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Skelton says Pay-As-You-Go legislation would improve budget challenges
Skelton says Pay-As-You-Go legislation would improve budget challenges

Congressman Ike Skelton
WASHINGTON, D.C. (July 19, 2009) — It is no coincidence that the U.S. moved from record deficits to record surpluses in the 1990s — when Congress enacted the Budget Enforcement Act of 1990. This legislation included pay-as-you-go rules, also referred to as PAYGO, ending the practice of borrow-as-you-go and requiring that any bill considered in Congress be deficit neutral.

It is also no coincidence that when the pay-as-you-go law was allowed to expire in 2002, our country returned to record deficits that doubled the national debt. The $5.6 trillion ten-year projected surplus that the Bush Administration inherited in 2001 disappeared and was replaced instead with a deficit over the same period of $3.4 trillion, once omitted costs are included. This represented a net deterioration of $9.0 trillion.

To be sure, this inherited debt has been made worse by the federal government’s necessary responses to the recession. While economic recovery efforts are important to help pull us out of the economic crisis, we must simultaneously focus on the nation’s longer-term fiscal situation. This is why I have cosponsored legislation, H.R. 2920, the Statutory Pay-As-You-Go Act of 2009, to reinstitute common sense pay-as-you-go budgeting rules. The PAYGO legislation would require Congress to offset the costs of tax cuts or increases in mandatory spending with savings elsewhere in the budget. If the net effect of all legislation enacted during a session of Congress increased the deficit, then there would be an automatic, across-the-board reduction in certain mandatory programs, because Congress had not succeeded in paying for all the new costs that it has enacted.

The legislation would exclude costs in four areas where current policy differs substantially from current law: the Alternative Minimum Tax, the estate and gift tax, Medicare payments to physicians, and tax cuts enacted in 2001 or 2003. There would also be an exemption for legislation to fund national emergencies. This provision was included in the pay-as-you-go rules enacted in the 1990s and was put to good use during the recession in the early 1990s, when Congress and the President enacted legislation extending unemployment benefits without offsets by designating it as emergency spending.

I am hopeful that the House will consider this legislation in the coming days. Had our nation continued the wise fiscal policies that led to our previous budget surpluses, Congress would now be in a much stronger position to respond to America’s economic crisis and to more adequately take care of pressing national priorities, like national security, health care, and education. The numbers clearly demonstrate why it is important to restore balance to our budget and return to strong pay-as-you-go budget policies. As any American family will tell you, fiscal discipline now is an investment in a financially secure future. Returning to PAYGO will improve our ability to meet our nation’s domestic and international challenges for years to come.

Congressman Ike Skelton (D-Mo.) serves as chairman of the House Armed Services Committee. Congressman Skelton’s website is at http://www.house.gov/skelton.

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