Daniel Indiviglio of Atlantic Business writes:

If these Republicans were really concerned about a tax, then they should have demanded spending cuts to fill the gap or scaled back some of the expensive regulation that the bill calls for. The only ones who benefit from this change are big banks and hedge funds. Taxpayers and community banks are indisputably worse off.

This is a very fair point. As Ezra Klein notes, however, that’s easier said than done:

To be fair to Brown, his original statement did specify spending cuts. But though it’s not impossible to find $19 billion lying around, it’s also harder than it looks: Congress wants to do lots of things that cost money and so tends to be pretty good at grabbing any easy money that’s fallen between the federal government’s couch cushions. There are programs that some people believe to be bad programs (liberals see plenty of these in the Defense Department, and conservatives tend to be down on the Department of Education), but these programs also have powerful backers, and so cutting their budgets tends to be difficult.

I find the notion that every bill should “pay for itself” to be an absurd fiction — it leads to a deficit-improving PPACA that uses every revenue measure opaque enough to get passed, ignoring the size of the existing fiscal imbalance. Moreover, the Obama-era PAYGO rules are significantly different from those imposed during the Clinton-era, as The Hill reported in February:

The pay-go legislation requires the government to fund any spending increases in entitlement programs by spending cuts or tax increases. But there are many exemptions — benefits like Medicare, Social Security, or annual provisions such as the Medicare “physician fix” that benefits doctors. It also would not apply to direct spending that is included in annual appropriations spending bills.

And as Keith Hennessey has explained, the exemption for “emergency” spending has been badly abused.

I buy Bruce Bartlett’s take on PAYGO:

Expecting every new spending programs to be paid for with specific offsets looks very much like a fallacy well known in the trade area. Even those who think it would be desirable for our trade accounts to be balanced in the aggregate know that it would be stupid to expect that our trade with each individual country should be in balance. We necessarily are going to need to import things from countries that we aren’t going to be able to sell enough goods and services to in return. But there will also be countries with which the reverse will be true. It’s the aggregate trade balance that matters, to the extent that it matters at all, not the bilateral balance with each country.
I think the same is true of the budget. We should be looking at aggregate revenues with reference to aggregate spending. If aggregate revenues are too low then they should be raised as sensibly as possible so as to minimize unfairness and economic distortion. PAYGO works against that goal even though it is motivated by a reasonable desire to avoid increasing the deficit more than necessary.
Instead of PAYGO, I think it would make more sense for Congress to stop ignoring the Budget Act of 1974 and adhere to its rules and procedures. It should set an aggregate target for revenues and expenditures, and pass a budget resolution that enforces caps on spending and floors on revenues. Then there will be no need for PAYGO. [Emphasis added.]

Forcing Congress to pass an annual revenue bill designed to meet spending commitments over the business cycle would be be far more transparent than PAYGO-inspired gimmicks like what we’ve seen in the financial reform bill. If you want to impose some kind of FTT, that’s fine — let’s actually debate the issue and weigh the alternatives openly and honestly.