Progressives To Put Up Last-Minute Fight To Stop 'Pay-Go' Budget Rules

Alexandria Ocasio-Cortez and Ro Khanna say the new rules risk hamstringing a progressive agenda.
Rep. Ro Khanna (D-Calif.) voiced his opposition to any House rules package that includes "pay-go," a pay-as-you-go rule requiring Congress to offset any new spending it enacts.
Rep. Ro Khanna (D-Calif.) voiced his opposition to any House rules package that includes "pay-go," a pay-as-you-go rule requiring Congress to offset any new spending it enacts.
Reed Saxon/Associated Press

WASHINGTON ― A small group of progressive lawmakers are trying to derail a fiscally conservative proposal put forward by the incoming House Democratic leadership ― one that could potentially block votes on ambitious policy proposals like Medicare for All unless it’s completely paid for.

The pay-as-you-go rules, commonly known as “pay-go,” would require Congress to offset any increased spending with equal cuts or revenue increases elsewhere. The provision is contained in a larger package of rules for the incoming 116th Congress, which convenes on Thursday.

The fact that Democrats are using their newfound power to stress fiscal responsibility is baffling to some progressives. Fiscal responsibility was hardly mentioned in the 2018 elections, whereas big legislative ideas ― which could be harmed by pay-go rules ― were popular with voters.

But the incoming leaders of the Congressional Progressive Caucus, Reps. Pramila Jayapal (D-Wash.) and Mark Pocan (D-Wis.), said they will not oppose the overall House rules package based on the pay-go provision because they’re satisfied with promises from Democratic leaders that they would waive pay-go if it interfered with significant bills, including Medicare for All.

With the assurances that PAYGO can be waived, we do plan to vote for the House rules package and proceed with legislation to fix the statute,” Jayapal and Pocan said in a joint statement.

If leadership waives pay-go rules, it would allow such legislation to come up for a vote on the House floor and for the House to pass it.

But that legislation would still not be able to become law unless both chambers of Congress voted to exempt it from “statutory pay-go,” a restriction enshrined in law that leadership alone cannot change.

Jayapal and Pocan said they plan to introduce legislation reversing statutory pay-go in the coming Congress as well.

But some CPC members aren’t as assured by leadership’s promises.

Khanna was responding to a tweet from Warren Gunnels, policy director to Sen. Bernie Sanders (I-Vt.), effectively challenging progressive members of Congress to take a stand against the “pay-go” rules.

Rep.-elect Rashida Tlaib (D-Mich.), a fellow incoming progressive and friend of Ocasio-Cortez’s, has yet to announce her stance on the rules package, according to her spokesman.

Rep.-elect Ilhan Omar (D-Minn.) announced Wednesday night that she would be voting for the rules package. Omar cited incoming Rules Committee Chairman Jim McGovern’s (D-Mass.) assurance that “pay-go” would not be used to block progressive legislation and celebrated a successful December effort to prevent a supermajority requirement for tax hikes on all but the wealthiest taxpayers.

“Budgets are an expression of our values,” Omar said in a statement. “Going forward, I support legislation to reform PAYGO and am committed to pursuing reforms that allow us to center our politics on people’s everyday needs rather than artificial constraints.”

Omar also noted that the package includes House rules to accommodate religious headwear, enabling her to continue wearing a Muslim headscarf, or hijab, on the House floor.

The CPC co-chairs did not notify Ocasio-Cortez of their plans to accommodate Democratic leaders on pay-go, according to Corbin Trent, a spokesman for the incoming congresswoman. He confirmed that Ocasio-Cortez would be whipping votes against the rules package. If 18 Democrats defect, the package will fail.

“If pay-go is going to be waived every step of the way ― every time we need something big passed ― then why do we need the thing in the first place?” he asked.

A House Democratic aide to a progressive member disputed Trent’s version of events, saying that Congressional Progressive Caucus co-chairs briefed all members on the rules and on their negotiating strategy with party leadership.

And Democratic leaders are nonetheless confident that the rules package will pass, according to a Democratic House leadership aide.

The last-minute revolt against pay-go, however small, reflects a tidal shift in Democratic thinking about fiscal policy since the party last controlled the House.

Under the leadership of then-House Speaker Nancy Pelosi (D-Calif.), Democrats reinstated expired pay-go rules requiring any new spending to be offset upon retaking the House in 2007. The party wanted to show that unlike then-President George W. Bush, who ran up annual budget deficits to finance the Iraq War and other priorities, Democrats were fiscally responsible.

But over the course of the following decade, many rank-and-file Democrats came to believe that trying to outflank Republicans from the right on fiscal policy was a suckers’ game. Republicans would run up the debt to pay for tax cuts and mammoth defense spending ― just as President Donald Trump has done. Democrats were left, as they saw it, to clean up the GOP’s mess and to fit their budget for social programs into ever-more-austere limits.

In addition, an increasingly influential band of progressive economists led by figures like Paul Krugman during the Obama years ― and more recently, Stephanie Kelton ― have argued that debt only matters inasmuch as it has an impact on inflation.

And against the predictions of many budget hawks, inflation has remained under 2 percent for years now.

This article has been updated to include a statement from Rep.-elect Ilhan Omar.

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