President Obama Proposes ‘Pay-As-You-Go’ Plan for Government Spending

June 10, 2009

Today, President Obama proposed that Congress implement a pay-as-you go program to control government spending. The program will be called PAYGO. It was successfully used in the 1990s to erase federal budget deficits, and has been suggested to address the record spending initiatives, including the $787 billion economic stimulus program of the Obama Administration.

President Obama says that the plan uses basic and common sense. It requires that Congress balance any increased spending with equal savings elsewhere. Many have called the proposal responsible and necessary; however, others believe that the idea of Obama proposing this program after sending so much money through the Congress for spending is disingenuous.

Some costs, including Medicare payments to doctors, estate and gift taxes and tax cuts enacted in 2001 and 2002 would be exempt from the program. It is now being considered by the Senate and the House of Representatives. If it is approved, it will go into affect almost immediately.