Fifth District residents remain very concerned about the level of federal spending and debt that our country has incurred over the past eight years and rightly so. I share this concern and am working with our congressional leadership and the White House to restore fiscal responsibility in Washington. I did vote against the president’s $3.6 trillion budget because I believe it did not go far enough in cutting our deficit. I am encouraged by the White House’s announcement last week that it plans to reinstate statutory PAYGO rules.
At the outset of the 1990s, Congress passed the Budget Enforcement Act to ensure that the budget agreement was carried out. Among its provisions was a rule called ‘pay-as-you-go’ (PAYGO), which simply means that Congress can only spend a dollar if it saves a dollar somewhere else. By the end of the 1990s, the budget was in surplus for the first time in 30 years and it was clear that PAYGO played a big part in that success.
In 2002 when the Budget Enforcement Act expired, Congress chose not to reinstate PAYGO. Without PAYGO, the budget plunged from a surplus of $236 billion in 2000 to a deficit of $413 billion in 2004. Then in 2006, Congress reinstated PAYGO rules but without a law on the books, the rules could not be strictly enforced. By 2007, our ballooning deficit was seeding the beginning of a recession. With the compounding banking and housing crises, Congress had to accommodate for extraordinary spending measures in 2008 and 2009 to keep our economy from falling off a cliff.
As these measures pull us out of the slump, we must focus attention on our longer-term fiscal fate because the path we’re currently on simply isn’t sustainable.
Now the president is proposing to put PAYGO back into law, which means Congress will need to approve legislation requiring that any new tax cut or entitlement program be paid for. The Office of Management and Budget would maintain a PAYGO ledger that records the average 10-year budgetary effects of all legislation enacted through 2013 that affects mandatory spending or tax legislation.
Under the president’s plan, there would be exceptions in four areas: (1) Medicare payments to physicians; (2) the estate and gift tax; (3) the Alternative Minimum Tax; and (4) tax cuts enacted in 2001 and 2003. These exceptions are similar to the treatment of expiring mandatory programs under current PAYGO rules, which do not record costs for simply extending those programs. If there is a PAYGO cost at the end of a particular year because Congress has not succeeded in paying for all the new costs that it has enacted, the president would be required to issue an order sequestering budgetary resources from certain mandatory programs.
PAYGO is just common sense. Working families have to balance their checkbook; why shouldn’t Congress? PAYGO necessarily forces lawmakers to make tough, sometimes unpopular choices, but I believe these efforts are necessary to return to an era of responsible government spending.
Please feel free to contact me to share your concerns and ideas. You may call 888.4.TOM4US (888.486.6487); write to 1520 Longworth House Office Building, Washington, D.C. 20515; or visit www.perriello.house.gov to sign up for my weekly e-newsletter.
Tom Perriello represents the Fifth District in the United States House of Representatives.