TIME By Karen Hughes and Mark Penn - February 15, 2012

Penn: What Republican challenge? While the Democrats had a long primary process in 2008, both Hillary Clinton and Barack Obama emerged from that contest as credible presidential possibilities; in this case, the Republican contenders are being diminished, not enhanced, by the bloody contest.

And unemployment is down, the Dow is up and President Obama is in election mode. Fired up and ready to go with his blueprint for America, Obama is rising in the polls.

The President’s budget is not without points of attack. It expands government and raises taxes — problems he describes as virtues in a spirited defense of government spending to protect middle-class values while raising taxes on the affluent. But so far Mitt Romney, one of the wealthiest candidates paying one of the lowest tax rates, has been ill-equipped to join the battle. He is self-interested in lower taxes for dividends and capital gains and so he comes to the debate tarnished by his perceived motivations.

The President has fared well these last two months. But this race is building for the day that there is a Republican nominee and a joint debate on the economy and the budget, which will be about more than unemployment statistics and deficits — it will be a clash of ideologies. Neither Obama nor Romney, if he is the nominee, come from the true extremes of their party; they nevertheless have very different outlooks on taxes and government spending that are going to be at the heart of the election come November.

For now, Obama has put together a strong case that his approach is beginning to work and that it’s time to raise taxes on the affluent to fund maintaining entitlements. So far, the Republican rebuttal has been fragmented and ineffective, but it’s not until the argument is joined one-on-one that the voters will make their firm choices for the presidency and decide the direction the country will take on these big issues.

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Hughes: President Obama’s supporters may be feeling a little better this month, thanks to slightly lower unemployment numbers. But to borrow the President’s new favorite phrase, the Obama team’s current sigh of relief is not “built to last.”

Americans’ unprecedented pessimism continues, with 63% believing the country is on the wrong track according to a recent Rasmussen Reports poll. And no wonder. At 8.3%, unemployment is still higher than President Obama’s Administration promised it ever would be. And if you count the estimated 3 million workers who are so discouraged that they have given up looking for work, today’s actual unemployment stands at more than 10%. A record number of Americans are living in poverty, and the housing crisis continues, with more than 1 million homes likely to be foreclosed on this year. Most discouraging, the President’s most recent proposals indicate he’s not serious about any fundamental changes.

His proposed new budget raises taxes for those who already pay the vast majority of them — those most likely to be job creators, small business owners and entrepreneurs. It makes no serious effort to deal with the fundamental problems of rising debt, deficits and entitlement spending. As the costs of the wars in Afghanistan and Iraq decrease, President Obama proposes diverting the spending to more government at home. His first trillion dollar spending spree failed to achieve its mission; there’s no reason to believe his new shopping trip will either. Instead, President Obama’s budget would run up another $1 trillion dollar deficit for the fourth year in a row. I can hear the slogan now: Re-elect me, I’m really, really good at losing your money.

Finally, as the reality of President Obama’s signature health care takeover began hitting home in recent weeks, its unprecedented sweep and scope became clearer. By ordering religiously-affiliated institutions to violate their convictions and provide coverage for contraception, President Obama launched a government assault on one of our most cherished freedoms, the freedom to exercise our religious beliefs without government interference. He quickly backpedaled. But his so-called accommodation (as if allowing religious freedom is a favor!) showed his true stripes as well. We’ll make the insurance companies pay for the coverage, he decided. But insurance companies don’t pay; they just charge the rest of us through our premiums. That’s a good summation of the Obama presidency: Just charge it, and let our children and grandchildren pay the bills. And after a spirited primary, Republicans will be more than ready to make that case.

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Hughes is the Global Vice Chair of the public relations firm Burson-Marsteller. Penn is the worldwide CEO of Burson-Marsteller. The views expressed are solely their own.