(WASHINGTON) -- In perhaps the most significant turnaround of economic policy since he first took office in 2009, President Obama reportedly plans to put the sacred cow entitlements of Social Security and Medicare on the chopping block to produce a long-term deficit reduction deal that is palatable to Republicans.
The New York Times reports Friday that the White House hopes that by offering a compromise, GOP lawmakers will be more open to accept tax increases in the form of ending loopholes and deductions for the very wealthy.
It’s definitely a political gamble since the president risks alienating his base, which feels that entitlements should be virtually immune from cuts. Furthermore, Republican House leaders, including House Speaker John Boehner and Majority Leader Eric Cantor, say that boosting the tax rates on the rich earlier this year to avert the “fiscal cliff” takes all other tax hikes off the table.
However, the administration believes it can convince GOP moderates in the Senate to go along with the new provisions included in the president's annual budget, which is already a couple of months late. If the Senate approves the budget, House Republicans might have to bend so as not to boost public perception that they are obstructionists.
The White House believes the proposed Social Security cuts, which would take the form of reducing cost-of-living payments, and savings in Medicare, would replace the automatic spending reductions known as the sequester, which are far more draconian than most in Washington intended them to be.
Ultimately, the plan is to cut the deficit by $4.3 trillion over a decade, which should slow the growth of the national debt.
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