PAYGO

January 6 - Today, the U.S. House of Representatives votes on the rules package that will govern House procedure for the 111^th Congress.  (Find here a section-by-section breakdown of the rules.)  Included in the rules package is an extension of pay-as-you-go rules (PAYGO) that require requires that the costs of new tax cuts or mandatory spending programs be offset with new revenue or reduced mandatory spending.  The new rule package modifies the previous PAYGO House rule by allowing offsets to occur between -  rather than only within - bills.

Another provision within the package would eliminate the Medicare trigger, a modification objected to by the Committee for a Responsible Federal Budget (CRFB). The Medicare trigger was created as part of the Medicare Modernization Act in 2003 and is enacted when for two consecutive years the program's trustees estimate that general revenue funding will exceed 45 percent of Medicare's total funding in any year within the next seven years. Said Maya MacGuineas, President of CRFB:

"Strengthening PAYGO would be a powerful sign that Congress is serious about becoming fiscally responsible - or at least preventing things from getting much worse.  Still, all budget rules can be gamed, bent, or ignored.  There are not substitutes for real political courage and a broad commitment to fiscal responsibility."

November 18 - Democratic Senator Max Baucus, who last week released his own proposal for comprehensive reform of the U.S. health care system, expressed doubt that his proposal could adhere to pay-as-you-go (PAYGO) budget rules.  PAYGO rules, which are designed to prevent increases in the federal deficit, require that any new spending or tax cuts be offset by other tax increases or spending cuts over either a five or ten-year period.  Since the most recent PAYGO rules were adopted in 2007, Congress has waived the provision several times.  The article quotes Robert Bixby of the Concord Coalition, on these developments:

"If they want to waive PAYGO for health care, [Democrats] are going to have to come up with a rationale for why the resulting deficits aren't as bad as the deficits from Bush's tax cuts," Bixby said. "People are going to argue it's better to have health care coverage than to have tax cuts for upper-income people. That's a legitimate political debate. But if ‘x' amount of deficit is economically ruinous, it doesn't matter what causes it."

October 8 - The Committee for a Responsible Federal Budget held two panels to discuss the recent fiscal crisis and its effect on future policy. The first panel, which featured Mark Zandi, Martin Baily, Rob Dugger, Dean Baker, and Tim Adams, examined the conditions that made the bailout necessary, the prospects for recovery, and some actions the government might take to avert further crisis. The second panel, featuring Leon Panetta, William Frenzel, Alice Rivlin, Rudolph Penner, and David Walker, discussed how the bailout and overall crisis should affect future policymaking, the current and future status of the US budget, and advice for the next presidential administration. Attendees to the event also received a handout with the October update to US Budget Watch's "Fiscal Voter Guide to the 2008 Election."

"President Bush inherited the largest projected surplus in our nation's history, and turned it into deficits as far as the eye can see. We now have a $9 trillion debt, and we borrow money from the Chinese to buy oil from the Saudis. We've got to start reducing the deficit and get back to fiscal responsibility. It's time to get back to the bi-partisan consensus we had in the 1990's: you don't spend what you don't have on what you don't need. And that's exactly what I'll do as President."