“President Obama is pressing congressional leaders to consider a far-reaching debt-reduction plan that would force Democrats to accept major changes to Social Security and Medicare in exchange for Republican support for fresh tax revenue.
At a meeting with top House and Senate leaders set for Thursday morning, Obama plans to argue 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.
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….
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 has all the earmarks of a game-changer. At the very least, it ratchets up the pressure on Republicans to negotiate more seriously.
In fact, according to The New York Times, “The president’s renewed efforts follow what knowledgeable officials said was an overture from Mr. Boehner, who met secretly with Mr. Obama last weekend, to consider as much as $1 trillion in unspecified new revenues as part of an overhaul of tax laws in exchange for an agreement that made substantial spending cuts.”
The Post story, however, quotes a Boehner spokesman as saying only that “there are no tax increases on the table.”
As that confusion suggests, few if any details are available. However, the proposal to cut Social Security is probably based on the plan offered by the Bowles-Simpson deficit-reduction commission. If so, I have no argument with it. Among other things, that proposal changes the way that annual Social Security benefit increases are calculated, making them more reflective of what retirees experience. The changes would have the greatest effect on the most affluent 20 percent of retirees, with low-income workers actually seeing an increase in their benefits.
Most important, the Bowles-Simpson approach treats Social Security on its own terms. It does not cut the program as a way to balance the overall budget, and it gives the program full credit for the many billions of dollars that have been borrowed from it over the last quarter century to fund general government. The changes are intended to make the program actuarially sound on its own terms, and that’s a good thing. Even the AARP last month embraced reform proposals that cut future benefits as long as it’s part of a package to make the system fiscally sound.
But again, we’ll have to see what exactly the president is proposing, and in turn what the Republican reaction will be. In recent days, we’ve seen signs that the GOP’s united front against revenue increases was beginning to crack. Message discipline had broken down as Boehner, Majority Whip Eric Cantor, Senate Minority Leader Mitch McConnell and a variety of GOP backbenchers began to sing different tunes.
This proposal by the president may break that wide open.
– Jay Bookman