House Passes ‘PAYGO’ Rule Over Objections of Left-Wing Dissenters

WASHINGTON (CN) – The House of Representatives approved a new rules package on Thursday, overcoming progressive opposition to a provision that requires lawmakers to offset increases in spending.

The controversial provision, known as Paygo or Pay-As-You-Go, drew criticism from some Democrats who said it would handcuff their efforts to enact progressive policies, such as Medicare for All or free college tuition.

Representatives Ro Khanna, D-Calif., and Alexandria Ocasio-Cortez, D-N.Y., on Wednesday announced their opposition to the rules package because of the bill, calling it bad economics.

Nevertheless, the package passed 234-197 on Thursday evening.

Rep.-elect Alexandria Ocasio-Cortez, D-NY., arrives for orientation for new members of Congress, Tuesday, Nov. 13, 2018, in Washington. (AP Photo/Pablo Martinez Monsivais)

The Paygo rule House Democrats reinstated on Thursday mirrors the provision the party put in place in 2007, when they took back the House during the George W. Bush administration. The rule requires any legislation that impacts the federal government’s spending to be offset with tax increases or spending cuts elsewhere.

Republicans changed the rule in 2010 when they took back the House under the Barack Obama administration, essentially making Paygo only apply to spending and allowing tax cuts to go unpaid for.

Marc Goldwein, senior vice president of the bipartisan think tank Committee for a Responsible Federal Budget, noted the House can waive most provisions in the rules package when necessary, making Paygo more about the principle it creates than about its actual impacts on policy.

He said while the rule as applied might make enacting progressive policies with a high price tag somewhat more difficult, its existence also makes it easier for lawmakers to make a case for increasing taxes paid by corporations and higher earners.

That would gel with progressives’ stated intentions of paying for their policy goals by bumping up taxes on those groups by giving lawmakers a built-in pitch to earn their buy-in.

“They have a pretty good case for why you would want higher earners to pay more in taxes, but it’s not going to happen on its own,” Goldwein said in an interview. “It’s not going to happen just punitively. The way it would happen is if we’re doing it to pay for something or we’re doing it for deficit reduction. And if you don’t believe in paying for things and you don’t believe in deficit reduction, the likelihood that we’re going to see corporations and higher earners paying their ‘fair share’ goes down dramatically.”

Representative Pramila Jayapal, the vice chair of the House Progressive Caucus, downplayed the importance of progressive opposition to the rules, saying the defections are relatively few. She also said she plans on co-sponsoring legislation that would repeal the statutory version of Paygo, which she said would be a more important step than defeating the version in the rules package.

Jayapal, a Democrat from Washington, said she does not believe the dust-up over the rules portends trouble for the Democratic caucus.

“I mean, we have big fights ahead of us and we’re getting a lot as we negotiate, but that does require that we try to stay as unified as possible,” Jayapal told reporters. “And I have confidence in all of our members of the Progressive Caucus to rally around the big fights that we really need people for.”  

Nicole Kaeding, director of federal projects with the Tax Foundation, said enacting the Paygo rule might also be a political boon for Democrats, given criticisms from the left about the Republican tax cuts’ impact on the growing deficit.

Kaeding also emphasized that Congress “frequently” waives Paygo rules, making impacts on the progressive policy aims somewhat speculative.

The party infighting between House Speaker Nancy Pelosi and Khanna, both of California, breaks from operations at the state level, where Governor Jerry Brown has largely kept an overwhelmingly Democratic Legislature on the same page.

Brown, who appointed Khanna to the state Workforce Development Board in 2012, has routinely shielded and nixed spending proposals by Democratic lawmakers over the last eight years. In deftly dodging permanent spending calls from his own party, Brown has morphed a $27 billion budget deficit that he inherited in 2011 into an estimated $14 billion surplus.

In the process of transforming the budget, Brown also convinced the Legislature to pad the state’s coffers with billions in “rainy day” reserves, leaving incoming Democratic Governor Gavin Newsom the fiscal flexibility to implement his progressive agenda.

The head of the California Supreme Court on Thursday credited the outgoing governor with requiring the state’s branches of government to draw back spending during the Great Recession.

“He forced us to reassess how we viewed money and resources and our programs, he forced us to be innovative, he forced us to be efficient as he himself did and led by example,” Chief Justice Tani Cantil-Sakauye said at a swearing-in ceremony in Sacramento. “He fused fiscal austerity with innovation, and made us a better state.”

Jennifer Hijazi contributed to this report.

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