Even as the White House and lawmakers signal optimism about reaching a grand bargain to avert the fiscal cliff before the New Year, President Obama’s liberal allies were battening down the hatches on their position: no cuts to entitlement benefits, at all.

MoveOn.org would not get behind any deal that reduced Medicare, Medicaid, or Social Security benefits, said Ilya Sheyman, campaign director for the liberal group. The AFL-CIO, the nation’s largest labor federation, is equally adamant that benefits should not be cut.

“Our principles are non-negotiable and if the cost for getting the speaker of the House on board is to do something like cut taxes yet again for the rich or cut benefits to the social safety net, we are opposed,” said AFL-CIO spokesman Jeff Hauser, who added that it was better to go over the “fiscal slope” than to bend to Republican demands.

White House spokesman Jay Carney said today that Social Security is one entitlement program that should be addressed on a “separate track.”

“We should address the drivers of the deficit and Social Security currently is not a driver of the deficit,” Carney told reporters today. The senior retirement program is solvent for another 21 years, at which time recipients could see a reduction in benefits…

“I don’t think you can look at entitlement reform without adjusting the age for retirement,” Sen. Lindsey Graham, R-S.C., said on Sunday. “I don’t expect the Democrats to go for premium support or a voucher plan, but I do expect them to adjust these entitlement programs before they bankrupt the country and run out of money themselves.”

Endorsed by Senator Lindsey Graham of South Carolina and by Representative Peter King of New York, the Chambliss decision — one that put him on the other side of Grover Norquist and the conservative base — is reminiscent of what began happening among Democrats in the aftermath of the 1984 Reagan landslide. Old allegiances to traditional Democratic constituencies were re-examined; the Democratic Leadership Council (DLC) urged office holders and candidates to adopt centrist rhetoric and a promarket orientation.

It worked. In the 1990s Bill Clinton became the first two-term Democratic president since FDR, and Al Gore — another early DLCer — won the popular vote in 2000. The climatic moment of the New Democrat ascendancy came in 1996, when Clinton declared that “the era of big government” was over.

Republicans are overdue for their own rethinking. After the exhaustion of the first decade of the new century, it’s understandable that such self-examination has been slow in coming, but it apparently has finally come. Whether the GOP is to be pragmatic in the mold of George H.W. Bush or more ideological in the mode of his son is a live question. The Chambliss-Graham-King moment suggests the debate is very much on.

If taxes are going up anyway because the Bush rates expire, and Republicans can stop them from going up as much as they otherwise would, then pledge-takers deserve some credit for that. Mr. Norquist says it violates his pledge to eliminate deductions without lowering rates, but at the current economic and political moment it is also a service if Republicans prevent tax rates from going up. Speaker John Boehner deserves some leeway to try to mitigate the damage by negotiating a larger tax reform.

All the more so if Mr. Boehner can also get Mr. Obama to agree to significant spending and entitlement reform. This means more than the usual suspects of cuts to doctors and hospitals and means-testing benefits for the affluent.

It means reforms—dotted-line commitments, not promises—that immediately reduce Medicare and Social Security liabilities, that terminate some discretionary programs, and that rein in such scandals as runaway Social Security disability payments. We doubt Mr. Obama will agree to much of this, but Republicans ought to try by putting their proposals out in the open where voters can see them.

The one thing Republicans shouldn’t do is join the media and Democratic chorus that Mr. Norquist and his pledge are the root of our political and economic woes. The real problems are a political class that won’t control its spending and economic policies that are retarding growth. That’s where the GOP should keep its public focus.

Who cares what Grover Norquist thinks? Organizations such as his Americans for Tax Reform are all right, but irrevocable “pledges” not to do this or that — in this case, never to raise taxes — strike me as simplistic, and severely limit the possible courses of action for those candidates and legislators who sign them. Not that I’m in favor of raising taxes, mind you, nor opposed to something like a flat tax — which in fact I’ve advocated. But silly things like “pledges” do nothing to direct the taxation argument in a fruitful direction, and I don’t understand why Norquist looms so large in Republican thinking.

Then again, if the Democrats are really serious about soaking the rich, why don’t they come out in favor of replacing the income tax — which is basically a mechanism to prevent the upper-middle class from becoming wealthy — with a wealth tax?

How is this all going to get solved? Our model tells us that House Republicans have to either get their way or be bought off. The president either has to cave, allowing the Bush-era tax cuts to stay the same for the wealthy, or offer something to sweeten the deal. House Republicans owe their majority to the Tea Party. Getting them to vote for a tax-rate increase is not going to come cheap. One solution is a promise from the president and Democrats to reduce tax rates at some future date when paired with comprehensive tax reform. (Obama wants taxes to go up on those making over $250,000 now but is open to having those rates come back down as a part of reform.)

Would Republicans buy such a promise about the future? Why on earth would they trust that these lower rates would ever come to pass? One possible offering the president could make would be a major concession on Medicare and Medicaid. White House spokesman Jay Carney said the president was committed to hard choices. If he’s not going to bend on tax rates and has ruled out touching Social Security (as he essentially has), then there’s only one place left where the president can find real money in the budget-cutting game: health care entitlements. That would show that he was serious about shared sacrifice, and if the changes the president agrees to are large enough, they’d give Republicans cover to accept tough tax changes.

It would also be pretty big news. So let’s amend our model. If the president agrees to change the eligibility requirements for Medicare, that would be worth pausing during the office party. Then we’d have to see if House Republicans would buy it.

The world has changed and the economic situation is different. Ronald Reagan and Tip O’Neill realized that in the 1980s. I think everything should be on the table. I, myself, am opposed to tax increases. The fact is the speaker and the majority leader and the president are gonna be in a room, trying to find the best package. I’m not gonna prejudge it. And I’m just saying we should not be taking iron clad positions. I have faith in John Boehner to put together a good package.

Via Mediaite.

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