WASHINGTON -- The Concord Coalition said today that the pay-as-you-go (PAYGO) rule for tax cuts and entitlement expansions included in the budget resolution now before the House and Senate fails to provide meaningful fiscal discipline because it expires after just one year and carves out a $27.5 billion exemption for unspecified tax cuts.
“If you want to deprive PAYGO of any real meaning, the best two methods are to limit its duration and carve out exemptions. This budget resolution does both. It sends an alarming signal that despite a projected deficit of over $400 billion this year, and projected deficits for as far as the eye can see, Congress is not yet taking our nation's deteriorating fiscal outlook seriously,” said Robert L. Bixby executive director of The Concord Coalition.
“Limiting PAYGO to one year, with or without exemptions, provides virtually no fiscal discipline. PAYGO can only be effective if it establishes an ongoing standard. Enacting PAYGO one year at a time essentially allows Congress to exempt any tax cuts or entitlement expansions from fiscal scrutiny so long as it does so in one-year increments. Like tax cut sunsets or the Medicare ‘donut hole,' one-year PAYGO seems explicitly designed to let Congress avoid hard choices ¾ exactly the opposite of what PAYGO is intended to do,” Bixby said.
Concord also expressed concern with the following aspects of the proposed PAYGO rule:
“A much more disciplined approach is needed to begin the road back to a balanced budget. While budget rules can be changed annually, a multi-year PAYGO provision in this year's budget resolution would at least ensure that next year's budget debate begins with PAYGO in place. The burden of enacting change would be on those seeking to get around PAYGO and not on those seeking to enforce it,” said Bixby.
The Concord Coalition is a nonpartisan, grassroots organization dedicated to balanced federal budgets and generationally responsible fiscal policy. Former U.S. Senators Warren Rudman (R-NH) and Bob Kerrey (D-NE) serve as Concord's co-chairs and former Secretary of Commerce Peter Peterson serves as president.