By Steve Holland
WASHINGTON, Feb 26 (Reuters) - Bill Clinton declared more than a decade ago "the era of big government is over." With his new budget, President Barack Obama has brought it back.
Obama's $3.55 trillion budget proposal represents a gamble that Americans are ready for the sort of change they embraced by electing him in November, including a tax increase on Americans making more than $250,000 a year.
He proposes expansion of spending on the U.S. healthcare system, on greater energy independence and on education, hoping Americans weary of paying for a raft of expensive bailouts for banks and the car industry will go along.
"What I won't do is sacrifice investments that will make America stronger, more competitive and more prosperous in the 21st century -- investments that have been neglected for too long," Obama said in rolling out his plan on Thursday.
The tax increase on Americans making more than $250,000 will help pay for a healthcare overhaul that has yet to be formulated.
Some experts worry this provision will have the unintended consequence of adding to the tax burden of small businesses, causing them to lay off workers or stop hiring.
"The taxing aspect of this is worse than Robin Hood," said economist Peter Morici, a University of Maryland professor. "He's resurrecting class warfare for political gain."
"POLITICAL JUDGMENT"
Obama's first budget was emblematic of a politician who, when he announced his run for the presidency two years ago, had rejected the conventional wisdom that, having little experience in national politics, he was moving too fast and should wait his turn.
"This is a matter of political judgment, not political science," said William Galston, a Brookings Institution economist who worked in the Clinton White House. "My judgment is that his reach will exceed his grasp. But I could easily be wrong about that."
His budget is an exercise in the use of political capital earned by his impressive election victory in November and an approval rating this week of more than 60 percent.
AMID BIG PROBLEMS, BIG PLANS
Some experts have been taken aback by the scope of his plans and the speed with which he is moving on fulfilling campaign promises at a time when the country is deep in recession and expecting a $1.75 trillion budget deficit for fiscal 2009.
"Given the economic catastrophe that we face, to go right into the teeth of that hurricane and plan for some ambitious expansion of government that goes beyond the triage element is bold to say the least," said Norman Ornstein, a political expert at the American Enterprise Institute.
Former Republican Senator Trent Lott said on MSNBC that presidents "tend to overplay their hand" in their first two years.
"I'm assuming this is going to find rough sailing in the Congress and I think rightly so," Lott said.
On Capitol Hill, Democrats in charge of both houses of Congress were generally pleased and eager to turn U.S. budget policy away from the years of Republican President George W. Bush. They had accused Bush of neglecting their spending priorities while cutting taxes.
"This is nothing short of a sober, honest assessment of where our country stands and a tough, realistic plan to get our budget in line with our priorities," said Senator John Kerry, the Democrats' 2004 candidate for president.
Morici said he feared Obama's policies could make matters worse.
"We have learned from hard experience that big government only begets big government and high unemployment," he said. "We have 1970s' solutions for new-age problems, and it's just not going to work. People are going to be happy to get some free healthcare for a while, then it's all going to end in tears."
(Editing by Howard Goller and Jackie Frank)