President's budget plan could limit his bargaining power

WASHINGTON -- President Barack Obama's budget overtures to Republicans may limit his bargaining power if the GOP ever returns to the negotiating table on a grand deficit-reduction deal.

In essence, Obama's spending blueprint is a final offer, a no-budge budget whose central elements have failed to persuade Republicans in the past.

By voluntarily putting entitlement cuts on the table, particularly a proposal to slow the rise of Social Security benefits, Obama has no other gambit to win tax increases from Republicans.

With many Democrats balking at what he's already offering, it's not politically feasible for him to offer the GOP anything more.

Puzzled Democrats maintain that Obama not only has given away his leverage, he also has threatened the very identity of his party and the legacy of President Franklin D. Roosevelt, who signed the Social Security Act of 1935.

"If he's trying to do it to show he is forthcoming as a negotiator, then why doesn't he wait until he gets to the negotiating table?" said Rep. Rush Holt (D-N.J.) "There's a lot of talk about the fact that politically this is not a winner. Our brand is the party that brought you Social Security."

What's irked Democrats the most is Obama's decision to include a significant shift in policy in his $3.8 trillion budget that would alter the government's calculation of inflation, or the Consumer Price Index. If adopted, this new "chained CPI" would change the way the government measures inflation and would slow the rise in Social Security benefits and other programs.

In exchange, Obama is insisting on $580 billion in tax increases on wealthier taxpayers. It's a demand that Republicans flatly reject.

The president has offered the benefit cut to Republicans before as part of broad deficit reduction negotiations, and only in exchange for tax increases the GOP stringently opposes. The White House says the same quid pro quo applies to Obama's current offer, and chained CPI can't take effect as a solo measure.

"You can't decide to only pick out the concessions the president has made and not include the concessions that are from the Republican side, that need to be part of a bipartisan deal that could pass both houses," said Gene Sperling, the top White House economist.

Faced with the withering criticism from Democratic and liberal allies, the White House has argued that the inflation proposal in the budget is a response to specific Republican demands during budget talks last year. "This is a Republican proposal," White House spokesman Jay Carney insisted.

But the idea has been part of the thinking in Obama's inner economic circle for two years, one the president put on the table during debt ceiling talks with the GOP in the summer of 2011.

Obama aides say the president had to include the Social Security change in the budget or risk being accused by Republicans of walking away from his previous offers. They say giving Republicans some of the entitlement cuts they seek means the GOP has one less reason to say no to the president's proposals.

"Are they as serious about reducing the deficit as they claim to be?" said Dan Pfeiffer, Obama's senior adviser.

But placing the plan on a negotiating document is quite different from including the inflation proposal in the president's budget, a document that turns his proposals from bargaining positions into actual policy proposals.