WASHINGTON -- President Obama's domestic agenda is losing steam in an increasingly contentious Democratic Congress amid growing public doubts about the veracity of raising taxes in a deep recession.

The economy remains sick. The stimulus plan isn't working. Investment capital, the lifeblood of a vigorous economy, is still on strike. More than 40 House Democrats voted against his energy tax bill, which barely passed by a seven-vote margin, and now faces huge obstacles in the Senate. His healthcare plan is on shaky ground. His promise not to tax middle class workers is in shreds, and massive deficits are piling up as fears mount that the economy may face months, if not years, of anemic growth.

The White House fashions new, defensive arguments weekly on behalf of Obama's stimulus. The latest argument coming out of the president's economic advisers is that they never actually expected the stimulus bill to trigger growth this early in the year. It's going to take a lot longer to show results, they now say.

The Gross Domestic Product, the measurement of all the goods and Services the economy produces, shrank at an annual rate of more than 5 percent in the first quarter. It is expected to shrink further in the second quarter but at a slower pace.

Americans are not spending, they're saving. The savings rate jumped to 6.9 percent in May, a 15-year high, while spending barely budged by 0.3 percent. "As the first half of '09 ends, investors are growing more anxious about whether the economy can bounce back later this year," AP reported last week.

Holding the economy back is unprecedented borrowing and a raft of higher taxes that Obama intends to impose on the country -- from energy taxes that will increase the cost of everything we buy to healthcare taxes to pay for the president's grandiose national health insurance plan.

None other than billionaire financier Warren Buffett spoke out disapprovingly last week about the Democrats' so-called "cap-and-trade" energy plan, calling it a "huge tax" and "fairly regressive" one that all of us will pay -- hitting low-to-middle income people the hardest. From turning on your light switch, to heating or cooling your home, to all the products we purchase and consume -- no one will be spared.

That makes a mockery of Obama's campaign promise that taxpayers who earn less than $250,000 would not see "any form of tax increase, not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes." That's why David Axelrod, Obama's senior adviser, avoided any mention Sunday of the president's campaign tax pledge on ABC's "This Week." Indeed, he pointedly would not rule out taxing employer/employee health insurance premiums that are now fully tax-deductible -- an idea that is being increasingly pushed by Democrats as the only way to finance his $2 trillion healthcare scheme.

Some Democrats say that would be the kiss of death for health care this year, but Obama may be willing to agree to it if it's the only way to get his plan through Congress, say policy insiders. Notably, the president does not want to engage in "drawing lines in the sand" beyond which he will not go in setting higher taxes, Axelrod said.

The president is willing to consider "a lot of different formulations" to finance his healthcare plan, he added. In other words, he's keeping his tax options open.

Therein lies the rub, With this year's budget deficit likely to surpass $2 trillion before Obama even begins to pay for his health, energy and other domestic initiatives, he's going to need a lot of tax revenue to pay for the costliest domestic spending legislative wish list in American history. Continued...