March 11, 2004

The Senate's Pay-as-You-Go Rule

Much of the good news about fiscal management in the 1990s came from the Senate's pay-as-you-go rule: that bills the Congressional Budget Office believed would widen the deficit needed 60 rather than 50 votes in the Senate. Now the Senate has attached a return of the pay-as-you-go rule to the Budget Resolution:

In Rebuff to Bush, Senate Raises Bar for Tax Cuts: The Senate dealt a surprising election-year rebuke on Wednesday to the White House goal of new tax cuts as it narrowly backed a new rule to require at least 60 votes to approve any tax cuts in the next five years. Four Republican senators — Lincoln Chafee of Rhode Island, John McCain of Arizona and Susan Collins and Olympia Snowe, both of Maine — joined Democrats in the 51-to-48 vote.

Mr. Bush has called on Congress to make permanent his tax cuts, which are scheduled to expire at the end of the decade. Republicans in Congress had already sidestepped action on his request this year, in an election campaign in which voters are concerned about the $478 billion budget deficit. But under the amendment approved on Wednesday night, any tax cuts — or spending increases — in the next five years will require 60 votes for approval in the Senate, unless supporters are able to find spending cuts or other tax increases to make up for the money that would be lost, said Senator Russell D. Feingold, the Wisconsin Democrat who sponsored the amendment.

First, though, the Senate would have to approve the budget resolution that is being debated. Then, Mr. Feingold said, his provision would have to be accepted at the conference committee, where House and Senate budget writers try to reconcile differences in their proposals. The Senate is expected to vote on its $2.4 trillion budget resolution by the end of the week. The House Budget Committee is scheduled to consider its proposal on Thursday. "The taxpayers of this country are desperate," Mr. Feingold said, "and I think people are going to find out that the taxpayers are frustrated and that they are figuring out that the deficit is completely out of control." His amendment, he added, helps put Congress on the "long hard road to balancing the budget."

Mr. Feingold said senators faced enormous pressure from Republican leaders to vote the other way, but he predicted that the House would be "sensitive" to the issue and that "we have a shot in conference." The new rule, Mr. Feingold added, is similar to provisions adopted in the 1990's that brought "fiscal discipline and a balanced budget" by the end of that decade.

Senate Republican leaders and White House officials fought efforts to adopt a so-called pay-as-you-go rule. On the Senate floor on Wednesday night, the Budget Committee chairman, Senator Don Nickles, Republican of Oklahoma, argued that accepting the plan could imperil extensions of three popular tax cuts that expire this year. They are ending the so-called marriage penalty, expanding the 10 percent tax bracket and keeping the child tax credit at $1,000 a year. Now that Mr. Feingold's amendment has passed, those three cuts will need 60 votes to be extended this year, unless money can be found to offset their projected $80 billion cost over five years. In debate on the floor, Mr. Feingold said he and many other Democrats would vote for them, and he assured senators that their passage was not in doubt.

Mr. Nickles, who is retiring after this year, acknowledged that the vote was a defeat, but he refused to speculate on how it could affect future efforts to extend or make permanent the tax cuts that expire in 2011. "I don't want to go there," he said. A House Republican aide said said many Republicans would favor requiring new spending increases or tax cuts to be paid for with other money, to avoid deepening the deficit. The aide emphasized that for many House Republicans that would be viewed as further impetus to cut spending, and not to reduce tax cuts.

The vote drew the support of the presumptive Democratic presidential nominee, Senator John Kerry of Massachusetts. The lone Democrat to vote against the measure was Senator Zell Miller of Georgia. Some Republicans said they believed that they had defeated efforts to establish new pay-as-you-go rules after Senator Pete V. Domenici, the Arizona Republican who is a widely respected former Budget Committee chairman, abandoned efforts to reach a compromise with Mr. Feingold. Mr. Domenici backed off, he said, because the issue had become "too complicated and too fractious."

Earlier in the day, President Bush's proposal received a lift when the Senate voted, 95 to 4, to restore $7 billion in military spending that Mr. Bush sought but that the Budget Committee deleted last week. In all, Mr. Bush is seeking a $27 billion increase, to $421 billion, for the military next year, compared to the $20 billion increase that the Budget Committee approved last week. "We have an obligation to live up to the president's budget request," said Senator John Warner, the Virginia Republican who sponsored the amendment to restore the money and who is chairman of the Armed Services Committee.

One thing I don't understand: why attach this to the Budget Resolution at all? The Budget Resolution has to be passed by both houses, conferenced, and repassed. But the House of Representatives has no right to a voice in the Senate's internal procedures--which this is. The pay-as-a-go rule is an exercise of the Senate's exclusive right to set its own internal procedures. Why attach it to the Budget Resolution? (Unless, that is, some of those Republican Senators are playing Kabuki, and fully expect it to be stripped out in the conference committee.)

It's quite sad that Pete Domenici and other Republicans whom I once respected as deficit hawks couldn't bring himself to vote for it.

Posted by DeLong at March 11, 2004 02:52 PM | TrackBack | | Other weblogs commenting on this post
Comments

attach it to the Budget Resolution?

To get it to pass? Implicitly, the threat is that if you don't attach it, the Budget Resolution will be filibustered, and if you don't pass it once its attached, you've got no budget.

It does create an interesting Constitutional question -- if the Senate includes an internal rule in a law that passes, can it still change it later without having both the consent of the House and either a Presidential signature or a veto override?

Posted by: cmdicely on March 11, 2004 03:00 PM

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I'm glad you're so pleased by this. The expiration of the breaks in the marriage tax, child tax credit, and 10 percent bracket will go a long way to making sure those rich bastards pay their fair share.

Do let me know when the Democrats propose a 60-vote requirement to pass a new spending bill. That would be the day.

Posted by: tbrosz on March 11, 2004 03:42 PM

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tbrosz

I guess we can assume you didn't actually read the post?


>under the amendment approved on Wednesday night, any tax cuts or spending increases in the next five years will require 60 votes for approval in the Senate

Posted by: ian on March 11, 2004 04:24 PM

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For a while there tbrosz I thought you were a real person with a interesting point of view. Now I have come to realize you are a RNC bot trolling the blogs

Posted by: dilbert dogbert on March 11, 2004 05:00 PM

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actually, dilbert, tbrosz does have his moments (just the other day, he spawned a very legitimate discussion about why haven't the jobs been created), but not only did he not read this posting carefully, he has also forgotten: a.) what happened to spending between '93 and '00; b.) what happened to spending between '01 and '03.

The idea that anyone can, with a straight face, still try and make the argument that dems are irresponsible spenders....

Posted by: howard on March 11, 2004 05:16 PM

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The belief of Democrats as tax and spenders comes from local politics, much less than federal politics. However, it is a label that will stick until Democrats can say with furvor the same thing that Ike said about Defense: "not one penny more than is necessary."

Posted by: Stirling Newberry on March 11, 2004 05:29 PM

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"those three cuts will need 60 votes to be extended this year, unless money can be found to offset their projected $80 billion cost over five years. In debate on the floor, Mr. Feingold said he and many other Democrats would vote for them, and he assured senators that their passage was not in doubt."

But, I am glad to see a sign that Tbrosz might be concerned about someone besides himself.

Posted by: masaccio on March 11, 2004 05:33 PM

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"Attach it to the budget resolution"

US Senate rules dictate that budget bills cannot be fillibustered. They must get an up or down vote. This is why all types of legislation (if it has a budget number in it) gets attached to the budget bill. Only budget billis in the US Senate can pass with only 50 votes because there is no cloture vote. All other legislation in the Senate is subject to the 60 votes needed to avoid a fillibuster.

Posted by: bakho on March 11, 2004 05:43 PM

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I guess it's too early in the game to consider selling off the National Parks. Great real estate, and could do alot to wipe out the debt.

Posted by: Knut Wicksell on March 11, 2004 06:03 PM

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I'll give Knut the benefit of the doubt, and assume he is joking.

Posted by: non economist on March 11, 2004 06:12 PM

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But the Byrd Rule? How can a change in the Senate's internal procedures be germane to a budget resolution, or to any part of the reconciliation process?

Posted by: Brad DeLong on March 11, 2004 06:13 PM

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Why pay taxes when you can get the fools to loan you the money and the sell you the assets to pay for the loan.

Posted by: Stirling Newberry on March 11, 2004 06:14 PM

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tbrosz wrote, "The expiration of the breaks in the marriage tax, child tax credit, and 10 percent bracket will go a long way to making sure those rich bastards pay their fair share."

Actually, the so-called "middle class tax cuts" comprise a big chunk of the revenue losses:

http://www.truthandpolitics.org/html_gen.php?entryId=80

Not to mention that on balance, there's no
"marriage tax"---married couples where one person makes little money typically pay less than if they each were to pay income taxes as single people. I guess you could call that a "singles tax."

Posted by: liberal on March 11, 2004 06:51 PM

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Tom, while I agree with your take in many ways, it's important to understand that the entire political system is biased towards increased spending and/or tax giveaways. Appropriations Committee meetings to determine spending levels are, quite appropriately, called "Mark-Up" and a whole lot of that goes on, as Senators and Representatives have strong political incentive to throw in a goody or two for their own districts.

A million here, a million there.... each little program is barely round-off error in the federal budget, but it adds up. There is, of course, a "check and balance" on this: the president has the right to veto pork-ridden spending bills, since he supposedly works for the good of the entire country, but that has yet to happen on GWB's watch.

Years ago I worked for the Senate Appropriations Committee, and the joke was that you could always tell when Fritz Hollings wanted something for South Carolina, it was only time he'd be on time for the meetings.

Expecting these guys to hold the line in the face of a dysfunctional system is like asking someone to lose weight while working in a donut factory. In this sense, the "supermajority" rule is like stomach stapling: crude, but effective.

Posted by: cogito on March 11, 2004 07:52 PM

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tbrosz: yep, I'm unemployed, so any more taxes on anyone that has any money at all is good from my point of view. Not having any stake in a society kinda fosters that attitude. But I can still vote. Scary, huh?

Posted by: Jeff Lawson on March 11, 2004 09:31 PM

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Oh, the Paygo is absolutely relevant to the Budget. No one dares invoke the Byrd rule against Paygo as part of the budget resolution. Paygo is far more relevant to the budget than 99% of the garbage that attaches itself to the budget. The Feingold amendment defines "budget process". It is absolutely germane. Of course, this would not happen without the support of the few remaining GOP moderate untouchables (immune to Right wing challenge) like Chafee, McCain, Snowe and her Maine colleague. DeLay would like them gone but Frist wants to keep his job. No thanks to Zell Miller on this one either. Plus, this will give the other GOP Senators much needed cover from the hardball GOP right.

Posted by: bakho on March 11, 2004 11:01 PM

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The reason to use the Budget Resolution to create the pay-as-you-go rule is that there are very few other opportunities in the Senate to change any element of Senate rules.

A direct change to Senate rules requires a two-thirds vote. I don't need to tell you what an impossible mountain to climb this is.

When Gramm-Hollings-Rudman got through in the mid-1980s, it was attached to the budget resolution. It was not a free-standing Senate rule change. A weakness (and in some cases, a strength) of the overall budget process is that quasi-rules changes of this can be made under its umbrella, whereas you definitely cannot change the rule that (for instance) filibusters need to be voted down by a three-fifths majority of those elected and sworn in conjunction with any other bill. I'm not an expert on the budget bill, but the "super-majority" idea has some kind of a hold on Members right now that ought to be exploited until it, too, runs out of steam.

Posted by: Anita Jensen on March 11, 2004 11:44 PM

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The reason to use the Budget Resolution to create the pay-as-you-go rule is that there are very few other opportunities in the Senate to change any element of Senate rules.

A direct change to Senate rules requires a two-thirds vote. I don't need to tell you what an impossible mountain to climb this is.

When Gramm-Hollings-Rudman got through in the mid-1980s, it was attached to the budget resolution. It was not a free-standing Senate rule change. A weakness (and in some cases, a strength) of the overall budget process is that quasi-rules changes of this can be made under its umbrella, whereas you definitely cannot change the rule that (for instance) filibusters need to be voted down by a three-fifths majority of those elected and sworn in conjunction with any other bill. I'm not an expert on the budget bill, but the "super-majority" idea has some kind of a hold on Members right now that ought to be exploited until it, too, runs out of steam.

Posted by: Anita Jensen on March 11, 2004 11:44 PM

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The supermajority is a way to give Senators more leverage against administration hard ball tactics. If the president only has to browbeat a couple of wayward GOP Senators to make his tax cuts permanent, that is more feasible politically than having to buy off a half dozen or more Democrats. This protects the GOP swing Senators from the administration. It gives them cover in their home district against primary challenges financed by Mr DeLay. They can vote for a tax cut that they would prefer not to see enacted and win the battle and cover their right flank at the same time. A vote for Paygo is not a vote against the tax cuts. It is a vote to give those opposed to tax cuts more leverage. The public support for extending the tax cuts is not high and the Democrats (except for Zell) know this. Democrats have every reason to hold out until next session. If Mr Bush is reelected, then that is another scenario.

Posted by: bakho on March 12, 2004 07:49 AM

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cmdicely- By Senate rules, budget bills are not subject to cloture votes- They cannot be filibustered. This is why the Byrd rule exists, to stop Senators from sneaking non-budget related policies past the filibuster process.

Posted by: bakho on March 12, 2004 07:53 AM

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> I'm unemployed, so any more taxes on anyone that has any money at all is good from my point of view. Not having any stake in a society kinda fosters that attitude. But I can still vote. Scary, huh?

Lucky ducky!

Posted by: nick on March 12, 2004 10:49 AM

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Hmmm, well, even though it is missing, I stand by my original point: This rule is a joke and should never be passed. There is no democracy or democratic process that will guarantee a good outcome. People still have to make good choices. The "leaders" of this democracy have been making bad choices on taxes and spending for a while now. The voters should hold them accountable.

Posted by: Tom DC/VA on March 13, 2004 07:31 AM

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It's a sign of mediocrity when you demonstrate gratitude with moderation.

Posted by: schlanger karen on May 3, 2004 12:48 PM

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All sentences that seem true should be questioned.

Posted by: Bumbray Rashida on June 30, 2004 12:33 PM

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Posted by: GENERIC DOMAI NAMES FOR SALE GOOGLE TOP RANKED SALE RENT LEASE on July 3, 2004 09:12 AM

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