Budget Battle Begins: Historic Ideological Shift

March 1, 2009— -- President Obama said he expected a vicious fight over his budget, and this weekend he got the first taste of battle.

Conservative talk show host Rush Limbaugh kicked off the weekend with a major speech at the Conservative Political Action Conference meeting, saying that Republicans must return to their core beliefs and that's it's OK to criticize Obama's plan.

"What is so strange about being honest and saying I want Barack Obama to fail if his mission is to restructure and reform this country so that capitalism and individual liberty are not its foundations?" Limbaugh said.

But not all Republicans all falling in behind the rhetoric.

On "This Week," ABC News' George Stephanopoulos asked House Minority Whip Eric Cantor, R-Va., if Limbaugh's approach was that of the House Republicans.

"Absolutely not," Cantor said. "And I don't -- I don't think anyone wants anything to fail right now. We have such challenges. What we need to do is we need to put forth solutions to the problems that real families are facing today.

"This budget obviously has raised a lot of concerns and a lot of different areas," Cantor added. "But let's remember what the priority should be right now. The priority should be focused on preserving and protecting, creating new jobs."

Obama's administration wasn't so quick to let Congressional Republicans distance themselves from Limbaugh.

Chief of staff Rahm Emanuel said on CBS' "Face the Nation" that Limbaugh is the "intellectual force" of the GOP and that Republicans now have to live with that choice.

Obama submitted an ambitious $3.5 trillion budget Thursday that – love it or hate it – aims to expand the role of government, increase taxes for the wealthy and cut tax breaks for powerful industries, including the nation's oil giants.

"I know these steps won't sit well with the special interests and lobbyists who are invested in the old way of doing business, and I know they're gearing up for a fight as we speak," Obama said in a fiery weekly address this weekend. "My message to them is this: So am I."

"I know that the insurance industry won't like the idea that they'll have to bid competitively to continue offering Medicare coverage," Obama added. "I know that banks and big student lenders won't like the idea that we're ending their huge taxpayer subsidies. … I know that oil and gas companies won't like us ending nearly $30 billion in tax breaks."

While Democrats control both chambers of Congress, Obama will likely need help from some Republicans to get his spending measure passed. To get his economic stimulus plan passed, the Democratic president had to make some concessions to a group of centrist Republicans.

Today, Cantor said told Stephanopoulos that the Republican Party must change to be more inclusive.

"There is no question the Republican Party has to return to be one of inclusion, not exclusion," Cantor said when asked if he was willing to move the party to the middle on issues like the environment and gay rights.

"We are a party with many ideas. And we have in that a commitment to make sure that we have positive alternatives, if we don't agree with this administration," Cantor said. "Let's come up with solutions that actually produce results for a change, instead of making matters worse, which Washington is famous for."

Two other key Republican leaders ripped apart the budget on "FOX News Sunday."

Senate Minority Whip Jon Kyl, R.-Ariz., quoted The Wall Street Journal saying that budget represents a historical shift in the ideological direction of U.S. economic policy.

"I think it's terrifying in the policy implications as well as mind-boggling in the numbers," Kyl said.

Rep. Paul D. Ryan, R.-Wis., called it "a breathtaking budget."

"This is probably the biggest rewrite or transformation of our federal budget since the New Deal. And that's not necessarily surprising. I mean, the president said he was going to bring us sweeping change, transformation," said Ryan, the top Republican on the House Budget Committee.

Ryan said that while taxes for the wealthiest Americans won't be raised until 2011, it impacts their decision making today. He said small businesses and entrepreneurs who are debating expanding or laying off people will weigh the tax hikes are part of that debate.

"What surprises me most about this budget, though, is that they would bring this out in the middle of a recession," he added. "This budget takes the size of our government in this year to the largest level it has been since World War II."

Scott Talbot, a lobbyist for the Financial Services Roundtable, concedes the banking industry makes an easy target.

"It's easy to demagogue the financial services industry right now, but at the same time, we are an important part of the economy, the American consumers are the oil for the economy and we help lend them the money," Talbot told ABC News. "And if we restore the lending -- be it on the housing, the student loans, the credit cards -- that will help restore the economy."