(Adds Hoyer to introduce legislation soon)
By Caren Bohan
WASHINGTON, June 9 President Barack Obama
sought on Tuesday to show he was serious about improving the
U.S. budget picture as he called on Congress to pass new limits
on tax cuts and spending programs to avoid adding to deficits.
Obama urged passage of "pay-as-you-go" legislation that
would require any new tax cut or automatic spending program to
be paid for within the budget.
"The 'pay as you go' principle is very simple. Congress can
only spend a dollar if it saves a dollar elsewhere," Obama said
in a speech at the White House attended by several Democratic
members of Congress.
"Entitlement increases and tax cuts need to be paid for.
They are not free," said Obama, who has been criticized by
Republicans for proposing a hefty domestic agenda that includes
overhauling the health care system, bolstering education and
tackling global climate change.
The White House has forecast a budget deficit for this year
of $1.84 trillion, or 12.9 percent of gross domestic product.
Republicans have warned that programs such as the proposed
health care plan would add to the budget deficit for years to
come and have also criticized Obama's $787 billion stimulus
plan, which was passed by Congress in February.
Obama contends that much of the budget deficit was
inherited from the Bush administration, which presided over a
shift from record surpluses to huge increases in the deficit
fueled by the financial crisis and spending for the Iraq war.
"The reckless fiscal policies of the past have left us in a
very deep hole," Obama said. "Digging our way out will take
time and patience and tough choices."
TOP DOMESTIC PRIORITY
Obama, who has made the push to revamp healthcare a top
domestic priority, has sought to allay the concerns of some
Democrats about its impact on the deficit.
Surging deficits have also become an increasing concern for
financial markets. Federal Reserve Chairman Ben Bernanke last
week issued a warning about risks to the economy of large
deficits, which drive up long-term interest rates.
Statutory pay-as-you-go has received support from House
Democratic leaders like Speaker Nancy Pelosi, but Obama's
proposal was met with quick resistance from a Senate Democrat
who could make moving forward difficult since one senator can
slow or block legislation.
Pay-as-you-go has its limits, said Senator Kent Conrad,
chairman of the Senate Budget Committee. "It can prevent the
passage of new legislation that would worsen the deficit, but
it does not address the deficits and debt projected under
existing policy," he said.
Rep. Steny Hoyer, the No. 2 Democrat in the House, said he
would introduce legislation on "pay-as-you-go" on Obama's
behalf in the coming days. Hoyer said he agreed with Conrad
that the legislation "is only a first step toward restoring
Rep. Eric Cantor, a Republican, said Obama had undertaken
"historic spending" during his first five months in office.
"So for us to sit here and listen to the White House say
that 'We ought to be responsible, we ought to pay for what
we're doing' I think lacks just a little bit of credibility,"
(Reporting by Caren Bohan, editing by Patricia Zengerle)