This Congress potentially could be the most productive in over 40 years. It has passed the largest recovery plan in the nation’s history. It extended health care to millions of children. It passed Obama’s first budget with its significant down payment on education and energy. The House just passed the comprehensive energy bill. Health care reform and the most extensive financial reform since the New Deal are next up.
Yet this same Congress will take the time to debate legislation that might best be considered symbolic blather. Its only effect is symbolic and the symbolism is loony.
The best example of this is the bill championed by Blue Dogs in the House and Senate—the conservative Democrats that the media labels “moderates”—called “paygo.” Paygo is the Washington shorthand for a rule that requires the Congress to pay for any expansion of entitlements (guaranteed benefits like Social Security Medicare) or decrease in taxes. It’s supposed to “discipline” the Congress on spending. Although discretionary spending—the appropriations that Congress approves annually for the running of the government—is not covered, the rule is designed to put significant pressure on Congress to limit spending.
Now House Blue Dogs are pushing to pass this self-imposed rule into legislation. At a time of unprecedented deficits, they want to parade their righteous commitment to cutting spending and balancing the budget. Since Democrats have already imposed paygo rules on their actions in the House and Senate, the legislation is purely symbolic. And the symbolism is utter blather.
For one thing, Blue Dogs are the first to line up to vote for massive spending on wars and adventure abroad, all of which is exempt from paygo rules. Thus Bush’s $3 trillion war in Iraq would not have violated paygo, nor does the special supplemental to fund the continuing war in Iraq and the escalating one in Afghanistan.
Beyond that, the message sent by the bill is wrong-headed. In the short term, it puts an emphasis on cutting spending and balancing the budget. But we’re in the midst of fighting the worst economic collapse since the Great Depression. In these conditions, with consumers and businesses cutting back, workers getting laid off and families losing their homes, the federal government must step in to boost the economy. Deficit spending is essential, not evil. In fact, as unemployment heads to double digits, states and localities face staggering cutbacks, banks aren’t lending, and as businesses are cutting capacity, not expanding it, we will need to borrow more money to spend on a second stimulus plan (as Paul Krugman, among others, argues). Paygo heads exactly in the wrong direction.
In the long term, paygo puts the focus on controlling “entitlement” costs. But virtually the entire long-term structural deficit problem comes from projected soaring health care costs. We don’t have an entitlement problem; we have to get health care costs under control. Ironically, the same Blue Dogs, like Sen. Max Baucus, that champion paygo are the ones doing the most to weaken the public option in health care reform, which will do the most to control costs by offering a choice to private insurance.
Paygo also is translated into the need to cut spending and limit tax cuts to balance the budget. In fact, as Clinton’s experience showed, the way to balance the budget is to get the economy going. Without growth, budget deficits will increase and should do so.
Washington’s dirty little secret is that we need more investment, not less. We’re running a debilitating public investment deficit—failing to invest adequately in areas vital to our future from modern infrastructure to research and development to new energy and education. In the new economy emerging out of the calamity, we need progressive tax reform, with the wealthy paying far more in taxes than they do now, and increased public investment.
Finally, as economist Dean Baker argues, paygo is an atavistic throwback to the conservative economics that led us off the cliff. Growth, we were taught, comes from balancing the budget, sustaining a high dollar, deregulating banking, adhering to corporate trade policies, and ignoring the inequality and loss of good manufacturing jobs that resulted. That didn’t work out so well. One would have thought that even the Blue Dogs understood that.
This week, progressive legislators will try to figure out where they stand on this lemon. At the very least, they should demand something sensible as a price for holding their noses as the symbolic blather passes. They could demand an investment bank or a capital account in the budget. Either would put the U.S. in the same position as a family or state and local governments, financing investments in buildings or homes or education or research and development rather than budgeting their entire costs in the first year.
House Speaker Nancy Pelosi supports paygo as a way of keeping the Blue Dogs as least partially on the leash. The question is why do the Blue Dogs so stridently demand it? It’s like an ideological tic. They don’t seem to understand how deep a hole we are in nor have a clue about how to get out. They simply want to croon the old ditties of a bygone and tawdry age.