By Shailagh Murray
Washington Post Staff Writer
Thursday, February 26, 2009 4:49 PM
Republicans criticized President Obama's first budget as a new spending bonanza that fails to address the entitlement crisis and relies overly on tax increases and new business costs to close the deficit gap.
"This is really big government," said Rep. Paul D. Ryan (R-Wis.), the ranking GOP member of the House Budget Committee.
Obama proposed a $3.55 trillion blueprint today that would raise taxes on the wealthiest Americans, trim Medicare and impose a pollution tariff on companies for excessive emissions, with the aim of cutting the federal deficit in half by the end of his first term. But Obama also is seeking a vast expansion of domestic programs, including a $634 billion "down payment" on a universal health care program.
Republicans sought to portray the revenue increases as reckless and irresponsible, given the economy's weakening state. "A $1.4 trillion tax hike is not the solution to our economic woes," said Sen. Judd Gregg (N.H.), ranking Republican on the Senate Budget Committee.
"If there's anything that economists on the left and the right agree on, that supply-siders, classic economists and Keynesians agree on, you don't raise taxes in a recession," said Ryan. "This budget is raising taxes in a recession."
Democrats noted that Obama's blueprint would not raise individual tax rates for nearly two years -- and even then, only the wealthiest households would take a hit. As he pledged during the campaign, Obama will seek to rescind President Bush's tax cut for households with incomes above $250,000, allowing the top individual tax rate to climb to 39 percent from the current 35 percent level when the Bush tax cut expires at the end of 2010.
Senate Budget Chairman Kent Conrad (D-N.D.) said Republicans are overlooking tax reductions in the Obama proposal, including an extension of Bush rate cuts for middle-class families; changes to the alternative minimum tax to prevent it from ensnaring the non-wealthy; and an extension of the "Make Work Pay" payroll tax credit in the stimulus bill.
Obama would tap other revenue sources, include closing business tax loopholes, limiting itemized deductions for upper-income taxpayers, and creating a "cap and trade" system that would fine companies for exceeding emission limits -- which doubles as a money raiser and a remedy for global warming. All ignited a Republican firestorm.
Democrats were somewhat muted in their response to the budget, framing it as the best Obama could do, given the heavy burden the government has assumed to help the country weather the recession, and the record deficit left behind by Bush.
The new administration "is inheriting record deficits, a doubling of the national debt, the worst recession since the Great Depression, financial market and housing crises almost unprecedented in our nation's history, 2.5 million jobs lost in just the last five months, and ongoing wars in Iraq and Afghanistan," said Conrad. "I've often thought what it must be like to be President Obama and go to work every morning facing this incredible constellation of crises."
But Republicans offered no such leeway. House Minority Leader John Boehner (R-Ohio) called the budget "a job killer" and singled out the emissions cap as especially onerous, asserting that companies would simply pass on their fines to consumers. "Let's just be honest and call it a carbon tax that will increase taxes on all Americans who drive a car, who have a job, who turn on a light switch, pure and simple," Boehner said.
Other GOP lawmakers attacked the budget's 9.3 percent increase in domestic discretionary spending. "Simply raising taxes to cover funding for unnecessary or wasteful programs is not the answer, and will only further harm our faltering economy," said Rep. Jerry Lewis (R-Calif.), ranking Republican on the House Appropriations Committee.
"I have serious concerns with this budget, which demands hardworking American families and job creators turn over more of their hard-earned money to the government to pay for unprecedented spending increases," said Senate Minority Leader Mitch McConnell (Ky.).
The proposal appeared to do little to sow the bipartisanship that Obama has cultivated since taking office. Republicans expressed disappointment that the budget left mostly unaddressed the looming fiscal threat of Social Security and Medicare. Gregg, who had been nominated to serve as Obama's Commerce secretary, delivered a clear, if measured, rebuke of the plan, for skirting the solvency question.
"I was hopeful that the calls for change would extend to the budget blueprint," said Gregg. "Unfortunately, this budget plan is once again a missed opportunity for American taxpayers -- it raises taxes on all Americans, implements massive new spending, and fails to make any tough choices to control the deficit and long-term fiscal crisis posed by the huge entitlement programs."
Some Republicans, including Ryan and Gregg, applauded Obama's bid to cut subsidies to corporate farms and apply a means test to Medicare prescription-drug premiums.
But they rejected the budget's vast new health-care investments, on grounds that the coverage gap won't be closed by money and an increased government role.
"If it's a plan to nationalize the health care system, then obviously we're not going to want to participate in that," Ryan said.