A Letter to Congress: PAYGO Legislation an Encouraging Start

This afternoon, OMB Watch submitted a letter to all members of the House of Representatives, encouraging them to support the "Statutory Pay-As-You-Go Act of 2009" ("PAYGO").  Introduced by House Majority Leader, Rep. Steny Hoyer (D-MD), the bill is a crucial first step towards returning to a culture of responsible spending. 

In short, the concept of PAYGO typically uses the threat of sequestration (i.e. automatic spending reductions when there are proposed tax cuts or spending increases that are not offset by reductions elsewhere.)  The revised version that the House will vote on includes some key changes to the bill that was originally introduced:

  • Bush tax cuts that would be exempt from PAYGO protect middle-class and low-income taxpayers, marriage penalty relief, and expansion of the child tax credit.  Taxpayers with incomes above $250k and lower rates on capital gains and dividents would be subject to PAYGO;
  • The use of CBO estimates to measure compliance with PAYGO;
  • To match the existing House PAYGO rule, deficit neutrality over five and ten years is necessary;
  • A separate Presidential designation would not be necessary - the emergency designation procedures in House PAYGO would suffice.

The House is expected to vote on PAYGO on Wednesday.  For more information on PAYGO from Rep. Hoyer's office, click here.

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