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  • Pelosi's PAYGO Ploy: Budgetary Gimmick Provides Cover for Liberals

    Four years after Democrats campaigned on the promise of using pay-as-you-go budgeting, their record is dismal. Since gaining control of Congress in 2007, they’ve gamed, ignored or employed PAYGO on 32 occasions to justify new spending or tax increases.

    Once hailed as a budgetary tool to stop deficit spending, PAYGO has become a gimmick House Speaker Nancy Pelosi (D.-Calif.) has used repeatedly to provide cover to her liberal allies.

    “Democrats are committed to fiscal responsibility through pay-as-you-go budgets, so that our children and grandchildren are not saddled with mountains of debt,” Pelosi pledged in 2007.

    Pelosi’s rhetoric doesn’t match reality. In fact, since Democrats took office in 2007, the deficit has spiked to $1.5 trillion, up from $160 billion four years ago. That’s nearly a 10-fold increase—and it happened with the PAYGO rule in place.

    Pay-as-you-go budgeting is the concept of offsetting, or paying for, new spending or tax cuts with spending reductions or tax increases. It doesn’t apply to all spending, however. In fact, PAYGO covers only new spending on mandatory entitlement programs, about 6% annually. But discretionary spending, or 40% of the budget, is totally exempt.

    Republicans let the PAYGO rule lapse in 2002. Seeking to exploit the issue for political purposes and offer a cure for the expanding federal deficit, Democrats pledged to restore it in 2006.

    Repeatedly, however, lawmakers have violated PAYGO, or used gimmicks and loopholes, to give the illusion they were acting within the spirit of the rule. PAYGO was waived or ignored 15 times in the 110th Congress and another 17 occasions so far in the 111th Congress.

    Examples include major pieces legislation such as the economic stimulus and Obamacare.

    President Obama can’t escape criticism either. Despite being a strong supporter of PAYGO, he’s signed legislation that increases spending by $1.4 trillion over 10 years and raises taxes by $447.3 billion, according to an analysis from Rep. Paul Ryan (R.-Wis.), ranking member on the Budget Committee.

    Now with Democrats again trotting out PAYGO for campaign purposes, it’s worth asking how the deficit ballooned to $1.5 trillion with the policy in place. Looking at each piece of legislation subject to PAYGO, Ryan found repeated violations. He said PAYGO simply drives higher taxes to chase higher spending.

    Take the American Recovery and Reinvestment Act, better known as the economic stimulus. Because it was designated an “emergency,” it was exempt from PAYGO. The Congressional Budget Office, therefore, scored it zero when it really had a deficit impact of $862 billion.

    Then there’s the Health Care and Education Reconciliation Act and the Patient Protection and Affordable Care Act. Both were written to give the appearance of reducing the deficit. Even though CBO made that claim, Ryan’s office put the deficit impact at $662 billion. Gimmicks and hidden spending played to the Democrats’ favor, an example of how PAYGO is exploited.

    These tricks are nothing new. The Heritage Foundation’s Alison Fraser and Brian Riedl warned in December 2006 that PAYGO would be a sham if Pelosi failed to properly institute it. Nearly four years later, Riedl continues to believe that PAYGO doesn’t make much difference. “Discretionary spending could triple,” he explained, “and Social Security, Medicare and Medicaid could keep growing at their unsustainable rate under PAYGO.”

    Ryan, who maintains a PAYGO Tracker on the Budget Committee website, noted that when Democrats failed to adopt a budget resolution this year, PAYGO was their excuse.

    “PAYGO has enabled hundreds of billions of dollars in deficit increases,” Ryan said, “mainly due to generous loopholes allowing the majority to satisfy the procedure’s technical requirements, and erect a façade of fiscal responsibility.”

    That façade is starting to crumble.

    Rob Bluey directs the Center for Media and Public Policy, an investigative journalism operation at The Heritage Foundation. Bluey is a contributing editor to Human Events, which first published this article.

    Posted in Obamacare, Ongoing Priorities, Scribe [slideshow_deploy]

    6 Responses to Pelosi's PAYGO Ploy: Budgetary Gimmick Provides Cover for Liberals

    1. Drew Page, IL says:

      They ought to call it "go-pay". After they have spent trillions, now they come along and say "it's time to pay". What incredible hypocrites. Obama and Pelosi are cut from the same cloth. They will say anything at any given time and then do something that totally contrdicts what they said and see absolutely nothing wrong with doing that. I must have heard Obama talk about all those "shovel ready" jobs he was going to spend the $800 billion Stimulus money on at least a dozen times. Now, he admits there are no "shovel ready" jobs.

      Obama's ship of state is sinking. Unemployment is still nearly 10%, with no signs of coming down. Congress went home with no resolution on continuing the Bush tax cuts. Neither businesses nor individuals know what there taxes will be for 2011 (75 days from now). His economic "advisors" have jumped ship, followed by his chief-of-staff. Democrats hoping to retain office have universally avoided claiming any responsibility for the Stimulus, health care reform, or cap & trade. If fact, many Democrats are claiming to have voted against these things in an attempt to distance themselves from the Democratic "triumphs". All the Democrats have to offer these days are the old lines: "it's still Bush's fault"; the TEA Party supporters are all dangerous right-wing extremists and racists"; "we need to spend more", etc.

      Are we better off today than we were two years ago? Without sweeping changes in Congress, does anyone think we will be better off two years from now?

    2. Ken McIntyre KenMac55, Washington says:

      Excellent explanation of how Congress plays taxpayers and voters for fools. The good news is that, thanks to Heritage and other watchdogs, and legislators such as Paul Ryan, Americans are wising up to the cynical double talk.

    3. Leon Lundquist, Dura says:

      It makes you sick to consider how many times we keep solving this problem and every damned time we send up to the Hill for a solution, something crappy like Pay Go comes down. Poor demented Democrat voters! The credibility of their candidates is shot, but "That's okay because all politicians lie!" We look on sites like Heritage's Over Criminalized spot, and there is so much Unconstitutional Legislation passed by the 110th and 111th Congresses, we may never be rid of it! They say something incredible like it was Bush's fault when they were the Party trying to spend even more money during his administration. They voted for all the spending they now blame on Republicans. We were the only guys voting no. Even more incredible, the Republicans say "We're sorry!" And it is really, we couldn't stop the Progressive madness. I guess the Dementicrats can believe anything, so what's the point of credibility?

    4. Disaster economics says:

      Hold on a minute. Pay Go means that you pay for any program you create. It does not mean you do not increase revenues. You need to decide if you are balancing a budget or gutting the government. If you are balancing a budget your cut and you increase revenues at the same time. My business would be dead in the water if I decided to exist on cutting staff and expenses without ever trying to increase revenues. That is a recipe for economic disaster.

    5. Karl Hamrick says:

      Did Nancy Pelosi read and understand the PAYGO budgeting concept? Or is this another case where she agreed to something in order to find out what it was all about after agreeing to abide by the concept? With her tract record regarding ObamaCare, I'm not sure she is capable of holding office.

    6. Clearhead says:

      It's really quite simple: America is almost broke. Even a lot of CEO's are reduced to playing miniature golf. So let's fix it. Spend more, tax more, lie more — problem solved. Now let's get down to real business and start intensive campaigning for reelection.

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