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| Republicans dismiss Obama's budget offer despite welfare concessions | Republicans dismiss Obama's budget offer despite welfare concessions |
| (8 days later) | |
| Congressional Republicans effectively declared Barack Obama's budget to be dead in the water on Friday – in spite of concessions that would see cuts to welfare benefits. | Congressional Republicans effectively declared Barack Obama's budget to be dead in the water on Friday – in spite of concessions that would see cuts to welfare benefits. |
| The budget, which would kick in on October 1, is not due to be published until Wednesday, but the main elements were reported on Friday by the New York Times and Reuters, and confirmed off the record by the White House. As well as benefit cuts, the budget proposes tax rises. | The budget, which would kick in on October 1, is not due to be published until Wednesday, but the main elements were reported on Friday by the New York Times and Reuters, and confirmed off the record by the White House. As well as benefit cuts, the budget proposes tax rises. |
| The Republican House speaker, John Boehner, dismissed the proposed benefit cuts as "modest". | The Republican House speaker, John Boehner, dismissed the proposed benefit cuts as "modest". |
| Obama made a rare visit to Congress last month to address House Republicans, who have proved to be his staunchest opponents, in an attempt to gather support for his budget. | Obama made a rare visit to Congress last month to address House Republicans, who have proved to be his staunchest opponents, in an attempt to gather support for his budget. |
| But Boehner, in a statement issued Friday, said: "When the president visited the Capitol last month, House Republicans stated a desire to find common ground and urged him not to make savings we agree upon conditional on another round of tax increases. | But Boehner, in a statement issued Friday, said: "When the president visited the Capitol last month, House Republicans stated a desire to find common ground and urged him not to make savings we agree upon conditional on another round of tax increases. |
| "If reports are accurate, the president has not heeded that call. 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. That's no way to lead and move the country forward." | "If reports are accurate, the president has not heeded that call. 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. That's no way to lead and move the country forward." |
| Almost as big a problem as the Republicans for Obama is his own party, whose liberal wing is staunchly opposed to cuts in the welfare programme. The Democratic prides itself on being the party of underprivileged, with members able to rattle of the major reforms implemented by Obama's predecessors, from Roosevelt's New Deal to LBJ's Great Society. | Almost as big a problem as the Republicans for Obama is his own party, whose liberal wing is staunchly opposed to cuts in the welfare programme. The Democratic prides itself on being the party of underprivileged, with members able to rattle of the major reforms implemented by Obama's predecessors, from Roosevelt's New Deal to LBJ's Great Society. |
| It is rare for a Democratic president to voluntarily offer up cuts in benefits. His bill is a compromise between two budgets produced this year, one by House Republicans, which would cut the deficit by reducing benefits while implementing no new tax increases, and the other by the Senate Democrats, which would raise taxes while protecting benefits. | It is rare for a Democratic president to voluntarily offer up cuts in benefits. His bill is a compromise between two budgets produced this year, one by House Republicans, which would cut the deficit by reducing benefits while implementing no new tax increases, and the other by the Senate Democrats, which would raise taxes while protecting benefits. |
| The budget to be published next week will include cuts in Medicare and social security. Obama is proposing to change the way the Consumer Price Index is measured, which would effectively reduce the value of benefits over time, though with safeguards for the poorest. | The budget to be published next week will include cuts in Medicare and social security. Obama is proposing to change the way the Consumer Price Index is measured, which would effectively reduce the value of benefits over time, though with safeguards for the poorest. |
| His budget is not a major surprise, with much of it set out in his state of the union address. | His budget is not a major surprise, with much of it set out in his state of the union address. |
| It is largely a revamp of a compromise deal known as the "grand bargain" he negotiated last year with Boehner, who rejected it in the end because he said the welfare cuts did not go deep enough but also because he would not be able to sell it to his colleagues. | It is largely a revamp of a compromise deal known as the "grand bargain" he negotiated last year with Boehner, who rejected it in the end because he said the welfare cuts did not go deep enough but also because he would not be able to sell it to his colleagues. |
| Boehner, in his statement Friday, said: "The president and I were not able to reach an agreement late last year because his offers never lived up to his rhetoric. Despite talk about so-called balance, the president's last offer was significantly skewed in favor of higher taxes and included only modest entitlement savings. He said he could go no further toward the middle, and that's why his last offer was rejected. | Boehner, in his statement Friday, said: "The president and I were not able to reach an agreement late last year because his offers never lived up to his rhetoric. Despite talk about so-called balance, the president's last offer was significantly skewed in favor of higher taxes and included only modest entitlement savings. He said he could go no further toward the middle, and that's why his last offer was rejected. |
| "In the end, the president got his tax hikes on the wealthy with no corresponding spending cuts. At some point we need to solve our spending problem, and what the president has offered would leave us with a budget that never balances. On reality, he's moved in the wrong direction, routinely taking off the table entitlement reforms he's previously told me he could support." | "In the end, the president got his tax hikes on the wealthy with no corresponding spending cuts. At some point we need to solve our spending problem, and what the president has offered would leave us with a budget that never balances. On reality, he's moved in the wrong direction, routinely taking off the table entitlement reforms he's previously told me he could support." |
| The White House hope is that while Boehner is unlikely to embrace the deal, some Republicans, especially in the Senate, might be won over. But it will be hard as a large component of the budget involves tax rises, which most Republicans oppose. | The White House hope is that while Boehner is unlikely to embrace the deal, some Republicans, especially in the Senate, might be won over. But it will be hard as a large component of the budget involves tax rises, which most Republicans oppose. |
| Obama's budget would, through a combination of tax rises and spending cuts, aim to reduce the federal deficit by $1.8tn over 10 years. | Obama's budget would, through a combination of tax rises and spending cuts, aim to reduce the federal deficit by $1.8tn over 10 years. |
| The change in inflation measurement would be one of the main benefit changes, meaning lower payments for some social security pension recipients. | The change in inflation measurement would be one of the main benefit changes, meaning lower payments for some social security pension recipients. |
| Republicans refused to accept this as a concession and branded it a tax increase. While the inflation adjustments would reduce federal spending over 10 years by about $130bn, it would mean an adjustment in tax brackets, bringing in about $100bn in higher taxes. | Republicans refused to accept this as a concession and branded it a tax increase. While the inflation adjustments would reduce federal spending over 10 years by about $130bn, it would mean an adjustment in tax brackets, bringing in about $100bn in higher taxes. |
| The budget includes an increase in tobacco tax, a plan to expand access to education for infants, and ending a system that allows people to claim both unemployment insurance and disability benefits at the same time. | The budget includes an increase in tobacco tax, a plan to expand access to education for infants, and ending a system that allows people to claim both unemployment insurance and disability benefits at the same time. |
| The Medicare changes would involve cutting payments to healthcare providers while getting better-off beneficiaries to pay more. | The Medicare changes would involve cutting payments to healthcare providers while getting better-off beneficiaries to pay more. |
| An Obama administration official, speaking off the record, said the president is willing to agree to the entitlement cuts only in exchange for tax rises. "The president has made clear that he is willing to compromise and do tough things to reduce the deficit, but only in the context of a package like this one that has balance and includes revenues from the wealthiest Americans and that is designed to promote economic growth. | An Obama administration official, speaking off the record, said the president is willing to agree to the entitlement cuts only in exchange for tax rises. "The president has made clear that he is willing to compromise and do tough things to reduce the deficit, but only in the context of a package like this one that has balance and includes revenues from the wealthiest Americans and that is designed to promote economic growth. |
| "That means that the things like CPI that Republican Leaders have pushed hard for will only be accepted if Congressional Republicans are willing to do more on revenues," the official said. | "That means that the things like CPI that Republican Leaders have pushed hard for will only be accepted if Congressional Republicans are willing to do more on revenues," the official said. |
| Organisations representing welfare recipients reacted angrily to the proposed benefit cuts. | Organisations representing welfare recipients reacted angrily to the proposed benefit cuts. |
| Eric Kingson, co-chair of the Strengthen Social Security Coalition, said Obama did not appear to understand the consequences of these cuts. | Eric Kingson, co-chair of the Strengthen Social Security Coalition, said Obama did not appear to understand the consequences of these cuts. |
| "What he and other elites call 'tweaks' are deep cuts which will take away the bread and butter of seniors, people with disabilities, children who have lost parents, veterans who have served this nation and others. He promised he would not slash benefits; he has broken his promise to the American people," Kingson said. | "What he and other elites call 'tweaks' are deep cuts which will take away the bread and butter of seniors, people with disabilities, children who have lost parents, veterans who have served this nation and others. He promised he would not slash benefits; he has broken his promise to the American people," Kingson said. |
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