At a meeting with top House and Senate leaders set for Thursday morning, Obama plans to argue that a rare consensus has emerged about the size and scope of the nation’s budget problems and that policymakers should seize the moment to take dramatic action.

As part of his pitch, Obama is proposing significant reductions in Medicare spending and for the first time is offering to tackle the rising cost of Social Security, according to people in both parties with knowledge of the proposal. The move marks a major shift for the White House and could present a direct challenge to Democratic lawmakers who have vowed to protect health and retirement benefits from the assault on government spending.

“Obviously, there will be some Democrats who don’t believe we need to do entitlement reform. But there seems to be some hunger to do something of some significance,” said a Democratic official familiar with the administration’s thinking. “These moments come along at most once a decade. And it would be a real mistake if we let it pass us by.”

The bipartisan fiscal commission I created last year made this crystal clear. I don’t agree with all their proposals, but they made important progress. And their conclusion is that the only way to tackle our deficit is to cut excessive spending wherever we find it –- in domestic spending, defense spending, health care spending, and spending through tax breaks and loopholes. (Applause.)

This means further reducing health care costs, including programs like Medicare and Medicaid, which are the single biggest contributor to our long-term deficit. The health insurance law we passed last year will slow these rising costs, which is part of the reason that nonpartisan economists have said that repealing the health care law would add a quarter of a trillion dollars to our deficit. Still, I’m willing to look at other ideas to bring down costs, including one that Republicans suggested last year -- medical malpractice reform to rein in frivolous lawsuits. (Applause.)

To put us on solid ground, we should also find a bipartisan solution to strengthen Social Security for future generations. (Applause.) We must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market. (Applause.)

And if we truly care about our deficit, we simply can’t afford a permanent extension of the tax cuts for the wealthiest 2 percent of Americans. (Applause.) Before we take money away from our schools or scholarships away from our students, we should ask millionaires to give up their tax break. It’s not a matter of punishing their success. It’s about promoting America’s success. (Applause.)

I think the American people are on my side on this. What we need to do is to have a balanced approach where everything is on the table. We need to reduce corporate loopholes. We need to reduce discretionary spending on programs that aren't working. We need to reduce defense spending. Everything has -- we need to look at entitlements, and we have to say, how do we protect and preserve Medicare and Social Security for not just this generation but also future generations. And that's going to require some modifications, even as we maintain its basic structure.

Meanwhile, another senior Republican on Wednesday signaled a new openness to raising taxes— at least for selected special interests. House Majority Leader Eric Cantor (Va.) told reporters that he is now willing to consider Democratic demands to end tax breaks for corporations, hedge-fund managers and owners of corporate jets, so long as the final deal does not raise tax rates or overall federal tax collections.

Ryan is arguing that raising taxes on corporate jet owners and others is only acceptable if the money raised is plowed back into new tax cuts, not to paying down the deficit. He is clearly more interested in cutting taxes than dealing with the deficit, and is willing to let these egregious loopholes stay in the tax code until he can best exploit their removal to lower taxes sometime in the future.

the 1983 Social Security amendments that followed the Greenspan Commission's recommendations. It was the Commission's recommendations that provided political cover for both political parties to act. The changes approved by President Reagan in 1983 were phased in over time and included raising the retirement age from 65 to 67, taxation of benefits, cost of living adjustment (COLA) delays, and inclusion of new federal hires in the program. There was a key point during the debate when House members were forced to choose between raising the retirement age or raising future taxes; they chose the former. Senator Daniel Patrick Moynihan indicated the compromises involved showed that lawmakers could still govern. Koitz cautions against the concept of a free lunch; retirement security cannot be provided without benefit cuts or tax increases.

The White House pushes back: But a top White House official pushes back that it won’t be making a “grand offer” on Social Security. The official explains that the president has always been open to “reasonable changes” to the entitlement programs as a way to strengthen them. Indeed, as Obama said in his fiscal-policy speech back in April, “..Both parties should work together now to strengthen Social Security for future generations. But we have to do it without putting at risk current retirees, or the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market.” Do Republicans want Social Security as part of the deal? Yes, the White House official responds. Is the White House taking it off the table? No, but it wouldn’t consider changes that are unbalanced and include slashing benefits.

The Obama administration is pushing back against a Wednesday night report that the president is prepared to offer cuts to Social Security as part of a deal to raise the debt ceiling.

"The story overshoots the runway," said a senior administration official. "The President said in the State of the Union that he wanted a bipartisan process to strengthen Social Security in a balanced way that preserves the promise of the program and doesn't slash benefits."

"While it is definitely not a driver of the deficit," the official added, "it does need to be strengthened."
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UPDATE 10:38 a.m: White House spokesman Jay Carney commented on the reports concerning Social Security cuts Thursday morning.

"There is no news here," Carney said. "The President has always said that while social security is not a major driver of the deficit, we do need to strengthen the program and the President said in the State of the Union Address that he wanted to work with both parties to do so in a balanced way that preserves the promise of the program and doesn't slash benefits."

"First, any cuts to Social Security, Medicare and Medicaid should be taken off the table. The individuals depending on these three programs deserve well-conceived improvements, not deep, ideologically driven cuts with harmful consequences."

As a second condition, the lawmakers added, "revenue increases must be a meaningful part of any agreement."

"Tax breaks benefiting the very richest Americans should be eliminated as part of this deal," the lawmakers wrote. "The middle class has experienced enough pain during the last three years, Republicans are willing to inflict even more. We will not join them."

Grijalva said there's room for "restructuring" in Social Security, Medicare and Medicaid. But if the final debt-ceiling package cuts benefits under those programs, he warned, "then I couldn't support it."

AARP delivered a similar message on Thursday, issuing a statement warning that the powerful lobbying group "will not accept any cuts to Social Security as part of a deal to pay the nation’s bills."