote Democratic.

“To sort of cherry-pick items in the context of this current negotiation with the White House strikes me as pretty challenging,” McConnell told reporters, adding that raising taxes on any sector of the economy could trigger job losses at a time when the unemployment rate hovers around 9 percent. “We want to tackle deficit reduction in a way that doesn’t exacerbate unemployment.”

And not all Democrats see the push for a major package as a negative.

“We don’t need a minideal,” Senator Richard J. Durbin of Illinois, the No. 2 Democrat, said Wednesday on the Senate floor. “We need something that speaks authoritatively to the world that the United States understands its deficit challenge and is prepared to make the hard choices to address it.” [via The Washington Post and The New York Times]

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