Above the Fold: Barack’s Bold Budget

"The most radical document of its kind since Reagan’s first year in office"

Barack Obama’s budget proves he was serious when he promised fundamental change if he became president.

Everyone in the MSM seems to agree that the president’s budget is the most radical document of its kind since Ronald Reagan’s first year in office. It keeps many of Obama’s most important campaign promises—including the sale of pollution permits (instead of giving them away) and permanent tax cuts for every household making less than $250,000; it is also the first serious effort in a generation to (modestly) redistribute wealth back to the middle class.

Among the highlights:

• In the coming year, Obama would cut $5 billion in direct payments to agribusinesses and farmers with more than $500,000 in annual revenue.

• He would kill $4 billion in annual subsidies to private banks that make college loans.

• A new cap-and-trade program to limit greenhouse gas emissions would produce $150 billion over ten years to finance renewable energy projects, plus another $65 billion a year to pay for middle-class tax credits.

• A 34 percent increase in funding for the Environmental Protection Agency includes a Great Lakes restoration program and across-the-board increases for regulation, research and enforcement, plus $19 million to establish an inventory of greenhouse gas emitters so that a genuine national carbon control regime would be possible.

As FCP predicted last December, the least radical part of his budget is the section that covers the Pentagon. Barney Frank has recommended slashing the Defense Department’s budget by 25 percent, or roughly $150 billion; Obama’s budget promises a 4 percent increase in military spending, to $534 billion in 2009. Deciding to stop production on Lockheed Martin Corp.’s F-22 Raptor, the Air Force’s completely unnecessary new fighter plane, would signal Obama’s willingness to make a radical (and courageous) change in this area. But don’t hold your breath waiting for that to happen.

The one thing his proposals decidedly do not do is “sharply raise taxes on the rich,” as David Leonhardt asserts in this morning’s New York Times. According to an analysis in the Wall Street Journal from Deloitte Tax LLP, a couple with two young children and an income of $500,000 would owe $11,300 more in taxes if all of Obama’s proposals are enacted. In other words, the amount they pay in federal taxes would increase by a whopping 2.26 percent of their income.

Leonhardt apparently thinks that’s a big deal because it’s “beyond where Bill Clinton had raised them.” But, in the same newspaper, his colleague John Harwood points out that the new top rate of 39.6 percent (up from 36 percent) is still a long, long way from the 70 percent rate which prevailed before Ronald Reagan inaugurated the magnificent policies which did so much to bring us to the current economic catastrophe.

In fact, the new budget specifies no income tax increases at all before 2011—but that didn’t prevent Republicans from immediately saying that it did exactly the opposite.

The near-universal scorn heaped on Louisiana governor Bobby Jindal for his response to Obama’s non-State-of-the-Union address obscured the most important thing about Jindal’s performance: his utterly accurate description of the Republicans’ unchanged prescription for all of our economic ills—more tax cuts for the rich. As a TPM reader pointed out, Jindal acted as an undertaker: He drained ” all of the remaining fluids from the corpse of GOP, and embalmed the desiccated carcass that remained.”

The stark intellectual bankruptcy of the Republican position is the biggest factor weighing in Obama’s favor as he prepares to battle every entrenched Washington interest in order to get his budget approved. (For a list of all those already arrayed against him—”Lobbyists Line Up to Torpedo Speech Proposals”—see this handy summary in The Wall Street Journal.)

The odds against Obama are even greater than they were when he first announced that he was a candidate for president. As Harwood accurately observes, whether or not Obama can change the fundamental direction of the nation “will largely depend on the same political skills that delivered him the presidency.”

Charles Kaiser is a former media critic for Newsweek and the author of three books, most recently The Cost of Courage, about one family in the French Resistance.