Over the last six years, Democrats and Republicans in the nation’s capital have behaved like the late coach George Allen of the Washington Redskins, whose owner lamented that Allen had an unlimited budget, yet managed to exceed it. But the Democratic takeover of Congress may have begun a new era in which the two parties compete to see who can squeeze a nickel hardest.
Administration budget director Rob Portman said the other day that President Bush will not hesitate to use his veto to keep Congress from overspending. That would be a change for a president who has never vetoed a spending bill, and who has presided over a rapid expansion of the federal budget. It suggests he may be ready to embrace frugality at last.
You would think that is bad news for the opposition party, which has a long list of programs it would like to fund. But House Democrats have committed themselves to a measure that would stop their spending spree before it begins. It’s a rule called "pay as you go" (known by the acronym paygo), which says: Any measure that would raise spending or reduce revenue must be offset by equivalent spending cuts or revenue increases elsewhere in the budget. If you can’t pay for it, supporters contend, you should do without it.
Not long ago, this was orthodox Republican doctrine. After the GOP took over the House in 1994, Newt Gingrich’s troops approved a constitutional amendment requiring a balanced federal budget — making it illegal for the government to spend more than it takes in. That was the ultimate pay-as-you-go plan, and Rep. John Boehner, R-Ohio, said then, "If it’s the only thing we pass, it’s the most important thing we pass."
But the amendment died, and House Republicans are suffering from amnesia. They now say pay-as-you-go rules should apply only to spending increases, not tax cuts. They, and the administration, argue that requiring all changes to be deficit-neutral could lead to tax increases. As Boehner says, "If you put the paygo rules in and you increase spending, the only answer is to raise taxes."
He says that like it’s a bad thing. But consider the alternatives. Under pay-as-you-go, Democrats cannot increase spending unless they are prepared to tell Americans, "We’re raising your taxes, and here’s how." That would be a significant curb on their appetite for new programs.
Without the constraint of pay-as-you-go, on the other hand, Democrats can shovel out money as fast as the Treasury can borrow it — letting us all think we’re getting goodies at no cost to anyone. Having that option available will only stimulate new outlays. With the restriction, spending may rise. But without it, spending would certainly rise.
For proof, we need only look at the recent past. In the 1990s, Congress functioned under a strict pay-as-you-go law, which provided for automatic budget cuts whenever a bill didn’t pay for itself. The restriction was one of several measures that helped to eliminate the deficit and create a budget surplus. But starting in 1999, lawmakers began waiving the rule, and in 2002, they junked it entirely.
How did that work out? In the last six years, federal spending (adjusted for inflation) has risen at more than triple the rate it did in the previous six years. The surplus drowned in a flood of red ink.
In explaining why the president rejects applying pay-as-you-go to tax cuts, budget director Portman inadvertently illuminated the need for an inclusive rule. "It’s not that we are undertaxed as much as we need to get our spending in line with our revenue," he told The Washington Times.
Exactly. And if the pay-as-you-go rule had been scrupulously followed over the last six years, spending would already be in line with revenue. Restoring the rule now would keep it from getting further out of line.
But what if the Democrats decide to adopt new spending programs paid for, as required, with higher taxes? Well, that’s where the president’s veto power comes in handy. Bush could even borrow a line from Ronald Reagan: "I have only one thing to say to the tax increasers: Go ahead, make my day."
Given our current divided government, pay-as-you-go would create a situation ideal for fiscal restraint: a Congress that can’t boost spending without raising taxes, and a president who will veto any tax increase. I can understand why fans of big government might have qualms about that. But for anyone who wants to control spending, it would be a dream come true.