President’s Call for ‘Pay-As-You-Go’ Rules Has Implications for Reform
On Tuesday, President Obama said he will send Congress a proposal that would revive "pay-as-you-go" rules and require all new spending programs and tax cuts to be paid for within 10 years, the AP/Philadelphia Inquirer reports (Taylor, AP/Philadelphia Inquirer, 6/10).
Under the rules, the White House Office of Management and Budget would tally the total cost of policies enacted by Congress each fiscal year, and if there is a negative balance, the administration could "sequester" pre-approved funds to bring the total cost to zero (Clarke, CQ Today, 6/9).
Obama's proposal would allow health care reform and other programs to run up large deficits in their first years, but Congress would have to find a way to cover those costs within 10 years.
In addition, the plan would provide for more than $3.5 trillion worth of exemptions from pay-go rules over 10 years (Montgomery, Washington Post, 6/10).
For example, lawmakers still would be able to delay a scheduled cut in Medicare payments to physicians (Youngman/Alarkon, The Hill, 6/9). The rules also would not apply to discretionary spending measures.
Obama said, "The 'pay-as-you-go' principle is very simple. Congress can only spend a dollar if it is saves a dollar elsewhere."
OMB Director Peter Orszag said that pay-go "embodies the common-sense principle that you shouldn't dig the hole any deeper," although it likely would not reduce the national debt (Gay Stolberg, New York Times, 6/10).
House Majority Leader Steny Hoyer (D-Md.) said, "The president is looking forward to signing a bill. This is one of the important steps toward restoring fiscal responsibility" (Clarke/Epstein, CQ Today, 6/9).
House Speaker Nancy Pelosi (D-Calif.) said, "We are fully committed to enacting pay-go rules into law with enforceable consequences" (Koffler, Roll Call, 6/9).
Members of the fiscally conservative House Blue Dog Coalition also praised the announcement (Parnes, Politico, 6/9).
However, critics said that the bill would allow too much spending to be exempted from the rules and noted that Congress has a long history of waiving pay-go requirements for new programs (New York Times, 6/10).
Senate Budget Committee Chair Kent Conrad (D-N.D.) said, "I'm not waiving pay-go for $3.5 trillion of items, much of which I think ought to be paid for," adding, "I don't think at this point we can afford not to pay for those very large expenditures" (Washington Post, 6/10).
Antonia Ferrier, spokesperson for House Minority Leader John Boehner (R-Ohio), said, "The administration and congressional Democrats are making it abundantly clear today that tax increases are very much on the horizon to pay for new programs like health care" (Roll Call, 6/9).
Hoyer said the House Budget Committee will hold hearings on the bill within the next two weeks with the goal of moving it to the House floor quickly (CQ Today, 6/9).
On Wednesday, NPR's "Morning Edition" reported on Obama's pay-go proposal. The segment also looks at Obama's efforts to promote his health reform plan (Liasson, "Morning Edition," NPR, 6/10).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.