Last updated on: November 02, 2009 12:20 PM
U.S. President Barack Obama is calling on Congress to pay for new government spending through tax increases or budget cuts, rather than by running up new debt. Some Republican lawmakers are skeptical about the plan.
President Obama is challenging lawmakers to adopt the "pay as you go" system of spending as law.
"The 'pay as you go' rule is very simple," said President Obama. "Congress can only spend a dollar if it saves a dollar elsewhere."
Mr. Obama said Tuesday that this principle guides responsible families in managing their household budgets.
At the White House, he told Democratic lawmakers that "pay as you go" helped shape U.S. fiscal policy during the Clinton administration.
"And it is no coincidence that this rule was in place when we moved from record deficits to record surpluses in the 1990s, and that when this rule was abandoned, we returned to record deficits that doubled the national debt," said Mr. Obama.
Some Republicans on Capitol Hill say they do not want to be lectured on fiscal responsibility by a president who signed into law a $787 billion financial stimulus package.
At a Senate financial subcommittee hearing, Republican Susan Collins said Mr. Obama's budget would double the government's debt in five years and triple it in ten.
"I am concerned that the long-term debt of this administration poses a threat to the sustainability of our economy," said Senator Collins. "Where will the money come from to pay these debts?"
Meanwhile, President Obama is welcoming efforts by some of America's largest banks to repay $68 billion of emergency government aid.
"This is not a sign that our troubles are over - far from it," he said. "The financial crisis this administration inherited is still creating painful challenges for businesses and families alike. But it is a positive sign. We are seeing initial return on a few of these investments."
However, some top economic experts, appointed by the government, say the U.S. should reevaluate the financial health of the nation's biggest banks. They warn that the recession could get worse than the government has anticipated.