President Barack Obama said yesterday that new budget rules that 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 on Friday 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 $1.3trn (€921bn) deficit he faced upon taking office in January 2009 and for a total debt of $8trn 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 on Friday also lifted the cap on the amount of money the US can borrow by $1.9trn – to a total of $14.3trn. The ceiling was lifted 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.

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 as soon as this week.

The administration is projecting a $1.56trn deficit for the budget year ending 30 September.

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 $1.9trn, the largest one-time increase in our history," Republican Party chairman Michael Steele said on Friday. "Taxpayers will continue to foot the bill for the Democrats' fiscal irresponsibility."

Meanwhile, the Obama administration's planned loan guarantee to build the first nuclear power plant in the United States in almost three decades is part of a broad shift in energy strategy to lessen dependence on foreign oil and reduce the use of other fossil fuels blamed for global warming.

Obama called for "a new generation of safe, clean nuclear power plants" in his January State of the Union speech and followed that by proposing to triple loan guarantees for new nuclear plants. He wants to use nuclear power and other alternative sources of energy in his effort to shift energy policy.

Obama will this week announce the loan guarantee to build the nuclear power plant, an official said on Friday. The two new reactors to be built in Georgia are part of a White House energy plan that administration officials hope will draw Republican support.

Loan guarantees for other sites are expected to be announced in the coming months. The federal guarantees are seen as essential for construction of any new reactor because of the expense involved. Critics call the guarantees a form of subsidy and say taxpayers will assume a huge risk, given the industry's record of cost overruns and loan defaults.

The proposed new reactors would generate power for some 1.4 million people and employ about 850 people, the official said, adding that the Georgia project would create about 3,000 jobs.