The paygo farce

In his continuing effort to sound like he's doing something about the federal spending that polls show are starting to worry respondents, President Obama expressed his devotion to the principles of paygo yesterday. But this is a total farce. We've heard Democrats since they took control of Congress talk about how they're going to bring spending under control through paygo principles. And then they keep exempting certain spending from paygo and merrily go along raising spending. The WSJ lays out what is really going on. Paygo applies only to new programs. So all they have to do is raise spending already existing spending or exempt whatever new program they're particularly fond of and paygo goes poof, at least until they need to reassure voters that they really, really mean it this time to bring spending under control.

The truth is that paygo is the kind of budget gimmick that gives gimmickry a bad name. As Mr. Obama knows but won't tell voters, paygo only applies to new or expanded entitlement programs, not to existing programs such as Medicare, this year growing at a 9.2% annual rate. Nor does paygo apply to discretionary spending, set to hit $1.4 trillion in fiscal 2010, or 40% of the budget.

This loophole matters, because on the very day Mr. Obama was hailing paygo the House Appropriations Committee was gleefully approving a 12% increase in 2010 nondefense discretionary spending, the third year running that Democrats have proposed double-digit increases. Or consider that the 2010 budget resolution included a $2 billion increase for low-income heating assistance as an entitlement change that should be subject to paygo. But Congressional Democrats simply classified it as discretionary spending, thereby avoiding the need for $2 billion in cuts elsewhere. C'est-la-paygo.

Mr. Obama's new proposal includes even more loopholes. There's an exception for Congress's annual alternative-minimum tax "patch," which is worth at least $576 billion over 10 years; for any of the Bush tax cuts that Mr. Obama decides he wants to extend past 2010; and to protect against planned cuts in Medicare doctor payments. These carve-outs alone spare Democrats from having to come up with some $2.5 trillion in spending cuts or new taxes. To add insult to profligacy, the rules also allow the Administration to run huge early deficits for its looming health-care bonanza, and only pay for it later -- say, after 2012.

So why talk about his allegiance to paygo if the concept is totally meaningless? Well, it does make nice talk and, as the WSJ points out, it gives cover to any Democrats up for election next year who thinks that voters will be alarmed at the vast increases in spending that we've seen this year. And it also opens the way for raising taxes.

So whenever you hear a politician talk about paygo, translate that into what is really going on. The politician is raising spending but trying to pretend that he or she is concerned about fiscal sanity. It's all a farce and just a code for making a political promise that won't be kept.