Obama urges Congress to pass spending limits

Jim Young/Reuters
President Obama spoke to House majority leader Steny Hoyer Tuesday after calling on Congress to pass new pay-as-you-go rules on federal spending.

Remember the '90s? Clinton. MC Hammer. Paygo....

OK, so maybe paygo – Congress's pay-as-you-go spending restrictions – didn't make anybody's Top 10 list. But boy was it effective.

From fiscal 1991 to 2000, the federal budget moved from red to black. Instead of a deficit equivalent to 4.5 percent of US gross domestic product, the US ended the decade with a surplus equal to 2.4 percent of GDP.

But the discipline didn't last. So on Tuesday, President Obama formally committed himself to pushing legislation that would get Congress part of the way back to those halcyon days of fiscal rectitude.

"The paygo rule is very simple," he said in a White House appearance with selected lawmakers. "Congress can only spend a dollar if it saves a dollar elsewhere.... It is no coincidence ... that when this rule was abandoned, we returned to record deficits that doubled the national debt."

Of course, in an effort to steady the financial system and jolt a contracting economy back to life, the president has spent his first months pushing for such huge increases in spending that the federal deficit is expected to quadruple from a year ago and top $1.8 trillion.

Much but not all of federal spending would be subject to the president's proposed rules. For example, Congress couldn't boost entitlement programs, like Medicare, create new entitlements, or cut taxes without finding offsetting revenues or savings. But Congress could still spend billions on discretionary spending and give up billions in revenues by extending the Bush tax cuts or keeping the alternative minimum tax from clobbering the middle class.

That's why some deficit hawks are disappointed the administration isn't proposing stricter discipline.

As it stands, Obama wants to push the nation toward a scenario that existed around the beginning of the decade, when Congress had already begun to free discretionary spending from the paygo rules but before it abandoned all restraint to approve President Bush's tax cuts and allow Medicare to pay for prescription drugs.

Fast forward to today. Déjà vu, anybody?

"I know that in the face of this historic challenge there are many across this country who are skeptical about our collective ability to meet it," Obama acknowledged Tuesday. "They're not wrong to feel that way. They're not wrong to draw this lesson after years in which we've put off difficult decisions, in which we've allowed our politics to grow smaller as our challenges grew ever more daunting. But I think everybody understands this is an extraordinary moment, one in which we are called upon not just to restore fiscal responsibility but to once again live up to the broader responsibilities we have to one another."

That's stirring rhetoric. Many Americans will be watching Washington's follow-through.


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