The 2013 budget counts $1.5 trillion in increased taxes, including the expiration of the George W. Bush-era tax cuts for top earners, increased estate taxes and higher rates on investment income.

Since expiration is automatic and will happen unless the Democrats in Congress and Obama do another grand bargain so as to cut Social Security and Medicare to save the nation, the question is how does Obama redo the Bush tax cuts for those under $250,000 in income per year. – and how does the GOP set up the dance so it looks like they are rejecting a tax increase just before they accept the tax cuts for the under $250,000 crowd.

My guess is that the GOP will fight any tax cut that excludes those over $250,000 as being class warfare -until they cave in October. Meanwhile Obama may offer up the usual SS/Medicare “destroy so we may save” grand bargain – just to get the nose under the tent change of Social Security from dedicated tax benefit to welfare via getting a “means test for the rich” passed, just like the Washington Post and Fred Hiatt said they wanted today. Once we have SS as welfare it will be easy to cut in Obama’a second term. And the excuse for giving the GOP the means test will be it is a compromise so as to get their vote for the other tax cuts – as if the GOP needed a bribe to agree to tax cuts.

Then again Obama may hold hostage the unemployment benefit extension and the Medicare “doc fix” – giving up the means test so as to get both of these passed for a few months.

I am sure Obama will focus group the two choices above plus other creative ideas on his way to means testing SS. He is not about to TOTALLY lose his GOP approach just because it is an election year. So while I would not bet on Obama getting, or even really wanting to get, his increased estate taxes and higher rates on investment income (dividends treated the same as wage income with cap. gain all the way up to the Clinton level that comes back anyway), I think you can safety place a bet on Obama getting his means testing of SS, turning it into a welfare program, because he really wants this one.