Paygo rule meaningless, harmful

In a letter printed in yesterday’s Wichita Eagle, Doug Ittner of Wichita promotes the benefit of a rule known as “paygo.” The purpose of this rule is to force budget discipline on Congress. As the Washington Post’s David Broder wrote in that newspaper in June: “[Paygo’s] key provision requires that any new tax cut or entitlement increase be paid for by an offsetting reduction in other programs or a tax increase. If, for example, you want to guarantee child care for every working mother or provide her with a payroll tax cut, you would have to find savings or revenue elsewhere of equal size.”

It sounds like Congress has suddenly been overtaken by reason, doesn’t it?

If only it were so.

The reality is that the paygo rule is so feckless as to be meaningless. In fact, the rule causes great harm. By sounding tough, the existence of the rule leaves apparently naive citizens like Mr. Ittner to conclude that things are under control in Washington. But things are far from under control, and this illusion of control is quite harmful.

A good article to read to understand how paygo works is the Wall Street Journal article The ‘Paygo’ Coverup from June. Here are some of the points it makes.

  • When Democrats took over Congress in 2006, Speaker Nancy Pelosi imposed paygo rules. What happened? “By 2008, Speaker Pelosi had let those rules lapse no fewer than 12 times, to make way for $400 billion in deficit spending.”
  • President Obama campaigned on paygo, and the deficit has exploded by an unprecedented amount since he took office.
  • “Paygo only applies to new or expanded entitlement programs, not to existing programs such as Medicare.” Existing entitlements consume the lion’s share of federal spending, so paygo doesn’t apply to much of the problem.
  • Paygo doesn’t apply to discretionary spending.
  • Congress classifies spending to circumvent paygo. “… the 2010 budget resolution included a $2 billion increase for low-income heating assistance as an entitlement change that should be subject to paygo. But Congressional Democrats simply classified it as discretionary spending, thereby avoiding the need for $2 billion in cuts elsewhere.
  • “The other goal of this new paygo campaign is to make it easier to raise taxes in 2011, and impossible to cut taxes for years after that.”

Even the liberal David Broder, in his Washington Post piece, recognizes that the current law is “full of loopholes,” as the title of his article indicates.

We’d be better off without this meaningless rule, so full of loopholes, that lets politicians promote the illusion of controlling the federal budget.

1 Comment

  • So putting something on layaway is actually cheaper? Weeks, you are naive. Common sense continues to elude you.

    I see you couldn’t post to the letter in question. Was the concept of people reading for themselves too much for you, or did you want to control the discussion by taking the words out of context?

    http://www.kansas.com/opinion/letters/story/918188.html

    What moron thinks that pay as you go doesn’t work because some people didn’t practice pay as you go? You might as well say speed limits don’t work because some people speed. Or perhaps laws against rape and murder don’t work because some people still rape and murder. What does that have to do with the argument? Nothing, but you didn’t have much of a case to make so you have to change the subject.

    Here’s a quarter Bob, buy a clue, then come back and tell me how putting something on credit and paying interest is cheaper. You don’t know diddly about economics.

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