Obama Gets Behind Push for PAYGO Bill

Posted June 9, 2009 at 1:40pm

Updated: 4:41 p.m.

President Barack Obama on Tuesday announced he is proposing to enshrine pay-as-you-go budget rules into law, drawing praise from leaders of the fiscally conservative Blue Dog Democrats, whom Obama needs to push his agenda through Congress.

Appearing at the White House following an East Room event, Blue Dog leaders said an announcement on plans to move a PAYGO bill in the House could come next week and that the Budget Committee plans to begin tackling the issue June 18.

Obama had promised the Blue Dogs earlier this year he would get behind the legislation, and he told Democrats at the White House that the Bush administration was to blame for failing to get PAYGO into law earlier.

“Two years ago, a new Democratic Congress put in place Congressional rules to restore this principle but could not pass legislation without the support of the administration,— Obama said. “I want you all to know, you now have that support.—

Blue Dog leaders pronounced themselves satisfied with Obama and said he has vowed to move his health care bill — which could require hundreds of billions of dollars in offsets — under the PAYGO rules.

“Today, he is keeping his promise,— said Rep. Baron Hill (D-Ind.). Rep. Stephanie Herseth Sandlin (D-S.D.) noted the PAYGO bill was the first legislative proposal formally transmitted from the Obama White House to Congress.

Speaker Nancy Pelosi (D-Calif.) issued a statement of support, saying, “We are fully committed to enacting PAYGO rules into law with enforceable consequences.— But she did not give a date for moving legislation.

Republicans criticized the proposal. Antonia Ferrier, spokeswoman for House Minority Leader John Boehner (R-Ohio), said the rules would end up as a tool for Democrats to raise taxes to pay for new initiatives.

“The administration and Congressional Democrats are making it abundantly clear today that tax increases are very much on the horizon to pay for new programs like health care,— Ferrier said.

The White House is exempting under its proposed PAYGO legislation some of the most expensive policy plans in the pipeline, arguing that current policy should not count as additional tax cuts or mandatory spending that must be offset.

“As long as legislation embodies the thrust of current policy, it won’t count as a cost or a saving under the system,— said Office of Management and Budget Director Peter Orszag, who briefed reporters Tuesday at the White House.

The PAYGO requirement to offset such items will not apply to an expected “fix— for the alternative minimum tax, for the extension of certain Bush-era tax cuts, and for changing current law to prevent Medicare physician payments from declining, Orszag said.

The PAYGO rules only include mandatory spending increases and taxes, not discretionary spending. They also are averaged over 10 years, so that in any individual year, offsets may not balance out the new obligations.