WASHINGTON: US President Barack Obama will offer cuts to Social Security and other benefit programmes in a budget proposal next week aimed at winning over enough congressional Republicans to pass a broad deal to reduce the deficit.
While Obama’s previous budgets have largely been ignored in Congress, the White House wants to use this year’s proposal, to be released on Wednesday, to move beyond the fiscal fights that have consumed Washington since 2010.
But several attempts to reach an agreement balancing spending cuts with tax increases have failed, and prospects for a “grand bargain” remain dim. House of Representatives Speaker John Boehner, who let taxes rise for the wealthiest Americans earlier this year, has ruled out any further revenue increases and was lukewarm about Obama’s latest proposal.
Obama will also face resistance from his fellow Democrats as a senior administration official yesterday said the president will offer to apply a less generous measure of inflation to calculate cost-of-living increases that would affect Social Security and other government programs when he reveals his budget.
That change would result in lower payments to some beneficiaries of the Social Security pension programme and is staunchly opposed by many Democrats as well as labour and retiree groups.
But, Obama will only accept the cuts to so-called entitlements like Social Security and Medicare if congressional Republicans agree to higher taxes, the official added.
“This isn’t about political horse trading,” the official said. “It’s about reducing the deficit in a balanced way that economists say is best for the economy and job creation.”
Sidetracked by a series of budget fights since the 2010 midterm elections that gave Republicans control of the House, Obama wants to focus more on issues like gun control and immigration reform in his second term.
“What I think he would like to have is a grand bargain which puts these fiscal issues behind us for a good number of years,” said Rudolph Penner, a former Congressional Budget Office director. “If he doesn’t get the grand bargain, his second term is not going to be a very happy one.”
Analysts familiar with the administration’s thinking, and who spoke on condition of anonymity, say the White House is considering a plan to raise revenues by limiting tax deductions to 28 percent for wealthier taxpayers.
Boehner, an Ohio Republican, made plain that spending cuts should not be accompanied by more tax increases. “If the president believes these modest entitlement savings are needed to help shore up these programs, there’s no reason they should be held hostage for more tax hikes,” he said in a statement yesterday.
The White House and Republicans have had repeated high-stakes clashes over raising the nation’s borrowing limit, tax increases, and government spending. Obama has been reaching out to individual Republicans to try to calm the waters, holding dinners and meetings.
Reuters
