Obama fights skepticism on deficits

President Obama sought Tuesday to fight back against the perception that his administration doesn’t care about budget deficits.

Obama called on Congress to codify pay-as-you-go (pay-go) rules that would require Congress to enact tax increases or spending cuts to offset other legislation that would add to the budget deficit.

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“Entitlement increases and tax cuts need to be paid for,” Obama said in remarks in the East Room. “They are not free, and borrowing to finance them is not a sustainable long-term policy.”

Obama was joined by dozens of lawmakers, including many members of the conservative Blue Dog caucus, who have repeatedly pushed for tough pay-go rules.

Republicans, noting soaring deficits and the $787 billion stimulus bill, howled at the president's pledge to be a deficit hawk.

“It seems a tad disingenuous for the president and Speaker [Nancy] Pelosi [D-Calif.] to talk about pay-go 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," House Minority Whip Eric Cantor (R-Va.) said.

Cantor alluded to a Gallup poll that showed 51 percent of Americans disapprove of Obama’s handling of federal spending.

“The administration's sudden focus on pay-go seems more driven by polling and PR strategy than a serious commitment to fiscal discipline,” he said.

Adopting the law would mean Congress would have to increase taxes or cut spending to move the healthcare reform legislation Democrats in both chambers are furiously working on.

But other expensive items would be exempted. The White House highlighted four exceptions: Medicare payments to physicians, the estate and gift tax, the Alternative Minimum Tax (AMT) and tax cuts enacted in 2001 and 2003. Some of those tax cuts are sure to be extended next year, and extending the AMT, a tax that would otherwise be applied to many middle-class Americans, has become an annual headache for Congress.

Still, a Blue Dog aide insisted Democrats in that caucus believe Obama is committed to restoring pay-go.

“They've been with us all along in private meetings. We didn't have to blackmail them on this," the aide said. "I don't feel like they were dragged into this kicking and screaming.”