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Fiscal Responsibility Returns to Congress

It was only the second day that Democrats controlled Congress. They wasted no time restoring the pay-go rules that had led to the budget surpluses of the late nineties. Just as ordinary American do every month around their kitchen table, the Congress will have to look at its bills, the money it wants to spend and figure out how to pay for it. The unlimited credit card has been cut off.

Two hundred and eighty members of the house, including forty-eight republicans voted to approve the new rules. The new provision requires that tax cuts or increased spending be paid for by raising taxes or cutting spending elsewhere. It will also require the disclosure of earmark sponsors, which direct spending to their home district or favored special interest. This new provision is a somewhat weaker version of the pay-as-you-go rule originally adopted in 1990. That provision triggered across the board cuts in spending each time the deficit was increased. According to the Congressional Budget Office, “between 1991 and 1997, most new revenue and mandatory spending laws that were enacted were consistent with the PAYGO requirement to be deficit neutral.” The house leader will pursue tougher legislation once they have secured the support of the senate and the white house for such a provision.

Rep Rahm Emanuel from the floor of the house declared, “The one thing we can say about George Bush and his economic policy is ‘We are forever in your debt.’ … Enough is enough with running up the debt of this country. We’re going to put our fiscal house in order.” But putting the government fiscal house in order will require some trade-offs, just as it does for many Americans balancing their budgets. The Democrats had promised to cut student interest rates in half, to keep promise and comply with the new paygo rules they will have to phase the cuts in over five years.

This rule has sent members of the house looking for ways to cover the cost of spending they want. The Chairman of the House Ways and Means Committee Chairman, Charles Rangel is searching the tax code for breaks that benefit special interests. Other options being considered are allowing the presidents tax cuts to expire and eliminating the federal deduction for state and local taxes. Rangel said, “At this point, nobody… has convinced me that there should be exemptions from pay go.” With no exemptions, lawmakers are going to have to make hard choices, choice they may not be popular with their constituents back home. If legislation is worth passing, it worth paying for. It tax cuts are not just for political gain, but to actually benefit the country then we will find a way to fund them. Continuing to build up debt that we pass on to our children, leaves them with a legacy that says we did not value what our government provided us with enough to pay for it and we don’t value them enough not to stick them with our debt.

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