As promised in his policy released his budget recommendation and spending plan today, focusing heavily on building a financial base for universal health coverage, creating a cap-and-trade system on fossil fuel emitters, and rescuing the financial system. The plan recognizes the huge deficits this year (estimated at $1.75 trillion) but sticks to Obama’s commitment to cut budget deficits in half by 2013 (which would be contingent upon a number of factors: the phasing-out of the Bush tax cuts, a large draw-down of troops and resources in Iraq, etc.).

More about the plan and the right-wing response after the jump.

Obama has proposed increasing the deficit by up to $250 billion this year in order to help rescue banks and other financial institutions with as much as $750 billion in aid. This is really disheartening because it sounds more and more likely that nationalization (or pre-privatization, if you like) won’t be the selected option. Many economists fear that the White House and the Treasury and underestimating the problem and that dosing out more subsidies just isn’t going to be effective. It certainly hasn’t worked thus far and there doesn’t seem to be a serious plan to restructure the TARP spending procedures. Not good.

On a brighter note, Obama’s education spending seems great. $2.5 billion will go “to support innovative State efforts to help low-income students succeed and complete their college education.” Obama also wants to eliminate the student loan middle-men and originate all federal loans through the direct lending program. So, instead of paying corrupt institutions like Sallie Mae to finance our loans, the government will save billions by loaning us the money itself.

And then there are taxes. Conservatives are already ranting about the TRILLION dollars in new taxes. Of course, they don’t mention that Obama is keeping to his promise of not raising taxes on anyone making less than $250,000. Over a third of the tax “increases” will be generated by letting the Bush tax cuts end, raising top earners’ marginal tax rates from 35 to 39.6 percent. Many of the other taxes are aimed at oil and gas companies by repealing loopholes and deductions in the tax code.

Yes, taxes will go up for the wealthy. But their tax burden will rise very gradually (the Bush tax cuts won’t even be repealed until 2011), so when you hear Republicans shouting that raising taxes during a recession is a bad idea, ignore them. And remember that hundreds of billions of dollars will be raised by implementing a cap-and-trade system, requiring companies to buy permits at auction if they want exceed a determined limit on carbon emissions. This encourages finding new sources of energy and cuts pollution while helping to fund the government.

This is, overall, another promising step forward for President Obama’s agenda. His first month has been very successful: the passage of the stimulus bill, the strong public support, and the smart policy and budget proposals have setup a solid foundation for economic recovery and prosperity. Let’s hope he keeps up the good work.

Photo courtesy of Flickr user Scott Ableman – used under CC license.