The Truth About PayGo (Pay-As-You-Go)

As Michele Bachmann points out the devil is in the details:

What the Administration would like for you to think is that by enacting this policy, Washington wouldn’t be able to spend a dollar unless they save a dollar and the national debt would cease to swell as it has these past several months.

However, this is really a charade – and the details tell the story. First of all, this PAYGO has no impact whatsoever on entitlement spending — Social Security, Medicare, and Medicaid, which make up a very sizable portion of the budget.  They’d continue to grow on autopilot.  In fact, even if this PAYGO were fully enforced, entitlement spending would continue to grow 6% a year without offsets.

Second, this PAYGO includes an enormous $3.5 trillion loophole.  The President’s proposal specifically exempts a wide array of expensive policies.  Maya MacGuineas, president of the Committee for a Responsible Federal Budget remarked that, “This is like quitting drinking, but making an exception for beer and hard liquor.” And, Senator Kent Conrad (D-ND), Chairman of the Senate Budget Committee has criticized the plan, adding, “I’m not for waiving PAYGO for $3.5 trillion of items, much of which I think ought to be paid for.”

And more from the Wall Street Journal:

Mr. Obama must think the press and public are dumb enough to buy it, because there he was Tuesday re-selling the same “paygo” promises that Democrats roll out every election. Paygo is “very simple,” the President claimed. “Congress can only spend a dollar if it saves a dollar elsewhere.”

WSJ, Obama and the politburo have no respect for middle America, of course they think we are stupid!

That’s what Democrats also promised in 2006, with Nancy Pelosi vowing that “the first thing” House Democrats would do if they took Congress was reimpose paygo rules that “Republicans had let lapse.” By 2008, Speaker Pelosi had let those rules lapse no fewer than 12 times, to make way for $400 billion in deficit spending. Mr. Obama repeated the paygo pledge during his 2008 campaign, and instead we have witnessed the greatest peacetime spending binge in U.S. history. As a share of GDP, spending will hit an astonishing 28.5% in fiscal 2009, with the deficit hitting 13% and projected to stay at 4% to 5% for years to come.

Nancy Pelosi strikes me as the fiscally responsible type, the type that really cares what happens with taxpayer money.  Well, I guess she does care, but that’s only when it’s used to pay for her botox injections and her flights back and forth to San Fran. in military aircraft.

The truth is that paygo is the kind of budget gimmick that gives gimmickry a bad name. As Mr. Obama knows but won’t tell voters, paygo only applies to new or expanded entitlement programs, not to existing programs such as Medicare, this year growing at a 9.2% annual rate. Nor does paygo apply to discretionary spending, set to hit $1.4 trillion in fiscal 2010, or 40% of the budget.

Does this not provide incentive to the government to create more entitlements to try and prove that PayGo was put to good use?  New entitlements on top of too many old entitlements…

This loophole matters, because on the very day Mr. Obama was hailing paygo the House Appropriations Committee was gleefully approving a 12% increase in 2010 nondefense discretionary spending, the third year running that Democrats have proposed double-digit increases. Or consider that the 2010 budget resolution included a $2 billion increase for low-income heating assistance as an entitlement change that should be subject to paygo. But Congressional Democrats simply classified it as discretionary spending, thereby avoiding the need for $2 billion in cuts elsewhere. C’est-la-paygo.

Mr. Obama’s new proposal includes even more loopholes. There’s an exception for Congress’s annual alternative-minimum tax “patch,” which is worth at least $576 billion over 10 years; for any of the Bush tax cuts that Mr. Obama decides he wants to extend past 2010; and to protect against planned cuts in Medicare doctor payments. These carve-outs alone spare Democrats from having to come up with some $2.5 trillion in spending cuts or new taxes. To add insult to profligacy, the rules also allow the Administration to run huge early deficits for its looming health-care bonanza, and only pay for it later — say, after 2012.

The President also revived the myth that paygo was somehow responsible for eliminating budget deficits during the Clinton years. In fact, that brief era of balanced budgets was due to: mid-decade spending reductions by a GOP Congress elected on a balanced-budget pledge; an excessive cut in defense spending to 3% from 5% of GOP across the decade; and an unsustainable revenue boom due to the dot-com bubble. But harking back to the 1990s lets Mr. Obama avoid having to defend his own spending record.

The real game here is that the President is trying to give Democrats in Congress political cover for the health-care blowout and tax-increase votes that he knows are coming. The polls are showing that Mr. Obama’s spending plans are far less popular than the President himself, and Democrats in swing districts are getting nervous. The paygo ruse gives Blue Dog Democrats cover to say they voted for “fiscal discipline,” even as they vote to pass the greatest entitlement expansion in modern history. The Blue Dogs always play this double game.

Ahhh yes, more Kabuki theater, as Michelle Malkin so succinctly puts it.

The other goal of this new paygo campaign is to make it easier to raise taxes in 2011, and impossible to cut taxes for years after that. In the near term, paygo gives Mr. Obama another excuse to let the Bush tax cuts he dislikes expire after 2010, while exempting those (for lower-income voters) that he likes. In the longer term, if a GOP Congress or President ever want to cut taxes, paygo applies a straitjacket that pits those tax cuts against, say, spending cuts in Medicare. The Reagan tax reductions would never have happened under paygo.

We are so Scr—d!  It’s like a game of chess they are playing – no concern for the country, just for their own political interests.  If Obama is ousted in 2012 it makes it that much harder for the incoming administration to resolve the mess he created.

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