September 22, 2014

Concord Coalition Supports Statutory PAYGO But Cautions Against Large Exemptions

The Concord Coalition today reiterated its support for enacting statutory pay-as-you-go (PAYGO) rules, particularly in light of proposals to expand the federal government’s health care commitments. Concord warned, however, that the Obama Administration’s PAYGO proposal would exempt $3.5 trillion of specific policies from the rule and protect most spending programs from across-the-board cuts intended to enforce the rule.

“Finding a cure for the nation’s dire fiscal outlook will obviously require a lot more than a new budget rule, but enactment of statutory PAYGO would send a very positive signal that the federal government is beginning to take the problem seriously. We have to begin forcing the kind of trade-offs that were not made when large deficit financed tax cuts and entitlement expansions were enacted after the old paygo law expired,” said Robert Bixby, executive director of The Concord Coalition.

The administration’s proposal builds off the paygo rules put in place during the 1990s. Similar in design, the Office of Management and Budget (OMB) would keep a running scorecard for the costs associated with enacted legislation through 2013 and compare those costs to the established baseline. At the conclusion of each session of Congress, OMB would be required to subject any resulting difference between the baseline and enacted legislation to sequestration -- an automatic trigger, which would reduce non-exempt mandatory programs.

“While statutory PAYGO would be a positive development, its effects should not be overestimated. At best, PAYGO is intended to stop the fiscal bleeding and, in this case, the exempted policies allow a lot of blood loss before the tourniquet is applied. The most immediate benefit of the new law would be to reinforce the President’s commitment to pay for health care reform. This is extremely important and a minimum requirement for fiscal responsibility. However, given that health care spending is already on an unsustainable path, deficit-neutrality is not a sufficient long-term fiscal goal,” Bixby said.

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The Concord Coalition is a nonpartisan, grassroots 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:
Jonathan DeWald
(703) 894-6222
communications@concordcoalition.org