Paygo Going, Gone?
Budget requirement relaxed
By Kaye A. Thomas
Posted January 7, 2009
Desperate times, desperate measures.
The new Congress has convened, and one of its first actions was to adopt rules for the new session. Included was a relaxed version of the pay-as-you-go budget rule, or paygo. The idea behind this rule is to make it harder to increase the budget deficit. Legislation that calls for increased spending or a tax cut generally has to include an equal amount of spending cuts or tax increases. Democrats kept the rule for the new Congress, with the proviso that any bill designated as an emergency measure is exempt from the requirement.
Republicans had done away with paygo when they controlled Congress, and Democrats revived it when they regained power two years ago, in keeping with a pledge to restore fiscal responsibility. Republican efforts to thwart compliance with the rule made it difficult to pass legislation needed to protect taxpayers from an increase in alternative minimum tax, or AMT. The new version of the rule recognizes the need for emergency legislation to stabilize and stimulate the economy, but prompted complaints from Republicans that it leaves paygo as a hollow promise, because legislation such as the AMT patch can be included in emergency legislation, bypassing the need for offsets.
Even without this rule change, last year's AMT patch was stuffed into the Emergency Economic Stabilization Act of 2008, a law that was passed under a waiver of the paygo rule.
Related
- Alternative Minimum Tax (free online guide)
- 529 Plans Gain Investment Flexibility (previous feature)
- Fairmark Forum (post questions and comments)
