Soon, President Obama will sign H.J.Res.45 to increase the debt limit by $1.9 trillion and to restore statutory PAYGO. The exceptions to PAYGO totaling $3.157 tr. (using estimates from the President's FY11 budget) reveal what Congress expects to pass later this year:
Over at economistmom.com, Diane Rogers, does her usual good job reviewing the current bidding on PAYGO. One of her conclusions is a reverse NIKE, that is, when it comes to tax cuts and spending increases, the best way to pay for them is to just not do it.
This is a good summary of the hearing held last Thursday by the House Budget Committee on PAYGO and, like almost everything Diane does, is well worth the few minutes it will take to read. If you want to read the testimony itself, take a look here.
This is one of those times when I want to shout at my budget brothers and sisters in the loudest possible voice to FOCUS. My column from today's Roll Call about all of the phoney hoopla about PAYGO definitely is one of those times.
PAYGO Is Just a Condiment, Not the Main Ingredient
June 23, 2009
By Stan Collender
Roll Call Contributing Writer
The federal budget world has gone a little crazy the past few weeks over the president’s new pay-as-you-go proposal. Some immediately embraced it, as a person who hasn’t eaten in several days and is offered a bacon cheeseburger and fries might do. Others immediately and loudly decried it much like you might expect from a well-fed vegetarian being served that same cheeseburger with bacon. And, like an executive chef at a fine-dining restaurant who differs on the type of oil used to make the fries that go with the burger, still others had problems with some of the components of the administration’s PAYGO proposal.
PAYGO was the mantra in Washington this week. "Paying for what you spend is basic common sense. Perhaps that's why, here in Washington, it's been so elusive," President Obama intoned last Tuesday.
From the 1990 Andrews Air Force Base budget summit until the end of 2002, Congress was bound by statutory PAYGO, which used draconian automatic budget cuts to "pay for" any tax cuts or direct spending increases that threatened to add to the deficit. Together with annual spending caps, it provided the bulwark that led to four years of budget surpluses beginning in 1998.
However, PAYGO by itself just offsets new spending with spending cuts or tax increases, it doesn't lower existing spending or deficits.
According to the Congressional Budget Office, the fiscal 2009 deficit will be $1.677 trillion with no change in law and $1.845 if President Obama's proposals are adopted. In August, CBO is expected to revise those estimates to nearly $2 trillion.
Even by its usual highly partisan position, an editorial in today's Wall Street Journal dealing with the pay-as-you-go rule is so extreme that it deserves to be debunked almost line by line.