The President's Paygo Schtick

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Budget: Putting the federal budget on a "pay as you go" basis sounds fiscally reasonable, responsible even. But it's nothing of the sort. Rather, it's a gimmick intended to raise Americans' taxes to record levels.

"The 'pay as you go' rule is very simple," President Obama said Tuesday. "Congress can only spend a dollar if it saves a dollar elsewhere. And this principle guides responsible families managing a budget."

But this is an inaccurate description of what budgeteers have dubbed "Paygo." If more money is spent, Congress doesn't have to "save" a dollar elsewhere at all — it can make up the difference by raising your taxes.

And that's what Paygo is. It's a way to increase spending now, then raise taxes later, while crying like the late comedian Flip Wilson, "The devil made me do it." Or, in this case, Paygo.

So Paygo really turns out to be a mask for the profligacy of current leaders who, based on the latest estimates, will ring up an estimated $13 trillion in deficits over the next decade and then try to fleece you through higher taxes to pay for it all.

This concept was on full display Tuesday, when the president said he wanted Paygo but that Congress would be free to rack up as much as $2.5 trillion in special budget "exemptions" over the next decade. Spending on a new $1.1 trillion national health care program would also be financed with new debt.

Such out-of-control spending will lead, inevitably, to higher taxes down the road. In fact, it could be used to rescind the Bush tax cuts of 2001 and 2003, which helped keep the economy from sinking further and which are set to expire next year.

Obama excludes the Bush cuts from Paygo. But pressures being what they are, we expect Congress to go after them anyway — using Paygo as an excuse. Paygo also can be used to justify all kinds of new taxes — from a Euro-style value-added tax to cap-and-trade levies.

Since entitlements — the fastest-growing part of the budget — are excluded from Paygo, it won't stop the inexorable growth of government. It won't even slow it down much. As Heritage Foundation analyst Brian Riedl notes, "Even if Paygo were fully enforced, entitlement spending would still grow 6% annually, and discretionary spending could grow without limit."

This is another budget gimmick that's been tried before — and failed. Indeed, Congress already has a Paygo rule in place. But since it's a mere rule, and not a law, Congress simply ignores it when it's convenient to do so, which is basically all the time.

Even the $787 billion stimulus package passed in February grossly violates Congress' own Paygo rules. After all, why let a little thing like rules stand in your way? Since 2007, Congress has added $600 billion to the deficit, with nary a peep about Paygo.

Expect Congress to become real Paygo sticklers, however, when it comes to raising taxes to pay for new programs. "We don't want to raise your taxes," they'll tell us, "but because of our soaring deficits, we have to. Paygo requires it."

If history is any guide, we're in for big trouble.

Heritage's Riedl notes that Paygo was in place from 1991 to 2002. During that time, both major parties controlled the White House and Congress. And during that time, Congress and the president added more than $700 billion to the budget deficit by simply ignoring Paygo.

Paygo serves another purpose — a political one. By dragging out Paygo and pretending to be fiscally responsible, the White House and Congress hope to convince average Americans that they've been handed this mess by the wild-spending Bush administration — that it's an "inherited" problem.

But that's utterly and factually false. In 2007 the Democrats took back Congress. Based on 10-year spending estimates made then and comparable ones this year by the Congressional Budget Office, our government will spend $5.6 trillion more over the next decade than first planned when the Democrats took over.

Sorry, but they own this mess. And Paygo won't fix it.

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