President Barack Obama will make key concessions to Republican foes next week when he unveils his US budget that proposes cuts to cherished entitlement programs, the White House said Friday.
Obama's fiscal blueprint slashes the deficit by $1.8 trillion over 10 years, in what a senior administration official described as a "compromise offer" that cuts federal spending, finds savings in Social Security, and raises tax revenue from the wealthy.
Republicans led by House Speaker John Boehner are widely opposed to any new tax hikes, after the president secured $600 billion in increased tax revenue in a year-end deal.
But Obama's concession to conservatives in the form of reduced cost-of-living payouts for Social Security benefits could revive consideration of a deficit-reducing "grand bargain" that has proved elusive in recent years.
Such cuts to public pension programs and public health insurance for the elderly -- seen as sacred cows for Obama's Democrats -- have been longstanding demands of Republicans.
"While this is not the president's ideal deficit reduction plan, and there are particular proposals in this plan like the CPI (consumer price index) change that were key Republican requests and not the president's preferred approach, this is a compromise proposal built on common ground," the administration official said.
The president is willing to "do tough things to reduce the deficit," but only in the context of a package that includes new revenues from the wealthy, the official added.
"This isn't about political horse trading; it's about reducing the deficit in a balanced way that economists say is best for the economy and job creation."
Obama's new revenues will draw in part from capping retirement savings plans for millionaires, and closing some loopholes that benefit the rich.
The annual budget deficit is projected at 5.5 percent of gross domestic product for the fiscal year ending in September. Under the Obama budget, that would decline to 1.7 percent of GDP by 2023.
Combined with the $2.5 trillion in savings already achieved since negotiations in 2010, the Obama budget would bring total deficit reduction to $4.3 trillion over 10 years, slightly higher than the overall goal agreed to by both parties for stabilizing the national debt.
Boehner offered a lukewarm reaction to the plan.
"One of the best things President Obama can do is follow the House and outline a balanced budget next week -- one that includes entitlement reforms that are not conditional on enactment of more tax increases, which will suppress growth instead of encourage it," Boehner said in a statement.