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Critics question 'pay-as-you-go' approach

  • Story Highlights
  • Approach requires Congress to balance spending increases with equal savings
  • Republicans question timing of announcement -- after months of spending
  • A key Democrat says Obama could have tough time keeping promise to halve deficit
  • Blue Dog Democrats applaud "pay-as-you-go" as responsible and necessary
From Jim Acosta
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WASHINGTON (CNN) -- President Obama urged Congress to adopt a "pay-as-you-go" approach to federal spending in order to restore fiscal discipline, but critics say the president's call lacks credibility.

Preisdent Obama says PAYGO is common sense.

Preisdent Obama says PAYGO is common sense.

Faced with a record $1.8 trillion deficit, Obama on Tuesday pushed Congress to take up the spending rules, known as PAYGO. The approach would require lawmakers to pay for new programs, dollar-for-dollar, with budget cuts elsewhere.

"The 'pay as you go' rule is very simple. Congress can only spend a dollar if it saves a dollar elsewhere," Obama said, as he announced that he was submitting to Congress a proposal to make PAYGO law.

Obama repeated his vow to halve the deficit by the end of his first term, and he said PAYGO is an important step toward making that happen. A previous PAYGO mandate helped erase federal budget deficits in the 1990s, and subsequent ineffective rules contributed to the current budget deficits, Obama said.

"Paying for what you spend is basic common sense. Perhaps that's why, here in Washington, it has been so elusive," the president said Tuesday. Video Watch more on Obama's 'pay-as-you-go' plan »

But Republicans were quick to question the administration's sincerity.

Republican Whip Eric Cantor charged that the administration's focus on PAYGO "seems more driven by polling and PR strategy than a serious commitment to fiscal discipline."

"It seems a tad disingenuous for the President and Speaker [Nancy] Pelosi to talk about PAYGO rules after ramming trillions in spending through Congress proposing policies that create more debt in the first six months of this year than in the previous 220 years combined," Cantor, R-Virginia, said in a statement Tuesday.

Republicans point to the $787 billion stimulus package as evidence that Obama is not following his own advice.

Cantor's statement included a "fiscal timeline" highlighting government spending initiatives this year. The timeline entry for June 8 points to polls showing dissatisfaction with the administration on spending and the deficit. The entry for June 9 shows the president holding a PAYGO summit.

However, a group of fiscally conservative Democratic representatives known as the Blue Dogs say Obama's proposal is responsible and necessary.

"President Obama inherited an economy in free fall and a $10.6 trillion national debt," said Rep. Jim Cooper of Tennessee, vice chairman of the Blue Dog Budget and Financial Services Task Force. "While short-term spending was necessary to get the economy moving again, our long-term fiscal problems became that much more urgent."

But when it comes to reducing the deficit, even the Senate Budget Committee's Democratic chairman doubts the president can deliver on his promise.

Asked if Obama could halve the deficit -- given the recent government spending --- Sen. Kent Conrad said, "I don't believe so. I don't believe anybody could."


Administration officials still defend piling the stimulus spending on top of the deficit, arguing that it was the best approach to get the country out of the recession.

"Pay-as-you-go embodies a common sense principle that you shouldn't dig a hole deeper," said Peter Orszag, director of the Office of Management and Budget.

CNN's Kristi Keck and Tom Cohen contributed to this report.

All About Barack ObamaGovernment SpendingFederal Budget

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