Analysis: Obama Tax Plan Brings Cries of Class Warfare

By TOM RAUM
Associated Press Writer

WASHINGTON (AP) -- 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 is already provoking cries of "class warfare'' in Congress.
The Obama priorities reflected in the $3.6 trillion budget guarantees a fierce political battle ahead over taxes. And it assumes a fairly quick economic recovery from the worst recession in decades.
The budget outline includes ambitious initiatives on energy, health care, education and climate change. It would boost taxes on the wealthy and cut Medicare payments to insurance companies and hospitals to make way for a $634 billion down payment on universal health care.
Predictably, Republicans complained, much as they had done during last year's presidential campaign, that Obama was pitting the haves against the have-nots.
His budget would benefit lower-income Americans at the expense of the wealthy and businesses, critics claim.
Rep. Eric Cantor of Virginia, the No. 2 Republican in the House, called the budget ``not just misguided but dangerous'' in seeking to raise taxes during a severe economic downturn.
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 occur when 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, with even more robust growth in the years after that.
Christina Romer, chairman of the president's Council of Economic Advisers, defended that forecast, 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.
Bixby said the budget has "a lot of downside risk'' in that the spending increases in domestic programs will appeal to congressional Democrats while program cuts and tax increases might turn out to be unappealing to Republicans and Democrats alike.
Obama, in remarks on the budget on Thursday, said his budget seeks to "come to grips with the hard choices that lie ahead. And there are some hard choices that lie ahead.''
Stanley Collender, a longtime budget expert, predicted a huge battle in Congress over the proposed tax cuts and Medicare changes. But he noted that, with Democrats in control of the House and Senate, there's probably not much Republicans can do to keep the expiring Bush tax cuts from ending on their own.
Furthermore, said Collender, in the current economic and political climate, "the wealthy are not as well thought of as they have been in the past.'' He also noted that exit polls from last year's presidential election showed those making more than $200,000 a year tended to vote for Obama rather than Republican John McCain.