House Republicans seek to reduce spending by replacing ‘PAYGO’ with ‘CUTGO’

Jon Ward Contributor
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House Republicans are putting in place a rule next year, when they take control, that they hope will help them win the battle over how to reduce the deficit.

Republicans, by and large, want to make the deficit smaller by cutting spending and consider tax increases to be anathema. But they did not do a lot to reduce spending when they had control of Congress and the White House over the last decade, though top Bush White House officials have argued they did what they could in light of the national security demands placed on them after 9/11.

Democrats, for the most part, often prefer to offset spending with a mix of spending cuts and increased taxes, though they haven’t actually done so very often in the last four years.

To prevent deficit reduction from being used as an excuse for tax hikes, Republicans are getting rid of the “Pay-As-You-Go” rule and replacing it with a “Cut-As-You-Go” rule.

The rule will require that any legislation that seeks to increase mandatory spending (which is spending that once added to the federal budget recurs year after year and is thus permanent) cuts spending by a similar amount.

“If it is your intention to create a new government program, you must also terminate or reduce spending on an existing government program of equal or greater size–in the very same bill,” said Rep. John Boehner, the Ohio Republican who will become Speaker of the House on Jan. 5.

Boehner, in a speech this fall, said the CUTGO idea was conceived by Sen.-elect Roy Blunt, a former member of the House GOP leadership.

“As [Blunt] put it, ‘Let’s turn the activists for big government on each other, instead of letting them gang up on the taxpayer,'” Boehner said. “Through this public discussion, we might end up finding out that neither program has a whole lot of merit in the first place.”

Democrats called the move a “scheme,” focusing their criticism on the fact that a CUTGO rule will mean tax cuts are not considered to be adding to the deficit, and will not need to be offset under the rule.

“Under their proposed scheme, tax breaks for special interests and millionaires would not be paid for – posing serious problems in our efforts to get our country on a path toward long-term sustainability,” said Rep. Chris Van Hollen, the Maryland Democrat who will be the ranking member on the House Budget Committee in 2011.

“It is unfortunate that House Republicans are already backtracking on their promises to the American people to address our nation’s deficit by carving a huge loophole in pay-as-you-go (PAYGO) rules currently in place,” Van Hollen said. “This fiscally reckless and irresponsible action will blow an even bigger hole in the deficit and stifle long-term economic growth and job creation.”

PAYGO rules were in place in Congress from 1991 to 2002, before they expired.

Van Hollen taunted the GOP for their spending largesse during the Bush years.

“Their proposal leads us down the same path of fiscal negligence that the GOP took the nation down when they got rid of PAYGO in 2002,” he said. “We know how that story ends: ballooning deficits and an economic crisis not seen since the Great Depression.”

In 2007, House Democrats reinstituted the rule. But the rule was waived numerous times for huge spending bills, such as the $290 billion 2007 Farm bill and the $150 billion stimulus bill signed by former President Bush in early 2008.

President Obama’s $814 billion stimulus bill in early 2009 was also exempted from PAYGO.

In February 2009, President Obama signed PAYGO into law. But the law was still repeatedly flouted over the past year under an exemption for spending that has been deemed to be an “emergency.”

Sen. Tom Coburn, the Oklahoma Republican who spent much of 2010 on the Senate floor demanding that “emergency spending” legislation be paid for with spending cuts, found in July that Congress had added almost $1 trillion in “emergency spending” to the federal budget deficit since 2009.

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