Paygo Is a Mistake for House Democrats

Bill Clark/CQ Roll Call via AP Images

Speaker of the House Nancy Pelosi holds her weekly on-camera press conference in the Capitol. 

As the 116th Congress gets underway, the new Democratic majority appears ready to constrain itself before making any real progress in curbing Trump administration abuses. As part of the rules package governing how the House operates, the Democrats plan to reinstate “Paygo,” a rule that requires all new spending increases passed by the House to be offset by either other spending decreases or tax increases, leaving all legislation essentially budget neutral. 

This is a terrible idea, and every Democrat who cares about getting things done in the next two years should strongly oppose it.

While Paygo might at first glance seem like a reasonable commitment to “fiscal responsibility,” it’s really just another obstacle, without any real economic justification, that’s going to stand in the way of progressive legislation. As Representative Ro Khanna of California,

one of the provision’s few opponents in the Democratic caucus (along with Representative Alexandria Ocasio-Cortez of New York), says, it’s “terrible economics.” 

Virtually all credible schools of economic thought acknowledge the importance, and even the necessity, of deficit spending during an economic downturn, which is beginning to look more and more likely at some point over the next two years.

Even in brighter economic times, the limitation that all new legislation must be paid for makes no sense. It ignores the reality that in this country’s long history, the federal government has almost never paid for new spending with corresponding spending cuts or tax increases, and America has still got a functioning economy, little inflation, and a solvent government that is not adversely affected by the amount of outstanding debt.

Some lawmakers may claim that debt is a ticking time bomb, but it’s worth pointing out that those same deficit scolds were quick to forget just how important it was to shrink the deficit. The second they had a chance to pass tax cuts for wealthy people and corporations (tax cuts that will add almost $1 trillion to the federal deficit) they jumped at the opportunity. If the Republican belief in the importance of “fiscal responsibility” ever held even an ounce of credibility, that moment has long since passed. There’s no reason that Democrats should limit their ability to pass significant legislation because Republicans want to pretend that the deficit is a reason to limit government spending.

The budget deficit number did not come from God written on stone tablets. It came from the Republicans, who did not seem to care at all that it is hundreds of billions of dollars greater than it was two years ago. It makes no sense for the Democrats to now treat the new number as inviolate, prioritizing that over accomplishing the things that they were elected to do.

From a purely political perspective, protecting red or purple state Democrats from accusations of fiscal irresponsibility is a terrible reason to hamstring the ability of this Congress to pass significant legislation, particularly considering how little room any Republican member of Congress has to criticize Democratic spending after coming up with a nearly $2 trillion tax bill. 

Rather than try to convince voters that they are the ones that care most about the deficit, Democrats should earn their votes by putting forward legislation that actually improves the lives of everyday Americans. If Paygo is in the mix, that task becomes much harder to do.

More Democrats should follow the lead of Khanna and Ocasio-Cortez, and reject Paygo. The alternative, passing progressive legislation that helps the American people even if it raises the deficit a bit, will be much more politically popular.

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