(Blog Post) If President Obama thought he'd score some easy political points by endorsing new PAYGO legislation to control deficit spending, he was sadly mistaken. Although PAYGO--budget-speak for "pay-as-you-go"--seems to limit Congress' ability to cut taxes or raise spending, the initial reviews were unkind and sometimes harsh. Full Story »
Posted by Derek Hawkins
Makes Obama's push for a PAYGO plan look like a politically naive mistake, but doesn't provide adequate background to familiarize us with the process enough to make the most compelling case. Not a bad story -- quotes Republicans and Democrats and provides some context -- but I wish there was more here.
PayGo is one of concepts that sounds great on paper—but means much less in practice. Under the PayGo law that was in effect from 1991 to 2002, Congress was required to pay for any new tax cuts or new entitlement benefits (in say, Social Security or Medicare) by either raising other taxes or cutting other entitlement spending. In theory, this seems a guaranteed way to balance the budget. Obviously, it isn’t. The Congressional Budget Office has projected that Obama’s budgets would run a collective deficit of about $11 trillion between now and 2019.
For starters, it applies only to tax cuts and and entitlement spending—programs like Social Security, Medicare, food stamps, agricultural subsidies or unemployment insurance when recipients automatically qualify for benefits by fulfilling eligibility requirements (by being unemployed, for instance). Totally exempted is “discretionary spending” for defense, education, environmental protection and many other programs. In 2008, discretionary spending totaled $1.135 trillion, or 38 percent of federal spending.
