Washington, D.C. —- U.S. Rep. Bob Etheridge, the only N.C. member of the House Ways and Means Committee, voted yesterday to restore fiscal discipline to Congress by supporting H.R. 2920 — the Statutory Pay-As-You-Go Act of 2009 (PAYGO).
The Act would require that any new tax and budget spending measures that would add to the deficit be offset with spending reductions.
“This vote is one of the most important actions Congress can take to towards ensuring fiscal discipline and restoring a balanced federal budget,” said Etheridge. “As a former small business owner, I know the importance of keeping your books balanced and your budget in order. The PAYGO Act’s concept is simple, if you propose new spending it must be paid for by reducing spending in other areas.”
The PAYGO Act is similar to the statutory PAYGO law that was in place in the 1990s, which helped turn massive deficits into record surpluses. The law, in effect from 1990 to 2002, required that tax cuts or new entitlement spending be paid for through budget cuts or tax increases. Over the next 12 years the United States saw its economy improve from a net budget deficit to a budget surplus and an improved economy. In 2002, the Republican-controlled Congress allowed these rules to expire, which contributed to the dramatic turnaround from a projected surplus of $5.6 trillion to projected deficits of more than $11 trillion.
H.R. 2920 would re-institute and update the pay-as-you-go requirement for balancing the federal budget. The legislation demands that any budgetary, tax or mandatory spending be paid for by savings elsewhere in the budget. The renewed requirement will be enforced by Congress with the threat of annual, across-the-board cuts in spending if the net effect of legislation increases the deficit. Etheridge believes that one step towards greater fiscal responsibility is by ensuring the nation’s deficit doesn’t grow larger.
“This legislation does not solve all of our budget problems overnight,” said Etheridge. “Congress must continue the hard work it’s going to take to invest in our priorities while putting our financial house in order. H.R. 2920 is one step towards budget discipline and restoring our economy.”