Democratic Leadership and Pay-Go

Nancy Pelosi

By Max Sawicky 
Ferment inspired by the execrable Trump presidency and Republican Congress has returned Democrats to a majority in the House of Representatives, but their incoming leader, Rep. Nancy Pelosi (D-CA), is maneuvering to squelch that ferment with a new “rules package” that will discourage progressive legislation.
The two moves in question are reinstituting a “PAY-GO” restriction on legislation, and neutering a new committee dedicated to advancing the Green New Deal (GND).
PAY-GO, short for “pay-as-you-go,” requires any proposal for new spending or tax cuts to be accompanied by offsetting measures that preclude any increase in the federal budget deficit over the ensuing decade. Under this rule, a bill violating this requirement is subject to a “point of order” on the House floor. That immediately interrupts consideration of the bill, which can then be killed absent consent by the Democratic leadership, meaning Nancy. It is possible for the restriction to be waived, but that would require buy-in from you guessed it, Nancy, so it will be her way or no way.
In practice, of course, a speaker who has the support of her caucus has dictatorial control over the House. She or her can block any bill at any time. What PAY-GO does is give Pelosi an excuse for letting something die before it has a chance to get a vote by the full House. Her fingerprints on the blockage are not as obvious. Instead of the headline being, “Nancy says she doesn’t like this bill,” it will be, “Green New Deal falls afoul of PAY-GO rules.” Meanwhile, the new committee dedicated to advancing the GND, besides being hampered by PAY-GO, would lack subpoena power. So compared to other Congressional committees, it will be like the kids’ table at Thanksgiving.
Why, oh why, would the great San Francisco liberal be doing this? A few possibilities come to mind.
The worst is that she is committed to the same nostrums of fiscal responsibility that have helped the Democrats lose political battles since Walter Mondale in 1984. If you’re old, you may remember Mondale’s bold announcement in his presidential campaign that he would raise taxes to fix the deficit. That November, he lost 49 states to the addled Ronald Reagan. In 1993, new president Bill Clinton rammed through a deficit-reduction-minded budget deal that was followed in 1994 by Democrats losing both the Senate and the House, the latter for the first time in forty years. In 2010, Barack Obama promoted a health care reform that, out of deficit concerns, was insufficiently funded, among other deficiencies, resulting in a plethora of difficulties in operation of the new law, and some impact on flipping the Congress to the Republicans. There’s a pattern here.
The wonder about mainstream Democratic affection for PAY-GO is that the deficit fears upon which it is premised are no longer subscribed to by Democratic economists, even relatively moderate ones such as Larry Summers, Obama’s chief economic adviser, or Jason Furman, head of Obama’s Council of Economic Advisers. Summers has written of his worries that the economy is in a long-term rut of “secular stagnation.” Furman recently acknowledged in the Wall Street Journal that deficits resulting from Trump’s tax cut had a positive boost for the economy, albeit limited and temporary.
There is a reasonable case for higher deficits even now with a low unemployment rate (and many remaining labor market drop-outs). Moreover, there is no reason to expect current conditions to persist for a full decade. In particular, policies that strengthen the “automatic stabilizers” in the budget (i.e., those that automatically increase spending and cut taxes when the economy slows down) would be beneficial for the long term.
As a general matter, it makes sense to finance infrastructure — investments that provided benefits over an extended period of time — with borrowed money, as business firms often do. Defraying the interest on such debt is the real pay-as-you-go. Denying such investment is just cutting your nose to spite your face.
We might also linger on the thought that a reduced national debt would not be much consolation after the advent of irreversible, catastrophic climate change. Investment will be one of the pillars of addressing this threat.
Deficit reduction politics by now should be recognized as a gigantic loser for Democrats. Republicans are never constrained by deficit impacts in any of their proposals. Either they are ignored, or measures like the Trump tax cut are magically transformed into deficit-reducing miracles.
On the Democratic side, any “fully-funded” spending bill provides opponents of the bill with a nice array of groups negatively affected by the offsets upon which to base a counter-mobilization. Knowledge of the PAY-GO obstacle will strangle potential progressive initiatives in the crib.
Nancy’s rules are probably designed to restrain the energized progressive contingent of House Democrats. She’s smart, after all; she can’t be unaware of the impact of her rules. However effective she was in mobilizing her caucus behind Obama’s initiatives in 2008 and 2009, her vision of political possibilities does not seemed to have evolved with the times. She reminds us of defeated Senator Claire McCaskill, who wondered how someone like Alexandra Ocasio-Cortez had become “the new, shiny object.” Something is happening and she don’t know what it is.
One rationale for stifling discussion of social legislation is to keep the spotlight on toppling Trump. While there is no reason not to unleash the full fire and fury of the House majority on our vicious, kleptocratic administration, there is a pragmatic reason to maintain attention on the issues that arguably flipped the House: meat and potatoes stuff like health care, the minimum wage, etc.
It is true that no progressive initiative is likely to make it through the Republican Senate, much less Trump’s White House, but that’s the cynic’s view. Proposing hopeless initiatives is the beginning of providing some hope for them. Republicans seem to understand that better than Democrats.
It’s always possible that the commitment to PAY-GO, like most other decisions, is more an artifact of what wealthy donors have indicated they prefer, rather than ordinary voters. Or as Nancy says, “We’re capitalists, and that’s just the way it is.”
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Reposted from Jacobin blog with the permission of the author. 
Max B. Sawicky is an economist and writer living in Virginia. He has worked at the Government Accountability Office and the Economic Policy Institute.
Ed note;  Congresswoman Alexandria Acosio-Cortez was one of 3 Democrats to vote to oppose the Pay-Go rule. 

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