Develop a 'cut as you go' rule

It's in the new package of House rules

Updated: Friday, January 7th, 2011 | By Robert Farley

One of the first actions taken by the new, Republican-led House was to pass a new package of House rules. And one of the most controversial measures in the package replaced the current "pay-as-you-go" requirements with the "cut-as-you-go" requirement proposed several months ago by now Speaker John Boehner.

Under the old "pay-as-you-go" rule passed by Democrats in 2007, the House was required to offset any proposal to cut taxes or increase spending by raising taxes or cutting spending elsewhere. In practice, there were numerous notable exceptions, including an extension of the Bush tax cuts, estate tax relief and the economic stimulus -- but that was the general guideline.

Under the "cut-as-you-go" rule, mandatory spending increases have to be offset by mandatory spending decreases. 

What's the difference?

Under "cut-as-you-go," mandatory spending increases can't be offset by tax increases. That was one of the chief complaints Republicans had about the "pay-as-you-go" rule.

There's another big difference: the new "cut-as-you-go" rule does not apply to tax cuts, which reduce revenue and, without being offset, worsen the deficit.

Several Democrats, including Rep. Frank Pallone, D-NJ, argued from the House floor on Jan. 5 that the new rule means tax cuts don't need to be paid for. It will allow Republicans to cut taxes for the rich while increasing the deficit, Pallone said.

That provision was also criticized by Steve Ellis of the nonpartisan Taxpayers for Common Sense, calling it PAYGO-lite.

"It takes what was already a weak, swiss cheese program and makes it even weaker," Ellis said. "Cut-go represents a step in the wrong direction by not making tax expenditures justify themselves."

Brian Riedl, lead budget analyst at the conservative Heritage Foundation, said the idea was to put expiring tax cuts on a level playing field with spending. Some spending programs like SCHIP, a health program for uninsured children, need to be reauthorized every year. But for budgeting purposes, they are assumed to continue at current levels. However, expiring tax cuts were not assumed, for budgeting purposes, to continue unless reauthorized.

We're not going to wade into the political battle over the merit of "cut-as-you-go" versus "pay-as-you-go." The issue here is whether Republicans are moving forward on their promise to implement "cut-as-you-go." We'll wait and see how this plays out with a few bills -- and whether there are numerous exceptions made, as happened "pay-as-you-go" -- but by putting the "cut-as-you-go" requirement in place with the new House rules, Republicans have this one firmly In the Works.

Sources:

House Committee on Rules website, Text of H.Res. 5 adopting rules for the 112th Congress

House Committee on Rules website, Section-by-section analysis of H.Res. 5 adopting rules for the 112th Congress

Taxpayers for Common Sense, "CUT-PAYGO-Lite and Other House Rules Changes," by Steve Ellis, Jan. 5, 2011

Washington Post, "House Adopts Pay-as-You-Go Rules," by Lori Montgomery, Jan. 6, 2007

Interview with Steve Ellis of Taxpayers for Common Sense, Jan. 5, 2011

Interview with Brian Riedl of the Heritage Foundation, Jan. 5, 2011