Promising fiscal restraint

WASHINGTON-The Obama administration is angling to print and distribute fewer dollars than it has in the initial months of its existence, following the passage of a budget that creates the largest government deficit in U.S. history. On Tuesday, President Obama announced his plan to stick to pay-as-you-go rules, codifying them into law so Congress can't spend a dime without having a dime to pay for it.

"Paying for what you spend is basic common sense," the president said. "Perhaps that's why here in Washington it has been so elusive."

Obama's announcement comes on the heels of good news from the Treasury: Taxpayers may recoup $68 billion in bailout funds as 10 assisted banks have qualified to make repayments.

"While we know that we will not escape the worst financial crisis in decades without some losses to the taxpayers, it is worth noting that in the first round of repayments from these companies, the government has actually turned a profit," the president said. The vast majority of bailout funds, however, are still outstanding-the fall financial bailout, TARP, and more recent bank bailouts total about $1 trillion.

The second-ranking Republican in the House, Eric Cantor of Virginia, said the plan "lacks just a little bit of credibility" because of the administration's record on spending.

Explaining the flood of spending, Obama said the recession "required extraordinary investments in the short-term." The Congressional Budget Office projects that the government will be under a $17 trillion debt by 2019. The estimates project debt to equal 65 percent of the country's gross domestic product by the end of fiscal 2010.

The president still asserts that the deficit will be cut in half over the next four years. Aside from cuts in defense spending and Medicare subsidies, he said the key is for Congress to tighten the faucet on spending.

Congress theoretically committed to PAYGO in 2007, though the rules allowed exceptions in the case of emergency-a contingency that Congress has relied upon frequently, like in the passage of the $800 billion stimulus package. A Republican Congress phased out the rules in 2002.

Obama blamed the "reckless fiscal policies of the past" for leaving the country in a "very deep hole," adding that while the last administration did not support the policy, he was setting a new standard.

House Blue Dog Democrats-a group of about 50 lawmakers attentive to fiscal responsibility-have harped on Speaker Nancy Pelosi to abide more closely to PAYGO. The outpouring of bailout and stimulus funds prompted several senators to form the upper chamber's first Blue Dog caucus, led by Sen. Evan Bayh of Indiana, who bucked his party and voted against the 2009 and 2010 budgets because of the level of spending-though he did vote for the stimulus bill.

Bayh was one striking absence from the president's announcement. Sen. Claire McCaskill, D-Mo., was present. A White House spokesman did not respond to the question of whether Bayh was invited.