Obama's 'PayGo' Sleight of Hand

In an attempt to defend the trillion-dollar health care overhaul bills currently being marked up in Congress and to shift attention from his own actions to those of his predecessor, President Barack Obama (D-IL) declared in his July 18 radio address that “the same folks who controlled the White House and Congress for the past eight years as we ran up record deficits will argue -- believe it or not -- that health reform will lead to record deficits. That’s simply not true.”

Leave aside for the moment the fact that any deficit-spending records set in “the past eight years” were wiped out by Obama himself within a single month of taking office. Also leave aside the fact that the president’s ire was misdirected (it was the director of the non-partisan Congressional Budget Office, Doug Elmendorf, who made that indictment of the health care overhaul bills currently in Congress). The truth is, Obama’s claim to suddenly care about deficit spending at all is belied by his actions and his administration’s statements on a range of issues, from nationalized health care to the so-called “stimulus” package.

In that radio address, Obama urged legislators to “seize this opportunity -- one we might not have again for generations -- and finally pass health insurance reform this year.” He issued what was intended to sound like a warning along with that plea, saying, “I want to be very clear [that] I will not sign on to any health plan that adds to our deficits over the next decade.”

While this statement was carefully worded to sound like an admonition to legislators against producing a health care overhaul bill that isn’t revenue-neutral, the phrase “deficits over the next decade” is a direct reference to the recommended “Pay-As-You-Go” (or “PayGo”) policy Obama asked Congress to pass in June.

At the time, Obama called on Congress to “to rein in deficits by addressing [current] challenges in a manner that is fiscally responsible.” This, Obama said, meant offsetting each new “expenditure” (including both spending and tax cuts) with a corresponding increase in revenue. The latter, of course, is poorly-disguised code for tax increases, generally targeted at the top 1% of wage earners who are already paying well over half of total taxes in America.

Though Republicans governed under pay-as-you-go guidelines from 1995 until 2001, Democrats added the policy to House budgeting rules shortly after taking control of the Congress in 2007. However, the policy has been waived or ignored several times since due to an unwillingness on the part of Democratic leaders to meet rising entitlement spending with corresponding budget cuts.

Obama’s stated hope is that the policy being enshrined into law will make it more difficult for Congress to waive or bypass it in the future when they want to fund pet projects without cutting spending in other areas. However, the proposed PayGo legislation he transmitted to Congress does allow for the rule to be bypassed in key areas important to Obama -- like his trillion dollar health care overhaul.