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Pay-Go Is Good Politics

By Froma Harrop

Left-wing Democrats often grumble about their party's affection in recent years for fiscal discipline. Their argument goes as follows:

In pursuing fiscal restraint, President Clinton didn't push very hard for many Democratic programs. He left a budget surplus that George Bush and the Republican Congress blew through in about two minutes. Bush then proceeded to ram Republican priorities through a pliant Congress without ever worrying his pretty head over how to pay for them. Who benefited from our fiscal discipline?

The complaint has merit, but in answer to the question of benefited: The country did.

We now see the fruits of fiscal irresponsibility in today's economic turmoil. The sinking dollar reflects investor angst over America's deficits -- the result of Republican passion for spending big, taxing too little and borrowing the difference.

The U.S. government borrows $800 billion a year largely from foreigners. We are now in hock to the Chinese, and America is no longer master of its fate.

So far has our economic prestige fallen that a single mischievous remark by a Chinese politician sent U.S. stocks plunging. (He had suggested that his country start moving its money out of the dollar and into the stronger euro.)

And so Democrats should be mighty proud that one of their first acts after winning majorities in Congress was to revive the pay-as-you-go budget rule. Pay-go requires lawmakers to offset the costs of legislation with tax increases or spending cuts. That means politicians have to find the money for new programs. Think about it: In the service of fiscal discipline, Democrats had agreed to trim their own ambitions.

Had pay-go been alive over the last five years, Bush and the Republican-led Congress couldn't have pushed through tax breaks for the rich. They couldn't have passed a Medicare drug benefit made outrageously expensive by cutting private businesses into the deal. Small wonder that Republicans let the pay-go rule expire in 2002. Once the pay-go chaperone was gone, they were free to boogie.

Fast-forward to the pay-go present. Democrats had to offset their $20 billion student-aid reforms with cuts in subsidies to student lenders. To pay for their $35 billion expansion of the children's health insurance program (vetoed by Bush), they had agreed to raise tobacco taxes. To fund new tax breaks for renewable energy, they planned to remove some of the tax deals for oil companies. (The bill failed.)

Senate Democrats had been desperately looking for the $50 billion needed for a one-year patch of the Alternative Minimum Tax. Without it, the AMT will ensnare 24 million new taxpayers this year, many earning less than $100,000.

Pressure to ditch pay-go is enormous. Sen. Max Baucus, a Montana Democrat, has proposed waiving the pay-go rules for the temporary AMT fix. (The pay-go rules can be lifted in special cases with a majority vote in the House and 60 votes in the Senate.) At the same meeting, several Republicans called for getting rid of the AMT altogether and extending the Bush tax cuts -- and with not a thought about how to offset them.

Who's piling the sandbags? Blue Dog Democrats, along with a few Republican deficit hawks, are determined not to let pay-go go. Blue Dog Democrats represent conservative parts of the country and tend to be fiscally upright. One of them, Sen. Kent Conrad of North Dakota, reportedly exploded when he heard the above plans to cannibalize the pay-go rule. He called the discussion "unbelievably irresponsible."

Democrats should be gratified by polls showing that more Americans trust them to manage the federal budget than Republicans. Fiscal discipline may be hard to do, but it is good politics -- and good for the country.

fharrop@projo.com

Copyright 2007 Creators Syndicate Inc.


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