Spratt Opening Statement at Hearing on Statutory PAYGO Legislation

WASHINGTON – House Budget Committee Chairman John Spratt (D-SC) made the following opening statement at a hearing today on Statutory PAYGO legislation.

“The purpose of today’s hearing is to review statutory Pay-As-You-Go (PAYGO) and examine the President’s proposal to renew it. We initially had planned this hearing for last Thursday and I would like to thank both our witnesses and our Ranking Member, Mr. Ryan, for their cooperation in helping us reschedule it for today.

“At the outset of the 1990s, Congress passed the Budget Enforcement Act to ensure that the Budget Summit Agreement was carried out. Among its provisions was a rule called ‘pay-as-you-go’ or PAYGO for short. Critics disdained our resort to budget process. They accused us of dodging the hard choices we had to make if we were going to wipe out the deficit. But by the end of the 1990s, the budget was in surplus for the first time in 30 years; and it was clear that process rules like PAYGO played a big part in our success.

“Republicans were in the majority in 2002 when the Budget Enforcement Act expired, and they chose not to reinstate PAYGO, knowing that it would impede passage of their tax cutting agenda. Without the process rules, the budget plunged from a surplus of $236 billion in the year 2000 to a deficit of $413 billion in the year 2004.

“When Democrats took back the House, the reinstatement of PAYGO was at the top of our agenda. We made PAYGO a rule of the House the first day we convened the 110th Congress.

“Two weeks ago, the President proposed a bill to make PAYGO statutory, and last week that bill was introduced -- with over 150 co-sponsors -- as a starting point toward making statutory PAYGO part of our budget process.

“The Obama Administration and the current Congress have inherited a colossal deficit, swollen this year to accommodate needed recovery measures. As these measures pull us out of the slump, we must focus attention on our longer-term fiscal fate. Earlier this month, Chairman Bernanke told our Budget Committee that the long-run fiscal path is simply not sustainable.

“Statutory PAYGO works because it reins in new entitlement spending and new tax cuts. Both tend to be long lasting – easy to pass, hard to repeal. By insisting on offsets and deficit neutrality, PAYGO buffers the bottom-line. Its terms are complex, but at its core, it is a common-sense rule that everyone can understand: when you are in a hole, stop digging.

“We share the Administration’s commitment to fiscal discipline, and believe that statutory PAYGO will put greater rigor into the budget process. To help us better understand the proposed legislation, our first witness will be no stranger to this Committee, former CBO Director and now OMB Director Peter Orszag. Then, on a second panel, we have lined up additional distinguished experts who are also old friends of the Budget Committee:

· Robert Greenstein is the founder and Executive Director of the Center on Budget and Policy Priorities and provides expertise on a wide range of budget policies.

· Douglas Holtz-Eakin, served as the sixth director of CBO and also worked with George H. W. Bush and George W. Bush on economic policy.

· We had originally planned for Alice Rivlin to testify, as well, but with the schedule change for the hearing, she cannot be with us in person today, but, without objection, her written testimony will be included as part of the record. As you know, she is senior fellow at the Brookings Institution and formerly served as director of OMB during the Clinton Administration and also as director of CBO from 1975 through 1983, at the onset of our current budget process.

“Before turning to Director Orszag for his testimony, however, let me turn to Mr. Ryan for any opening statement he may wish to make.”