As part of his pitch, Obama is proposing significant reductions in Medicare spending and for the first time is offering to tackle the rising cost of Social Security, according to people in both parties with knowledge of the proposal. The 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.
“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.”
Rather than roughly $2 trillion in savings, 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.
It is not clear whether that argument can prevail on Capitol Hill. Thursday’s meeting at the White House — an attempt by Obama to break the impasse that halted debt-reduction talks two weeks ago — will provide a critical opportunity for leaders in both parties to say how far they’re willing to go to restrain government borrowing as the clock ticks toward an Aug. 2 deadline for raising the debt limit.
Privately, some congressional Democrats were alarmed by the president’s proposal, which could include adjusting the measure of inflation used to determine Social Security payouts. But others described it as primarily a bargaining strategy intended to demonstrate Obama’s willingness to compromise and highlight the Republican refusal to raise taxes.
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, according to people with knowledge of those talks, who, like others quoted in this article, spoke on the condition of anonymity to shed light on private negotiations. The two discussed various options for overhauling the tax code and cutting entitlement spending, but they reached no agreement.