It sounds like an exotic South Sea island.
Close your eyes, say it to yourself twice, and you can imagine a tropical paradise replete with swaying palms, warm trade winds and shapely gals in grass skirts.
Paygo could just as easily be the latest hit TV game show hosted by the likes of Ryan Seacrest or a recycled Regis.
When the President referred to it in his recent State of the Union address, there was hesitant applause from selected members of the House and Senate. Others looked at each other, not knowing whether the President was referring to a new-fangled foreign policy initiative or a federal version of the Powerball.
Paygo is short for pay-as-you-go, a cardinal rule of fiscal responsibility. Until 2002, the Paygo regimen was the law of the land.
This simple budget discipline was adopted in the Omnibus Budget Reconciliation Act of 1990. Unfortunately, it was allowed to sunset in 2002 to make room for the Bush tax cuts and the anticipated prosecution of a war on two fronts.
Paygo should be a no-brainer for those who regularly trumpet the need to live within our means. Yet when it came to a vote last Thursday, all 40 of the Senate’s Republicans gave it the old Roman thumbs-down.
Strictly Party-Line
Despite the odd opposition by members of the GOP, the renewal of the Paygo measure passed with all 58 Senate Democrats and both Independents according it their endorsement. Because a similar measure already has passed the House, a version of this essential budget mechanism should soon make it to the President’s desk.
For the record, Republicans base their opposition on the claim that Paygo would open the door to tax increases. Many of these same Republicans, however, have repeatedly voted in favor of Paygo over the last five years. Given their perennial breast-beating about dedication to fiscal responsibility, their stated fear about possible tax hikes borders on being disingenuous.
It Is Just Baffling
There is broad agreement that pernicious and uncurbed budget deficits pose a corrosive threat to our long-term economic health. While there may be legitimate debate about whether it is too soon to pull the plug on further stimulus spending to support the nascent recovery, it is never too early to set the framework for the imposition of a future fiscal discipline.
Along with the booming tech economy of the late 1990’s, the Paygo principle was one of the chief reasons the Clinton administration was able to achieve a historic budget surplus. While most Republicans abhorred Slick Willie’s politics and suspect values, they embraced his fiscal policies, including his unwavering support for Paygo.
With the election of Scott Brown to fill Ted Kennedy’s traditionally liberal seat in Massachusetts, the Republican leadership smells blood in the water. They see an opportunity to emasculate a President they previously perceived as politically bulletproof. But in light of their blanket opposition to this President’s latest budget proposal, and their dense denunciation of the Paygo provisions, the GOP runs the risk of becoming the fiscal equivalent Chicken Little.
As political strategies go, it’s stunningly stupid.
Brown’s ascendency opened the door for Republicans to construct sober challenges to President Obama’s fiscal policies. By voting against Paygo, they’ve not only undermined their own credibility on the subject, but may have squandered what little political capital they garnered as a result of Brown’s surprise victory.
John Cohn is a senior partner in the Globe West Financial Group based in West Los Angeles. He may be contacted at www.globewestfinancial.com
