Spratt Statement on the Introduction of Statutory PAYGO Legislation

WASHINGTON – House Budget Committee Chairman John Spratt made the following statement at a press conference today announcing the introduction of statutory PAYGO legislation in the House.

“I’m pleased to join arms with the Majority Leader, Steny Hoyer; the OMB Director, Peter Orszag; and with Blue Dogs and a host of others concerned about fiscal soundness. We have a common purpose: to make pay-go statutory, and add it to our tool kit of budget rules.

“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.

“Last week, the President proposed a bill to make PAYGO statutory – and today we introduce that bill as a starting point toward making statutory PAYGO part of our budget process. Tomorrow the House Budget Committee will hold a hearing to explore our bill with OMB Director Orszag as lead witness. We have begun the process of meeting with various groups and gathering feedback on the proposal. The House is likely to make changes to the Administration’s bill before passing it, but if we differ a bit on the means, we are in full agreement on the end, which is to make PAYGO a prevailing rule.

“The Obama Administration and the current Congress have inherited a colossal deficit, swollen this year to accommodate massive recovery measures. As these measures pull us out of the slump, we must focus attention on our longer-term fiscal fate. Two weeks ago, 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. I look forward to working with all interested parties as we move statutory PAYGO through Congress.”