Obama budget to make small entitlement cuts
President Obama will deliver his budget proposal next week - 2 months late as usual - and in it, he will make an offer that some Senate Republicans may be unable to refuse.
In exchange for some small cuts in entitlement programs, the president will propose more stimulus spending, increased tobacco taxes and closing some loopholes in the tax code.
For Social Security, there would be a significant, but small change; tying yearly increases in benefits to a "chained" CPI. This is the carrot Obama is offering the GOP who have been pushing this idea for years.
For Medicare, a reduction in payment to doctors and hospitals and making wealthier seniors pay more for coverage.
Will the GOP take the bait? New York Times:
Congressional Republicans have dug in against any new tax revenues after higher taxes for the affluent were approved at the start of the year. The administration's hope is to create cracks in Republicans' antitax resistance, especially in the Senate, as constituents complain about the across-the-board cuts in military and domestic programs that took effect March 1.
Mr. Obama's proposed deficit reduction would replace those cuts. And if Republicans continue to resist the president, the White House believes that most Americans will blame them for the fiscal paralysis.
Besides the tax increases that most Republicans continue to oppose, Mr. Obama's budget will propose a new inflation formula that would have the effect of reducing cost-of-living payments for Social Security benefits, though with financial protections for low-income and very old beneficiaries, administration officials said. The idea, known as chained C.P.I., has infuriated some Democrats and advocacy groups to Mr. Obama's left, and they have already mobilized in opposition.
As Mr. Obama has before, his budget documents will emphasize that he would support the cost-of-living change, as well as other reductions that Republicans have called for in the popular programs for older Americans, only if Republicans agree to additional taxes on the wealthy and infrastructure investments that the president called for in last year's offer to Mr. Boehner.
Mr. Obama will propose other spending and tax credit initiatives, including aid for states to make free prekindergarten education available nationwide -- a priority outlined in his State of the Union address in February. He will propose to pay for it by raising federal taxes on cigarettes and other tobacco products.
All the president needs is to peel off 5 Republicans in the Senate to get an up or down vote on the budget. And that's dependent on more liberal Senators sticking with the president despite the entitlement cuts. I don't see it happening - nor will the GOP House even bother to take it up if it gets that far.
But in the PR fight over the budget, it might be a political version of "shock and awe." Obama is going to anger his base - they will go ballistic - and win no friends on the right. But most Democrats will probably stay with him and indpendents will wonder why the GOP won't accept most of what they've been advocating for months.
As a serious effort at deficit reduction, it falls considerably short. But as a political document, it will probably give the president at least a temporary advantage and make life difficult for Republicans running in 2014.