White House: Obama ready to deal on entitlements in next week's budget

President Obama will propose cuts next week to Social Security and other entitlements as part of a renewed effort to strike a long-term deficit-reduction deal with Republicans, the White House said Friday. 


Obama will embrace a plan — known as chained CPI — that would reduce cost-of-living increases for Social Security recipients through a more restrictive measure of inflation, according to officials first cited by Reuters and The New York Times

The president’s April 10 budget will seek savings in Medicare through lower payments to hospitals, pharmaceutical companies and other healthcare providers, the Times reported. 

Obama’s plan to set a new formula for Social Security payments marks a significant political risk because the proposal is widely unpopular with Democrats. 

But the president’s gambit is that the offer will appeal to Republicans who have, until now, staunchly opposed administration calls for a broad deficit deal that includes an even balance of spending cuts and revenue increases. 

"While this is not the president’s ideal deficit reduction plan, and there are particular proposals in this plan like the CPI change that were key Republican requests and not the president’s preferred approach, this is a compromise proposal built on common ground, and the president felt it was important to make it clear that the offer still stands," one senior administration official told The Hill. 

The 10-year budget plan, to be released Wednesday, would reduce annual deficits by $1.8 trillion and reportedly replace the across-the-board sequestration cuts that took effect last month. The White House calls it "a cohesive package that reflects the kind of compromise we should be able to reach."

The president is willing to agree to the entitlement cuts only in exchange for tax hikes in other areas. 

"The president has made clear that he is willing to compromise and do tough things to reduce the deficit, but only in the context of a package like this one that has balance and includes revenues from the wealthiest Americans and that is designed to promote economic growth," the administration official said. "That means that the things like CPI that Republican Leaders have pushed hard for will only be accepted if Congressional Republicans are willing to do more on revenues."

The budget plan revives efforts by Obama dating to 2011 to strike a long-term deficit compromise with Republicans, none of which have succeeded. 

Speaker John BoehnerJohn Andrew BoehnerLobbying world A new kind of hero? Last week's emotional TV may be a sign GOP up in arms over Cheney, Kinzinger MORE (R-Ohio) issued a statement Friday saying no deal was reached in the past because Obama's offers "never lived up to his rhetoric."

Obama's last deficit deal offer "was significantly skewed in favor of higher taxes and included only modest entitlement savings," BoehnerJohn Andrew BoehnerLobbying world A new kind of hero? Last week's emotional TV may be a sign GOP up in arms over Cheney, Kinzinger MORE said. 

"He said he could go no further toward the middle, and that’s why his last offer was rejected."

Obama's move comes amid ongoing outreach to the GOP that has included private dinners with select senators and multiple trips to Capitol Hill to meet with Republican and Democratic lawmakers. 

At a California fundraiser earlier this week, Obama said he remains hopeful for a bipartisan compromise on the debt. 

“My intention here is to try to get as much done with the Republican Party over the next two years as I can, because we can’t have perpetual campaigns,” Obama said at a San Francisco event on Wednesday. 

“I want to make sure that we’re working together to stabilize our finances.  And I think actually that we can come up with a fiscal deal that, instead of lurching from crisis to crisis every three months, we lay the groundwork for long-term growth — controlling our deficits, controlling our debt, but also making sure we can invest in our future.”

Republican leaders have so far insisted they won’t accept a budget deal that includes more tax hikes, after agreeing earlier this year to let the Bush-era tax rates expire for higher-income people. 

“The president got his tax hikes on January 1,” Boehner (R-Ohio) told ABC’s “This Week” last month. “The talk about raising revenue is over.  It’s time to deal with the spending problem.”

On Friday, Boehner said House Republicans urged the president last month not to make budget savings conditional on more tax hikes. 

"If reports are accurate, the president has not heeded that call," Boehner said. 

"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."

Obama’s budget plan would raise $9 billion over 10 years by including a $3 million limit on tax-preferred retirement accounts. It would forbid people from "double dipping" by collecting disability and unemployment insurance benefits at the same time. 

He also will advocate higher cigarette and tobacco taxes as a way to pay for new funding for free pre-kindergarten education, the White House said.  

"This proposal is fully paid for in this budget by raising taxes on cigarettes and other tobacco products," the administration official said. 

- Updated at 7:25 a.m. and 11 a.m.