'Pay-go' returns as public worries about spending

House Democrats will take time out of the healthcare debate this week to pull out their favorite deficit-buster: a “pay-go” law.

The action comes as polls show public concerns about runaway spending rising nearly as fast as the deficit itself.

The House is planning a vote next week to embed in law their “pay-as-you-go” rules requiring that all spending increases be offset by spending cuts or tax hikes. Supporters say the legislation is one step toward reining in record deficits, which will reach $1.8 trillion this year and exceed $600 billion over the next decade.

“It’s the most important thing we can do to show the public we’re taking the spending situation seriously,” said Rep. Dennis Cardoza (D-Calif.). Cardoza is a member of the Blue Dog Coalition, a group of fiscally conservative Democrats who are pay-go’s biggest backers in Congress.

Many Blue Dogs are at odds with Democratic leaders about the cost of healthcare legislation moving through the House.

The bill has 177 sponsors and House leaders expect to be able to get the 218 votes needed to pass the bill. But the bill has opponents on the right and left.

Republicans have dismissed the Democratic effort as a way to cover their tracks after loading up on federal spending. And they warn that it could lead to tax increases.

“The quickest way to save money is to stop spending it recklessly,” said House Minority Whip Eric Cantor (R-Va.).

Critics also say the bill is full of loopholes. The Obama administration has agreed to exempt a few big-ticket items that have added to the nation’s budget deficit. Those items include the extension of middle-class tax cuts enacted during the Bush administration, funds to keep the Alternative Minimum Tax from hitting middle-income Americans and Medicare payments to physicians.

Many liberal Democrats are wary of the bill, fearing that it will target social programs while leaving defense and other more conservative priorities untouched. Many Democrats have also been frustrated with Blue Dogs, who opposed cutting funds to end the war in Iraq.

Some members also see the pay-go push as driven by politics, not policy.

“When things start showing up in the polls, they usually call a meeting,” said one Democratic member after emerging from a caucus meeting on pay-go. “Now the polls are showing concerns about the deficit.”

A CBS News poll earlier this month showed that 61 percent of Americans would prefer cutting the deficit to stimulating the sputtering economy. That was nine points higher than the previous month.

Because Republicans are likely to unite against the pay-go law, liberal skepticism could force Democratic leaders to make changes to get the 218 votes needed to pass the bill.

But the bill’s biggest obstacle is the Senate. Senate Majority Leader Harry Reid (D-Nev.) has voiced support for it but Senate Budget Committee Chairman Kent Conrad (D-N.D.) has criticized it. House Democratic leaders have pledged not to consider any new tax bills from the Senate unless the upper chamber takes up pay-go legislation.
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