President will unveil a 10-year budget blueprint that will include his big initiatives in health care, energy and education
23 02 09 - 13:37
Obama Pushes Firmer Budget Rules
President Wants Any New Measures That Widen Deficit Offset by Spending Cuts
By JONATHAN WEISMAN and JOHN D. MCKINNON - The Wall Street Journal
Stepping up a campaign to persuade Americans he is serious about the budget deficit, President Barack Obama this week will propose using mandatory, across-the-board spending cuts to offset any new initiative that expands the government's red ink.
The proposal, which would apply to any new tax cuts or spending, would return the government to the budget constraints that existed in the 1990s, a senior administration official said. Mr. Obama wants those rules to come in the form of a law, passed by Congress and signed by him. That would put presidential prestige on the line, raising pressure on Congress to observe the limits.
Such restrictions have been in effect in recent years, in the form of rules adopted by Congress and enforced by the lawmakers themselves -- with spotty results.
The Obama administration's initiative is set to be unveiled in a week dedicated to addressing a budget deficit that could be heading toward $2 trillion this year. Over the weekend, the administration said Mr. Obama would seek to cut the deficit in half by 2013, through tax increases and spending restraint. Monday, the president will convene a "fiscal responsibility" summit with the aim of starting to tackle the longer-term budgetary problems posed by entitlement programs, such as Social Security and Medicare, the tax system and the budgeting process.
Mr. Obama will address a joint session of Congress Tuesday to stress what spokesman Robert Gibbs called the "shared sacrifices" needed to tame the government's budget problems. Thursday, the president will unveil a 10-year budget blueprint that will provide a window into his plans for entitlements and taxes as well as for his big initiatives in health care, energy and education.
Any meaningful budget-restraint rules would likely face opposition from both parties. Many Republicans oppose constraints on tax cuts, which they say spur economic growth and generate government revenue. Some liberal Democrats have qualms about rules that could thwart long-sought expansions of government programs.
Several Republicans Sunday said congressional Democrats have flouted their own budget restrictions, known as pay-as-you-go rules, since taking over Congress in 2007. They predicted Democrats would build loopholes into any new restrictions.
"The Democratic Senate and House made a farce of [pay-as-you-go rules] over the last two years," said Sen. Judd Gregg of New Hampshire, the ranking Republican on the Senate Budget Committee. "For them to revive it would be the most hypocritical act they could pursue."
Under the administration's plan, pay-as-you-go rules that were instituted in 1990 but allowed to lapse in 2003 would return with teeth that Democratic congressional leaders didn't include when they re-imposed the rules in 2007.
Under Mr. Obama's plan, new spending or tax cuts being adopted by Congress would have to be offset by equivalent spending cuts or tax increases elsewhere. If Congress failed to find offsets, across-the-board spending cuts known as "mandatory sequestration" would kick in.
The administration official said the president and Congress would work out the magnitude and timing of those automatic cuts, as well as provisions allowing the deficit to grow in times of war, recession or other emergencies. But, he said, by giving budget rules the force of law, Mr. Obama hopes to change the political calculus and make it more difficult to build momentum in Congress for spending increases or tax cuts.
"Sequestration would work, both as a budget reality and as a device that reframes the debate, so it's not just the tax cut of the day or the new spending of the day," the senior official said.
The president's interest in reinstating tough pay-go rules appears, in part, to reflect the changing makeup of the Democrats' congressional majorities. Over two election cycles, the party's growing strength has come largely from the election of moderate Blue Dog Democrats in traditionally Republican states in the South and Midwest.
Although Mr. Obama spoke on the campaign trail about pay-go rules, he didn't pledge to implement a statutory change or mandatory cuts. But the fiscally conservative Blue Dogs have pressed him hard on the issue. They raised the need for statutory budget rules at a White House meeting ahead of passage of Mr. Obama's $787 billion stimulus plan. "They helped persuade him," the senior administration official said.
Congress approved similar rules in 1990. They were extended in President Bill Clinton's 1993 budget act and, again, in the 1997 balanced-budget agreement.
Enforcement was relatively easy in a time of peace and rapid government-revenue growth. After the Sept. 11, 2001, terrorist attacks, President George W. Bush routinely passed massive spending bills as emergency measures, effectively shredding the budget rules, which were allowed to lapse.
Over the weekend, Republicans also expressed skepticism toward Mr. Obama's pledge to cut the deficit from the level he inherited -- $1.3 trillion, or 9.2% of the gross domestic product -- to $533 billion in 2013, or 3% of GDP.
"Their proposals to stop the one-time spending sprees on the stimulus and [financial bailouts] will help cut this year's inflated deficit, but that's the easy part," said Kevin Smith, a spokesman for House Minority Leader John Boehner. "Where's the real spending cuts?"
Separately, Mr. Obama Monday is expected to name Earl Devaney chairman of the Recovery Act Transparency and Accountability Board, overseeing implementation of the just-passed stimulus plan. Mr. Devaney is currently the inspector general of the Department of Interior, where he helped uncover lobbyist Jack Abramoff's dealings at the agency.
Write to Jonathan Weisman at jonathan.weisman@wsj.com and John D. McKinnon at john.mckinnon@wsj.com