Paygo-a-go-go
Amitai asks whether it’s a good idea to restore pay-as-you-go rules to Congressional appropriations: “Does it make sense for the Democrats to ‘act responsibly’ only to provide funds to be expended by the next Republican administrations on its constituencies?” My answer is absolutely, yes, because bringing back paygo is one of the best ways to reinforce the narrative that we can be trusted to govern effectively and they can’t – thereby helping to put off into the distant future when Republicans will regain the White House and Congressional majorities.
The blindness of movement conservativism to historical experience and its indifference to the real-world consequences of its ideologically driven policies is one of the main messages to carry forward not just in the coming campaign but from here on out. And the decision of the Republican Congress early on to grease the skids for tax cuts by dropping paygo, which had demonstrably proven to be critical in transforming big deficits into surpluses in the 1990s, is one of the many examples of the right’s premeditated acts of destruction – in this case to the budget.
Obviously, paygo rules in and of themselves don’t arouse the passions of the masses. But the public at this stage is more than a little primed to have dots connected about the distinctions between responsible and irresponsible governing – and the role the right’s ideology has played in the multitudinous governance failures of the last six years. The simple act of dropping paygo was one of the clearest illustrations of how movement conservativism’s belief system, when implemented, screwed up the country in a big way. (By the way, in case you’re wondering, no one at the Heritage Foundation or Cato, or other right-wing pooh-bahs who moan about government spending, raised a peep when paygo rules were dropped—tax cuts were more important, and they still held out hope for the "starve the beast" alchemy).
Reversing their withdrawal of paygo is one small but important way of demonstrating the difference between us and them, underscoring the important political case to be made about why we can be trusted to run the government. If a policy works, in this case paygo, it makes sense to stick with it and build on it. That’s a mindset alien to the conservatives who have been in charge of the country for the past six years. Restoring paygo will strengthen the budget, which in its own right makes it worth doing. But its political value is in reinforcing the bigger story line about how Democrats will work to regain some degree of public confidence in government and why movement conservatives shouldn’t get any more chances.
In this same vein, it is critical that the budget include the cost of each tax break (general and specific). The neutral revenue value of the tax system minus all twists and turns should be revealed.
In this structure there should be no deductions, nothing to modify AGI, no tax credits, no special treatment of anyone's income (not even the clergy), etc. Each of these special modifications should then be budgeted and added into the budget as an expenditure.
The president and congress should be required to show how much each form of special treatment costs the neutral tax system. It should also be possible to eliminate these forms of special treatment by de-funding them in the budget.
Finally, these budgeted tax expenditures should be subject to audit. If there is material variance between budget and audit, the beneficiaries should be required to reimburse the government proportionally.
January 22, 2007 2:32 PM | Reply | Permalink
OK, I'm waiting for you to proudly proclaim an increase in taxes and drastic cuts in "defense" spending, otherwise I expect what we're going to see is an extremely conservative budget robbing from health care, education, cancer research, and basic infrastructure to pay for war.
January 22, 2007 3:28 PM | Reply | Permalink
I especially like this:
"no special treatment of anyone's income (not even the clergy), etc."
I mean, if a preacher's house is on fire; if the church itself is robbed; do they not call the fire department or police? Are the roads that get their flock to their doors not maintained by the government?
It's time to end this unfathomably large subsidy of religion. That alone would solve many financial problems!
Jan Knaus
January 22, 2007 4:10 PM | Reply | Permalink
Certainly a balanced budget is a false goal ... a old lie about how the economy works dressed as a shiny new lie about how the economy works.
But PAYGO isn't a balanced budget amendment. Given that the budget has been pushed to unsustainable levels, especially given that much of the spending is destructive government consumption rather than productive government investment, PAYGO from this point is perfectly reasonable.
And if it stiffens the back of Congresscritters to oppose funding an invasion of Iran, all the better.
January 22, 2007 5:06 PM | Reply | Permalink
Re: no special treatment of anyone's income (not even the clergy), etc
Clergy do pay income and FICA taxes.
Churches (synagogues etc.) get a break on A) property taxes and B) since they are non-profits and are not classed as businesses they pay no corporate taxes (which distinction they share with colleges, secular charities, etc.)
January 22, 2007 5:13 PM | Reply | Permalink
Clergy don't pay income taxes; in fact they don't even pay sales taxes. I am very familiar with a missionary who presents her card at Sams Club and gets charged no sales tax for anything, including jewelry, televisions, furniture, wine...you name it.
Jan Knaus
January 22, 2007 5:45 PM | Reply | Permalink
I'm disappointed in the entire question, and indeed I'm disappointed in how Amitai Etzioni's post has framed it. Perhaps it's the haste of blogging and his adjusting to it, but I'm sorry to see a scholar of his stature creating an either/or that's so misleading.
I can only hope in haste, he's conflated quickly three separate ideas. You may not agree with all my answers, but let me at least hope to disentangle them. First, PAYGO. Well, no, it's not a good principle. We are all Keynesians now, as a certain GOP nutcase once said, and we need the flexibility to enact legislation for goals other than macroeconomic, such as liberty or equality or risk reduction, with certain consequential interests in education and so on. Indeed, the post refers specifically to the Reagan hypocrisy in claiming supply side while doing its best to run up deficits to sabotage such goals. Why should we concur, and why shouldn't the post have done more to consider its own evidence?
Second, sure, the Clinton administration was left with a mess. Indeed, I wish more TPM commenters would consider that when they label it RINO. (I realize that a separate issue, NAFTA, will always loom larger for Naderites than everything else. And I'm not buying welfare reform.) But still, why raise this in order to move us right?
Last, is it futile to be responsible if the GOP will just screw it up? Logically, that's wrong, because it misstates the choice as giving the GOP more leeway, rather than a choice between having them pretty darn near ruin us for good and agreeing totally to ruin. Empirically, it's wrong because we did not so bad in the 1990s.
But either way, it sets up the wrong opposition. It's not whether we agree to a conservative balanced budget strategy. it's whether we do the usual liberal mix of responsibility and justice.
John
http://www.haberarts.com/
January 22, 2007 6:06 PM | Reply | Permalink
The REAL problem is that successful democratic policies and administrations create REPUBLICAN VOTERS.
Generally they make people better off, generally more self-supporting and there is a bigger safety net to fall back on if you do get hurt. All this adds up to people economically feeling like they are rich and so they elect republicans so they can get richer. Of course this doesn't work for 95% of the people and so you get Dems in to pick up the pieces after a while.
The only time this really changed was in the Great Depression because things were SO BAD and the matter SO TIED to the Republican Party that these voters had the matters BURNED into their memories so they knew what would happen.
Unless we make sure that we communicate that the bad times are not only tied to Republicans but that they STILL ARE these debates will have political salience.
January 22, 2007 6:27 PM | Reply | Permalink
You and Jan are both wrong. A simple check of the tax law will reveal that there is special treatment of clergy income, but they are also subject to income tax. As I originally proposed, every special consideration should be budgeted just like a program, should be audited, and if it is overspent, the beneficiaries should reimburse.
January 22, 2007 6:52 PM | Reply | Permalink
PAYGO, well done, is a good policy. Congress has legislative authority, so they CAN go around PAYGO when circumstances demand. However, typically, circumstances do NOT demand. The reason I have been harping about tax expenditures is to explicitly put them on the table for PAYGO consideration. The usual reason for tax expenditures is to hide them from the budget cutting knife, but not under the scenario I am proposing.
Americans may not realize the implications of exporting our debt. We used to transfer our debt between generations (younger to older). When the older generation died, they conveniently left the assets to the generation that borrowed the money in the first place. The only problem was the class transfer of money. Borrowing that way was ONLY A CLASS problem, in the big scheme of things not the biggest possible problem.
We NOW export our debt. Nice as long as it works. Thank you poor Chinese workers for lending us money. But, you may recall that China shot a cannon across our bow just last week. Debt exportation is so essentially linked to this event. We need to get our house in order, and that means PAYGO. Borrowing when we really need to depends on NOT borrowing when we don't. We have a credit card problem.
WHEN we go to PAYGO, we can cut Republican programs (tax expenditures). That is why we need to put them in the budget as positive dollar expenditures.
On your second point, we are calling Clinton a DINO not a RINO. Eisenhower was almost a RINO. Clinton gets no break for the circumstance he inherited. Reagan was in office during some of the largest DEMOCRATIC majorities of the 20th century, but somehow HE managed to push his RADICAL REPUBLICAN agenda. Why wasn't he handicapped? OR, are you saying that entire Congress and Senate are DINOs?
January 22, 2007 7:11 PM | Reply | Permalink
Question: Rule XXI, Section 5 (b) which requires a three-fifths majority to raise income taxes was waived, right?
January 22, 2007 8:03 PM | Reply | Permalink
Tnank you, Good 4! I had tried to check this but never got the right place (I'm not good at this!) I wonder if my missionary aquaintance was just bragging, or is actually not paying and getting away with it.
What I said about sales tax I saw with my own eyes, however. That was probably "under the rug" as well, and was meant only for purchases for the non-profit itself.
Again, thanks. I stand corrected (and I feel a whole lot better about the system than I did before!)
Jan Knaus
January 23, 2007 7:01 AM | Reply | Permalink
From "Who Will Tell the People," by W. Greider, copyright 1992. "If Congress had done nothing since 1977 to alter the US tax code, passed no new legislation at all, nine out of ten American families would be paying less. That is, a smaller share of their incomes would be devoted to federal taxes.
"Yet...the government would be collecting more revenue each year - almost $70 billion more - if none of those tax bills had been enacted.
"...Where did all that money go? Roughly speaking, it went to corporations and to the one in ten families at the top of the income ladder. Their taxes were cut by spectacular dimensions."
Paygo or no Paygo, the Republican Party holds to the Andrew Mellon declaration in the 1920's, "The prosperity of the lower and middle classes depends upon the good fortune and light taxes of the rich." So it is that the Republicans when in power have and will continue to work the tax code to benefit their benefactors - even if it means bankrupting the treasury.
January 23, 2007 10:19 AM | Reply | Permalink