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Obama's Tax Plan: Another Sign of Hillary's Strength?

I noted earlier that the questions rivals had raised about Hillary Clinton's health plan indicated she may have hit the political sweet spot. Republican Mitt Romney slammed her for a "big government" plan whose signal feature matched one he backed as Massachusetts governor. John Edwards suggested she was too timid with special interests to make a deal; Barack Obama made the opposite point, raising questions about her ability to forge consensus.

And here's another sign of Hillary Clinton's strength: the "Middle Class Tax-Relief Plan" that Barack Obama unveiled in Washington today.It represented a hefty swing for the fences -- and mainstream Democratic economists I talked to think Obama whiffed. The Illinois senator, trailing Clinton substantially in national polls, proposed a massive tax cut of at least $80-billion a year. It has three parts, all of them ripe for intra-party criticism.

1) A new $500-per person, $1,000 per family tax credit that Obama would offer to "150-million Americans and their families." Though many Democrats would like to provide tax relief to low-income earners, promising to hand out cash to 150-million people makes it fair to ask about the seriousness of Obama's commitment to fiscal responsibility.

2) A new "universal homeowner's tax credit" to benefit 10-million homeowners, most earning below $50,000 per year, who don't itemize their deductions and therefore can't claim the mortgage interest deduction. But such tax-filers already benefit from a standard deduction that is designed to account for deductible expenses.

3) Elimination of income taxes for 7-million senior citizens whose income is less than $50,000 a year--this at a time when the unfunded liability of our entitlement programs for senior citizens already represents a major potential tax burden for younger working Americans.

Obama contends he would pay for all this by closing unspecified tax loopholes "such as those for the oil and gas industry", curbing offshore tax havens, raising taxes on "carried interest" for private equity and hedge fund executives, and hiking the rate on capital gains and dividends. Aides have previously said he aims for a new capital gains rate of 20%, up from the current 15%, but the materials published with his tax proposal don't specify a rate.

The Obama campaign distributed blurbs from economists hailing his commitment to tax "fairness." But the prevailing mood among experienced Democratic economists I talked to privately was disappointment that a candidate as serious-minded as Obama had offered such a proposal. One called it transparently "a campaign economic plan," as opposed to a proposal for governing. Another veteran said simply, "It's crazy."

Would Obama have offered the same plan this week had he been leading Hillary Clinton in the polls by nearly 20 percentage points, instead of the other way around? Good question.

Questions? Comments? Write to politicalcapital@cnbc.com.