PAYGO -- Congress Pays Heed to PAYGO: On three fronts, Congress paid heed to the principles of PAYGO this week, planning to pay for tax cuts and spending increases in the farm bill, the tax extenders package, and (most surprsingly; see below) the supplemental. The farm bill's new tax credits would be paid for, in part, by limiting the net operating loss carryback to $200,000 on businesses' non-agriculture income if they receive commodity payments. The extenders would raise revenue by limiting the deferral of offshore corporate income. That's the plan for now. Here's how PAYGO works. War Supplemental -- Compromised Reached with Blue Dogs?: Politco's The Crypt is saying that House Democratic leadership will offset a $52 billion expansion of the GI Bill with a half percentage-point increase on income for couples earning more than $1 million. (CongressDaily reports that the increase applies to individuals earning more than $500,000 as well). Taxes -- Senate Finance Hears Ideas on Tax Reform: The Senate Finance Committee heard ideas from left, center, and right on individual income tax reform yesterday at Cracking the Code, the first of three hearings chair Sen. Max Baucus (D-MT) plans in the coming months. From AMT to the estate tax, the individual income tax code will probably see significant reform in the next couple of years. The Brookings Perspective.