What is Pay-As-You-Go (PAYGO) and how will it help balance the budget?
On July 22, the House passed legislation reestablishing statutory “pay-as-you-go” (PAYGO) rules. In the 1990s, PAYGO helped the Clinton Administration turn deficits into record surpluses by compelling Congress to find offsetting savings for increases in direct spending or decreases in revenues. However, President Bush and Congressional Republicans allowed PAYGO to expire, clearing the way for policies that wiped out those surpluses. In 2007, new Democratic Majorities in the 110th Congress implemented PAYGO rules for the consideration of legislation by Congress. The new statutory PAYGO rules – proposed by President Obama and now passed by the House – would complement the existing Congressional rules. Restoring fiscal health will not be quick or easy, but reinstating statutory PAYGO is an important step toward that recovery.
