The 2014 budget proposal unveiled by President Obama on Wednesday represents a daring bid to break the gridlock over spending and revenue that has kept Washington in a perpetual state of crisis for the past few years. By making an offer to reduce Social Security benefits, he hopes to win Republican cooperation for a balanced budget.
They’d be crazy to ignore it.
By any measure, Mr. Obama’s initiative represents a significant departure in policy. In the nearly eight decades since Franklin Roosevelt won the enactment of Social Security, the centerpiece of the New Deal, the five Democratic occupants of the Oval Office — Presidents Truman, Kennedy, Johnson, Carter and Clinton — have fought to expand its benefits or keep them intact, often against Republican opposition.
Yet here is Mr. Obama, once seen as the torch-bearer of the progressive wing of his party, doing a full turnabout, risking the predictable wrath of Democrats on the left who see it as an abandonment of principle.
True, the Great Recession, which produced the deficits at the heart of the nation’s fiscal debate, was not caused by Social Security or entitlement programs per se, so why should these programs be reduced to resolve the spending problem?
Simply put, it’s because this is where the money is.
Essentially, Mr. Obama’s plan would change the way the government measures inflation, resulting in stingier cost-of-living increases for future Social Security retirees, among other effects. Altogether, the change would reduce the federal budget deficit by $340 billion over the next decade, according to congressional estimates.
That’s real money, yet the direct impact on beneficiaries would not be huge. On average, annual increases in Social Security payments, government pensions and veterans’ benefits would be about 0.3 percentage points smaller each year, according to the chief actuary for the Social Security Administration. Mr. Obama promises also to protect the most vulnerable, including the elderly.
Democrats don’t like the proposal at all and are outraged that Mr. Obama would make this an opening bid — a provision of his own budget rather than the result of a negotiated package that includes Republican concessions.
Yet the budget speaks to the seriousness of Mr. Obama’s effort and his eagerness to be seen as meeting Republicans halfway by agreeing to demands that the government cut entitlements.
The question is whether Republicans are equally serious about balancing the budget. The initial signs are discouraging.
Mr. Obama wants a quid pro quo in the form of $580 billion in new taxes. That would include a 28 percent cap on tax reductions for couples earning more than $250,000 and individuals earning more than $200,000, along with higher tobacco taxes to finance expanded prekindergarten education and limits on tax-sheltered retirement savings.
So far, it’s been met with the usual Republican rejection on tax increases. Speaker John Boehner refused to consider the idea and dismissed the Social Security change as “modest.” Rep. Paul Ryan, the Republican House budget chief, said Mr. Obama’s offer “doesn’t break new ground.”
They should reconsider. No deal will ever be possible unless both sides are prepared to give. Mr. Obama’s offer is a challenge to Republicans. If they want to make an earnest effort to put the nation’s finances in order, they should regard his proposal as an offer they can’t refuse.