House Democrats assume their first majority in eight years tomorrow, but already, they’re hard at work to limit the usefulness of anything they might pass over the next two years.
The Intercept’s David Dayen reported on Tuesday that the House rules package for the next Congress, which will be voted on tomorrow, includes a pay-go (short for “pay-as-you-go”) provision which requires all new spending to be offset by budget cuts or tax hikes. This would be a return to the House’s policy under Nancy Pelosi’s last speakership, which she touted in 2009 as having “helped President Clinton turn over an historic budget surplus to President Bush.”
Republicans let those rules lapse during George W. Bush took office and almost immediately passed drastic tax cuts, and when they took control of the House during the Obama presidency, they implemented a version of “pay-as-you-go” that required new spending to be offset only by budget cuts. What a coincidence.
The problem is that budget surpluses are generally bad, as economists such as Stephanie Kelton have argued. And this useless rule is especially bad for the left, which wants to pass a bold, progressive agenda including Medicare for All and a Green New Deal. All of these items would require large initial investments (although they may end up pumping money back into the economy in the long run) but they’re necessary to improve the quality of life for the working class and everyone in the country in general.
Just how bad was pay-go the last time around? Dayen explains:
Last month, the Economic Policy Institute put out a damning paper arguing that during the Obama administration, pay-go led to unnecessary shrinking of ambitions in areas like health care and an unsuitable response to the Great Recession. “It is terrible economics to view federal budget deficits as always and everywhere bad,” wrote report author Josh Bivens, pointing out that pay-go stunted the economic recovery: “If … public spending following the Great Recession had followed the average path of the recoveries of the 1980s, 1990s, and early 2000s, a full recovery with unemployment around 4 percent would have been achieved by 2013.”
The pay-go rule can be waived so long as an emergency designation is attached to it—I’d say our impending climate apocalypse qualifies as one—but as Dayen writes, don’t expect the Democrats to attach this designation often:
The Democratic leadership replaced that rule with the 2007 version. The new rule establishes a point of order against any bill that increases the deficit within a ten-year budget window, based on figures from the Congressional Budget Office (CBO). The House could attach an “emergency” designation to legislation to get around the paygo rule: Congress did this in 2009 to pass the economic stimulus package under President Obama. The point of order could be waived by a majority vote of the House. But this gives the Democratic leadership another lever of control on what legislation can advance, as their assent would be critical to exempting bills from the paygo rule. And members of Congress tend to resist voting to waive the rule, as they worry it creates ready-made attack ads.
This shouldn’t come as any surprise considering Pelosi and incoming House Majority Leader Steny Hoyer have been talking about doing this for months. But it’s difficult to overstate just how useless this provision is, especially considering any big ticket items passed by a Democratic House over the next few years are sure to die either in the Republican-controlled Senate or on Donald Trump’s desk.
The good news is that the House leadership’s move isn’t coming without pushback. Rep-elect. Alexandria Ocasio-Cortez’s office told Dayen that she would vote against the rules package—which also includes a neutered climate change committee which won’t have subpoena power, unlike its 2007-2011 predecessor. Reps. Ro Khanna and Tim Ryan—who come from very different parts of the ideological spectrum—also announced their opposition.
Stephanie Kelton, who was an economic advisor to Bernie Sanders’ presidential campaign in 2016, was also trying to build support against the rule:
Here’s to hoping they’re successful. At this point in history, the absolute last thing we need is for the ostensibly liberal opposition to corporate fascism to kneecap its own efforts to prove it has something good and unique to offer people.