(PAYGO) Rules are made to be broken

March 8, 2010

Gretchen Hamel, executive director of Public Notice, wrote an OpEd for US News and World Reports on PAYGO (a budget rule that is meant to ensure new spending is paid for).  Among Hamel’s warnings of PAYGO’s limitations, she points out that any spending deemed an “emergency” by lawmakers exempts them from offsetting the new spending with savings elsewhere.

The ink barely dried before Washington lawmakers passed an “emergency” $10 billion piece of legislation, exempt from the newly created PAYGO rules.

In her piece, Hamel also notes that PAYGO does not apply to spending through entitlement programs (which are programs like Social Security and Medicare with past authorization to spend on ) and plenty of room for work-around gimmicks.  If you likened the pay-as-you-go rules to a family managing its budget, Hamel says it might look something like this:

They could ignore spending that they had scheduled years before: items like their mortgage and health insurance. When planning their food budget they could front load all the spending to the first six months of the year, and then budget nothing for food for the rest of the year. When something unexpected came up–whether that’s a broken window or just a desire for a new pair of shoes–they could declare it necessary because of an “emergency,” and then not bother with pinching pennies elsewhere.

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