Obama says new budget rules will rein in spending

President Barack Obama said today that new budget rules that say spending increases must be matched by spending cuts will force Congress to "pay for what it spends, just like everybody else."

Obama signed a bill yesterday reinstating budget rules known as "paygo" — short for "pay as you go."

In place during the 1990s, the rules helped create balanced budgets and surpluses. Obama blames eliminating them for creating much of the $1.3 trillion (£800bn) deficit he faced upon taking office in January 2009 and for a total debt of $8 trillion (£5tr) projected over the next decade.

The president has been trying to show a public alarmed by higher government spending in the midst of an economic downturn that he is taking steps to tighten Washington's purse strings.

But the bill signed Friday also lifted the cap on the amount of money the US can borrow by $1.9 trillion (£1.2tr) — to a total of $14.3 trillion (£9.1tr) . The ceiling was lifted from to keep the US from going into default.

In his weekly Saturday radio and Internet address, Obama said the "politics of the moment" often overwhelms the desire Democrats and Republicans have to produce balanced budgets — something the federal government legally is not required to do.

"Now, Congress will have to pay for what it spends, just like everybody else," he said.

Obama did not discuss raising the debt ceiling in his message.

The president also repeated a promise to create a panel of Democrats and Republicans to suggest strategies for closing the gap between what the government spends and what it collects in revenue. His proposal, however, is weaker than a similar plan recently defeated by the Senate because Congress would not be required to vote on its recommendations.

Obama plans to name the panel by executive order, and he was expected to do so as soon as next week.

The administration is projecting a $1.56 trillion deficit for the budget year ending Sept. 30.

Republicans mocked Obama for signing the "paygo" bill behind closed doors.

"With a simple stroke of his pen, President Obama now has the ability to continue his binge spending agenda to the tune of an additional $1.9 trillion, the largest one-time increase in our history," Republican Party Chairman Michael Steele said Friday. "Taxpayers will continue to foot the bill for the Democrats' fiscal irresponsibility."