House Dems Signal Bolder Action by Weakening Self-Imposed Austerity Rules

They are learning that they shouldn’t hold themselves to standards that Republicans have long abandoned.

There are many ways in which Democrats limit their effectiveness by holding themselves to standards that Republicans long ago abandoned. One of the most frustrating of these is the so-called PAYGO rules dictating that any potential spending must be offset by equivalent budget-balancing revenue enhancements.

After Reagan exploded budget deficits with guns and butter policies, hypocritical Republicans and deficit-obsessed Democrats implemented statutory PAYGO rules during the Clinton years. Then, almost magically, they expired in 2002, at which point the George W. Bush failed to reimplement them before once again passing budget-busting tax cuts and the famous Medicare “fix.” President Obama signed statutory PAYGO rules into law in 2010, though the law allowed for a wide variety of exemptions.

As if driven by masochism or perpetual fear of bad faith attacks, Democrats in the House have continued to maintain a standing rule committing themselves balanced budget legislating. This despite that fact that Republicans hold themselves to no such constraints and the fact that both interest rates and inflation remain extremely low, while the need for infrastructure, health and social spending remains dire.

Finally, House Dems–under pressure from their more progressive members like Alexandria Ocasio-Cortez–are set to loosen those PAYGO rules for bills relating to COVID and climate change:

The new rules package for the 117th Congress unveiled by House Democrats on Friday would grant a sweeping new exemption from deficit controls for legislation related to the coronavirus pandemic or efforts to curb climate change.

The text of the resolution, which House leaders expect to take up Monday, would provide House Budget Chairman John Yarmuth, D-Ky., broad authority to “adjust” cost estimates for certain bills so that their budgetary impacts don’t count as increasing deficits under House rules.

In practice, the new section means legislation that fits within the two broad new categories doesn’t need to comply with appropriations limits affecting discretionary programs, or pay-as-you-go rules for measures affecting tax revenues and “direct spending,” otherwise known as mandatory programs.

There is no reason, frankly, for any of the PAYGO rules to still exist. Any voter who is both obsessed with deficits and still believes against all evidence that Democrats are chiefly responsible for them is lost to the party to begin with. And in any case Democrats cannot properly address the country’s challenges while meeting PAYGO rules, given that Republicans are intransigent on tax increases for the wealthy. It’s far easier to get Republicans to trade spending priorities than to get them on the bad side of their donors and supply-side ideology.

But the good part is that not only are COVID relief and climate change two of the most crucial policy needs in the coming year (alongside healthcare), a wide variety of spending programs can fit under that rubric:

But the new exemptions are so broad that it’s possible wide swaths of a $1.5 trillion infrastructure package similar to one that passed the House over the summer could be spared, for instance. That measure contained new spending and tax incentives for clean energy programs and financing, water and wastewater infrastructure and more.

The new language stipulates that “measures to prevent, prepare for, or respond to economic, environmental, or public health consequences resulting from climate change” wouldn’t be considered deficit-spending that requires offsets.

The same language applies to measures intended to address the “COVID-19 pandemic.” That could include much of the initiatives contained in earlier House Democratic relief packages that ranged in size from $2.4 trillion to $3.4 trillion in increased deficits.

As Ocasio-Cortez tweeted:

Of course, all of it will only amount to message bills if Democrats fail to take the Senate as a result of the upcoming Georgia elections. But even at that, a message bill delivering clear and unambiguous popular priorities will be better than the alternative.

It’s not just a victory for progressive power in the House, but also an acknowledgement even among more long-established players that deficit fears have largely been overblown in decades past, and more importantly that there cannot continue to be one set of rules for Democrats in power, and another for Republicans. If Republicans can drive up deficits by giving rich people tax breaks to buy more yachts, Democrats must be able to increase spending to save lives and the planet itself.

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David Atkins

David Atkins is a writer, activist and research professional living in Santa Barbara. He is a contributor to the Washington Monthly's Political Animal and president of The Pollux Group, a qualitative research firm.