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Obama expected to propose cuts to Social Security, Medicare

WASHINGTON — President Obama will take the political risk next week of formally proposing cuts to Social Security and Medicare in his annual budget in an effort to demonstrate his willingness to compromise with Republicans and revive prospects for a long-term deficit-reduction deal, administration officials say.

In a significant shift in fiscal strategy, Obama will send a budget plan to Capitol Hill on Wednesday that departs from the usual presidential wish list that Republicans typically declare dead on arrival. Instead it will embody the final compromise offer that he made to Speaker John A. Boehner late last year, before Boehner abandoned negotiations in opposition to the president’s demand for higher taxes from wealthy individuals and some corporations.

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Congressional Republicans have dug in against any new tax revenues after higher taxes for the affluent were approved at the start of the year. The administration’s hope is to create cracks in Republicans’ anti-tax resistance, especially in the Senate, as constituents complain about the across-the-board cuts in military and domestic programs that took effect March 1.

Obama’s proposed deficit reduction would replace those cuts. And the White House believes that if Republicans continue to resist the president, most Americans will blame them for the fiscal paralysis.

Besides the tax increases that most Republicans continue to oppose, Obama’s budget will propose a new inflation formula that would have the effect of reducing cost-of-living payments for Social Security benefits, although with financial protections for low-income and very old beneficiaries, administration officials said. The idea has infuriated some Democrats and advocacy groups to Obama’s left, and they have already mobilized in opposition.

As Obama has before, his budget documents will emphasize that he would support the cost-of-living change, as well as other reductions that Republicans have called for in the popular programs for older Americans, only if Republicans agree to more taxes on the wealthy and infrastructure investments that the president called for in last year’s offer to Bohener.

Obama will propose other spending and tax credit initiatives, including aid for states to make free prekindergarten education available nationwide — a priority outlined in his State of the Union address in February. He will propose to pay for it by raising federal taxes on cigarettes and other tobacco products.

“The president has made clear that he is willing to compromise and do tough things to reduce the deficits 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,’’ said a senior administration official, who, like others, declined to be identified confirming details about the coming budget.

This week, Representative Eric Cantor of Virginia, the House majority leader, reiterated the party’s anti-tax stance and called for reducing spending by cutting waste and making changes in federal programs. The growth in the so-called entitlement programs is a main driver behind projections of mounting federal debt as baby boomers age and medical costs rise.

Obama’s budget was due in February but administration officials said it was delayed by the year-end fiscal negotiations and resulting tax changes. It will arrive on Capitol Hill hours before the president dines Wednesday evening with a dozen Senate Republicans — his second such parlay in recent weeks.

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