President Obama, hoping to make debt reduction part of his legacy, appears focused on striking a grand bargain with Republicans to reform Medicare this year.
Medicare's growing share of the budget and its increasing toll on the expanding debt were the main topic of conversation at an unprecedented dinner meeting last week between Obama and Senate Republicans, who came away convinced that entitlement reform is now the president's No. 1 priority.
And he wants the job done by this summer.
Medicare was topic one when the bipartisan group sat down to dine on prime rib, roast duck and striped bass at the exclusive Jefferson Hotel, just across the street from the White House. It was the first substantive meeting in three years between Obama and Republicans, who have been locked in a bitter partisan battle over spending and taxes.
Medicare is the biggest driver of the nation's debt, Obama told the group, and it's costing far more than American workers are pumping into the system through paycheck deductions.
"They all think that Medicare is their money, and to a certain extent it is," Obama said, according to Sen. Ron Johnson, R-Wis., who attended the event. "But for every dollar they put in, they get three back. The American people don't understand that."
The acknowledgment was music to the ears of fiscal reform-minded Republican senators, who believe a Medicare overhaul is key to reducing the debt, which by the time Obama leaves office is expected to grow from the current $16.4 trillion to more than $20 trillion. Medicare now makes up more than 15 percent of the federal budget, and the cost is rising.
Medicare, Medicaid and Social Security combined make up more than 40 percent of the federal budget.
Obama and Republicans talked at the Jefferson for two hours, hardly enough time to get into specifics about a deal, but the dinner ended with a pledge to negotiate a grand bargain that would aim to reduce the nation's debt and deficit, with Medicare reform leading the way.
Obama will meet with House and Senate Republicans again next week and has already place phone calls to several other GOP senators.
But forging a deal on Medicare with Republicans will be difficult because of past disagreements over how to reduce the cost of the program.
The day after he met with Republicans, Obama lunched with House Budget Committee Chairman Paul Ryan, R-Wis., the GOP's chief architect of Medicare reform. Ryan, who will introduce his 2014 budget proposal this week, wants to reduce the cost of the Medicare by raising the age of eligibility and offering Medicare recipients the option of using a "premium support plan," which would provide a stipend that would allow them to purchase private insurance.
Democrats, including Obama, have strongly resisted the idea of raising the age requirement and have labeled Ryan's premium support plan a "voucher program" that will force seniors to pay more for coverage.
"What has to happen is [the president] has to listen," Sen. Lamar Alexander, R-Tenn., told The Washington Examiner. "He's right to try to discover where the consensus is. But, in the end he is going to have to say, 'OK, let's go this way,' and try to lead the country and the Congress in a particular direction."