- The Foundry: Conservative Policy News from The Heritage Foundation - http://blog.heritage.org -

Morning Bell: The Obama PAYGO Farce

Posted By Conn Carroll On June 10, 2009 @ 8:56 am In Ongoing Priorities | Comments Disabled

Did you ever know anyone that would repeatedly go out to the bar, drink themselves unconscious, and then wake up the next morning and promise never to drink again? That is President Barack Obama when it comes to spending. This February, after signing the largest single-year increase in domestic federal spending since World War II [1], President Obama held a “fiscal responsibility [2]” summit designed to “send a signal that we are serious” [3] at putting the nation on sounder financial footing. The Washington Post’s Dana Milbank quipped [2] at the time: “Holding a ‘fiscal responsibility summit’ at the White House in the middle of a government spending spree is a bit like having an Alcoholics Anonymous meeting at a frat house on homecoming weekend.”

Obama completed the exact same kabuki act yesterday, calling on Congress to pass “pay-as-you-go” legislation [4] (PAYGO) the day after he promised faster deficit spending to stimulate the economy. [5] Commenting on President Obama’s exemption for entitlement spending in his PAYGO legislation, Committee for a Responsible Federal Budget President Maya MacGuineas said: “This is like quitting drinking, but making an exception for beer and hard liquor.”

In theory, PAYGO sounds like common sense: Congress can only spend a dollar if it saves a dollar elsewhere. [6] In reality, PAYGO is nothing more than a political gimmick that only enables higher spending and exploding deficits. Heritage fellow Brian Riedl explains [7]:

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.
  • 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.

Already this year Obama expanded Medicaid liabilities by $200 billion over 10 years [8], and he is now pushing a public health insurance option that would cost $452 billion per year, or more than $6 trillion over a 10-year period. [9] How does Obama plan to pay for all this new spending under his new PAYGO legislation? He doesn’t. The AP reports [10]: “It would carve out about $2.5 trillion worth of exemptions for Obama’s priorities over the next decade. His health care reform plan also would get a green light to run big deficits in its early years.” So if President Obama does get his trillion dollar health care plan passed, you can count on another “fiscal responsibility summit” soon thereafter.

Quick Hits:

  • In an unsigned opinion last night, the Supreme Court acquiesced [11] to Obama administration claims that car companies are also financial institutions and refused to grant a stay to Chrysler’s Chapter 11 sale to Fiat.
  • Rep. Barney Frank (D-MA) defended his intervention on behalf of a General Motors center in his district [12], claiming his example will not lead other lawmakers to do the same thing.
  • In the Washington Post [13], Brookings Institution senior fellow Michael O’Hanlon says the Obama administration’s defense budget is “insufficient to support the national security establishment over the next five years.”
  • Senate Judiciary Committee chair Patrick Leahy (D-VT) unilaterally [14] set Sonia Sotomayor’s Supreme Court confirmation hearing for July 13 yesterday.
  • A new study [15] shows that trains emit more greenhouse gas over their full life-cycle than airplanes do.

Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/06/10/morning-bell-the-obama-paygo-farce/

URLs in this post:

[1] the largest single-year increase in domestic federal spending since World War II: http://online.wsj.com/article/SB123440436240475615.html

[2] fiscal responsibility: http://www.washingtonpost.com/wp-dyn/content/article/2009/02/23/AR2009022302595.html

[3] “send a signal that we are serious”: http://voices.washingtonpost.com/44/2009/01/15/obama_to_hold_fiscal_responsib.html

[4] calling on Congress to pass “pay-as-you-go” legislation: http://www.reuters.com/article/newsOne/idUSN0938720120090609

[5] he promised faster deficit spending to stimulate the economy.: http://www.latimes.com/news/nationworld/nation/la-na-obama-stimulus9-2009jun09,0,7287398.story

[6] Congress can only spend a dollar if it saves a dollar elsewhere.: http://www.cbsnews.com/blogs/2009/06/09/politics/politicalhotsheet/entry5076078.shtml

[7] explains: http://www.foundry.org/2009/06/09/president%E2%80%99s-paygo-proposal-is-unworkable/

[8] expanded Medicaid liabilities by $200 billion over 10 years: http://www.heritage.org/Press/Commentary/ed052609c.cfm

[9] would cost $452 billion per year, or more than $6 trillion over a 10-year period.: http://www.heritage.org/Research/HealthCare/wm2114.cfm

[10] AP reports: http://www.google.com/hostednews/ap/article/ALeqM5j8db-x8aZtGaU-FOMlbG5cSsIRWQD98NETP00

[11] the Supreme Court acquiesced: http://www.usatoday.com/money/autos/2009-06-09-chrysler-dealer-cuts-approved_N.htm

[12] intervention on behalf of a General Motors center in his district: http://thehill.com/leading-the-news/frank-defends-intervention-to-save-gm-facility-in-his-district-2009-06-09.html

[13] Washington Post: http://www.washingtonpost.com/wp-dyn/content/article/2009/06/09/AR2009060902647.html

[14] unilaterally: http://blog.heritage.org http://thehill.com/leading-the-news/gop-criticizes-hearing-dates-for-sotomayor-2009-06-09.html

[15] new study: http://www.newscientist.com/article/dn17260-train-can-be-worse-for-climate-than-plane.html

Copyright © 2011 The Heritage Foundation. All rights reserved.