Lawmakers to assemble at White House for budget talks

By Jim Kuhnhenn

Associated Press

Published: Thursday, July 7 2011 12:00 a.m. MDT

House Majority Leader Eric Cantor of Va. speaks to reporters during a pen and pad on Capitol Hill in Washington, Wednesday, July 6, 2011.

Manuel Balce Ceneta, Associated Press

WASHINGTON — President Barack Obama sat down with leaders of Congress at a crucial deficit-reduction negotiating session Thursday as the White House signaled a willingness to reduce costs for major benefit programs like Social Security and Medicare while Republicans indicated they might consider new steps to raise revenue.

Obama met with the leaders of both parties around a table in the Cabinet Room as they struggled to reach a deal on raising the government's debt limit with less than four weeks remaining before the government faces the prospect of a first-ever default on U.S. financial obligations.

"I think there will be a spirit of trying to get results here," House Majority Leader Eric Cantor, R-Va., said early Thursday.

While discussions on trimming the costs of entitlement programs had centered on Medicare, the health care program for older Americans, the White House is revisiting a proposal raised earlier in the negotiations to change the inflation measurement used to calculate Social Security cost-of-living adjustments, thus reducing annual increases.

House Speaker John Boehner told reporters before leaving for the White House that proposals to reform the tax code are "under discussion" as part of budget talks with Obama, but the Ohio Republican promised that any such plans won't "raise taxes on the American people."

"We believe that comprehensive tax reform, both on the corporate side and the personal side, will make America more competitive, help create jobs in our country, and is something that is under discussion," Boehner said.

The White House signaled Wednesday that the president is aiming for deficit reduction closer to $4 trillion over 10 years — an ambitious number that would nearly double the roughly $2 trillion that had been at the center of negotiations. Negotiations are gaining urgency by the day, because Republicans are insisting on major cuts to the deficit as the price for approving legislation to maintain the government's ability to borrow money and stave off a market-rattling default.

Democratic and Republican officials familiar with the discussions said Thursday that Social Security was in the mix for potential cost savings. Reintroducing the retirement program to the talks is likely to cause anxiety among congressional Democrats who have insisted that Social Security does not contribute to the nation's deficit problems.

The officials spoke on the condition of anonymity because of the sensitivity of the talks. They stressed that no aspect of the deal had been accepted by either side.

Obama ignored a question about Social Security during a photo session at the beginning of the meeting.

One official said that an option under discussion would allow Republicans to make a commitment to overhaul and simplify the tax system that would lower individual and corporate tax rates while closing loopholes, ending some deductions and limiting other tax subsidies. Those changes could generate tax revenue and was central element of a deficit reduction plan proposed by a bipartisan commission early this year.

That discussion also included lowering the costs of Social Security, Medicare and Medicaid.

Amid media reports Thursday of Social Security's inclusion in the debt-cutting talks, Obama's chief spokesman, Jay Carney, pushed back.

"There is no news here - the president has always said that while Social Security is not a major driver of the deficit, we do need to strengthen the program," Carney said, providing that any such effort "doesn't slash benefits." His statement did not directly address the possibility of reducing annual Social Security increases by changing the inflation adjustments.

Two Democratic officials allied with Obama said the president believes it would be easier to win bipartisan support in the House and Senate for a deal that embraces larger deficit cuts closer to the $4 trillion over 12 years that Obama proposed in April.

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