One of the reforms adopted by Democrats when they took control of Congress this year was ‘pay-go.’ Simply put, pay-go requires Congress to offset tax cuts and new entitlement spending with tax increases or spending cuts. As long as Congress sticks to the pay-go rule, it ensures that Congress does nothing that will increase the deficit–at least not dramatically. How proud were Democrats to have reinstated pay-go? The Washington Post wrote about the reform last January:
There are ways to get around pay-go. One of them is on display today in the S-Chip debate, where Democrats have pushed a bill which assumes both that there will suddenly be 22 million new smokers, and that the program will see an 80 percent cut in 2013. Neither of these will happen of course; that’s a fiction to hide the real cost, so S-Chip passes muster under pay-go. By sustaining the president’s veto today, the House prevented tens of billions of dollars from being added to the deficit. Fixing the Alternative Minimum Tax will also force Democrats to raise taxes by billions of dollars or to do an end-run around pay-go. It looks like House and Senate Democrats may differ on which approach to take. Charlie Rangel wants to enact a permanent fix for the AMT, which would require a tax increase of about $1 trillion. Senator Max Baucus–who faces re-election in a red state next year–prefers a smaller one-year patch. And with tax increases not especially popular in Montana, it seems that waiving pay-go is on the table:
Congressional Democrats are eager for tax increases when they can claim that they’re needed to pay for the war. But when they have to choose between extending a tax cut or risking their seats in Congress, it seems that a bigger deficit is just fine, thanks.
