Washington He’s not being timid, that’s for sure.
President Barack Obama’s first federal budget lays out the most far-reaching agenda for American life since Lyndon Johnson’s Great Society. But paying for it by having upper-income earners shoulder much of the cost quickly provoked cries of class warfare in Congress.
The Obama priorities reflected in the $3.6 trillion budget guarantee a fierce political battle ahead over taxes and spending. And despite the administration’s agonizing over the depth and global nature of the worst recession in decades, the new president’s budget forecasts a rapid U.S. recovery.
The budget outline includes activist initiatives on energy, health care, education and climate change.
It would boost taxes on the wealthy, oil companies and other businesses while cutting Medicare and Medicaid payments to insurance companies and hospitals to make way for a $634 billion down payment on universal health care. It would also limit charitable and other tax deductions for the affluent and trim spending on government subsidies to big farms.
Predictably, Republicans complained, much as they had done during last year’s presidential campaign, that Obama was pitting the haves against the have-nots.
“The era of big government is back, and Democrats are asking you to pay for it,” said House Republican leader John Boehner of Ohio. He suggested Obama’s proposed tax increases would reach deep into the middle class, despite repeated administration statements that tax hikes would be limited to families making more than $250,000 a year.
Boehner and other Republicans also said it was folly to raise taxes during a recession.
But the administration’s own economic forecasts suggest that the brunt of the tax increases, including allowing existing tax cuts from the Bush administration to expire, will fall only after the nation is in recovery.
The Obama budget forecasts that, despite the depth of the current recession, the economy will recover and grow by 3.2 percent in 2010 and then climb to an even more robust 4 percent in the three following years.
Most of the proposed Obama tax increases, including the permit levy on greenhouse gas emissions, would not take effect until a presumably post-recession 2012.
Christina Romer, chairman of the president’s Council of Economic Advisers, defended the administration’s upbeat forecast for recovery, saying it “reflects the administration’s assessment that the comprehensive recovery program outlined by the president on Tuesday night will be effective.”
But some deficit hawks suggested that Obama was being too optimistic given the severity of the recession.
“He is relying on a strong economic comeback very quickly. And he’s assuming that a lot of the new issues will be paid for,” said Robert Bixby, the executive director of the Concord Coalition, a bipartisan fiscal watchdog group.