President Obama Proposes 'Radical' Spending Plan

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Yesterday, President Obama proposed a spending plan for the upcoming fiscal year that exceeds $3.5 trillion.

NPR Political Editor Ken Rudin explains why the budget is so expensive and how Congress is expected to react.

Obama's Budget: A Bold Vision To Revamp Policy

The reviews of President Obama's budget blueprint are in, and they're unanimous.

"Big!" "Ambitious!" "Unprecedented!"

Those superlatives are, predictably, being uttered in both praise and disdain of the president's $3.55 trillion spend-and-tax plan. During a time of recession, the plan seeks to set in motion a historic remaking of the nation's health, energy and education policies over the next decade.

Without question, Obama has used his 2009-2010 budget plan — and projections through 2019 — to make his aggressive presidential aspirations clear: Think big, quickly take advantage of political capital and a Democratic Congress, and increase taxes on the rich and on polluting energy companies to help pay the bill.

And don't shy away from deficit spending: Under Obama's coming-year plan, the deficit would soar to $1.75 trillion.

'Great Society' Redux?

"Ambition is the hallmark of the budget," said Mark Zandi, chief economist of Moody's Economy.com. "He's tackling an unprecedented economic crisis and also trying to roll out a version of the Great Society all at once."

"I don't know, if I were in his position, that I would take the same approach," said Zandi, who advised Arizona Republican Sen. John McCain during his presidential run and also spoke at the White House this week during Obama's fiscal summit.

Ambitious, indeed.

With a budget plan that historian Stephen Hess calls "fascinating and progressive," Obama has for the moment silenced his party's liberal wing.

Liberals had been aflutter over the president's inclusion of Republicans in his Cabinet, his reliance on former Clinton administration officials and his continued call for bipartisanship.

"There are very few real defining moments in politics, and this is one of them," said Hess, a senior fellow emeritus at the liberal Brookings Institution and a former adviser to Presidents Ford and Carter. "This is big-time redistribution."

House Minority Leader John Boehner agreed. "The era of big government is back," he said. No fiscal restraint, Republicans charged.

Obama's proposal has alarmed libertarians like Chris Edwards at the Cato Institute, who said of the plan, only half jokingly, "I fear for my country."

Edwards says the budget — as projected over the decade by Obama and his budget director, Peter Orszag — suggests that the president, like many of his contemporaries on both sides of the aisle, "doesn't fear deficits."

Federal spending has remained around 16.5 percent of the economy since 1980, he says. That would spike to 23 percent of the gross domestic project in the coming fiscal year and remain at about 20 percent in 2019, according to Edwards' review of Obama's proposal.

Edwards is also among those warning that Obama's proposal to raise billions annually through a so-called cap-and-trade surcharge on polluting utility and energy companies would translate into higher utility bills for customers. (Under a typical cap-and-trade system, companies essentially are issued "pollution credits." A company that complies with federal air quality standards can sell its unused credits to a firm that has or will exceed its emissions allowance.)

Expect Pushback

That cap-and-trade provision is just one of a score of proposals that are likely to face tough going when Congress starts working out the details of the budget.

Obama's proposal provided ample fodder for those attending Thursday's Conservative Political Action Committee meeting, during which former GOP presidential candidate Mike Huckabee asserted that Democrats are turning into socialists.

On Capitol Hill, California Rep. Jerry Lewis, the ranking Republican on the House Appropriations Committee, said raising taxes would only "further harm our faltering economy."

Conservatives will push back on Obama's plan to allow the Bush tax cuts for the wealthy to expire, and Democrats are likely to resist shoveling more money to the nation's fragile banks, says Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget. And no one expects the agribusiness lobby to let the president's proposed subsidy cuts go through without a major fight.

MacGuineas says that Obama's ambitions are "really, really big and perfectly appropriate if he's doing it in a fiscally responsible manner."

But she, like Edwards, says that Obama has not done enough to reduce the deficit over the next few years — particularly if all the stimulus and bailout money helps put the economy on a growth track. The president's budget projects a $533 billion deficit by 2012.

"A half a trillion budget deficit when the economy is growing? Not good enough," MacGuineas said. "I would have preferred to see them shelve new spending and tax cuts until the economy stabilized."

Health Care Gambit

Liberal health care advocates like Ron Pollack of Families USA say the time is ripe for one of Obama's most ambitious proposals: to overhaul health care in the coming fiscal year. But history suggests that it will be a tough sell.

The president has proposed tax increases and cuts in spending to fund, over 10 years, a $634 billion fund to extend health coverage to uninsured Americans.

On Capitol Hill Thursday, House Speaker Nancy Pelosi said that "health care is the priority of the Congress and this president going forward."

"Health care reform is entitlement reform," she said. "This issue is central. This is an investment."

First Round Of The Budget Battle

The president's plan has miles to go. He won't submit a final budget proposal to Congress until April, and then both chambers will have at it until a final bill is fashioned by fall.

Zandi is among those who will be watching closely to see how the president leverages his political resources to get the fundamental changes he seeks.

The country needs a win, Zandi says, and Obama has laid out a plan that makes a simple, easy "win" unlikely — particularly in the realm of health care, where "reform" means vastly different things to different people.

"Nonetheless, we have to admire his ambition, energy and drive," Zandi said.

Obama's bold plan surprised Hess — even though many of the initiatives were campaign promises.

"He is going beyond the need of the moment," Hess says. "He's got a Congress that almost gives him a supermajority, tremendous public appeal and approval.

"If he didn't take advantage of that, you'd have to ask, 'What does he stand for?' "

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