Pay-as-you-go, or “PAYGO” rules require that new entitlement spending and new tax cuts must be paid for dollar-for-dollar with entitlement spending cuts or tax increases. On February 4, 2010, pushing for passage of the pay-as-you-go (PAYGO) legislation, then House Speaker Nancy Pelosi stated on the House floor,
The PAYGO legislation was enacted into law on February 12, 2010 (H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010). The new PAYGO law was part of a larger bill that raised the debt limit by $1.9 trillion. The nonpartisan Congressional Budget Office reported that the net budgetary effects of the bill over the 11-year period 2010-2020 were
- $40 billion net tax increase
- $174 billion spending increase
- $134 billion deficit increase
Similarly, in her November 2010 opinion piece for USA Today, Nancy Pelosi provided a long list of accomplishments since assuming control of the House and Senate in January 2007. She also discussed PAYGO as follows:
Similarly, reflecting on the 111th Congress at her last press conference on January 4, 2011, former House Speaker Nancy Pelosi stated this again:
Deficit reduction has been a high priority for us. It is our mantra – pay as you go.”
The reality about PAYGO is different. On January 4, 2007 (the start of this particular Congressional session), the national debt stood at $8,670,596,242,973.04. The last day of the 111th Congress on December 22, 2010, the national debt was $13,858,529,371,601.09 – a roughly $5.2 trillion increase in four years. The year over year federal deficit increased over 7 times during these four years from $162 billion in fiscal year 2007 to approximately $1.3 trillion at the end of fiscal year 2010. This $1.3 trillion is 8.9 percent of GDP – the second highest since 1945.
The following table lists instances in which Congress waived or ignored its PAYGO rule during the 110th Congress. Overall, Congress passed legislation exempting from PAYGO over $420 billion in non-offset deficit increases.
Table: Non Offset Deficit Increases During 110th Congress
Legislation | Date Passed | Non-Offset Amount |
Auto Bailout (H.R. 7321) | 12/10/2008 | $3.9 billion |
Unemployment Insurance Extension (H.R. 6867) | 10/3/2008 | $5.7 billion |
Emergency Economic Stabilization Act (H.R. 1424) | 10/3/2008 | $110.4 billion |
Economic Stimulus II (H.R. 7110) | 9/26/2008 | $23.9 billion |
Disaster Tax Relief Act (H.R. 7006) | 9/24/2008 | $8.1 billion |
2008 Alternative Minimum Tax Patch (H.R. 7005) | 9/24/2008 | $64.6 billion |
Housing and Economic Recovery Act (H.R. 3221) | 7/23/2008 | $24.9 billion |
Senate Restaurant Employees (S. 2967) | 7/10/2008 | $3 million |
War Supplemental (H.R. 2642) | 6/19/2008 | $70.9 billion |
Unemployment Insurance Extension (H.R. 5749) | 6/12/08 | $10.0 billion |
Farm Bill (H.R. 2419) | 5/14/2008 | $2.9 billion |
Economic Stimulus I (H.R. 5140) | 2/7/08 | $124.4 billion |
2007 Alternative Minimum Tax Patch (H.R. 3996) | 12/19/2007 | $50.6 billion |
State Children’s Health Insurance Program (H.R. 3963) | 10/25/2000 | $3.1 billion |
2007 War Supplemental (H.R. 2206) | 5/24/2007 | $6.0 billion |
Because of this spending and deficits, nonpartisan experts have warned about the creditworthiness of the United States government almost a full year ago.
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