Spratt Statement on Obama Administration’s Pay-As-You-Go (PAYGO) Proposal

House Budget Committee Chairman John Spratt issued the following statement on the Obama Administration’s PAYGO proposal, which was announced by the President today at the White House.

“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’ (PAYGO). Critics disdained our resort to budget process. They accused us of dodging the substantive issues we had to face 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 agenda. Without the process rules, the budget plunged from a surplus of $236 billion in 2000 to a deficit of $413 billion in 2004.

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

“Today, we take another, longer stride towards budget discipline. The President is proposing a bill to make PAYGO statutory. I share the Administration’s commitment to fiscal discipline, and believe that statutory PAYGO will help put greater rigor back in the budget process.

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

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

“The President, the House Democratic leadership, and members of the Blue Dog Coalition have spearheaded this initiative. I welcome their efforts and look forward to working with all interested parties as we move statutory PAYGO through Congress.”