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‘Pay as You Go’ Takes a Holiday

Despite a heavy battering in recent weeks, House Democrats assert pay-as-you-go budget rules aren’t dead. Just resting up for the duration of the 110th Congress.

“PAYGO is not dead over here,” House Majority Leader Steny Hoyer (D-Md.) pledged Monday. “We’re going to be fighting to adhere to PAYGO premise and policy.”

Nonetheless, that vow comes as the House is expected today to shelve PAYGO rules — a cornerstone of the majority’s push for fiscal responsibility that require any spending increases to be offset through comparable cuts or tax increases — to pass its first major initiative of the year, an approximately $150 billion economic stimulus measure.

That decision follows on the heels of a hard-fought loss in late December to the Senate over applying House spending rules to the alternative minimum tax relief package. Despite several House attempts to invoke PAYGO, Senate opposition ultimately forced the chamber into accepting an “unfunded” tax-cut package.

Given recent events, Rep. Paul Ryan (R-Wis.), ranking member of the Budget Committee, asserted the PAYGO rules were effectively dead. “PAYGO is dead and they can hear the crickets,” Ryan said.

But Democratic lawmakers, as well as balanced-budget advocates, assert the back-to-back denials of spending rules are not comparable incidents, much less indicative of the legislative year ahead.

“We did not have votes in the Senate” for offsetting AMT, Hoyer said. “Stimulus really is a different animal. To stimulate and depress at the same time is not rational.”

Hoyer later added that lawmakers have not ruled out future offsets for the stimulus package either. “Over the longer term we should pay for the stimulus,” he said.

Even fiscally conservative Democratic Blue Dogs appear to have acquiesced in negotiations over the stimulus measure. Rep. Mike Ross (D-Ark.), a Blue Dog co-chairman, asserted that PAYGO rules influenced negotiations on the bill.

“The fact that it’s temporary and targeted offsets the fact that it is not paid for,” Ross said. “Hopefully it will be paid for at some point in the future. Perhaps when the economy turns around.”

But several Blue Dog Democrats have openly questioned Congress’ will to revisit the measure at a later date rather than include long-term offsets in its current version.

In fact, senior Democrats proposed a similar structure to address the AMT fix in late December after failing to win Senate support for their version of the legislation, but Hoyer squelched that possibility Monday, stating that the House would not revisit that measure.

“Not at this point in time,” Hoyer acknowledged. “We need to get through this [2008] budget.”

Rep. Jim Cooper (Tenn.), a fiscally conservative Blue Dog Democrat who has been disappointed that Democrats haven’t worked harder to cut spending, predicted Democrats would be embarrassed back into PAYGO fidelity.

“It’s premature to write the obituary on PAYGO,” Cooper said. “If we abandon PAYGO after all the speeches and all the hard work then we are abandoning one of the fundamentals of governing.”

Still, Cooper questioned the benefits of borrowing money for the stimulus package.

“Is it a stimulus to borrow money from China to give people rebate checks so they can buy products from China at Wal-Mart? Sooner or later we’re going to have to pay for this.”

Robert Bixby, executive director of the nonpartisan Concord Coalition, which advocates for balanced budgets, predicted obstacles for PAYGO, but suggested it would emerge intact in the 110th Congress.

“I think it’s important for the leadership to make it clear that they still have a firm commitment to PAYGO, and so long as they do, and Members understand that, PAYGO will hold,” Bixby said. “I do think PAYGO will be tested, but it ain’t dead.”

Even those Democrats who have criticized the majority’s adoption of the spending rules — asserting that PAYGO has enfeebled Democratic initiatives in favor of addressing a deficit created under the Republican majority — allow that the spending rules aren’t yet a smoldering ruin.

“We shot ourselves in our own feet by forcing ourselves to live within these rules,” said one senior Democratic aide, who asked not to be identified. “My boss has to compromise his values every time he has to vote for something that doesn’t increase spending to levels we know are needed.”

But the aide added: “We’re not going to waive it on every bill. These are two very unique situations. You can only bend so much.”

Steven T. Dennis contributed to this report.

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