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WASHINGTON – President Barack Obama’s proposed tax increases are being met with misgivings by both Republicans and Democrats in Congress as he sends his Treasury secretary to Capitol Hill to defend them.

Lawmakers in both parties question Obama’s call to reduce high-income earners’ tax deductions for the interest on their house payments and for charitable contributions. Also drawing fire is his proposal to start taxing industries on their greenhouse gas pollution — a move sure to raise consumers’ electric rates.  Obama and his top aides have been promoting the budget package since unveiling an outline last week, but Tuesday will provide the lawmakers their first opportunity to publicly question top officials about the details.

Administration officials say the nation’s economic crisis requires bold action to right the economy and expand access to health care while providing tax breaks to middle- and low-income families.

The economy took another hit Monday when the Dow Jones Industrial Average plunged below 7,000 for the first time since 1997.

Treasury Secretary Tim Geithner was scheduled to appear Tuesday before the tax-writing House Ways and Means Committee, which also is likely to question him about Obama’s declaration last week that he may be asking Congress this year for another $750 billion bailout for troubled banks.

Meanwhile, White House Budget Director Peter Orszag was to testify Tuesday before the House Budget Committee on Obama’s spending priorities in the administration’s $3.5 trillion budget blueprint for the 2010 fiscal year beginning Oct. 1.

Taxes only on wealthiest?
Obama has been careful throughout the presidential campaign and since being elected to say he would impose higher taxes only on the wealthiest. Republicans, however, say Obama’s energy proposal amounts to a tax that would increase energy costs for all Americans.

“This massive hidden energy tax is going to work its way through every aspect of American life,” said Rep. Dave Camp of Michigan, the top Republican on the Ways and Means Committee. “How we light our homes, heat our homes and pay for the gas in our cars, in every phase of our daily lives, we will be paying higher costs.”

Under the energy plan, Obama wants to reduce the emissions blamed for global warming by auctioning off carbon pollution permits. The proposal, known as cap and trade, is projected to raise $646 billion over 10 years.

Most of the money would be used to pay for Obama’s “Making Work Pay” tax credit, which provides up to $400 a year to individuals and $800 a year to couples. The plan also would raise money for clean-fuel technologies, such as solar and wind power.

Orszag has acknowledged that the energy proposal would increase costs for consumers, but he argues that the vast majority of consumers will get tax breaks elsewhere in Obama’s budget package.

House Speaker Nancy Pelosi, shown with Rep. Henry Waxman, said lawmakers have their work cut out for them.

WASHINGTON — President Barack Obama has made it clear he intends to reorder the nation’s priorities, but Congress must act to make that a reality.

It won’t be easy.

Mr. Obama is asking the 111th Congress for accomplishments that rival those of the 1933 Congress that passed the New Deal and the 1965 Congress that enacted the Great Society. But despite the pain of the current crisis, it doesn’t yet compare with the devastation of the Great Depression or the upheaval of the 1960s. And Congress’s pace in recent years has been anything but speedy.

In his prime-time speech and budget plan this week, Mr. Obama urged Congress to take on sweeping proposals he promoted during the campaign to address climate change and overhaul health care. In addition, the downturn is forcing lawmakers to simultaneously debate fixes for the mortgage crisis and the auto industry, along with ways to rewrite rules for the financial sector.

Democrats on Capitol Hill are also pushing items on their longtime agenda, such as giving the District of Columbia a vote in Congress, expanding funding for stem-cell research and requiring broader use of renewable energy. They hope to pass a 2010 budget by early April and will need to enact a dozen individual spending bills for next year.

Mr. Obama and the Democrats may have relatively little time to get all this done. The president has considerable political momentum now, but that might not last. By the middle of next year, the approaching November elections will make it much harder to strike legislative deals.

After outlining the agenda this week, House Speaker Nancy Pelosi told reporters, “Our work is well cut out for us.”

While the Republicans are in the minority, they still can create significant problems for the Democrats — especially in the Senate, where the majority often needs 60 votes to overcome parliamentary obstacles.

That task is harder because Al Franken of Minnesota, who could give the Democrats their 59th vote in the Senate, is embroiled in an election dispute with former Republican Sen. Norm Coleman. And Sen. Edward Kennedy (D., Mass.) suffers from brain cancer, making his schedule uncertain.

“This is going to require compromise and negotiation with Senate Republicans,” said Jim Manley, spokesman for Senate Majority Leader Harry Reid (D., Nev.). “The sooner everyone realizes that, the better off we’ll be.”

Senate Minority Leader Mitch McConnell and other Republicans can create obstacles for President Obama's agenda.

At a meeting Friday of the Conservative Political Action Committee, Senate Minority Leader Mitch McConnell (R., Ky.) and House Minority Leader John Boehner (R., Ohio) left little doubt about their readiness to fight the Democrats.

“The stimulus, the omnibus, the budget — it’s all one big down payment on a new American socialist experiment,” Mr. Boehner told cheering conservatives.

But managing the tensions within Democratic ranks also will be a challenge. On Thursday, moderate “Blue Dog” Democrats forced House leaders to delay a vote on a bill that would empower judges to rewrite the mortgages of people declaring bankruptcy. Critics say this would add dangerous uncertainty to the home-loan market, raising interest rates and making it even harder to get mortgages.

Beyond that, Congress, like any complex institution, can only accomplish so much at any given time. Bills must be considered by subcommittees and full committees, and lengthy negotiations often occur before legislation can be passed.

House and Senate Democrats have concluded that climate-change legislation and a health-care overhaul will probably be the toughest items to push through.

Rep. Henry Waxman (D., Calif.), chairman of the House Energy and Commerce Committee, has vowed to have a climate-change bill, including a cap-and-trade system for controlling harmful emissions, ready for floor action by Memorial Day. That would set the stage for votes in the full House this summer.

That means the battle over health care will probably be put off until later in the year, if only because many of the lawmakers involved in climate-change issues also specialize in health care.

Whatever happens, the road ahead carries risks for Democrats. Failure to deliver on the Obama agenda threatens to alienate voters. But delivering on those goals comes with risks, too, potentially forcing the majority party to explain why it raised taxes or eliminated cherished programs. And Republicans will have to balance their desire to block many of Democratic initiatives with the need to be something more than naysayers.

Despite the obstacles, the new Congress has already enacted several major laws this year, including a $787 billion economic-stimulus package and legislation on children’s health care and pay equity.

Those challenges pale next to what lies ahead. “We just did the easiest of the tough stuff,” Mr. Manley said. “It only gets harder from here on out.”

Senator Edward M. Kennedy has been holding biweekly meetings to help build a consensus solution on health care that follows the road map laid out by President Barack Obama

As part of the $3.5 trillion budget he proposed on Thursday, President Barack Obama is pushing for a down payment on universal health care, a reserve fund of $634 billion over 10 years paid for by higher taxes on the wealthiest Americans and savings from government programs like Medicare and Medicaid.

By putting the funding on the table before the program has even been crafted, though, Obama is essentially putting the cart before the horse. Many health-care analysts hope to see more details of the President’s plan during a White House health-care summit expected at the end of next week — but they may be looking toward the wrong end of Pennsylvania Avenue. Unlike the failed 1994 Clinton health-care-reform effort, this isn’t going to be a bill that the Executive Branch drafts in isolation and then tries to ram down the throats of Congress.

Instead, Congress — particularly a working group convened by longtime health-care-reform advocate Senator Edward M. Kennedy — is working on a consensus solution following the road map laid out by Obama.

In fact, since the middle of last fall, Kennedy’s group has held biweekly meetings that feel somewhat like a college class — albeit the most advanced seminar on health policy on the planet. There’s a curriculum for each of the two-hour sessions; topics have ranged from benefits packages and employer mandates to tax treatment of health insurance, payment reform and prevention and wellness.

Although they are about halfway through the agenda, participants say progress has already been made. The group agrees on broad principles like a focus on prevention, a commitment to cutting costs and universal coverage approached through the expansion of employer plans. But the group — so far on the friendliest of terms — has disagreed on whether coverage should be mandated or simply offered to all individuals, how much money is needed and what the proper role of government plans should be in the private system. And they haven’t even gotten to some of the tougher parts yet, like how to make cuts in Medicare and Medicaid.

Taking part in these meetings, as was reported last week in the New York Times, are a diverse group of stakeholders: AARP, the insurer Aetna, the AFL-CIO, the American Cancer Society, the American Medical Association (AMA), America’s Health Insurance Plans, the Business Roundtable, Easter Seals, the National Federation of Independent Business, the Pharmaceutical Research and Manufacturers of America (PhRMA) and the U.S. Chamber of Commerce.

Most participants declined to comment directly on the talks, saying they were sworn to secrecy by Kennedy and risked expulsion from the meetings by talking on the record — though a few were willing to speak anonymously about some of the progress that has been made. Most were eager to praise the new momentum Obama has breathed into the talks this week, including the breakout session on health in his fiscal-responsibility summit on Monday, the underlining of his commitment to health-care reform in his address to the joint session of Congress on Tuesday and in his budget announcement on Thursday, and his announcement of a health-care summit for next week.

“This is a frank and respectful discussion that essentially began in earnest on Monday,” says Dr. Nancy Nielsen, president of the AMA. “What we’re hearing from him is that there is an urgent need for health-care reform and that we also want to make sure that we get it right when we do those reforms.”

Senator Chris Dodd, who often sits in on the meetings in case Kennedy, who is battling brain cancer, can’t participate, has said he expects to see legislation introduced by Memorial Day. Kennedy monitors the progress by telephone from home. Senate Finance Committee chairman Max Baucus, who has called health-care reform his top priority this year and is working hand-in-hand with Kennedy — Baucus’ staff has often been in the room when stimulus negotiations allowed them the time — has said that he expects to hold hearings in the spring.

By all accounts, the bill will go through the usual committee process in an effort to draw as much bipartisan support as possible. Democrats control the Senate with 58 votes — two votes short of preventing a Republican filibuster, so at least some GOP support must be drawn. There has been concern among the stakeholders that the Republicans have not been in any of the meetings thus far; one person involved in the talks said they have been invited but have declined to attend, though several participants have said they keep GOP colleagues abreast of progress.

“We would hope that any process that goes forward will actually include Republicans and Democrats to get support not only of both parties but of the American people,” says Dan Smith, president of the American Cancer Society Cancer Action Network.

The House, meanwhile, has been waiting for guidance from the Administration before it gets the legislative ball rolling — guidance that could come as early as next week at the anticipated White House summit.

Obama is still struggling to put his team in place after the loss of Tom Daschle, the former Senate majority leader who withdrew his name from consideration to become Secretary of Health and Human Services and the Administration’s health-care czar after revelations of his failure to pay $128,000 in taxes.

At least three experts involved in the talks say the House is so far behind, they will have to run to catch up to the Senate. The Senate’s progress is largely due to Kennedy’s “incredible ability and strength,” says Billy Tauzin, CEO and president of PhRMA, and a former Congressman from Louisiana. “He’s anxious to make this a great legacy.”

The sticking points within the group are no surprise to the health-care community. “You don’t need to know what’s going on in the secret meetings to know the two biggest challenges are the individual mandate and costs,” says Senator Sherrod Brown, an Ohio Democrat who sits on the Senate Health, Education, Labor and Pension Committee, which is convening the meetings. Obama’s budget also draws some battle lines on these issues: the White House, for instance, doesn’t support an individual mandate as Kennedy and Baucus do.

Then there’s the question of whether the program can really be shoehorned into the $634 billion 10-year budget figure that Obama has proposed; some have estimated that it would take at minimum $1 trillion over 10 years. And while everyone in the room has marveled at how congenial the discussions have been, the hardest part is yet to come. “Whenever there’s change, there will be a winner and loser,” says one meeting participant. “It will be not easy.”