* President seeks compromise with Congress on deficit
* Obama to propose less generous inflation gauge in budget
* Boehner balks at accepting more revenue
By Mark Felsenthal
WASHINGTON, April 5 U.S. President Barack Obama
will offer cuts to Social Security and other benefit programs in
a budget proposal next week aimed at winning over enough
congressional Republicans to pass a broad deal to reduce the
While Obama's previous budgets have largely been ignored in
Congress, the White House wants to use this year's proposal, to
be released on Wednesday, to move beyond the fiscal fights that
have consumed Washington since 2010.
But several attempts to reach an agreement balancing
spending cuts with tax increases have failed, and prospects for
a "grand bargain" remain dim. House of Representatives Speaker
John Boehner, who let taxes rise for the wealthiest Americans
earlier this year, has ruled out any further revenue increases
and was lukewarm about Obama's latest proposal.
"When the president visited the Capitol last month, House
Republicans stated a desire to find common ground and urged him
not to make savings we agree upon conditional on another round
of tax increases," he said in a statement. "If reports are
accurate, the president has not heeded that call."
Obama also faces resistance from fellow Democrats over his
offer to apply a less generous measure of inflation to calculate
cost-of-living increases that would affect Social Security and
other government programs when he reveals his budget.
That change would result in lower payments to some
beneficiaries of the Social Security pension program and is
staunchly opposed by many of the president's party as well as
labor and retiree groups.
"I am terribly disappointed and will do everything in my
power to block President Obama's proposal to cut benefits for
Social Security recipients," said Vermont Senator Bernie
Sanders, an independent who votes with the Democrats.
PRIORITIES IN AN IMPERFECT WORLD
But Obama will only accept the cuts to so-called
entitlements like Social Security and Medicare if congressional
Republicans agree to higher taxes, a senior administration
official said. White House spokesman Jay Carney said the
administration needed to compromise with a Republican-led House.
"The budget reflects his priorities within a budget world
that is not ideal," Carney told reporters at a briefing.
Sidetracked by a series of fights over taxes, spending, and
the nation's borrowing since the 2010 midterm elections that
gave Republicans control of the House, Obama wants to focus
more on issues like gun control and immigration reform in his
"What I think he would like to have is a grand bargain which
puts these fiscal issues behind us for a good number of years,"
said Rudolph Penner, a former Congressional Budget Office
director. "If he doesn't get the grand bargain, his second term
is not going to be a very happy one."
Obama has been reaching out to individual Republicans to try
to soften the tone of the debate, holding dinners and meetings
in what is being called a charm offensive.
He plans to keep up that effort on Wednesday at a dinner
with a dozen Republican senators at the White House.
"The president is engaged in conversations with potential
members of the common-sense caucus with Republicans who will at
least entertain the idea of dealing with our budget challenges
in a balanced way," Carney said.
SOCIAL SECURITY CUTS
By the same token, he may have to focus his charm on
Democrats to get them to accept using the different inflation
gauge, the "chained Consumer Price Index."
Supporters of the switch say the standard CPI index
overstates price rises, but opponents say moving to the chained
CPI would unfairly deprive older Americans of benefits they have
"Politically, this is a terrible idea," the left-leaning
group MoveOn.org wrote to its members. "Social Security is such
a popular and successful program that even Republicans didn't
touch it in their budget."
Overall, Obama's proposal would cut the deficit by $1.8
trillion over 10 years, the administration official said, and is
expected to undo at least some of the $85 billion in
across-the-board spending cuts known as sequestration that went
into effect last month.
"Undoing the sequester is very important," said Michael
Linden, managing director for economic policy at the
left-leaning Center for American Progress. "Lots and lots of
little bad things are happening all over the country and it's
going to get worse over the next few months."
Republican critics called the president's $1.8 trillion
deficit reduction estimate inflated, saying that if
sequestration cuts were reversed, the reductions would be much
smaller than promised.
But Carney said the president's budget proposal, if passed,
would add to deficit reduction. Including $2.5 trillion in
deficit cuts already agreed to through spending reductions and
tax increases, the additional $1.8 trillion would bring the
total to $4.3 trillion, more than the $4 trillion in deficit
cuts both sides have said was their goal.
The nonpartisan Congressional Budget Office estimated in
February that the deficit would shrink to $845 billion this
year, or 5.3 percent of GDP, its smallest size since 2008.
Obama's budget for the fiscal year that starts on Oct. 1
will also contain a proposal to expand access to early childhood
education, the administration official said. That program would
be paid for by raising tobacco taxes.
In addition, the president wants to increase revenues by
placing a $3 million upper limit on tax-preferred retirement
accounts and by barring people from collecting disability
benefits and unemployment insurance at the same time, the
Analysts familiar with the administration's thinking, and
who spoke on condition of anonymity, say the White House is
considering a plan to raise revenues by limiting tax deductions
to 28 percent for wealthier taxpayers.
In addition, the president was considering cuts to Medicare,
the health program for the elderly, through reducing payments to
healthcare providers but also by requiring wealthier
beneficiaries to pay more out-of-pocket, analysts said.