Feb. 20 (Bloomberg) — President Barack Obama plans to drop his proposal to reduce cost-of-living adjustments for Social Security and other benefit programs in his next budget.
The so-called chained-CPI formula was part of a bid by the president to engage in deficit-reduction negotiations with Republicans. It wasn’t adopted after a standoff over taxes and spending. It also was criticized by many congressional Democrats and some of Obama’s political allies.
Josh Earnest, a White House spokesman, said today that the proposal remains on the table if talks with Republicans on a long-term deficit reduction plan resume.
Obama also is proposing $56 billion in spending, evenly split between domestic programs and defense, for what it calls an “Opportunity, Growth and Security Initiative.” It is mostly a collection of proposals that Obama has made previously on research, education, manufacturing, energy efficiency and training that were never acted upon by Congress.
Earnest said the programs would be “fully paid for” through a combination of spending cuts elsewhere and closing tax loopholes. He declined to give specifics before the March 4 release of the administration’s 2015 fiscal year spending plan.
Obama previously announced he will ask Congress to approve a $1 billion Climate Resilience Fund as part of the budget to help federal, state and local governments prepare for the effects of climate change.
Imposing a revised formula on Social Security payments and other programs with cost-of-living adjustments was part of the president’s offer to Republicans in negotiations on a so-called grand bargain to control U.S. debt levels. He included it in the budget sent to Congress last year and the nonpartisan Congressional Budget Office said in November that it would save $162.5 billion over 10 years.
Obama abandoned the proposal a day after 117 House Democrats, led by Representative Allyson Schwartz of Pennsylvania, urge the president to drop the plan.