Obama aims to revive 'pay as you go'

WASHINGTON — During the first four months of his administration, President Obama has committed roughly $1 trillion in federal spending: a $787 billion economic recovery package, and $350 billion in money to bail out the nation's banks. The budget deficit for this year is now projected at $1.8 trillion.

So on Tuesday, in the face of considerable skepticism from Republicans, the president was talking about saving money, not spending it.

Mr. Obama announced he was sending legislation to Congress to restore the 1990s-era "pay as you go" law, known as Paygo. The law, in effect from 1990 to 2002, required that tax cuts or new entitlement spending — like the health care overhaul that Mr. Obama hopes will be a signature domestic achievement — be paid for through budget cuts or tax increases.

The restriction would not apply to so-called “discretionary” spending that finances most government programs aside from Medicare and Social Security.

"The 'pay as you go' principle is very simple," Mr. Obama told a group of Congressional Democrats in the East Room of the White House. "Congress can only spend a dollar if it saves a dollar elsewhere."

But critics of Paygo say it is not simple at all, because Congress has a long history of waiving its requirements. And White House officials conceded Mr. Obama's proposal would not put a dent in the federal deficit. It would only keep it from getting bigger.