Link—Spending Climate – AT: Public Won’t Support Cuts

Link—CUTGO Enforcement = T/Off

Changing Pay-go to Cut-go. The new rules replace the previous ‘pay-as-you-go’ or PAYGO requirement with a ‘cut-as-you-go’ or cut-go requirement. Cut-go prohibits the House from considering any bill that produces a net increase in mandatory spending within the 1-year, 5-year and 10-year budget windows, as opposed to PAYGO’s ten-year window. If a bill increases mandatory spending by any amount, the bill must cut the budget somewhere by that same amount. Under PAYGO, spending cuts could serve as offsets to spending increases, however, revenue increases could also serve as offsets. Under the ‘cut-go’ rule increases in revenue cannot be used to offset increases in mandatory spending.

While in the House majority, the Democrats had in place a “pay-as-you-go” budget rule, requiring that any tax cut or increase in mandatory (entitlement) spending must be offset by cuts in other mandatory spending or increases in other taxes, in order to avoid increasing the deficit. They also barred use of budget reconciliation on any measure that would increase the deficit, as was the case in the 2001 and 2003 Bush tax cuts and the law that established Medicare Part D. While the incoming Republican majority professes strong support for fiscal responsibility, it is more deeply committed to low taxes and less spending. The changes to PAYGO in their rules package reflect those priorities. Summay: The new rules include a number of provisions intended to lock in the Republicans’ budget principles for the 112th Congress. Specifically, they: • Replace “pay-go” with “cut-go”, a new system that requires all new mandatory spending to offset by other mandatory spending cuts. Tax increases are no longer allowed to act as offsets; • No longer require tax cuts to be budget-neutral; • Grant the Budget Committee Chairman complete authority to set aggregate spending limits for FY11, limits usually set through a budget resolution; • Overtly exempt the repeal of health care reform and the extended Bush tax cuts from requiring budgetary offsets; • Allow deficit-increasing tax cut measures to be passed through budget reconciliation, but bar its use for measures that would increase net spending; • Extend “cut-go” to bar measures that increase spending by over $5B in any ten years within a 40-year window; • Eliminate the “Gephardt Rule” that had allowed the House to avoid stand-alone votes to raise the debt ceiling; • Require each committee to formulate proposals to cut or eliminate programs that are inefficient, duplicative, outdated, or more appropriately administered by State or local governments. It should be noted that the Senate has no obligation to concur with these rules, and likely will engage in a bitter fight with the House majority on budgetary issues. Nevertheless, the rules are deliberately designed to virtually guarantee that mandatory spending will not increase, and likely will decrease, during the 112th Congress. Supporters: most Republicans, Tea Party and small government advocates • Supporters applaud these measures as an important reflection of commitment to reduce federal spending and shrink government in the coming years. Opposition: most if not all Democrats, deficit hawks • Detractors view the changes as a significant weakening of pay-go’s deficit reducing impact, and many believe it demonstrates Republicans’ fundamental unseriousness about tackling persistent budget deficits.