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  • President’s PAYGO Proposal is Unworkable

    President Obama today is promoting a Pay-as-You-Go (PAYGO) statute requiring that tax cuts and entitlement expansions be collectively deficit-neutral. Congress is likely to take up the proposal later this month.

    Since 2007, Congress has had a PAYGO rule mandating that each new tax and entitlement bill be deficit-neutral. Because it is merely a congressional rule, lawmakers can (and do) waive it easily. By contrast, a PAYGO statute—which existed from 1991 until 2002—would operate differently. Instead of requiring that each tax and entitlement bill be deficit neutral, this law would keep a running scorecard of all enacted bills (allowing one bill to offset another). If, at the end of the year, the net effect of all tax and entitlement legislation was to increase the budget deficit over the next decade, an automatic series of entitlement spending cuts (“sequestrations”) would be triggered to offset those costs.

    Yet PAYGO has proven to be more of a talking point than an actual tool for budget discipline. Consider that:

    1) PAYGO has never been enforced

    • During the 1991-2002 round of statutory PAYGO, Congress and the President still added more than $700 billion to the budget deficit and simply cancelled every single sequestration that would have enforced PAYGO. Even if Congress had wanted to enforce PAYGO during that period, they had already exempted 97% of all entitlement spending from sequestration cuts. It was basically designed to fail.
    • Since the 2007 creation of the PAYGO rule, Congress has waived it numerous times in order to add $600 billion to the deficit. In fact, the entire “stimulus” bill violated PAYGO; Congress simply ignored the rule.

    2) PAYGO’s design is flawed

    • PAYGO exempts all discretionary spending, and would also allow all current entitlement programs like Social Security, Medicare, and Medicaid to continue growing on autopilot. It affects only new entitlements or tax cuts that may be created in the future.
    • Even if PAYGO were fully enforced, entitlement spending would still grow 6 percent annually, and discretionary spending could grow without limit.

    Creating a PAYGO law and then blocking its enforcement is inconsistent and hypocritical. And given their recent waiving of PAYGO to pass a massive stimulus bill, there is no reason to believe the current Congress and the President are any more likely to enforce PAYGO than their predecessors were. And even if it were enforced, PAYGO applies to only a small fraction of federal spending (new entitlements). Consequently, PAYGO is merely a distraction from real budget reforms that could rein in runaway spending and budget deficits – such as statutory spending caps.

    Posted in Ongoing Priorities [slideshow_deploy]

    20 Responses to President’s PAYGO Proposal is Unworkable

    1. Whicket Williams Kin says:

      These elected officals have been lying and cheating for so long, they think this kind of cheating is perfectly acceptable. They Must ALL be Removed. At the risk if seeming redundant, I must repeat,"NEVER RE-ELECT ANY INCUMBENT" regardless of party. Do not fall for that old lie,"The Other Guy Did It" that has been played on us for 50+ years, and is wearing a little thin, don't you think? If an individual is holding office , THAT person is guilty. When a freshman goes to washington, they tell him, you have to play ball with us, or we will freeze you out. That is the reason they must ALL be fired.

    2. Ken B, Cochise Count says:

      Amen to that, Mr Williams. We gotta start imposing term limits at the polls. One term and you're done. You get MY vote only once. No matter what! It's the only way these liars and thieves will ever figure out who they work for.

    3. Pingback: Top Headlines–Tuesday, June 9, 2009

    4. Pingback: » Financial News Update - 06/09/09 NoisyRoom.net: “Extremism in the defense of liberty is no vice. Moderation in the face of tyranny is no virtue.” Barry Goldwater

    5. Spiritof76, New Hampshire says:

      This is like Bernie Madeoff claiming that he is rehabilitated. Obama and his Congressional stooges are incapable of anything resembling fiscal responsibility. This is all nonsense designed to bamboozle the hapless electorates that believe essentially tooth fairy.

    6. Charles Ott, Chicago, IL says:

      Okay, now I’m curious. If PAYGO has never worked, what was it that did happen during the Clinton administration to result in a balanced budget? If PAYGO was routinely ignored, why was it rescinded in 2002? If it doesn’t matter anyway, why not re-enact it now?

    7. Pingback: You’re Kidding: Obama Wants Fiscal Responsibility Mantle : The American Pundit

    8. Tucano Fulano, USA says:

      In Obama-speak "psygo" means our taxes are going UP !!!

    9. jjay - Louisville, K says:

      If the insurance empire can make off with so much of the public funds to be able to lobby their causes so effectively and generously,

      then a government operation with informed enthusiasts for the program and from the insurance industry should be able to not only give great benefits to the tax payers, but do it at a lower cost and still even make money for the government. Capitalism at it's best! The tax payers paying themselves for the insurance coverage they deserve and making a profit for the program to continue!

      GO FOR IT!!!

    10. Barb -mn says:

      This is fraud, proposed by frauds.

      Here's something to trust, the strong words and discipline of one of the president's coded message:

      "congress can only spend a dollar if they save a dollar elsewhere."

      Nothing but deceit. Intentionally confusing everyone they "hope," but anyone they can.

    11. Pingback: Brian Reidl: PAYGO Has Never Been Enforced - RENEWtv: Renewing America. Renewing the GOP.

    12. Tre Kendrick, CA says:

      in response to mr. ott. Obama called it a surplus so i'll use that term. Clinton having a surplus had nothing to do with paygo. i shouldn't even have to make that distinction but i will, afterall our all knowing president doesn't even know. The "surplus" was largely due to two things: the dot com boom and defense cuts. PayGo has been and still is a charade. No one gets to see where all this money is spent, we just have to take the press secretary's word for it. PayGo is just another teleprompted speech that makes Obama appear "fiscally responsible" to the knuckleheads at msnbc.

    13. Steve Topper, Rapid says:

      To answer Mr Ott's question, a "balanced budget" in political terms means you've kept it within the PROPOSED budget, even if it's 50% larger than the previous one. The only president to to erase the deficit was Hamilton, who did it by selling off public lands.

    14. mrking says:

      Amen, Mr. Williams. Have a chat w/ Mr. Gatehouse, also of TX. "gettin after lefty" radio podcast.

      Just another ploy to throw the dawg off the scent.

      "Surplus?" Laughable. So ya paid the lite bill yet owe $10k on the house-where is your "surplus?"

    15. Brett, Tacoma says:

      >>>Charles Ott, Chicago, IL writes:

      Okay, now I’m curious. If PAYGO has never worked, what was it that did happen during the Clinton administration to result in a balanced budget? If PAYGO was routinely ignored, why was it rescinded in 2002? If it doesn’t matter anyway, why not re-enact it now?<<<

      There never was a true balanced budget or surplus. Instead congress moved "intergovernmental holdings" off budget.

    16. Engineer, Mississipp says:

      All presidents, with the exception of Andrew Jackson, have run deficits; although nowhere near that of Obama. The press conference was a joke wanting to spend less after signing a 1.3 trillion dollar budget, nearly a 1 trillion dollar stimulus and now 2 trillion health care.

      This guy is like the old short story The Emperor Has No Clothes On, largely fueled by the press who tells us how great he is.

    17. Larry Weckerling, At says:

      Let's vote out all the blood sucking liberals and thieves who

      vote only to get themselves elected. Also the ones who take

      money from lobbyist. Unless we pass laws to stop these practices

      nothing will change. We should find a way to take back our country.

    18. Pingback: Must Be an Election Year - Kagen's Talking Fiscal Restraint

    19. Pingback: PAYGO: Political Gimmick, Not Real Fiscal Reform | The Foundry: Conservative Policy News.

    20. Pingback: One Week After Passing, Congress Set to Break PAYGO | Step Down Obama

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