Alexandria Ocasio-Cortez Wants Democrats to Drop the Pretense of Fiscal Responsibility
The fight over PAYGO is about whether Democrats will pretend to care about the deficit.
Perhaps the biggest question looming over the progressive economic policy agenda is how to pay for it. Rep. Alexandria Ocasio-Cortez (D–N.Y.) and a handful of other left-leaning Democrats appear to have settled on an answer: Don't.
As Democrats take control of the House this week, Reps. Ocasio-Cortez, Ro Khanna, and other progressives have come out against the reinstatement of a House rule known as PAYGO, or pay-as-you-go.
Broadly speaking, PAYGO would require the House to offset expansions of mandatory spending (which mostly means entitlements) with either tax hikes or spending reductions, making the spending deficit-neutral. PAYGO would replace CUTGO, a rule adopted by the Republican House in 2011 requiring spending reductions to offset increases in entitlement spending; CUTGO does not require deficit increases stemming from a tax reduction to be offset.
Speaker of the House Nancy Pelosi included the rule in a package of changes intended to signal a sharp break from her Republican predecessors. The message she wants to send is that Republicans, who in 2017 passed a deficit-increasing tax-cut bill on party lines and then followed up by agreeing to a bipartisan spending increase, were fiscally irresponsible. This is a political promise that Democrats won't be.
Granted, it's not much of a commitment. House Democrats could waive the rule any time they wanted to, and if doing so was necessary to pass big-ticket legislation they likely would. Some Democrats appear to support the rule changes only on the understanding that they won't really be binding.
And in a larger sense, it doesn't matter anyway, since PAYGO is encoded in statute, which requires the Office of Management and Budget to implement across-the-board spending cuts under certain conditions. But even statutory PAYGO has limits: Programs like Medicaid, food stamps, and Social Security are exempt from those across-the-board cuts; reductions to Medicare spending are capped on annual basis; and no cuts have actually gone into effect since 2010.
So the fight over the House PAYGO rule is almost entirely symbolic. At heart, it's a debate about whether Democrats will maintain the pretense of self-imposed fiscal responsibility. Ocasio-Cortez and others who oppose the rule are arguing, essentially, that Democrats should drop it entirely, because maintaining even the pretense could make it prohibitively difficult to pass expensive legislation like single-payer health care.
On Twitter, Ocasio-Cortez, who campaigned on Medicare for All, singled out health care legislation as a reason to oppose PAYGO:
Tomorrow I will also vote No on the rules package, which is trying to slip in #PAYGO.
PAYGO isn't only bad economics, as @RoKhanna explains; it's also a dark political maneuver designed to hamstring progress on healthcare+other leg.
We shouldn't hinder ourselves from the start. https://t.co/WW3UaBs7vh
— Alexandria Ocasio-Cortez (@AOC) January 2, 2019
In some ways, this is a response to Republicans running up the deficit over the last two years. Rep. Tim Ryan (D–Ohio) tells Vox, "Critical investments in education, infrastructure, and health care should not be held hostage to budgetary constraints that Republicans have never respected." Other PAYGO opponents are making a pro-growth argument that mirrors the Republican argument that tax cuts pay for themselves. Khanna tells Vox, "We should make it clear that our policies will lead to growth and that's how, long term, we will avoid uncontrollable deficits."
Republicans certainly haven't done themselves any favors by enacting legislation that has caused debt and deficits to rise, and this response from the Democrats was entirely predictable. Ambitious progressives were nearly certain to seize on Republican deficit hypocrisy as a way to advance their own agenda.
But this isn't just political tit-for-tat. It's a response to the question of how to pay for progressive policies that rejects the premise. Underlying this intra-Democratic dispute is an admission on the part of the progressive faction that they not only are unlikely to find a politically workable way to pay for their agenda, they don't believe they should even have to try.