Concord Coalition says that Deficit Outlook Justifies Return to "Pay-As-You-Go" Rule for Tax Cuts and Spending

Press Release
Sunday, March 13, 2005

WASHINGTON -- As the House and Senate debate their respective versions of the Fiscal Year 2006 budget resolutions, The Concord Coalition today urged them to combat the threat of growing deficits by adopting strong enforcement mechanisms - including a “pay-as-you-go” rule (PAYGO) for tax cuts and entitlement expansions.

“It is clear that the deficit is not going to go away on its own. Despite attempts to avoid the inevitable, at some point Congress and the President will need to either cut spending or raise revenues by more than is implied in these budget blueprints. Since elected leaders are loathe to make such decisions, it will help to have budget process measures in place that stiffen political spines. Tough spending caps for appropriations are a proven tool and should be part of the budget resolution. Standing alone, however, appropriations caps will not be enough. What's also needed is the reinstatement of PAYGO for entitlement expansions and tax cuts,” said Concord Coalition Executive Director Robert Bixby.

“In a time of persistent or expanding deficits, such as we face now, the PAYGO rule is common sense. It does not, by itself, reduce the deficit but it promotes fiscal responsibility by requiring anyone who proposes a tax cut or entitlement expansion to answer the question: ‘Can we afford it?' Given what's happened in recent years -- when large tax cuts were combined with large entitlement expansions -- forcing an answer to this simple question is perhaps the most important thing politicians can do immediately to stop digging the hole deeper. In contrast, failure to renew PAYGO would send an alarming signal that Washington policymakers are not yet taking our nation's deteriorating fiscal outlook seriously,” Bixby said.

The Concord Coalition also reiterated its opposition to renewing PAYGO in a way that exempts tax cuts.

“Exempting tax cuts from PAYGO does nothing to promote fiscal discipline. It would neither control spending nor shrink the deficit. All it would do is exempt any tax legislation 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. Moreover, exempting tax cuts from PAYGO would encourage an expansion of so-called ‘tax entitlements' where benefits are funneled through the tax code rather than by direct spending ¾ a far less efficient approach,” 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.



CONTACT: Tristan Cohen (703) 894-6222 [email protected]