President Obama will unveil a budget next week that proposes cuts to Medicare and Social Security in exchange for more tax increases, essentially repacking a previous proposal he made to House Speaker John Boehner during fiscal negotiations.
Obama’s budget blueprint for next fiscal year will include a change in the cost-of-living calculation for Social Security benefits, according to administration officials. The president would only make such a concession if Republicans once again agree to raise taxes on wealthier individuals and corporations, they said.
However, Obama’s budget does not balance within 10 years — and Republican leaders have said they won’t even consider another tax increase after agreeing earlier this year to return to the Clinton-era income tax rate for households earning more than $450,000 a year.
“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,” Boehner said in a statement. “That’s no way to lead and move the country forward.”
Obama would like to limit tax deductions for high-income Americans and close loopholes for certain industries, such as oil and gas. The president would also increase taxes on tobacco products to pay for a universal pre-school initiative.
And the White House will look to limit retirement accounts for the wealthy.
Obama’s budget on Wednesday will be released just hours before he continues his so-called charm offensive of GOP senators, when he’ll dine with a handful of Republican lawmakers. Knowing that Republican leadership is unlikely to embrace his budget, Obama is hoping to peel off support from more moderate members of the upper chamber.
The White House estimates that Obama’s plan would cut $1.8 trillion over the next decade. Republicans counter that such a proposal doesn’t do enough to curtail chronic trillion dollar deficits.
Obama has to appease more than just Republicans. Upon learning of the president’s planned Social Security adjustments, progressive groups threatened to punish any Democrat who backed the president’s proposal.
“You can’t call yourself a Democrat and support Social Security benefit cuts,” Stephanie Taylor, of the Progressive Change Campaign Committee, said. “The president is proposing to steal thousands of dollars from grandparents and veterans by cutting cost of living adjustments, and any congressional Democrat who votes for such a plan should be ready for a primary challenge.”