Obama Embraces Bluedog Paygo and Announces Banks Repaying $68 Billion in Bailout Funds

07/11/2009 05:12 am ET | Updated May 25, 2011

President Barack Obama reported today that a number of banks which received bailout funds will be paying back $68 billion dollars, making a profit for the government.

Obama discussed getting rid of no-bid contracts, revising military spending, tightening medicare ... and he called for restoring PayGo-- the pay as you go rule. Paygo is the mantra of the Bluedog Democrats. It means that only spending that has a clear cut source of funding, or where other costs will be cut, balancing the expenditure will be allowed.

Obama, calling for the congressional codification of paygo, thanked house bluedogs, Steny Hoyer, Nancy Pelosi and Claire McCaskill, "who showed real leadership in the senate."

Observing, "The reckless fiscal policies of the past have left us in a deep hole." he said that he wants paygo in place so members of congress keep in mind the "fiscal horizon."

This is a brilliant two pronged response to the Republican attack machine, showing that the bailout is not thrown away money, on the contrary, that it is bringing a profit to the government. Actually, the profit is probably more that these banks have ever paid in taxes in a given year. And the PAYGO policy, which Bush blocked, makes it hard for Republicans to talk about "tax and spend" liberals.

Ironically, this may mean that Obama's mish mosh, corporate health care plan will not pass PayGo muster, while single payer is generally believed to pay for itself, including creating over two million new jobs. Could this be a strategy that forces bluedogs to back single payer? Not likely, but possible. This man plays chess not checkers.

Another consideration is that Obama's new move may be a bone he's thrown to the blue dogs to persuade them to pass the health care plan he's pushing. They give him a plan with a public option. They get a huge victory on the fiscal responsibility front.

Or it may be that by throwing the Paygo bone -- a very big bone-- to the bluedogs, he will be in a position to do some things that progressives are looking for.

One thing is clear. This press conference said and did a lot more than was said and done on the surface, and this writer can really fantasize positive progressive outcomes regarding a president who has, so far been very predictably moderate.

Crossposted from