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Wednesday, June 10, 2009

President Obama's Pay Go Chutzpah

When I first read this on Politico, I thought it was a joke.

A day after announcing the acceleration of federal spending under his economic stimulus plan, President Barack Obama Tuesday called for binding legislation that would force a return to pay-as-you-go budgeting rules.

The so-called paygo approach would mean the federal government could not launch new tax cut or entitlement programs without finding a way to pay for them with budget cuts or revenue increases.

Pay go is the legislative idea that all increases in spending are made up by decreases in spending elsewhere. So, let's see, the president passes a stimulus package worth $787 billion. His omnibus has just under 8000 earmarks. His budget is $3.6 trillion, and now he wants to spend more than a trillion dollars on health care reform, and we still have education reform, no price tag yet, on the plate. Now, President Obama claims that going forward he won't spend on anything without cutting anything else.

This is sort of like Imelda Marcos buying up over a hundred pairs of shoes and then saying that she would only buy a new pair if she donated one to charity. The whole thing is absurd on its face, but also, it smacks of genius.

If you follow politics closely, you will see the absurdity of this president, who's spent more in 5 months than all other presidents COMBINED, now championing pay go. If you don't follow politics, and most people don't, you may believe him when on the issue of fiscal responsibility he touts his support for Pay Go.

Essentially, the president hopes that enough people will be too dumb and too naive to realize that his pulled this misdirection. After running up our deficit to unsustainable levels, the president hopes to also become a champion of fiscal conservatism by championing pay go. The president took his chutzpah this far even.

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

That's good philosophy. It's too bad that he's only $4 trillion late on taking it himself. It should also come as no surprise that President Obama's pay go has all sorts of holes.

The PAYGO rules will apply to new tax cuts and mandatory spending, with four major exemptions – any renewal of the 2001 and 2003 tax cuts, the continued efforts to “patch” the Alternative Minimum Tax, any effort to address physician's payments in Medicare, and modifying the estate tax.

In addition, discretionary spending – roughly 40% of the federal budget – is not covered by PAYGO.

"This is like quitting drinking, but making an exception for beer and hard liquor," said Maya MacGuineas, President of the Committee for a Responsible Federal Budget (CRFB). "Exempting these measures from PAYGO would increase the ten-year deficit by over $2.5 trillion dollars. That's not fiscal responsibility."

Again, those that follow politics will see the cynicism of this move. President Obama is counting on enough people not following close enough. Let's all hope he doesn't get away with it, because if President Obama is also known for fiscal responsibility then we truly have entered the twilight zone.

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