Obama defends healthcare programs in inaugural speech

U.S. President Barack Obama speaks during swearing-in ceremonies on the West front of the U.S Capitol in Washington, January 21, 2013.

WASHINGTON (Reuters) - President Barack Obama's strong stance on looking after the elderly was viewed by Republicans as a sign that the White House was not serious about reducing the cost of the Social Security retirement fund and Medicare for seniors.

Obama was sworn in for his second term on Monday and he made his position clear by stating in his inaugural speech that government programs for the elderly do not make the United States a "nation of takers."

This did not sit well with Republican lawmakers, who noted that healthcare is one of the biggest drivers of the country's $16.4 trillion debt.

"In order to protect them we've got to reform them. That was not what was communicated," Republican Senator Jeff Flake said of the programs, known in Washington parlance as "entitlements," as Obama lunched with Cabinet members and lawmakers at the Capitol.

"It was more like 'don't touch these programs.' That was sort of the sense that you got," said the Arizona lawmaker, who thought Obama's tone on Medicare may make it more difficult to reform the programs.

Obama and Republicans in Congress have fought bitterly over how to put the country on a sustainable fiscal path. Republicans want to overhaul the benefits programs and favor changes opposed by Democrats, such as raising the eligibility age on Medicare and making wealthier retirees pay more for their healthcare.

Although Obama said Washington must make hard choices to cut healthcare costs and the deficit, he also said: "We reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future."

Budget battles threaten to dominate Obama's second term with another set of fiscal deadlines looming.

The U.S. Treasury is expected to reach the debt limit on how much the government is allowed to borrow around mid-February. Automatic budget cuts will start to go into effect on March 1 and a stop-gap government funding bill expires at the end of March.

Ohio Republican Senator Rob Portman said Obama missed the opportunity to talk about where lawmakers could find common ground on deficit reduction.

"I mean we have to make tough decisions. The president can provide both leadership and cover for his own party to make the right decisions," Portman told reporters.

Obama has been open to allowing the government to use a lower inflation index to calculate federal benefits, an idea Republicans support and liberal Democrats dislike.

(Additional reporting by David Lawder; editing by Christopher Wilson)