Reinstatement of Pay-As-You-Go Is a Welcome Step toward Fiscal Responsibility, 12/20/06

The Center on Budget and Policy Priorities is a generally liberal policy study group. I'm glad to see them supporting Pay-as-you-go.

House and Senate Democratic leaders have pledged to reinstate the “Pay-As-You-Go” rule early in the 110th Congress. Such a rule, which was in effect in the 1990s, helps to enforce fiscal discipline by requiring that any tax cut or increase in entitlement spending be offset by an increase in other taxes or reduction in other entitlement spending, rather than being deficit financed.

Reinstating a PAYGO rule that bars consideration of tax cuts or entitlement increases that would increase the deficit will not guarantee that the Congress and the President act in a fiscally responsible manner, but it will indicate that the leaders of the new Congress:

• Recognize that the nation faces a serious deficit problem and that enacting legislation that would make that problem worse is not desirable;
  
Reject the notion that tax cuts are different from entitlement increases and should not have to be paid for; and

Accept the proposition that budgeting requires tradeoffs and that tax cuts or entitlement increases that are worth enacting are worth paying for.

The reinstatement of the PAYGO rule represents a limited, but significant, step toward a more fiscally responsible budget process. Those who recognize that the continuation of current budget policies would lead eventually to economically dangerous levels of debt, and also erode the ability of the government to meet the needs of the American public, should welcome reinstatement of the rule and hope it encourages policymakers to take further steps to deal with the long-term budget problems we face.