Requires Congress to find a way to pay for all new spending

WASHINGTON, D.C. - U.S. Senators Claire McCaskill (D-MO) and Michael Bennet (D-CO) today introduced legislation that would force Congress to rein in run-away spending and bring new fiscal restraint to Washington. The legislation, known as Pay-As-You-Go (PAYGO), would require Congress to find a way to pay for all new entitlement spending or tax cuts, rather than adding to the national deficit.

"We need to return to the simple, common sense laws of the 1990s that required us to pay for new spending programs and new tax cuts. The last administration abandoned that law, and the results speak for themselves," Bennet said.

"We can't continue spending money we don't have," McCaskill said. "Most Americans manage to live on a budget and not spend beyond their means, and the federal government should too."
The legislation would reinstate PAYGO rules similar to those in effect during the 1990s that helped lead to budget surpluses. Under those rules:

  • All legislation that Congress passes during the year will be added up on a PAYGO "scorecard."
  • If Congress fails to offset the cost of all new entitlement increases or tax cuts passed during the year, the "scorecard" will show a deficit, and it will trigger across the board cuts in entitlement spending.
  • Budget gimmicks, such as putting off payments until just outside the budget window, will be eliminated.
  • Unlike the PAYGO bill passed by the House of Representatives, Congress will have to offset the cost of extending the Bush Tax Cuts, the Alternative Minimum Tax (AMT), 2009 levels of the Estate Tax, and Medicare Physician Payments rates.

President Barack Obama announced in June his support for putting PAYGO into law, and called on Congress to take up and pass the legislation (read his speech here). The House of Representatives approved PAYGO legislation last month.

In 2007, both the House of Representatives and the Senate adopted PAYGO principles as congressional rules. The PAYGO bill Senators McCaskill and Bennet introduced would write much stronger rules into law. They would strengthen enforcement through the threat of mandatory cuts, and make PayGo harder to waive by requiring that deficits be tallied cumulatively, as well as on a bill by bill basis. The PAYGO rules under the legislation are similar to the PAYGO rules that were the law during the 1990s, but those were allowed to expire in 2002.

Other original co-sponsors of the legislation include Senators Amy Klobuchar (D-MN), Jon Tester (D-MT), Mark Udall (D-CO), Mark Warner (D-VA), Jeanne Shaheen (D-NH), and Mark Begich (D-AK).