The PAYGO Scam - An Opportunity for the GOP

The Democrats rode many GOP gaffes to their Congressional majority in 2006, not the least of which was the then-majority's addiction to pork-barrel spending, especially the abuse of the so-called "earmarks". The Republican Party had unfortunately decided that one of the best ways of preserving their majority status was seemingly unlimited spending in each members district - essentially buying votes.

Federal spending for local projects in of itself is not bad, as long as one goes through the proper channels. Submit spending requests as part of the normal appropriations process, where each project is open to public scrutiny and debate. But it became easier for members of both sides of the aisle to attach spending at the end of the appropriations process, rather than at the beginning - avoiding such things as actually having to defend sponsored projects on the floors of the House and Senate. Unfortunately, that provided  both a mechanism and an opportunity for members of Congress to easily use spending measures to benefit either themselves, family members, or special constituencies. The Democrats rightly killed the GOP over this issue in 2006, pledging to eliminate such abuses once they were in power.

One of the first things that the Democrats did once elected was to pass something called "Paygo". It was sold to the American public as a measure that would require that each spending item be paid for, either by a reduction in spending elsewhere or an increase in taxes. Here's how the new Democrat "pay-as-you-go" rules were described in the Washington Post on January 6th, 2007: House Adopts Pay-as-You-Go Rules.

On its second day under Democratic management, the House yesterday overwhelmingly approved new rules aimed at reining in deficit spending and shedding more light on the murky world of special-interest projects known as earmarks.

Under the new provisions, the House will for the first time in years be required to pay for any proposal to cut taxes or increase spending on the most expensive federal programs by raising taxes or cutting spending elsewhere. And lawmakers will be required to disclose the sponsors of earmarks, which are attached in virtual secrecy to legislation to direct money to favored interests or home-district projects.

In recent months, with revelations that lawmakers had earmarked funds for projects with little public benefit, earmarks had became a political embarrassment and a symbol of fiscal profligacy.

..."It's important that they passed a pay-go rule because they're setting a standard for themselves. This is a way of saying 'There's a new sheriff in town' and 'We're going to be fiscally responsible,' " said Robert L. Bixby, executive director of the Concord Coalition, an advocacy group dedicated to deficit reduction. "But, now, they're going to have to figure out how to live up to that standard. And that's going to be pretty tough."

We're now learning that the Democrats, contrary to their public protestations, were only interested in passing Paygo as a means to prevent any extension of the Bush tax cuts - it was never intended to prevent either wasteful spending or the use of earmarks to buy votes for re-election.

In a new article by AEI's Kevin Hassett (Pork Projects Thrive in Democrats' Spending Scam), the author reveals that from the very beginning of their new majority, the Democrats and the media failed to point out that the Dems built in two ways for them to continue as much pork barrel spending as they could approve. First, the Paygo rules did not apply to discretionary spending. And second, the Dems passed an amendment to their rules stating that they would use ongoing baselines calculated by the CBO as a determining factor for the applicability of the Paygo rule. That means that once any earmarked project was approved, the CBO uses its dollar cost to calculate an ongoing baseline spending level - so even if a $100 million single-time item (like paying for a road project) is passed this year, the CBO adds that $100 million to its baseline spending limits moving forward. During the next fiscal year, even if the original $100 million road project is finished, funds equivalent to that road project would be available to anyone else for other earmarked projects without triggering Paygo. In his article, Hassett talks about the infamous "Bridge to Nowhere" which helped doom the GOP in 2006 - pointing out that the Dems used that particular earmark to defeat the GOP and enact their much heralded fiscal responsibly rules:

How could they continue to behave so badly in spite of their aggressive paygo measures? There are two big reasons.

The first is a key feature of the new rules that has gone mostly unnoticed. I hope you are sitting down, because you may find the next sentence startling: The paygo formula doesn't apply to discretionary appropriations like the infamous bridge.

When the Democrats told you they would enact a paygo rule, you thought they meant they would enact a policy that made it tougher to engage in wasteful spending. But if you propose a Woodstock Museum (as Hillary Clinton did), or a Carp Barrier (as Barack Obama did), then it can be approved without having to pass a procedural paygo hurdle. Paygo only applies to changes in taxes, continuation of expiring tax provisions and mandatory spending, things like veterans' compensation and food stamps.

...The profligate spenders have another advantage that is even bigger come budget time. The CBO baseline, the ultimate metric of fiscal virtue, is a pork spender's best friend. If an idiotic appropriation is made just for this year, the CBO assumes that the appropriation will be made forever, and even kindly adjusts for inflation so that we stay real, not just nominal, idiots. It does this even if Congress explicitly appropriates the money on a one-time basis. If we spend hundreds of millions of dollars on a project this year, then we will, as the Alaska delegation did in 2005, have to take some heat to get it passed. But next year, and the year after, that money will be in the baseline. We can waste it again and again, and do it without any notice.

The Republicans already have destroyed their reputations as responsible fiscal stewards, perhaps irrevocably (at least with the current crew in office). The Democrats have merely hidden their fiscal irresponsibility behind smoke-screens like the Paygo rule, with assistance of the mainstream media. Does that mean that anti-pork barrel and earmark spending is a dead issue to run on for the GOP?

To regain an advantage, Republicans are going to have to point out the Democrats' most recent scam, and propose several bold changes, most of which have been previously discussed but never seriously fought for. One idea would be to mandate that all Congressional members' local spending proposals, including ones that currently fall under the category of "earmarks", be publicly submitted at the beginning of each fiscal year prior to the various committee hearings under the auspices of which the spending measures would normally fall. At the same time, propose a rule allowing for the existence of rare "emergency earmarks" (emphasis on "emergency" and "rare") - federal spending that is sometimes necessary but cannot be predicted, such as that following the Minnesota bridge collapse or any disaster spending. Then offer a proposal that mandates all spending bills be printed in plain English and distributed electronically long before hearings open, thus allowing all members of Congress, the media, and the public time to read and discuss them.

From the public's perspective, simpler is bound to be better than what we have now. And simpler also makes it easier for the voters to determine if election year promises are being fulfilled.