Amendment passed and was amended to S.Con.Res. 95 by the Senate: 03.10.04; was removed from the final bill by the House: 03.30.04.
The Legislation:
The Restore Pay-As-You-Go Tax Cut Amendment to the 2005 budget resolution would have reinstated the Senate’s pay-as-you-go (PAYGO) rules, which mandate that any tax cuts or increases in government spending must be balanced out with spending cuts or revenue increases elsewhere. The amendment, which would have been in effect until 2009, would require a 60-vote supermajority in the Senate to approve any direct spending or tax cuts that don’t conform to this rule. These rules, which enhanced fiscal responsibility and helped to shrink the budget deficit in the 1990s, expired in 2002. In 2004, the Senate adopted a weaker set of PAYGO rules, which are still in effect.
The Middle-Class Position:
The Middle Class Supports: Pay-As-You-Go spending rules mandate fiscal responsibility: Congress must consider carefully before spending or giving away in the form of tax cuts money it doesn’t have. The 60-vote supermajority rule is intended to institutionalize this careful consideration. While deficit spending can provide needed economic stimulus during a recession, the unrestrained deficit-inducing tax cuts of the past few years were ill-considered, with little job creation to show for them. Instead, running deficits year after year has led to little more than ballooning debt and the need to repeatedly extend the federal debt limit. Middle-class families, threatened with increasingly dire consequences by bills like the Bankruptcy Abuse Prevention Act (see page 9) when they depart from a pay-as-you-go routine in their household finances, are made to bear the burden of the government’s fiscal irresponsibility. Down the line, a higher debt weakens the dollar and fosters inflation. If deficit spending provided sound investments and economic stimulus, inflation would not dramatically undercut the middle class. But in the absence of higher wages, inflation makes basic necessities harder for middle-class families to afford and threatens to lower the country’s standard of living.
From the Experts:
“We need PAYGO, which is an important—in my judgment, critical—issue in budget programming… I think it was a mistake not to extend PAYGO, both for tax and expenditure programs, and let it expire in September 2002.” —Alan Greenspan, Chairman, The Federal Reserve Board (July 21, 2004)
“With concern mounting over the rapidly deteriorating fiscal outlook, returning to the pay-as-you-go standard is a matter of common sense. It reminds us that we all have a duty to pay our bills. To have a meaningful effect, however, the rule must apply to both spending increases and tax cuts. Removing tax cuts from paygo would do nothing to promote fiscal discipline. It would neither control spending nor shrink the deficit. All it would do is exempt tax cuts from fiscal scrutiny, regardless of the circumstances.” —Robert Bixby, Executive Director, The Concord Coalition, a bipartisan budget watchdog group (March 30th, 2004)
Beyond this Bill:
As recently as March 2005, Alan Greenspan urged Congress to pass PAYGO legislation to insure that deficits will not continue to mount in 2005. A primary concern about reinstituting PAYGO rules was the worry that they would not allow Congress to extend President Bush’s tax cuts in 2005. Yet if these tax cuts cannot be extended without pushing the nation deeper into debt and creating more serious fiscal problems down the road, their benefit should be reassessed. The courageous legislators, especially in the Senate, who took a stand for fiscal responsibility in 2004 should stand their ground against fiscally irresponsible tax cuts for the wealthy in 2005.
2004 United States budget deficit: $413 billion
Increase over the size of the 2003 budget deficit: $35 billion
Amount U.S. taxpayers spent on interest on the federal debt in 2004: $159 billion
Estimated cost of the interest on the federal debt to the average middleclass household in 2004: $5,215
Cost of the Bush tax cuts over 10 years: $1.7 trillion
Number of times the federal debt limit has been raised in the past three years: 3
Number of tax cuts in the last four years: 5
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