Obama promises return to “pay-as-you-go” budgeting

When Republicans gained full control of the government during the Bush years, they abandoned the “pay-as-you-go” budget requirement that helped Bill Clinton and the GOP congress to balance the budget and ultimately create surpluses in the 1990s. The results were disastrous, as the national debt nearly doubled during the Bush years.

Many Blue-Dog Democrats have wanted a return to these policies, and Obama has pledged that all spending and tax changes enacted after the stimulus will be held to this standard.

House Democrats won a key procedural vote Tuesday on the stimulus after a last-minute promise from the Obama administration to return to “pay-as-you-go” budget rules after the stimulus is approved.

In a 224-199 vote, the House approved a resolution allowing the stimulus bill to come to the floor for debate. Twenty-seven Democrats – 24 of them members of the conservative Blue Dog Coalition – bucked their leadership and voted against the measure.

But according to Democratic leadership sources, the number was almost much higher – and could have been high enough to hand the Republicans a monumental victory – had it not been for a letter from President Obama’s budget director Peter Orszag.

The letter addressed to House Appropriations Committee Chairman David promised to return to “pay-as-you-go budgeting,” and stressed that the stimulus was an “extraordinary response to an extraordinary process” and thus subject to different rules.

“It should not be seen as an opportunity to abandon the fiscal discipline that we owe each and every taxpayer in spending their money – and that is critical to keeping the United States strong in a global, interdependent economy,” the letter stated.

Orszag also emphasized that Obama’s support for paying for any temporary tax cuts in the stimulus that he would like to make permanent. The budget director said Obama would detail those offsets in his budget.

“Moving forward, we need to return to the fiscal responsibility and pay-as-you-go budgeting that we had in the 1990’s for all non-emergency measures,” Orszag continued. “The President and his economic team look forward to working with the Congress to develop budget enforcement rules that are based on the tools that helped create the surpluses of a decade ago.

“Putting the country back on the path of fiscal responsibility will mean tough choices and difficult trade-offs, but for the long-term health of our economy, the President believes that they must be made.”

Though addressed to Obey, Democratic sources said copies of the letter were distributed in a last minute flurry to Blue Dogs, many of whom were already on the floor and ready to cast their votes. The centrist group already was ruffled by the fact the package included far more spending than Obama had called for, and were prepared to vote as a block against the resolution, Democratic sources said.

  

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