House GOP exchanges 'PAYGO' for 'CUTGO'
As we noted when we first looked at this promise, 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 "pay-as-you-go," or "PAYGO,” requirements with a "cut-as-you-go,” or "CUTGO,” requirement.
To recap, the PAYGO rule in the Democratic-run House prior to January 2011 required each bill to have offsets that ensured the bill didn"t add to the deficit. The version of PAYGO that governed House actions when the Democrats were in control allowed either spending cuts or revenue increases to be used as offsets for new spending. (The Senate had, and still has under continued Democratic control, a similar PAYGO rule.)
But after the Republicans won control in the 2010 elections, they instituted CUTGO. Under CUTGO, mandatory spending increases can't be offset by tax increases -- only by spending cuts. In addition, CUTGO does not apply to tax cuts, which reduce revenue and, without being offset, worsen the deficit.
CUTGO has been enforced in the House, said Steve Ellis, vice president of Taxpayers for Common Sense, though he added that as far as deficit reduction goes, "it takes what was already a weak, swiss cheese program and makes it even weaker."
However, the GOP Pledge-O-Meter doesn"t evaluate the effectiveness of policies instituted by the Republican majority, only whether they stuck to their promise to do something. In the case of CUTGO, they did, so this is a Promise Kept.
PolitiFact, "President signed a PAYGO bill, but GOP House changed key Democratic rule,” Dec. 20, 2012
PolitiFact, "It's in the new package of House rules," Jan. 7, 2011
Committee for a Responsible Federal Budget, blog post, Jan. 5, 2011
Email interviews with Steve Ellis, vice president of Taxpayers for Common Sense, Jan. 5, 2011 and Dec. 18, 2012
It's in the new package of House rules
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.
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