As congressional leaders meet at the White House for debt talks Thursday, President Obama will seek broad changes to Social Security, Medicare and a commitment to overhaul the nation’s tax code in a bold push for a $4-trillion package of deficit reductions, sources said.
Such a large proposal would be greater than the spending cuts GOP leaders have demanded in exchange for their votes to raise the nation’s debt limit, and comes just weeks before a looming deadline. A debt ceiling vote is needed by Aug. 2 to avert what experts say would be a catastrophic upheaval of the financial system if the nation defaults.
Obama’s decision to tackle big-ticket items in a broader deal is politically difficult for all sides and will certainly draw resistance from rank-and-file lawmakers, especially those seeking reelection in 2012.
The two sides have been at a standoff for weeks and Obama deepened his involvement this week by pressing congressional leaders to “do something big.”
In talks with House Speaker John Boehner, the White House has presented various options. Among those were reforms to all three major entitlement programs--Social Security, Medicare and Medicaid, which is the health program for low-income and disabled Americans and seniors.
Among options being considered for Social Security and Medicare, some would hold down benefit increases for current recipients and increase costs for future beneficiaries.
Also discussed by the White House was a “commitment” to reforming the nation’s individual and corporate tax code by closing loopholes and using the revenue saved to lower rates, according to a congressional aide.
Such a tax code overhaul had been underway on a separate track from debt negotiations, but Obama is now bringing it into the debate.
Taxes have been a major logjam in discussions as the GOP has resisted new revenue from closing tax loopholes -- even those for corporate jets or wealthy Americans. Republicans indicated this week they now would be willing to discuss those options in the debt debate as long as any revenue went only for tax breaks elsewhere rather than deficit reduction.
Allowing the Bush-era tax cuts on the wealthy to expire in 2012 has also been floated as an option, another congressional aide said.
On Thursday, the Senate advanced a nonbinding resolution that would require those earning $1 million or more to “make a more meaningful contribution to the deficit reduction effort.”
Boehner’s office said new taxes are not an option and the speaker never suggested allowing the Bush-era tax cuts to expire. "There are no tax increases on the table," said Boehner spokesman Michael Steel.
Democrats have refused to entertain entitlement cuts, and pushed back Thursday morning against the scope of the president’s proposals.
“Congressional Democrats are not going to support something that seeks to balance the budget on the backs of Social Security beneficiaries,” said Rep. Chris Van Hollen (D-Md.), the top Democrat on the Budget Committee, said on CNN.
Achieving political support for a $4-trillion package of spending cuts and new revenue is a difficult task -- as shown by President Obama’s fiscal commission. That panel crafted a politically painful package of spending cuts and taxes, but failed to achieve the super majority of votes needed.