Obama Defends Plan As Economy Sinks The U.S. economy continues to spiral downward. A report released Friday by the Commerce Department shows that the economy contracted at the end of last year by the fastest pace since 1982. This puts even more pressure on President Barack Obama, who this week presented his $3.6 trillion budget proposal. Saturday morning, the president said he knows he faces an uphill battle.
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Obama Defends Plan As Economy Sinks

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Obama Defends Plan As Economy Sinks

Obama Defends Plan As Economy Sinks

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This is WEEKEND EDITION from NPR News. I'm Scott Simon.

The U.S. economy continues to decline. A report released by the Commerce Department shows the economy contracted at the end of last year by the fastest pace since 1982. And this certainly puts even more pressure on President Obama's $3.6 trillion budget proposal.

This morning the president said he realizes that he faces an uphill battle.

President BARACK OBAMA: I know these steps won't sit well with the special interests and lobbyists who are invested in the old ways of doing business. And I know they're gearing up for a fight as we speak. My message to them is this: So am I.

SIMON: Joining us now is our favorite fight commentator - our friend, NPR News analyst Juan Williams. Juan, thanks for being with us.

JUAN WILLIAMS: Good morning, Scott.

SIMON: Congressman Boehner, House Republican leader, calls this one - calls the budget proposal, quote, "one big down-payment on a new American socialist experiment." Those are fighting words.

WILLIAMS: They are. I mean, clearly, there is no bipartisanship on the stimulus bill that the president talked about Tuesday night before Congress, and none on the budget that was announced Thursday. The Republicans are drawing a line much as you just described Congressman Boehner doing, saying that what the president is about - they don't say it explicitly as socialism, although you will hear that on the talk show circuit - but they're talking about taxes and spending that will balloon deficits and burden future generations, drive inflation possibly, but essentially then take money away from businesses in the country and therefore cripple the economy. So they're making a strong bet that this doesn't work.

Now, I must say in political terms this argument has revitalized the Republican party's base. Their base is, in fact, growing stronger in terms of opposition to President Obama. But among independents and Democrats, President Obama is doing fine. His favorable numbers, his approval ratings, are way up there. And the general response in terms of polling to what we've seen of the speech and the budget has been very positive. But President Obama is using the word responsibility a lot. In fact, if you look at the document, the budget document, it's called A New Era of Responsibility. And so the battle lines, from his perspective, is to say the Republicans have not been responsible in terms of how they have conducted this economy over the last eight years.

SIMON: Let me ask you about this feature in President Obama's plan. Families making more than $250,000 a year would have to pay higher taxes. They would see deductions reduced for their mortgage interest and charitable contributions. Now, this is the group of taxpayers that A) often you rely on to invest in the economy and create jobs, and B) they voted for President Obama.

WILLIAMS: They did. They did strongly - 52 percent voted for President Obama, 46 percent for Senator John McCain. So what you see here is that the wealthy -if that's what you want to call people who have more than $250,000; here we're talking couples as opposed to individuals; an individual would be over $200,000. And then those under $100,000 also voted for President Obama. In between that 100 and 200, that vote went to Senator McCain.

So this is a very interesting sort of anomaly. The question is, do they remain in support of President Obama going forward? Because as you point out, they're going to have now lower deductions for many things. They're going to find because of the market's decline that they're not as rich as they used to be.

At what point do class wars take over here, Scott?

SIMON: Yeah. And of course, there is anxiety in the economy, as reflected in the public opinion polls, isn't there?

WILLIAMS: There is tremendous anxiety. In fact, you know, it's striking to me that right now, if you look at it, 46 percent, according to a Washington Post poll, say that they are concerned about having enough money to afford their housing payments, their mortgage payments. Forty-six percent, Scott. And two-thirds of those polled say they've cut back on spending.

Seventy percent of Americans anticipate the recession, however you want to describe it, the economic downturn, lasting well into 2010 or beyond. And when you think of it, for upper income - not just upper income individuals but big business - what President Obama is proposing in his budget is that agribusinesses would lose their subsidy if they're making more than half a million; keeping the estate tax in place; curtailing the shield for multinational firms that do business based in the U.S., but those profits now would be taxed at a higher rate; hedge fund and private equity managers, instead of having their income taxed on the basis of capital gains would now be taxed in terms of individual income tax; oil and gas tax credits and deductions would be less. All of that going away. This is a big hit in terms of the wealthy and business.

SIMON: Let me ask - the president also announced Friday he wants to withdraw most U.S. troops from Iraq by the end of August 2010. But up to 50,000 would remain in country, as they say, to provide security and training. The first opposition to his announcement didn't come from Republicans. In fact, Senator McCain said that he supports it. But it came from Democrats, including House Speaker Pelosi.

WILLIAMS: She did. She indicated that she was concerned that so many would remain on the ground. Similarly, Senate Majority Leader Harry Reid had the same thing to say, Scott. Now, they've moderated it somewhat to say, you know, it's maybe responsible government; we understand the president is under pressures and he's been talking with the generals.

But the whole sense is, wait a second, on the campaign trail President Obama was so sharp in saying that he was going to pull those troops out in 16 months; in the first day he was going to meet with the generals and set this up. And now what you're looking at is something more like 19 months with these troops remaining, 50,000 remaining on the ground. And the question is whether or not for the Democrats this is really living up to his pledge to end the war.

SIMON: NPR News analyst Juan Williams. Thanks so much.

WILLIAMS: You're welcome, Scott.

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