Paygo and the politics of fraud

Opinion Journal:

"Democrats are committed to ending years of irresponsible budget policies that have produced historic deficits. Instead of compiling tril

lions of dollars of debt onto our children and grandchildren, we will restore pay-as-you-go budget discipline."--Speaker Nancy Pelosi, December 12, 2006

Well, as Emily Littela, the half-witted Gilder Radner character on Saturday Night Live, would have put it: "Never mind."

Last week Congressional Democrats formally renounced their ballyhooed budget pledge to offset any new tax cuts with other tax increases or spending cuts. We're delighted to see this false promise go, but there's a larger lesson in this failure for the tax and spending battles of 2008.

Senate Democrats gave up on "paygo," as it's called, when they realized they lacked the votes to offset the $50.6 billion cost of protecting more than 20 million middle-class taxpayers from getting whacked by the Alternative Minimum Tax this year. They've spent the year floating all kinds of tax increases to make up the difference. But in the end they passed an AMT relief bill without a penny to pay for it. Paygo is now pay gone.

We should stress that this is the right decision for the economy and the federal budget. The AMT was never supposed to hit the middle class, and it only does so now because the Democrats who designed it failed to index it for inflation and raised AMT rates under Bill Clinton in 1993. With the economy in a slowdown, the last thing anyone needs now is a tax hike. The budget deficit is a little above 1% of GDP, which is below the 25-year average, and should remain so as long as the economy keeps growing.

But paygo shouldn't be allowed to expire without everyone kicking sand on its grave. That's because it has been nothing but a confidence game from the very start. Paygo doesn't apply to domestic discretionary spending, and it doesn't restrain spending increases under current law in entitlements like Medicare and Medicaid. Its main goals are to make tax cutting all but impossible, while letting Democrats pretend to favor "fiscal discipline," a la Ms. Pelosi's boast above.

...

This is part of the fraud of the 2006 election. I guess it is proof of America's collective short term memory that anyone believed that Democrats would be serious about balancing a budget. When have they ever done it? They fought tooth and nail to keep Republicans from doing it in the 90's.

It is remarkable that public opinion still shows a belief in their ability to handle these matters, but that is a testament more to the profligacy of Republicans since 2001 than to any historical record of Democrats being wise in the handling of revenue and expenditures in Washington. The Republicans still show little knack for fighting this politics of fraud. Where are the after hours speeches that Gingrich and his allies used to bring attention to the Democrat mess before the 1994 election?