Both sides knock Obama budget plan

Saturday, April 6, 2013

WASHINGTON - House Speaker John Boehner waved aside reports that President Barack Obama would seek a new budget compromise next week, accusing the president Friday of again demanding tax increases in exchange for “modest entitlement savings.”

“If the president believes these modest entitlement savings are needed to help shore up these programs, there’s no reason they should be held hostage for more tax hikes,” said Boehner, an Ohio Republican. “That’s no way to lead and move the country forward.”

At the same time, liberals quickly vented their anger about Obama’s plans, saying they would not accept changes to Social Security and Medicare that would threaten the programs and harm beneficiaries.

“Evidently the president either does not understand or does not care how critically important Social Security and Medicare are, not just to seniors but to middle-aged and younger workers for whom these programs are likely to be even more crucial,” said Eric Kingson, co-chairman of the Strengthen Social Security Coalition.

The president will formally unveil his budget Wednesday.

According to reports, the document would call for a deal similar to the final compromise offer Obama made to Boehner last year before talks fell apart - cuts to entitlement programs in exchange for new revenue from tax increases.

Among those cuts is a change in the way inflation is calculated for Social Security, called “chained CPI.” An administration official said that “things like CPI that Republican leaders have pushed hard for will only be accepted if congressional Republicans are willing to do more on revenues.”

Republicans quickly dismissed that idea, noting that the CPI, or consumer price index, change also raises some revenue for the treasury and should not be used as an excuse for other tax increases. Boehner said that the president had “never lived up to his rhetoric” about his willingness to cut entitlement programs.

“In reality, he’s moved in the wrong direction, routinely taking off the table entitlement reforms he’s previously told me he could support,” Boehner said.

Rep. Eric Cantor of Virginia, the House majority leader, also seemed unimpressed. On CNBC’s The Squawk Box, he said that if the president agreed with Republicans about some entitlement changes, he should agree to make them without additional tax increases.

Cantor said he did not understand “why we just don’t see the White House come forward and do the things that we agree on.” But he added: “I am in a wait-and-see mode as to whether this White House is really serious.”

Liberals, however, are not waiting.

Some of the president’s staunchest supporters expressed anger months ago when Obama first proposed changing the way inflation is calculated for Social Security. Many Democrats are also against cuts to Medicare.

Obama’s plan would reduce Medicare spending, mostly by targeting payments to health-care providers and drug companies. The Medicare proposal also would require wealthier recipients to pay higher premiums or co-pays.

Obama’s budget proposal also seeks to place a 28 percent cap on tax deductions and other tax exclusions. That plan would affect high-earning taxpayers as would a new administration proposal to place limits on tax-preferred retirement accounts for millionaires and billionaires.

Once the proposed CPI change is fully phased in, Social Security benefits for a typical middle-income 65-year-old would be about $136 less a year, according to an analysis of Social Security data. At age 75, annual benefits under the new index would be $560 less. At 85, the cut would be $984 a year.

The concept behind the chained CPI is that consumers substitute lower-priced alternatives for goods whose costs spike. So, for example, if the price of oranges goes too high for some consumers, they could buy alternatives such as apples or strawberries if their prices were more affordable. This flexibility isn’t considered in the current system of gauging inflation, a calculation that determines how much benefits grow each year. Taking it into account means such benefits won’t grow by as much.

The White House has said the cost-of-living adjustments would include protections for “vulnerable” recipients.

On Friday, several liberal organizations suggested that the president was unnecessarily giving in to Republican demands for entitlement cuts.

“President Obama’s plan to cut Social Security would harm seniors who worked hard all their lives,” said Anna Galland, the executive director of Moveon.org. “Under this plan, a typical 80-year-old woman would lose the equivalent of three months’ worth of food every year.

That’s unconscionable.”

Galland added: “It’s even more outrageous given that Republicans in Congress aren’t even asking for this Social Security cut. This time, the drive to cut Social Security is being led by President Obama and Democrats.”

MORE FOR VA

Obama’s budget proposal will also include a nearly 14 percent spending increase for the section of the Department of Veterans Affairs responsible for attacking a growing backlog of disability claims - a problem that officials warned is likely to worsen in coming months.

All told, the VA would see a 4 percent increase, to $63.5 billion, for such items as veterans’ medical care and research, technology and new construction. That does not include disability, pension and education benefits.

The president is also going to ask Congress to make permanent tax credits for employers who hire unemployed veterans. The unemployment rate for veterans who have served since the onset of the wars in Iraq and Afghanistan was 9.9 percent last year.

White House Chief of Staff Denis McDonough told reporters Friday that more money for the VA in tight budgetary times reflects Obama’s commitment to veterans.

Veterans receive disability compensation for injuries or illness incurred during their active military service.About 600,000 claims, or 70 percent, have been pending more than 125 days. That number has soared in recent years as more veterans have sought compensation and as the claims have become more complicated. VA Secretary Eric Shinseki also made it easier for veterans exposed to Agent Orange during the Vietnam War to get benefits, which caused the backlog to spike, starting in 2010.

Shinseki has set a goal of eliminating the backlog in 2015. But officials also cautioned that they could not say when the number of claims pending longer than 125 days would start to go down.

Shinseki said the key to improving VA services is to eliminate paper records through a new computer system that is being rolled out to VA regional offices throughout the country.

The budget also calls for a 7.2 percent increase for mental-health-care services as part of the overall $63.5 billion budget. The proposed increase reflects concerns about ensuring that veterans with post-traumatic stress disorder have timely access to care.

Rep. Jeff Miller, R-Fla., chairman of the House Committee on Veterans’ Affairs, voiced skepticism that more money for the VA would improve results.

“Congress has given VA everything it has asked for to overcome perennial challenges such as the backlog and mental-health-care access,” Miller said. “For its part, VA has failed to deliver the results department officials have been promising for years.” Information for this article was contributed by Michael D. Shear of The New York Times; and by Kevin Freking, Andrew Taylor, Jim Kuhnhenn, Stephen Ohlemacher and Ricardo Alonso-Zaldivar of The Associated Press.

Front Section, Pages 1 on 04/06/2013