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House Passes Obama-Backed Budget Rules

By Ben Pershing
The House approved a bill Wednesday requiring that much new legislation be deficit-neutral, endorsing budget rules proposed by President Obama as he struggles to halt a rising tide of red ink.

The "pay-as-you-go," or PAYGO, measure passed the House 265 to 166. It mandates that most tax cuts and spending increases be offset with corresponding spending cuts or tax increases.

The bill faces an uncertain fate in the Senate, where Budget Chairman Kent Conrad (D-N.D.) has not endorsed bringing it up for consideration. During the last Congress, House Democrats vowed to follow PAYGO rules and then routinely set them aside on major bills, blaming the Senate's unwillingness to go along.

Obama and congressional Democrats say the rules will help rein in the mounting deficit and prevent irresponsible fiscal policy in the future, arguing that such restrictions helped lead to budget surpluses in the 1990s.

Obama applauded the House vote, saying lawmakers "demonstrated strong support for fiscal discipline. ... It is time to stop the practice of passing today's costs onto future generations. PAYGO was a driving principle behind the move from deficit to surplus in the 1990s, and must be so again today."

But Republicans complained that Wednesday's bill was weaker than advertised and would most likely lead to undesirable tax hikes. The conservative Republican Study Committee called the legislation "so riddled with loopholes and exemptions that it only continues the mockery of fiscal restraint this Congress has come to represent."

When the GOP held the House majority, it generally resisted the argument that tax cuts needed to be "offset," arguing that tax cuts spurred economic growth and so should not be made more difficult to pass. Republicans pointed out Wednesday that Obama's proposal exempted key items from adherence to PAYGO rules, including a "patch" for the alternative minimum tax, extensions of some expiring tax cuts and a bill to prevent Medicare reimbursement rates for doctors from declining. And the restrictions would only apply to taxes and mandatory spending, like entitlement programs, not discretionary spending like the stimulus bill.

"The fact is this bill would not have stopped the tsunami of spending Democrats have unleashed during the past six months," said House Minority Leader John Boehner (R-Ohio).

A Republican-authored substitute, which would have imposed caps on both discretionary and mandatory spending and would not have provided for automatic tax increases, was defeated by an almost-party-line vote.

But Democrats said Wednesday's vote was an important -- and realistic -- first step back towards budget sanity. House Majority Leader Steny Hoyer (D-Md.), the measure's lead sponsor, said on its introduction last week that "the principle of paying for what we buy was abandoned by President Bush, who used borrowed money to fund tax cuts for the most privileged."

The importance of deficit neutrality has figured prominently in the ongoing debate over health-care reform, and Hoyer said, "PAYGO is only part of the solution to our fiscal mess -- the work ahead will include controlling the costs of health care and the growth of our entitlement programs."

By Ben Pershing  |  July 22, 2009; 5:14 PM ET
Categories:  House , Purse Strings  
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Thanks for the "explanation" why the GOP feels tax cuts should not be included in a PAYGO system. Of course, we already learned in the Reagan years that tax cuts lead to deficits not increased revenues.
As a Californian, we have learned the hard way that tax cuts without a corresponding spending cut only leads to fiscal disaster. Arnold came in and immediately revoked the tax hikes on auto registration without attempting to close the deficit. This is not the only problem in CA. (In CA, the legislature and the people thru the initiative process can increase spending with a simple majority but need a two-thirds vote to raise taxes.
I noticed that the Ryan (R. WI) written GOP
amendment wanted a 2/3 vote to increase spending. Yeah, right. We want an even harder bar than the Senate 60 vote cloture rule to get something passed.
I don't get it. The GOP succeeded in getting their agenda passed with bare majorities and a SCOTUS aided Presidential election victory in which the "the winner" actually lost by 1/2 million votes.

Posted by: change-we-must | July 22, 2009 6:00 PM | Report abuse

Gee... I wonder how many pages long might this bill be? Maybe we can rescind the past 3 stimulus bills, and GM bailout. Pray to Buddha it will stop Cap and Trade, and Health Care.... Oh excuse me Ur ah pray to Allah.

Posted by: s3mgc | July 22, 2009 10:44 PM | Report abuse

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