Shouldn’t Congress Tell Us How We’ll Pay for Tax Cuts?
March 22, 2016, 11:48am

By Nancy Pelosi.

THE long-endangered Republican Deficit Hawk is now extinct.

In December, the Republican Congress passed into law a huge permanent package of tax measures as part of the tax and spending deal. However, Republicans refused to pay for the legislation, thereby adding a thunderous $2 trillion to the deficit over the next two decades, according to an estimate from the nonpartisan Committee for a Responsible Federal Budget.

As House Republicans prepare to leave for two weeks of recess without passing a budget for next year, the cost of this tax package is casting a long shadow over America’s future, threatening to crowd out essential investments for hard-working American families.

Why isn’t there a rule requiring lawmakers to account for new expenditures by finding offsetting budget cuts or revenue increases when Congress enacts them? In fact, there is.

In 1982, George Miller, a progressive Democratic Congressman from California, had a simple but transformative idea to cut the deficit and restore fiscal responsibility to Washington, which he called pay as you go, or paygo. Under this rule, when Congress wanted to pass a new law that would increase the deficit, legislators would have to pay for the cost with matching revenue increases or spending cuts.

Paygo still allows for flexibility in overall discretionary budget increases and in times of emergency, but it forces lawmakers to account for the impact of laws that have consequences for federal revenues or mandatory spending.

It’s so common-sense that most people would be surprised it hasn’t always been the rule. After all, even the priorities we want and need must still be paid for.

The historic Tax Reform Act of 1986 — sponsored by Democrats and signed into law by President Ronald Reagan — was grounded in this rule. In 1990, paygo was passed into law as part of the budget process under President George H.W. Bush. We extended it through the deficit-reduction and budget agreements of the Bill Clinton years, driving four consecutive annual budgets that were either in balance or in surplus.

Since then, however, Congress has often failed to do the hard, necessary work of paying for what it wants.

President Clinton handed his successor, President George W. Bush, a projected $5.6 trillion 10-year budget surplus and eight years of economic expansion. But Republicans quickly abandoned any measure of fiscal responsibility and began a catastrophic spending spree. The completely unpaid-for tax cuts, including huge tax cuts for the wealthy in 2001, and two completely unpaid-for wars shattered our multitrillion-dollar surplus and created a vast new deficit.

After President Bush left the White House, President Obama was faced with a staggering $1.2 trillion projected budget deficit in his first year alone, according to estimates from the Congressional Budget Office, and an economy in free fall. Under President Obama, the paygo law was reinstated, and we’ve brought the annual deficit from $1.2 trillion when President Obama took office to $544 billion today.

With the recent tax package, however, the Republican Congress is once again ignoring the inescapable mathematical realities behind budgeting. In advancing a narrow and expensive agenda largely benefiting special interests, they are adding trillions to the deficit in the coming decades.

Some of the provisions in the tax package have long been championed by Democrats — especially credits that help put more money in the pockets of hardworking but low-earning men and women, as well as working parents raising children or trying to send a child to college. Modernizing and making the research and development tax credit permanent is central to Democrats’ Innovation Agenda.

However, Republicans used these provisions to advance hundreds of billions of dollars in unpaid-for tax breaks. Furthermore, Republicans refused to pay for any of the $622 billion in tax extenders, good or bad. With the additional cost of debt service factored in, this permanent tax package will add well over $800 billion to the deficit in the first 10 years alone — reaching $2 trillion over 20 years.
In devising the December 2015 omnibus legislation to fund the government, Democrats were obliged to find money to cover every budget increase. We even scrounged on behalf of our 9/11 responders, coming up with the funds to cover $7 billion in the budget for their lost wages and treatment of their illnesses from exposure to toxins at ground zero.

The Republican refusal to adhere to paygo is not only a problem for our deficit. It undermines the long-overdue passage of broad, bipartisan tax reform that would lower the corporate rate, close special interest loopholes, end costly tax expenditures, and ensure that all Americans are paying their fair share.

To contain and reduce the national debt, we must return to a simple rule called pay as you go. We can restore fairness to the tax code, delivering reforms that support bigger paychecks and better infrastructure for the American people, even as we honor basic fiscal realities.