WASHINGTON (AP) — President Barack Obama's re-election has stiffened Democrats' spine against cutting popular benefit programs such as Medicare and Social Security. Their new resolve could become as big a hurdle to a deal that would skirt crippling tax increases and spending cuts in January as Republicans' resistance to raising tax rates on the wealthy.
Just last year, Obama and top Democrats were willing during budget negotiations with Republicans to take politically risky steps such as reducing the annual inflation adjustment to Social Security and raising the eligibility age for Medicare.
Now, with new leverage from Obama's big election victory and a playing field for negotiations that is more favorable in other ways, too, Senate Majority Leader Harry Reid and other Democrats are taking a harder line.
"I've made it very clear. I've told anyone that will listen, including everyone in the White House, including the president, that I am not going to be part of having Social Security as part of these talks relating to this deficit," Reid, D-Nev., told reporters.
Reid's edict would appear to take a key proposal off the table as an ingredient for a deal on avoiding the "fiscal cliff," the year-end combination of expiring President George W. Bush-era tax cuts and harsh across-the-board spending cuts.
At issue is the inflation adjustment used by the government to calculate cost-of-living adjustments for Social Security and other federal programs. A less generous inflation measure that takes into account consumers finding alternatives when prices go up could reduce deficits by more than $200 billion over the next decade.
It's a no-brainer for many budget wonks because it means gradual, less noticeable curbs to the growth of benefits. It also means about $70 billion more tax revenues over 10 years because automatic rises in tax brackets to account for inflation would be smaller.
That new inflation index, known as chained Consumer Price Index, is a magic elixir for budget writers. But it's anathema to many liberals, who say that moving to the new cost-of-living measure could cut average retiree benefits by about $600 a year a decade after taking effect and mean a cut of about $1,000 a year after 20 years.
"Think about it this way. You're standing on the deck of a boat and you're in very deep water and they want you to swim, but they're going to put a log chain around your ankle," Sen. Tom Harkin, D-Iowa, told a group of liberal activists assembled for a rally Thursday in a Senate hearing room. "That's chained CPI."
Sixteen months ago, Obama's White House took a different view during talks with House Speaker John Boehner, R-Ohio, on a possible budget deal. A White House draft offer by top Obama aide Rob Nabors, made public by Washington Post author Bob Woodward, proposed several controversial changes to benefit programs, including the lower inflation adjustment, raising the eligibility age for Medicare and higher Medicare premiums.
Those negotiations, however, were conducted on a playing field that favored Republicans. It was less than a year after Obama's self-described "shellacking" in the 2010 elections and the president was desperate to win an increase in the government's borrowing cap and avoid a government default on its debt that should shatter financial markets. Also, Obama still faced re-election in 2012.
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