The Robin Hood Budget

By Dan Froomkin
1:55 PM ET, 02/26/2009

President Obama today unveiled a fiscal year 2010 budget proposal that is dazzling both in the scale of its ambitions and its deficits. It is also the most detailed blueprint yet for the profound course-change that Obama promised in his campaign.

White House budget director Peter Orszag describes the budget proposal to reporters this morning. (Bill O'Leary/Post)

"You know, there are times where you can afford to redecorate your house and there are times where you need to focus on rebuilding its foundation," Obama said this morning "Today, we have to focus on foundations."

What he didn't mention was that he was also ripping out some of the foundations that were laid by the previous administration.

Obama's budget would dramatically increase taxes on the wealthy, while cutting payments and subsidies to insurance companies, pharmaceutical companies, agribusiness and defense contractors -- and mandating a system to charge polluters for their carbon emissions.

It would, in short, reverse the redistribution of wealth that took place during the Bush era. This time, the rich will be subsidizing the poor, not the other way around.

The revenue increases -- supplemented by staggering deficit spending -- would pay for tax cuts for non-wealthy Americans and hugely ambitious plans in the areas of energy, health and education that, as Obama insisted on Tuesday night are necessary to assure the country's long-term prosperity.

Realizing they had some explaining to do, Obama's budget team points the finger at the last guys: "[F]or far too long, the resilience, optimism, and industriousness of the American people have been frustrated by irresponsible policy choices in Washington," the budget document says.

"Prudent investments in education, clean energy, health care, and infrastructure were sacrificed for huge tax cuts for the wealthy and well-connected. In the face of these trade-offs, Washington has ignored the squeeze on middle-class families that is making it harder for them to get ahead. Our Government has spent taxpayer money without making sure the numbers add up and without making it clear and understandable to the American people where their money was being spent. Tough choices have been avoided, and we have failed to make the wise investments we need to compete in a global, information-age economy....

"This is the legacy that we inherit — a legacy of mismanagement and misplaced priorities, of missed opportunities and of deep, structural problems ignored for too long. It’s a legacy of irresponsibility, and it is our duty to change it."

The projected deficits are nothing short of astronomical. The budget assumes a $1.75 trillion deficit this year. And while annual deficits would drop to $533 billion in 2013, they would then start going up again (although they would stay basically flat as a percentage of gross domestic product). The national debt, which went up from $7 trillion to $10 trillion in the Bush era, would be $20 trillion in 2016.

The scale of just about everything in this budget will inevitably lead many in Washington to suggest with increasing alarm that Obama is trying to do too much, too fast. (It begins.) They may be right. But they should also ask: Is Obama right that doing less is actually more risky? Isn't this what the voters elected him to do? And does the fractured, already marginalized Republican party really want to define itself as the party of tax breaks for the rich and the special interests?

Lori Montgomery has the big numbers on washingtonpost.com: "President Obama's proposed budget includes an additional $250 billion that could be used to bail out struggling banks this year, bringing the expected 2009 budget deficit to a soaring $1.75 trillion, officials said this morning. The government's yearly shortfall would equal 12.3 percent of the nation's annual economic output, a level not seen in generations."

Jackie Calmes and Robert Pear have the big picture on nytimes.com: "By redirecting enormous streams of deficit spending toward programs like health care, education and energy, and paying for some of it through taxes on the rich, pollution surcharges, and cuts in such inviolable programs as farm subsidies, the $3.55 trillion spending plan Mr. Obama is undertaking signals a radical change of course that Congress has yet to endorse."

Bloomberg's Ryan J. Donmoyer looks at the revenue side: "President Barack Obama proposed almost $1 trillion in higher taxes on the 2.6 million highest- earning Americans, Wall Street financiers, U.S.-based multinational corporations, and oil companies, to pay for permanent breaks for lower earners....

"The tax increases, which Obama vowed to implement as a presidential candidate, would be the first on high-income earners since 1993 and would reverse a course set by Bush of lowering the tax burden on the nation’s wealthiest people.

"'It’s a clear repudiation of Bush’s policy,' said Peter Morici, an economist at the University of Maryland in College Park. 'It’s more Obama Robin Hood.'"

Noam N. Levey writes in the Los Angeles Times that with this budget, Obama is "[m]aking good on populist rhetoric he has employed since he was a candidate."

Ceci Connolly writes in The Washington Post about how "Obama is proposing to begin a vast expansion of the U.S. health-care system by creating a $634 billion reserve fund over the next decade, launching an overhaul that most experts project will ultimately cost at least $1 trillion.

"The 'reserve fund' in the budget proposal being released today is Obama's attempt to demonstrate how the country could extend health insurance to millions more Americans and at the same time begin to control escalating medical bills that threaten the solvency of families, businesses and the government."

Juliet Eilperin and Steven Mufson write in The Washington Post: "A mandatory cap on the nation's greenhouse gas emissions, which President Obama embraced on Tuesday as central to his domestic agenda, would be designed to generate badly needed revenue for the government while addressing arguably the world's most pressing environmental issue....

"[O]nly hours after Obama's speech Tuesday to Congress, the cap-and-trade proposal triggered a heated exchange among senators on a key committee, underscoring that efforts to come up with a system that limits emissions, puts a price on carbon and allows industries to trade pollution allowances will be a difficult sell on Capitol Hill, especially in the current economic crisis.

"A federal cap-and-trade program, which many scientific and policy experts see as key to curbing dangerous levels of global warming, would create a new commodity -- in the form of the allowances permitting industries to discharge specified amounts of carbon dioxide into the atmosphere -- and a market for that commodity that would be worth tens or perhaps hundreds of billions of dollars, along with a complex new regulatory system."

Congressional Republicans are already gearing up against Obama's agenda.

Jackie Kucinich writes for Roll Call (subscription required): "Determined to present a unified front against the White House and a Democratic-run Congress, Republicans plan to use the budget release today to kick off a five-week campaign that will highlight areas where they believe the administration’s blueprint is flawed.

"A senior GOP aide said the campaign would include the circulation of coordinated talking points and the melding of the documents from the House and Senate Budget panels and Republican Conference committees."

But it may be asking too much even of Democrats.

Shailagh Murray and Paul Kane write in The Washington Post that Obama's agenda "confronts the era's most intractable problems, from a tattered financial system that has helped fuel a deepening recession to health-care, education and energy policies that have long defied meaningful reform.

"It amounts to a long work order for a legislature that has seen its productivity sag in recent years. Mired in partisan divisions, Congress has produced few bills of sweeping impact since the end of President George W. Bush's first term. Now Obama is asking lawmakers to deliver legislation on the scale of the No Child Left Behind education bill or the Medicare prescription drug benefit -- two of Bush's signature achievements -- roughly once a month....

"Many Democrats have expressed trepidation about the lofty expectations that Obama has set and are keenly aware that the party could pay a steep price in the 2010 midterm elections if the promises are not fulfilled. At a White House meeting yesterday with House and Senate leaders, Obama noted that polls showed the Democratic Congress's popularity rising with the passage of the stimulus bill, despite Republicans' near-unanimous opposition because of the package's heavy spending programs."

Obama's speech Tuesday continues to elicit reaction.

Joe Klein writes for Time: "Let it be recorded that Barack Obama came into full possession of the U.S. presidency toward the end of his February 24 budget speech to a joint session of Congress. He had just read a letter from a South Carolina schoolgirl, pleading for help with her dilapidated school. 'We are not quitters,' the girl had written. The President's eyes brightened as he repeated that phrase, and he seemed barely able to control his joy and confidence as he attacked his peroration: that even in the toughest times, 'there is a generosity, a resilience, a decency and a determination that perseveres.' This was the chord that had been missing in the first dour month of Obama's presidency — not so much optimism as confidence, the sense that he was not only steering the presidency, but loving the challenge of it."

Obama seems to have lost David S. Broder, who writes in his Washington Post opinion column: "Is he naive? Does he not understand the political challenge he is inviting?...

"The size of the gambles that President Obama is taking every day is simply staggering. What came through in his speech to a joint session of Congress and a national television audience Tuesday night was a dramatic reminder of the unbelievable stakes he has placed on the table in his first month in office, putting at risk the future well-being of the country and the Democratic Party's control of Washington....

"When we elected Obama, we didn't know what a gambler we were getting."

And William Kristol, in his Washington Post opinion column, calls for obstructionism and delay: "Conservatives and Republicans...should do their best not to permit Obama to rush his agenda through this year. They can't allow Obama to make of 2009 what Franklin Roosevelt made of 1933 or Johnson of 1965. Slow down the policy train. Insist on a real and lengthy debate. Conservatives can't win politically right now. But they can raise doubts, they can point out other issues that we can't ignore (especially in national security and foreign policy), they can pick other fights -- and they can try in any way possible to break Obama's momentum. Only if this happens will conservatives be able to get a hearing for their (compelling, in my view) arguments against big-government, liberal-nanny-state social engineering -- and for their preferred alternatives."

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