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The Democratic Pay-Go Legislation

A Facade of Fiscal Responsibility (H.R. 2920)

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Washington, Jul 22, 2009 | comments

SUMMARY

  • The Democrats’ pay-as-you-go [pay-go] bill is an attempt to appear fiscally responsible while they push through an explosion of spending, deficits, and debt. But the bill and the process are deeply flawed. Specifically:
    • It is a needlessly complex rewrite of pay-go, not a simple extension.
    • It extends the Democrats’ dismal track record with pay-go.
    • It is riddled with loopholes, and weakened with broad exemptions.
    • It fails to reduce deficits, and fails to address the existing crisis of entitlement spending.
    • It’s being jammed through the House, bypassing the Budget Committee.
  • In short, the bill is merely a facade of “fiscal responsibility.” This discussion elaborates on these and other flaws of the bill, and provides a technical description of the legislation.

CRITIQUE OF THE DEMOCRATIC SUBSTITUTE

  • Adds Needless Complexity. This is not a simple extension of the previous pay-go law. It is a complicated piece of legislation, drafted in the inner sanctum of leadership offices, that involves rolling “scorecards” based on averaging the cost of legislation. This complexity only invites more gimmickry to give the illusion of budget discipline, making the law less credible.
  • Extends the Democrats’ Dismal Pay-Go Track Record. When House Democrats adopted their pay-go rule, they said it would eliminate deficit spending. But the facts tell a different story:
    • Deficits leapt from $162 billion in fiscal year 2007 (the last budget under a Republican Congress) to an estimated $1.8 trillion this year – an increase of more than ten-fold. Further, under the Democrats’ budget, deficits never fall below $600 billion, and they exceed $1 trillion in 2019 (see Figure 1, next page).

Read the full report here.

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