Obama to Offer Budget Cuts in Latest Deal, Official Says

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Susan Walsh/AP
By Mark Felsenthal

WASHINGTON -- U.S. President Barack Obama will offer cuts to Social Security and other entitlement programs in a budget proposal aimed at swaying Republicans to compromise on a deficit-reduction deal, a senior administration official said on Friday.

Under a proposal that would cut the deficit by $1.8 trillion over 10 years, the president will offer to apply a less generous measure of inflation to calculate cost-of-living increases, the official said on condition of anonymity. That change would result in lower payments to some beneficiaries of the Social Security program for retirees and is staunchly opposed by many congressional Democrats as well as labor and retiree groups.

Obama would agree to cuts to other so-called entitlement programs, the official said.

However, the president will only accept these spending cuts if congressional Republicans, for their part, agree to higher taxes, the official added. The president's budget proposal is due to be laid out in full on Wednesday.

The president's renewed offer of fiscal negotiations with congressional Republicans follows a series of bitter battles over taxes and spending that date back to 2011. Obama is eager to put the issue of deficit reduction behind him and move on to other priorities, which include immigration and gun control legislation.

"This isn't about political horse trading," the official said. "It's about reducing the deficit in a balanced way that economists say is best for the economy and job creation."

Still, several attempts to reach an agreement balancing spending cuts with tax increases have failed, and prospects for a deal remain doubtful. House Speaker John Boehner, who let taxes rise for the wealthiest Americans earlier this year, has said any further revenue increases are off the table.
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The president also wants to undo at least some of the $85 billion in across-the-board spending cuts that went into effect last month through the process known as sequestration.

Obama's budget for the fiscal year that starts Oct. 1 will contain a proposal to expand access to early childhood education, the official said. That program will be paid for by increases in tobacco taxes, the official added.

In addition, the president will seek 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 official said.

Analysts who have seen early drafts of the budget proposal say the president was considering cuts to Medicare through reducing payments to health care providers but also by requiring wealthier beneficiaries to pay more out of pocket.

Reductions to Social Security and Medicare benefits are highly unpopular among many of the president's strongest supporters and groups have already mobilized to oppose them.

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9 Ways Sequestration Will Affect You
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Obama to Offer Budget Cuts in Latest Deal, Official Says

If you have a child in public school, watch out: $406 million is scheduled to get axed from the Head Start budget, which means that 70,000 kids will be kicked out of the program. Another $840 million is going to get pulled out of special education programs, and the White House estimates that another 10,000 teachers' jobs will be put at risk.

If you're planning to fly anywhere, be sure to pack an extra paperback: The TSA's airport security budget will be cut by $323 million, which means that your already-long check-in line will get even longer. And, while we're at it, it looks like there will be about 10 percent fewer air traffic controllers on the job, which is sure to slow things down even more.

Remember the floods and hurricanes that have devastated large swathes of the country over the past few years? Remember all the complaints we heard (and made) about FEMA's sluggish response to those disasters? Well, get ready for more of the same: Sequestration is going to cut $375 million from FEMA's disaster relief budget.

If you like meat -- or any food, really -- now might be a good time to stock up. The food inspectors who make sure your ground beef isn't ground horse and your chicken isn't a petri dish of harmful bacteria are about to be furloughed. Even non-carnivores are facing bad news: After a $206 million cut to its budget, the FDA will have to cut back on most of its food inspection programs.

Sequestration won't be bad news for everyone: If you're a criminal, it might be cause to celebrate. After all, with $355 million being cut from prison funding, convicts could be out on the street sooner than they expected. And, with $480 million being cut from the FBI's budget, if you've committed a crime recently, you might not need to worry as much about covering your tracks.

If you're a virus, things are looking up for you and your relatives, too. The National Institutes of Health are losing $1.6 billion and the Centers for Disease Control will say goodbye to $323 million. From research to public health programs, this will translate into a real downgrade to our nation's health care backbone.

Unfortunately, things won't be great if you want to take a vacation: With $110 million being cut from the National Park Service budget, many park services will be cut back or closed. In other words, if you're one of the 250,000 people who were planning to visit the Grand Canyon this year, you should prepare for a delayed opening and reduced options.

While not all federal student aid programs will take a hit in 2013, sequestration is on track to make things tough for low-income college students. The Supplemental Educational Opportunity Grant program, which can give a needy student up to $4,000 a year, will likely be cut by 8.2 percent, as will federal work study programs. And for students who want to borrow money, student loan origination fees will also go up.

Here's a silver lining to sequestration: It will be educational. For years, this nation has been in the midst of an argument about what role the federal government has and should have in our daily lives. For anyone who has wondered what the government really does for them, the next few months will be an outstanding lesson in where, exactly, your tax money goes.

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