Blog: Republicans Abandon Pay-As-You-Go Budgeting

Statement

On day one of this new Congress, the House Republicans first step is backwards. While professing great concern about spending and debt, they abandon pay-as-you-go budgeting, returning to the Bush-Cheney approach -- endless borrowing. They claimed so much wasteful spending could be eliminated, but reject the very rule that required them to cut spending as one way to offset the revenue loss from each new tax break they give away. Their misleading "Cut-Go" just cuts fiscal discipline and says, "Go borrow from the Chinese."

They are like the fellow who bellies up to the bar, asking for just one more tax break for his buddies, while declaring, "put it on my tab." But it's really "our" tab. All Americans will be indebted for Republican addiction to endless borrowing for endless tax breaks.

We cannot eliminate deficits by revisiting Republican trickle-down economics -- this nonsense dug the deficit hole in the first place. Even Republican economists, like former CBO Director Doug Holtz-Eakin, concede that "there is no serious research evidence" to support the too frequent claim that "tax cuts pay for themselves."

Our Democratic House rule helped ensure greater budget discipline than either Statutory PAYGO or Cut-Go. The Democratic rule required each bill affecting direct spending or revenue to be deficit neutral. In contrast, Statutory PAYGO only requires the cumulative effect of all bills approved during an entire year to be deficit neutral. Under the new, weakened rule, deficit-bloating bills that lower revenue can be adopted without concern until year's end, at which point, it may be impossible to offset them except through statutory sequestration that enacts across the board spending cuts to priorities like Medicare and education loans without having to assume specific responsibility for what has been cut.

Another, troubling result of this Republican "Cut-Go" rule is the distorted incentive it creates to convert spending programs -- that would otherwise need to be offset -- into tax expenditures, which do not and which are really just another form of entitlement spending, subject to no accountability through the Budget process. Already abused and criticized by the bipartisan Presidential Fiscal Commission, this spending through the Tax Code is often an inefficient means of accomplishing a goal. With a current estimated cost exceeding $1 trillion, these barnacles on the Tax Code can sink efforts to contain the debt. Ironically, just last August, incoming Speaker Boehner himself lamented the proliferation of these unjustified tax breaks saying, "We need to take a long and hard look at the undergrowth of deductions, credits, and special carve-outs that our Tax Code has become."

We need pay-as-you-go budgeting like a family facing foreclosure and sky-high credit card debt does. An indebted family cannot balance its budget by reducing its income, cutting necessities like school lunch money or college tuition, and borrowing more. Neither can America.

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