David Broder has a very good piece in this morning’s Washington Post about the PAY-GO bill that passed the House yesterday. He makes the case that what this bill might result in more spending rather then more fiscal discipline.
This is what it’s supposed to be for:
Its key provision requires that any new tax cut or entitlement increase be paid for by an offsetting reduction in other programs or a tax increase. If, for example, you want to guarantee child care for every working mother or provide her with a payroll tax cut, you would have to find savings or revenue elsewhere of equal size.
This is what it could be for:
It could do just the opposite. The bill says that at the end of the year, if Congress has spent more on new entitlements or tax cuts than it has saved, the president can roll back or sequester the excess. But the Congressional Budget Office, the official scorekeeper, warned in a July 14 memo that, as introduced, the bill might allow spending to increase — and by a staggering amount.
“In effect,” it said, “that rule would allow the Congress to enact legislation that would increase deficits by an amount in the vicinity of $3 trillion over the 2010-2019 period without triggering a sequestration.”
The reason is that the bill exempts from pay-go all of the spending involved in Medicare physician payments and all of the revenue dependent on estate and gift taxes, the alternative minimum tax for individuals and the administration’s plan to continue the middle-income tax cuts of 2001 and 2003.
But there are more loopholes in the bill. Find out here.
I am a big fan of fiscal discipline. I am a big fan of cutting spending and taxes. But I have always had troubles with PAYGO, especially linked to an unspecified goal of a balanced budget. The USSR had a balanced budget. It was balanced with outlays representing 80 percent of GDP, but it was balanced. I guess I would feel better about PAYGO if the goal was to balance the budget at, let’s say, 15 percent of GDP.