Pay-go redux: Can Obama rein in federal spending?

Days after presenting a budget that will create a record $1.56 trillion deficit this year, President Obama vowed Saturday to comb through future budgets line by line to forestall growing deficits that began under his predecessor, George W. Bush.

Legislation signed by Obama on Friday raises the federal debt ceiling from $12.4 trillion to $14.3 trillion but aims to rein in runaway federal spending by bringing back the “pay-go” rules of the 1990s – forcing lawmakers and the president to offset new spending with equal cuts elsewhere.

“This isn’t a perfect world. This is Washington,” Obama said in his weekly Saturday radio address. “[Balancing budgets] falls prey to the pressure of special interests, to the pull of local concerns, and to a reality familiar to every single American – the fact that it is a lot easier to spend a dollar than save one.”

What about the debt ceiling?

Critics say Obama is being partisan if not disingenuous in talking about budget discipline even as he and the Democratic Congress just lifted the debt ceiling – ostensibly to save the economy – further beholding the nation to China, its chief lender.

After Obama’s statement last week that he’s “agnostic,” or unwilling to commit to an opinion, about middle class tax hikes, Republicans especially are worried that the president is signaling a willingness go back on his campaign promise to hold the line on middle class taxes in order to underwrite what they see as his overly-progressive agenda.

The share of federal debt owed by each American, as of this morning, amounted to $40,137.43. (Graph of Bush v. Obama deficit spending here.)

"With a simple stroke of his pen, President Obama now has the ability to continue his binge spending agenda to the tune of an additional $1.9 trillion, the largest one-time increase in our history," Republican Party Chairman Michael Steele told the Associated Press on Friday "Taxpayers will continue to foot the bill for the Democrats' fiscal irresponsibility."

Yet the president’s Saturday radio address follows a new, more conservative tack by the President as he’s engaging growing fears and anger among voters – as well as intraparty feuds over his handling of the economy and healthcare.

"It's easy to get up in front of the cameras and rant against exploding deficits. What's hard is actually getting deficits under control. But that's what we must do," Obama said in his radio address. "Now, Congress will have to pay for what it spends, just like everybody else.”

To be sure, the President’s message isn’t just to assuage angry voters.

Wall Street worries

“Investors want to know [that] the White House is serious about fiscal responsibility, and failure to convince them could hit the dollar and bond markets,” Reuters reports.

The legislation, Obama said, is a return to the “common sense” pay-as-you-go rules of the 1990s, which created budget surpluses.

“It was the abandonment of this rule that allowed the previous administration and previous congresses to pass massive tax cuts for the wealthy and create an expensive new drug program without paying for any of it,” Obama said.

In a post titled “Bend it like Obama,” Jacob Sullum, of the conservative Human Events blog, writes: “Pressing Obama to confront the contradictions in his own proposal – between spending restraint and huge new subsidies, between amplifying and blocking price signals, between promoting choice and impairing competition – might not yield agreement. But it could produce a little clarity.”

David Sirota at the Coloradoan has the liberal take, saying that exempting military spending from budgetary discipline makes a mockery of the national debate.

“For 30 years, Republicans and conservative Democrats have precluded factual debates about spending priorities,” writes Mr. Sirota. “They've done this for three reasons: They seek to protect defense-industry campaign contributors; they fear an electoral backlash against cuts to mandatory programs such as Social Security and Medicare; and they are afraid to antagonize the wealthy with pragmatic tax legislation to shore up these mandatory programs.”

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