Also on the table are higher Medicare premiums and reduced benefits for better-off seniors, and a higher Medicare eligibility age.
At the same time, House Speaker John A. Boehner (R-Ohio) said he has moved to tamp down criticism of Obama’s proposal, which quickly bubbled up from GOP lawmakers in swing districts, such as Rep. Chris Collins (N.Y.), who accused the president of cutting spending “on the backs of our seniors.” And Rep. Greg Walden (Ore.), the chairman of the House Republican campaign arm, called Obama’s plan “a shocking attack on seniors.”
The developments signal an important shift in the budget battle as party leaders nervously prepare again to raise the federal debt limit. After more than two years of talking about taxes and “wasteful” government spending, policymakers appear ready to move into the more serious and sensitive realm of entitlement programs.
Republican leaders have made reducing the cost of entitlements their top priority, and for good reason, budget analysts say. Medicare, Medicaid and Social Security account for nearly 40 percent of federal spending and are growing rapidly, as they must provide benefits to all who qualify, regardless of cost.
Recipients pay into the programs throughout their working lives, and through premiums. But as the baby-boom generation retires, the programs threaten to swamp the federal budget. But relatively minor changes could make a huge difference. For example, the new inflation measure — known as the chained consumer price index, or chained CPI — would reduce benefits by only about 0.3 percentage points per year. But over the long run, it would save enough to wipe out as much as 20 percent of the program’s 75-year funding gap.
The elderly are disproportionately likely to vote, however, and although Republicans have offered a plan to overhaul Medicare a decade from now, both parties have shied away from more immediate changes, particularly to Social Security. Chained CPI has come up in private negotiations and recommendations from independent groups, such as the Bowles-Simpson commission. But Obama’s decision to include it in his formal budget request — and House leaders’ decision to hold hearings with the hope of drafting bipartisan legislation — is plowing new ground.
Still, reining in entitlement spending remains “one of the harder and stickier aspects of fiscal reform” for both parties, said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget.
Many Democrats are furious with Obama, saying chained CPI represents bad policy and bad politics. Last week, lawmakers emerged from an information session arranged by House Minority Leader Nancy Pelosi (D-Calif.) complaining that their offices had been flooded with calls.