Democratic members of congress and President Obama plan to re-institute statutory pay-as-you-go(or PAYGO) legislation, which they say would restore fiscal responsibility to government. PAYGO uses new spending or tax changes in order not to not ad to the federal deficit. New proposals must either be budget neutral or must be offset with savings derived from existing funds. It strives to require those writing the budget to use fiscal restraint and prioritize expenses.Second District Congressman Joe Wilson, a Republican, says the issue has developed into a shell game. “People announce that you’re going to have to pay for a program, but it gets so confused, and the ultimate affect, as we’ve seen with the Democrats in control of congress. They took congress in 2007, with a PAYGO rule at the time. We had a deficit of 160 billion dollars. Now we have a deficit of $1.8 trillion.”
But Congressman John Spratt, Chairman of the House Budget Committee and a Democrat, points out that Republicans were in the majority in 2002 when the Budget Enforcement Act expired. He says they chose not to reinstate PAYGO, knowing that it would impede passage of their agenda. He says if they had, the budget would not have plunged from a surplus of $236 billion in 2000 to a deficit of $413 billion in 2004. Spratt says PAYGO restrains entitlement spending and new tax cuts, which both tend to be permanent, easy to pass and hard to repeal.
House Majority Whip Jim Clyburn, a democrat, says the pay-as-you-go discipline has been a key principle of Democratic policy since the early 1980’s. He says President Clinton’s Budget Enforcement Act passed in the early 1990’s yielded successive surpluses for the first time in 30 years.
Wilson says he fears that PAYGO would cause an automatice tax increase. “The tax increase will be on small businesses, the people in South Carolina who create jobs. I’m concerned that we’ll have an increase in unemployment. We should be working to reduce taxes on small businesses.”
Wilson says PAYGO should not be a partisan issue. “When we had a downturn in 1960, President John F. Kennedy reduced taxes and the economy grew. Twenty years after that, President Ronald Reagan reduced tax rates and jobs were created.”