EDITORIAL: Preserving budget discipline

Washington Times
Sunday, March 1, 2009

President Obama's efforts to get Congress to reinstitute statutory budget rules forcing hard choices is being opposed by Republicans and Democrats alike. They will produce a law with so many loopholes opening the monetary floodgates that Mr. Obama may have to veto it the first time out. But he'd be absolutely right to do so.

Without pay-go rules - budget codes enforced by law that require every prospective dollar in expenditure added to be matched with a cut or another revenue stream - there is little chance of halving the $1 trillion-plus deficit by 2013 to $533 billion, as the White House has indicated it wants to do (ironically, President Bush had similar aspirations in 2004). But it's bait-and-switch, with deficit reduction the bait and the switch being tax increases (not spending cuts) to achieve the reduction, which is exactly where this is going with the liberals ruling the roost. This is something Republicans will not willingly stand for regarding pay-go, no matter how much the country "needs" the spending and thus "must" tax to reach a deficit reduction.

"My experience with Democrats and pay-go is you pay and they just go on spending," said Indiana Rep. Mike Pence, chairman of the House Republican Conference. "Republicans have not categorically opposed pay-go; we oppose pay-go that does not exclude tax increases." Mr. Pence said that in a recession no one should raise taxes on anybody. He is right about that. But Republicans should think hard before abandoning support for pay-go, despite the bait-and-switch potential. With budget controls, there must be a vote on every spending measure, every change to each spending measure, and any tax increases to offset spending increases. That makes it very difficult for Democrats to raise taxes at will without their fingerprints being on the measures, and it would be very easy for Republicans to hammer them at election time if new taxes are imposed.

Under the original Budget Enforcement Act passed in 1990, taxes went up but were largely unnoticed by the American people due to the booming high-tech market, the vast numbers of jobs it created, and the rising economy. There is no comparable new technology or situation today. Going back to the recessions and deficits of the 1980s, the economic slump was a mere speck compared to what the country is facing today. Tax increases today would primarily hit small businesses and their employees, who constitute nearly 90 percent of the workforce, and would only make matters worse than they are now.

Mr. Obama should work to get pay-go enforced. Democrats should keep in mind that raising taxes will not go unnoticed by the American people this time, and they will have an impact on future elections. Republicans will make sure of it.