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Washington, D.C. – Congressman Pete Visclosky announced today that he has endorsed the Statutory Pay-As-You-Go Act of 2009, becoming an original cosponsor of the legislation that has the backing of 156 Members of Congress. The bill is designed to restore fiscal responsibility while allowing for critical investments in national priorities.
“I believe that Congress has a moral obligation to budget taxpayer dollars in an efficient, effective, and responsible manner,” said Visclosky. “Balancing the federal budget and keeping it balanced should continue to be one of this country’s top priorities.”
The statutory PAYGO bill would require offsetting revenue increases or spending reductions when creating new non-emergency tax cuts or entitlement expansions. In other words, it forces Congress, like a family household, to operate within its budget. For example, if the House increases funding for one program, it must either decrease the funding of a different program or increase taxes to accommodate for the first program’s increase. Likewise, if the House cuts taxes for a specific group, it must reduce funding for an existing program or increase a different group’s taxes. If the net effect of all legislation enacted during a session of Congress increases the deficit because Congress has not succeeded in paying for all the new costs that it has enacted, there would be an across-the-board reduction in certain mandatory programs, known as a sequester.
The bill does include some exemptions so that the baseline would be adjusted to exclude the costs of extending current policy on the Alternative Minimum Tax, Medicare Sustainable Growth Rate, estate tax, and the middle class tax cuts enacted in 2001 from all calculations for PAYGO. Additionally, as was the case in the original PAYGO law, there would be an exemption for emergency legislation.
“Although this bill is not perfect, it is a firm, positive step in the direction of fiscal responsibility,” said Visclosky. “Given the current economic crisis, we should not allow the perfect to be the enemy of the good.”
The statutory PAYGO bill is similar to the statutory PAYGO law that was in place in the 1990s, when the budget was last balanced, and was a factor in enforcing the fiscal discipline that led to balanced budgets. In 2002, Congress failed to reauthorize the PAYGO law and allowed it to expire. This failure contributed to the dramatic turnaround from a projected surplus of $5.6 trillion to projected deficits of more than $11 trillion.
“This PAYGO legislation will help restore the fiscal responsibility that brought us budget surpluses and prosperity in the 1990s,” said Visclosky. |
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