House Speaker Nancy Pelosi faced a minor rebellion from the progressive wing of her party on reinstating pay-as-you-go budget rules, or PAYGO, with some Democratic lawmakers arguing that the rule creates an unnecessary impediment to moving forward with ambitious – and costly – new programs such as Medicare for All.
Vox’s Tara Golshan says that “to progressives, PAYGO is like trying to fit progressive talking points into a Paul Ryan-esque worldview, where only balanced budgets and austere entitlement cuts lead to economic growth.”
The imposition of deficit-based restrictions is particularly galling for some Democrats in light of the recent Republican tax cuts that will increase the federal debt by more than $1 trillion. If Republicans can run up the debt with tax cuts for the rich, they ask, why can’t Democrats spend more on social programs without pesky budget rules getting in the way?
While the rebellion against PAYGO failed to truly threaten the Democratic rules package, the issue will likely crop up again as Democrats hash out their agenda for the next two years and beyond.
Here’s a rundown on the Democrat’s intraparty PAYGO fight:
Who supports PAYGO: Fiscal hawks love the PAYGO rule. “We strongly support PAYGO rules that encourage fiscal responsibility,” the Committee for a Responsible Federal Budget said Wednesday. The sense of fiscal discipline the rule creates is embraced by many mainstream Democrats, as well as Republicans, at least when they’re out of power and can’t pass deficit-increasing tax cuts. Pelosi has embraced the PAYGO rule as part of an approach meant to signal to voters that Democrats will govern responsibly, and keep the deficit under control, unlike the GOP. “Democrats believe that you must pay as you go,” she said last year. “Whatever you want to invest in, you must offset.”
Who’s opposed: Progressives have for months made clear their opposition to Pelosi’s plan to include the PAYGO rule. After the Democratic rules package was released, lawmakers Ro Khanna (CA) and Alexandria Ocasio-Cortez (NY) announced that they wouldn’t support it because of the PAYGO rule. Khanna tweeted, “It is terrible economics,” adding that “PayGo would be a terrible policy that unilaterally disarms the incoming Democratic majority’s ability to govern.” Ocasio-Cortez tweeted that she sees PAYGO as “a dark political maneuver designed to hamstring progress on healthcare+other [legislation]. We shouldn’t hinder ourselves from the start.”
Some academics who reject the idea that deficits should be a primary concern for lawmakers also protested. Economist Stephanie Kelton of Stony Brook University, a leading critic of the deficit hawks, tweeted, “Why should a Democratic majority operate on the basis of a Republican ideology that even the Republicans don't believe in. Reject #PAYGO as a House rule, then repeal the statute.” Arguing that PAYGO is ultimately about political power, not economics, Mike Konczal of the Roosevelt Institute wrote that, “PAYGO isn't about debt, it's about who gets to exercise power over the legislative process.”
Why it may not matter much one way or another: Whatever political signals the PAYGO rule may send, it may not have as much impact as either its supporters or critics think it will, since the rule can be suspended with a simple majority vote. Rep. Pramila Jayapal (D-WA), who co-chairs the Congressional Progressive Caucus but supports the PAYGO rule, said that the rule won’t get in the way of “advancing key progressive priorities” in the new Congress. “The critical thing here is: Do we have a commitment to waive paygo on critical bills? I think we do,” she said. “I think we’ve not only got a commitment for that, but for hearings on those bills, and we’ve never had that before.”
Progressives see this fight as a sign of progress: “Fortunately, the mere existence of a divisive, intraparty fight over PAYGO is a sign of vital progress,” writes New York’s Eric Levitz. “For decades, a belief in the necessity of long-term deficit reduction was a source of consensus within the Democratic Party. Democrats might fight about whether spending cuts were necessary — but the idea that new spending would have to be paid for with tax hikes wasn’t controversial. Now it is. And that fact is more important than the details of the House’s ultimate rules package. Khanna and Ocasio-Cortez lost a battle that didn’t matter — and, in so doing, made some tangible progress toward victory in a wider war that does.”