http://www.reuters.com/article/governmentFilingsNews/idUSN0938720120090609 UPDATE 2-Obama seeks fiscal responsibility mantle Tue Jun 9, 2009 6:08pm EDT (Adds Hoyer to introduce legislation soon) By Caren Bohan WASHINGTON, June 9 (Reuters) - President Barack Obama sought on Tuesday to show he was serious about improving the U.S. budget picture as he called on Congress to pass new limits on tax cuts and spending programs to avoid adding to deficits. Obama urged passage of "pay-as-you-go" legislation that would require any new tax cut or automatic spending program to be paid for within the budget. "The 'pay as you go' principle is very simple. Congress can only spend a dollar if it saves a dollar elsewhere," Obama said in a speech at the White House attended by several Democratic members of Congress. "Entitlement increases and tax cuts need to be paid for. They are not free," said Obama, who has been criticized by Republicans for proposing a hefty domestic agenda that includes overhauling the health care system, bolstering education and tackling global climate change. The White House has forecast a budget deficit for this year of $1.84 trillion, or 12.9 percent of gross domestic product. Republicans have warned that programs such as the proposed health care plan would add to the budget deficit for years to come and have also criticized Obama's $787 billion stimulus plan, which was passed by Congress in February. Obama contends that much of the budget deficit was inherited from the Bush administration, which presided over a shift from record surpluses to huge increases in the deficit fueled by the financial crisis and spending for the Iraq war. "The reckless fiscal policies of the past have left us in a very deep hole," Obama said. "Digging our way out will take time and patience and tough choices." TOP DOMESTIC PRIORITY Obama, who has made the push to revamp healthcare a top domestic priority, has sought to allay the concerns of some Democrats about its impact on the deficit. Surging deficits have also become an increasing concern for financial markets. Federal Reserve Chairman Ben Bernanke last week issued a warning about risks to the economy of large deficits, which drive up long-term interest rates. Statutory pay-as-you-go has received support from House Democratic leaders like Speaker Nancy Pelosi, but Obama's proposal was met with quick resistance from a Senate Democrat who could make moving forward difficult since one senator can slow or block legislation. Pay-as-you-go has its limits, said Senator Kent Conrad, chairman of the Senate Budget Committee. "It can prevent the passage of new legislation that would worsen the deficit, but it does not address the deficits and debt projected under existing policy," he said. Rep. Steny Hoyer, the No. 2 Democrat in the House, said he would introduce legislation on "pay-as-you-go" on Obama's behalf in the coming days. Hoyer said he agreed with Conrad that the legislation "is only a first step toward restoring fiscal discipline." Rep. Eric Cantor, a Republican, said Obama had undertaken "historic spending" during his first five months in office. "So for us to sit here and listen to the White House say that 'We ought to be responsible, we ought to pay for what we're doing' I think lacks just a little bit of credibility," Cantor said. (Reporting by Caren Bohan, editing by Patricia Zengerle)
Re: An odd couple of stories that ran todayhttp://www.reuters.com/article/governmentF http://finance.yahoo.com/news/Obama-Its-OK-to-borrow-to-pay-apf-15483626.html?.v=13 Obama: It's OK to borrow to pay for health care Obama-proposed budget rules allow deficits to swell to pay for health care plan Andrew Taylor, Associated Press Writer On Tuesday June 9, 2009, 7:22 pm EDT WASHINGTON (AP) -- President Barack Obama on Tuesday proposed budget rules that would allow Congress to borrow tens of billions of dollars and put the nation deeper in debt to jump-start the administration's emerging health care overhaul. The "pay-as-you-go" budget formula plan is significantly weaker than a proposal Obama issued with little fanfare last month. It would carve out about $2.5 trillion worth of exemptions for Obama's priorities over the next decade. His health care reform plan also would get a green light to run big deficits in its early years. But over a decade, Congress would have to come up with money to cover those early year deficits. Obama's latest proposal for addressing deficits urges Congress to pass a law requiring lawmakers to pay for new spending programs and tax cuts without further adding to exploding deficits projected to total about $10 trillion over the next decade. If new spending or tax reductions are not offset, there would be automatic cuts in so-called mandatory programs -- although Social Security payments and the Medicaid health care program for poor and disabled would be exempt and cuts to Medicare would be sharply limited. "The 'pay-as-you-go' rule is very simple," Obama said. "Congress can only spend a dollar if it saves a dollar elsewhere." Last month Obama suggested a tougher plan that would prohibit Congress from swelling the deficit in one year by putting off until later years the tax increases or spending cuts to pay for it. The requirement for legislation to be financed over the coming decade generally mirrors existing congressional rules and reflects the likelihood that Obama's health care plan will add many billions of dollars to the deficit in the early years. Savings and revenues in later years would have to make up for the initial deficits. Congress lived under a so-called "pay-go" regime in the 1990s and the early years of this decade. But it didn't stop lawmakers from passing President George W. Bush's landmark 2001 and 2003 tax cuts and big increases in farm subsidies without making the required spending cuts elsewhere. A $127 billion surplus in 2001 subsequently turned into deficits over the next four years of $159 billion, $377 billion, $413 billion and $319 billion. The rules still exist and lawmakers routinely find ways around them. For example, a bill to effectively double GI Bill education benefits was enacted last year. Congress also regularly waives the rules to pass an annual "patch" to the alternative minimum tax, sparing some 20 million families from a $2,000 tax increase on average. Still, Democrats profess a faith in pay-as-you-go rules. "It is no coincidence that this rule was in place when we moved from record deficits to record surpluses in the 1990s -- and that when this rule was abandoned, we returned to record deficits that doubled the national debt," Obama said. In fact, the surpluses of the late 1990s were largely due to a huge influx of tax revenues from a booming economy. Rep. Dennis Moore, D-Kan., said the House is likely to pass Obama's latest proposal next month. The plan faces far tougher sledding in the Senate, where Budget Committee Chairman Kent Conrad, D-N.D., has expressed serious reservations. Conrad said Obama's proposal does nothing about the fiscal perils the country already faces, including deficits that the Congressional Budget Office predicts will average nearly $1 trillion a year over the next decade. "I remain concerned about the potential effect of this proposal on American farmers, seniors and veterans," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee. Republicans said new budget rules ring hollow in the wake of the Obama-championed $787 billion stimulus package and other deficit spending. They said legal limits on appropriations should be put into place as they were in the 1990s, though such "caps" were easily evaded when surpluses appeared. Congress is just ramping up the annual appropriations process, which in the House would award increases averaging 12 percent to non-defense programs. Obama's proposal does not include the comparable "caps" from the 1990s. "Time after time this year, Democrats have ignored calls for fiscal responsibility," said House GOP leader John Boehner of Ohio. "We don't need more rhetoric and gimmicks. We need action to tackle the tremendous fiscal challenges facing this nation." Obama's proposal would require future tax cuts to be financed by tax increases elsewhere. But again, he carves out several exceptions, including for an extension of Bush's tax cuts due to expire in 2011 and relief from the alternative minimum tax. The federal deficit is on pace to explode past $1.8 trillion this year, more than four times last year's all-time high. The record borrowing is credited with pushing up interest rates, which could imperil chances for a recovery later in the year.
Re: An odd couple of stories that ran todayhttp://www.reuters.com/article/governmentF Caught talking out of both sides of his mouth on the same day. Go figure.
Re: An odd couple of stories that ran todayhttp://www.reuters.com/article/governmentF "Pay as you go" plans are as old as the hills. They're meaningless plans for political milege. Many politicians have tried to use them.
I think they've at least kept the deficits managable (like 3 or 4% of GDP). But isn't it odd to say both these things on the same day?
I saw this on Dave. Just stop paying 48M to advertise to car owners to buy their model again, and you can save the kids' orphanage, right? Totally agree. While we're at it, you only get a dollar of social security if you put it in. Same with welfare. GI Bill is ok, since it's basically a deferred signing bonus for the troops.
Can you say it's a "reckless fiscal policy" if you've quadrupled the record debt in just over 100 days? Can you say you "inherited" it, if you're the one who pushed its legislation? So it's "pay as you go", unless it's part of his 250B per year 'whatever I want' account?
Let me get this straight. His solution for the "reckless fiscal policies of the past" that "have left us in a very deep hole" is to actually spend more money? That conclusion is frankly bizarre. And then there's this one: So, spending would only be restrained AFTER he left office? But while he's in, it's spend, spend spend! Barack Obama in the space of only a few months has already surpassed Jimmy Carter as the worst President of my lifetime.
