Health plan defers 'pay as you go'

WASHINGTON - President Obama yesterday proposed budget rules that would allow Congress to borrow tens of billions of dollars and put the nation deeper in debt to jump-start the administration's emerging health-care overhaul.

The "pay-as-you-go" budget formula plan is significantly weaker than a proposal Obama issued with little fanfare last month.

It would carve out about $2.5 trillion worth of exemptions from "pay-as-you-go" for Obama's priorities over the next decade. His health-care plan would get a green light to run big deficits in its early years. But over a decade, Congress would have to come up with money to cover those early-year deficits.

Obama's latest proposal for addressing deficits urges Congress to pass a law requiring lawmakers to pay for new spending programs and tax cuts without further adding to exploding deficits projected to total about $10 trillion over the next decade.

If new spending or tax reductions are not offset, there would be automatic cuts in so-called mandatory programs - although Social Security payments and the Medicaid health-care program for poor and disabled would be exempt and cuts to Medicare would be sharply limited.

"The 'pay-as-you-go' rule is very simple," Obama said. "Congress can only spend a dollar if it saves a dollar elsewhere."

Last month Obama suggested a tougher plan that would prohibit Congress from swelling the deficit in one year by putting off until later years the tax increases or spending cuts to pay for it.

The requirement for legislation to be financed over the coming decade generally conforms with existing congressional rules. Congress lived under a "pay-go" regime in the 1990s and the early years of this decade. But it did not stop lawmakers from passing President George W. Bush's landmark 2001 and 2003 tax cuts and big increases in farm subsidies without making spending cuts elsewhere.

Rep. Dennis Moore (D., Kan.) said the House was likely to pass Obama's latest proposal next month. The plan faces far tougher sledding in the Senate, where Budget Committee Chairman Kent Conrad (D., N.D.) has expressed serious reservations.

Conrad said Obama's proposal would do nothing about the fiscal perils the country already faced.

Republicans said new budget rules rang hollow after the Obama-championed $787 billion stimulus package and other deficit spending.