Press Release
Monday, March 29, 2004

WASHINGTON -- With budget negotiations between the House and Senate now underway, The Concord Coalition today strongly recommended that negotiators agree to reinstate the traditional pay-as-you-go (paygo) rule for entitlement expansions and tax cuts. This fiscally responsible rule played a key role in past bipartisan efforts to rein in ballooning budget deficits.  The Senate version of the budget resolution contains a paygo provision, but the House version does not.

“With concern mounting over the rapidly deteriorating fiscal outlook, returning to the pay-as-you-go standard is a matter of common sense. It reminds us that we all have a duty to pay our bills. To have a meaningful effect, however, the rule must apply to both spending increases and tax cuts,” said Concord Coalition Executive Director Robert Bixby.

“Removing tax cuts from paygo would do nothing to promote fiscal discipline. It would neither control spending nor shrink the deficit. All it would do is exempt tax cuts from fiscal scrutiny, regardless of the circumstances. Such an enormous and unnecessary loophole would not be wise policy given that deficits are back for as far as the eye can see. Since spending and tax decisions both have consequences for the budget, there is no good reason to exempt either from enforcement rules. If spending is viewed as the main problem, Congress has a duty to cut spending before giving itself a free pass to cut taxes. Doing otherwise would simply encourage a steady expansion of deficits,” said Bixby.


“A further danger of exempting tax cuts from paygo is the incentive it would provide to create additional ‘tax entitlements' where benefits are funneled through tax breaks. This subterfuge complicates the tax code while growing the deficit just as inexorably as new entitlement spending,” said Bixby.

The Concord Coalition is a nonpartisan, grass roots 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.