The Honorable Allen Boyd, Co-Chair for Administration, The Blue Dog Coalition

The Honorable Dennis Moore Co-Chair for Policy, The Blue Dog Coalition

The Honorable Mike Ross, Co-Chair for Communications, The Blue Dog Coalition

The Honorable Stephanie Herseth Sandlin, Whip, The Blue Dog Coalition

1227 LHOB, United States House of Representatives

Washington, DC 20515-0902

Dear Mr. Boyd, Mr. Moore, Mr. Ross and Ms. Herseth Sandlin,

On behalf of The Concord Coalition, I am writing to express strong support for the Blue Dog

Coalition’s insistence that pay-as-you-go (paygo) not be waived for a $52 billion entitlement

expansion that has been proposed as an amendment to the emergency supplemental spending

bill. While this new spending for veterans’ education benefits enjoys widespread support, it

does not qualify as an emergency and, if paygo were waived, would be entirely financed with

borrowed money.

By insisting that paygo be upheld, even for a popular initiative, the Blue Dog Coalition is

setting a very positive example of fiscal responsibility at a crucial moment. To be blunt,

paygo is under assault. Last year, the House and Senate took an important step toward

restoring fiscal discipline and preventing the long-term outlook from getting any worse by

reinstating paygo for new entitlement spending and tax cuts. A similar rule, in effect from

1990 through 2002, was a key factor in turning budget deficits into surpluses during the

1990’s.

In recent months, however, Congress has waived paygo for economic stimulus legislation

and a one-year Alternative Minimum Tax (AMT) “patch.” These waivers alone have added

roughly $180 billion to the projected debt, not including higher debt service costs. Yet these

actions were at least time-limited and, aside from the debt service increase, will not have the

same long-term consequences as waiving paygo for purposes of expanding permanent

entitlement spending, as is at issue here.

With an estimated cost of $52 billion for the first 10 years alone, strict adherence to paygo in

this legislation is both necessary as a matter of budgetary discipline and desirable as a means

of compelling the types of trade-offs that must be made for a sustainable fiscal future. It

presents a choice between paying our own way or continuing to run up a legacy of debt for

future generations of Americans. Expressing support for paygo in the abstract is easy.

Making the trade-offs is the hard part.

2

I am aware that your position has generated strong opposition. That can be expected any time

budget rules become inconvenient. However, I have yet to hear a compelling case for why

fiscal irresponsibility at home is somehow necessary to honor our troops abroad. To the

contrary, your insistence that expanded benefits be paid for demonstrates a willingness to

honor our veterans’ sacrifice with some sacrifice of our own. Surely, proponents of this

benefit do not mean to suggest that it is only worth doing if it doesn’t have to be paid for.

In the face of immediate concerns and desires, it is always tempting for lawmakers to lose

sight of the fact that current budget policies are on an unsustainable path. The Congressional

Budget Office (CBO), the Government Accountability Office (GAO), the Office of

Management and Budget (OMB), and independent fiscal and economic policy experts,

including The Concord Coalition, confirm that basic reality.

Not only does paygo help to keep the long-term outlook from getting worse, but it also forces

explicit acknowledgement of the obvious — at some point, someone will have to pay for

deficit financed increases in entitlement spending and tax cuts, if not within the five to 10-

year budget window, then in the future through higher taxes or reduced federal programs,

benefits and services. There is no free lunch.

How the current situation is resolved will have serious implications beyond the fate of one

particular bill. It is already clear that the push for paygo waivers will become more intense as

other legislation bumps up against the need to find offsets. If paygo is waived for the

proposed expansion of veterans’ education benefits, it will be that much more difficult to

hold the line on items such as extension of expiring tax breaks (“extenders”), a Medicare

physician payment increase and, most expensive of all, another AMT patch. Indeed, waiving

paygo in this case may unravel the existing consensus to offset popular initiatives such as

expansion of the State Children’s Health Insurance Program (SCHIP) and the farm bill.

If Congress maintains its commitment to paygo when the going gets rough, it will send a

powerful signal that Washington has found the resolve to take its long-term fiscal problems

seriously. Looking ahead, this would set a good precedent for the hard choices that will be

needed to achieve fiscal sustainability. By contrast, a decision to waive paygo will signal

business as usual ? casting in doubt the credibility of paygo for tough decisions on taxes as

well as spending. That is why The Concord Coalition appreciates the strong stand the Blue

Dog Coalition has taken in this regard and why we hope your position will prevail in the end.

Sincerely,

Robert L. Bixby

Executive Director

The Concord Coalition