Obama’s offer to include chained CPI in exchange for new tax revenue remains. Obama to drop entitlement cuts

President Barack Obama is done pretending that he’ll get any new budget cooperation from House Republicans.

His proposed 2015 budget, due to be released next month, will stick to the economic strategy the White House has laid out without the compromise suggestion he floated last year, White House officials said Thursday.


Gone, the White House said, is Obama’s proposal for chained CPI — an offer to reduce the the benefit increases for Social Security and other federal social programs.

( Also on POLITICO: Gene Sperling offers budget preview)

And gone with it, senior administration officials said Thursday, is any sense of presidential urgency on long-term entitlement reform. It’s still something Obama believes in, they said, and would like to do — but changing economics and mathematics have meant a change in his approach.

The president’s 10-year projection in the budget will show the deficit down to 2 percent of the GDP and the debt-to-GDP ratio lower than in previous administrations.

Administration officials said the earlier offer of chained CPI — which many Democrats revolted against — was what they called a show of good faith, made in the aftermath of the fiscal cliff deal and with the sequester cuts looming.

( Also on POLITICO: Camp defies skeptics on tax bill)

Arguing that Republicans took no steps toward serious negotiations in response — and that they were no closer to the broad tax reform the president would want in return — these officials said they were done with that detour into using the budget as a negotiating position, and had returned to the idea of it as an expression of the president’s priorities.

White House officials added that Obama’s chained CPI offer remains on the table, should the Republicans experience some sort of an epiphany on the issue — but that they weren’t counting on that development.

Obama’s 2015 budget proposal comes about as Democrats and Republicans are operating under a two-year bipartisan spending agreement reached in December by Sen. Patty Murray (D-Wash.) and Rep. Paul Ryan (R-Wis.), the leaders of the Senate and House budget committees. The Obama budget proposal will adhere largely to the Murray-Ryan spending limits, the White House said, and be informed by that budget’s sense of new spending paid for by long-term savings.

( Also on POLITICO: IRS changes mean pain for taxpayers)

But the president’s budget will also call for $56 billion in new spending, paid for by closing tax loopholes and mandatory spending reform. For now, the White House isn’t providing specifics on what either of those would entail.

That new spending would go to Obama’s Opportunity, Growth, and Security Initiative which would, among other things, a new Race to the Top energy efficiency initiative, the manufacturing institutes Obama has called for in his last two State of the Union addresses and universal pre-kindergarten.

The White House expressed disappointment — though not surprise — that Republicans wouldn’t consider tax revenue increases, then or now.

“Unfortunately, Republicans refused to even consider the possibility of raising some revenue,” said White House spokesman Josh Earnest. “That is an unfortunate policy choice that Republicans themselves have made.”

All of the new spending will be linked to the president’s larger economic agenda, as part of what the White House will refer to as focused investments from the federal government.

The White House budget is, as Earnest said, a political document that represents how a president “in an ideal world believes the government should be funded.” The budget Obama proposed last year fizzled nearly as soon as it was presented. The largest new revenue stream the White House pitched — $78 billion in new taxes on tobacco to fund education programs — never got traction in Congress and was largely forgotten.

Administration officials said that the tobacco tax would be in the budget again this year, but not to expect any big new proposals.

Speaker John Boehner (R-Ohio) called Obama’s budget stance as a “non-starter” in the House.

“This reaffirms what has become all too apparent: the president has no interest in doing anything, even modest, to address our looming debt crisis,” Boehner spokesman Brendan Buck said Thursday. “The one and only idea the president has to offer is even more job-destroying tax hikes, and that non-starter won’t do anything to save the entitlement programs that are critical to so many Americans. With three years left in office, it seems the president is already throwing in the towel.”

Leading congressional Democrats hailed Obama’s budget announcement with statements that seemed to offer a subtle and retroactive criticism to last year’s chained CPI proposal.

Senate Majority Leader Harry Reid (D-Nev.) called the budget proposal “a powerful statement of Democratic principles.”

“I commend President Obama for his commitment to keeping Social Security strong, and for rejecting Republican calls to cut badly-needed cost of living increases,” Reid said.

And House Minority Whip Steny Hoyer (D-Md.) said the rest of the Democratic agenda will serve as an economic boost.

“We will promote budget savings that do not come at the expense of the most vulnerable in our society,” Hoyer said. “Enacting policies that improve our economy while helping stabilize our debt over the long term, like comprehensive immigration reform, can allow us to invest further in a stronger economy.”

Obama’s move to abandon chained CPI was also hailed by liberal activists.

“This is a huge progressive victory — and greatly increases Democratic chances of taking back the House and keeping the Senate,” said Stephanie Taylor, a founder of the Progressive Change Campaign Committee. “Now, the White House should join Elizabeth Warren and others in pushing to expand Social Security benefits to keep up with the rising cost of living.”

Obama’s proposed budget, the White House said, will also include expanding the Earned Income Tax Credit for childless workers — even as officials acknowledged that its proposals are essentially dead on arrival in the GOP-controlled House.

“While Republicans may still protest any effort to close a single common-sense tax loophole, that is not going to stop the President from promoting new policies that should be part of our public debate,” a White House official said.