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Washington, D.C. – Congressman Pete Visclosky today voted for the Statutory Pay-As-You-Go Act of 2009, which is designed to restore fiscal responsibility while allowing for critical investments in national priorities. The bill passed the U.S. House of Representatives by a vote of 265 to 166.
“Just as the hardworking people of Northwest Indiana have to balance their checkbooks and make ends meet, so too must Congress,” said Visclosky. “I believe that Congress has a responsibility to the American taxpayers to balance the federal budget and to shepherd government programs in an efficient, effective, and responsible manner. This bill reinforces that obligation by writing it into law.”
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 Congress 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 Congress 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 non-exempt legislation enacted during a session of Congress increases the deficit, there would be an across-the-board reduction in certain mandatory programs, known as a sequester.
This measure is similar to the PAYGO law that was in place in the 1990s, when the budget was last balanced, and that was a factor in enforcing the fiscal discipline that led to balanced budgets. In 2002, Congress failed to reauthorize that PAYGO law, allowing it to expire. This failure contributed to the dramatic turnaround from a projected surplus of $5.6 trillion to projected deficits of $4.5 trillion.
The bill includes 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 is an exemption for emergency legislation.
“This PAYGO legislation helps restore the fiscal responsibility we need to balance the budget and lay the foundation for a vital economy,” said Visclosky. “It may not be perfect in every way, but it is important to impose fiscal discipline and it is the right thing to do. People in Northwest Indiana and across the country will reap the benefits of this new era of fiscal responsibility in Washington.”
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