America is in a massive fiscal hole. And on behalf of President Obama, we have helped to introduce a bill designed to start digging us out: pay-as-you-go, or PAYGO. The idea behind PAYGO is simple: our country, like any family struggling with deep credit card debt, must start paying for what it buys.
PAYGO helped President Clinton turn Reagan's deficits into a record $5.6 trillion projected surplus. PAYGO stood in the way of President Bush's massive tax cuts for the most privileged, leading congressional Republicans and the president to choose instead to finance the tax cuts with borrowed money and ultimately repeal PAYGO, turning the surplus back into massive deficits. Today, recommitting ourselves to paying for what we buy is crucial to rolling back deficits once again -- and equally crucial to achieving progressive goals for all Americans.
There has long been a misconception that fiscal discipline is somehow only a conservative position. The truth is that PAYGO has long been embraced by progressive members of Congress. They are well-represented among the more than 160 House Democrats who have already co-sponsored the President's PAYGO legislation.
Why is PAYGO important for progressives? For one, the investments that matter most -- clean energy technology, affordable higher education, and health care access -- demand long-term commitment, year after year. None of them are one-time payments. But the deeper our deficit gets, the more and more interest payments on our debt will crowd out spending on everything progressives value. As Bob Greenstein of the respected Center on Budget and Policy Priorities put it, "Without changes in current policies, we face the prospect of rapidly growing federal deficits and debt over time that will pose a significant threat to the U.S. economy, to the standard of living of all Americans, and to the ability of the government to meet the needs of its citizens."
Fiscal discipline today will make sure that we can afford to pay for our most important priorities 10 or 20 years down the road.
Additionally, PAYGO would apply to new entitlement and new tax cuts but not to programs that are funded through the annual appropriations process such as funding for elementary and secondary education, Head Start, health research, environmental protection and other basic government functions. Mandatory programs that assist low-income Americans, such as Medicaid, Social Security, the Children's Health Insurance Program, and Temporary Assistance to Needy Families, are also protected against any across-the-board cuts that result from a PAYGO violation.
Should Republicans come back into power, they'd find a PAYGO law to be a powerful bulwark against reckless debt-financed tax cuts. President Bush was able to push through his unaffordable tax cuts only by waiving PAYGO. The costs were not paid up-front, by those who reaped the benefits -- instead, the costs will be borne, with interest, by our children. With a PAYGO law in place, future tax cutters would have to explain just which programs they would cut in order to send a windfall to the wealthy. PAYGO will force Republicans and Democrats alike to make clear the consequences of our actions.
President Obama's PAYGO proposal exempts some spending, such as extending current policy on the Alternative Minimum Tax, the estate and income tax cuts passed in 2001 and 2003, and Medicare payments to doctors. Some have criticized those exemptions, but we agree with the President that we need them to keep PAYGO enforceable and credible. No one believes there enough votes to offset extensions of those policies; a law pretending otherwise would look like an empty promise.
PAYGO is a fresh start. It is the beginning of many years of hard work to get our country back in the black while meeting our most pressing priorities. The interests of progressives will be well served by making PAYGO law again.