What PAYGO Really Means

On the surface, PAYGO (short for Pay As You Go) seems like it would be an effective policy to rein in government spending, but like so many things: the devil is in the details.

What the Administration would like for you to think is that by enacting this policy, Washington wouldn't be able to spend a dollar unless they save a dollar and the national debt would cease to swell as it has these past several months.

However, this is really a charade – and the details tell the story. First of all, this PAYGO has no impact whatsoever on entitlement spending -- Social Security, Medicare, and Medicaid, which make up a very sizable portion of the budget. They’d continue to grow on autopilot. In fact, even if this PAYGO were fully enforced, entitlement spending would continue to grow 6% a year without offsets.

Second, this PAYGO includes an enormous $3.5 trillion loophole. The President’s proposal specifically exempts a wide array of expensive policies. Maya MacGuineas, president of the Committee for a Responsible Federal Budget remarked that, “This is like quitting drinking, but making an exception for beer and hard liquor.”

And, Senator Kent Conrad (D-ND), Chairman of the Senate Budget Committee has criticized the plan, adding, “I’m not for waiving PAYGO for $3.5 trillion of items, much of which I think ought to be paid for.”

The spending spree of the past 6 months is proof that Congress needs to get serious about saving money. But, simply saying you support PAYGO is not proof that they are serious. I’m not too optimistic that this Administration or this Congress is keen on cutting spending and I have real concerns that this PAYGO will not be used to enforce fiscal responsibility, but will instead be used as an excuse for raising taxes.