House OKs 'pay-as-you-go'


Published: Saturday, January 6, 2007 at 6:01 a.m.
Last Modified: Friday, January 5, 2007 at 11:32 p.m.

WASHINGTON — Resurgent House Democrats voted Friday, their second day back in control, to block future tax cuts or benefit increases from being financed with dollars that swell the national deficit.

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The Associated Press

Republicans protested the change would imperil GOP-sponsored tax cuts that expire in four years. The new rule also could make it more difficult for the Democrats to fulfill campaign promises to cut student loan rates and extend tax cuts for the middle class.

The drive to restore the "pay-as-you-go" rule has been a priority for moderate-to-conservative Democrats, whose House ranks swelled on Election Day. Adopted 280-152, the measure requires legislation that contains pet projects and narrowly targeted tax breaks — "earmarks" to Washington insiders — to include names of lawmakers requesting them.

The idea is openness will help prevent abuses like the earmark bribery scandal that forced former Rep. Randy "Duke" Cunningham, R-Calif., out of Congress and into prison. The new rules replace slightly weaker ones on earmarks approved in September by Republicans.

In the Senate, both parties held strategy meetings. The chamber's first moves next week will largely mirror House steps to ban lawmakers from accepting gifts and free trips from lobbyists. The bipartisan Senate ethics and lobbying reform bill, the first legislation to reach floor debate under Democratic control, also requires disclosure of senators' earmarks.

Also Friday:

· House opponents of oil drilling in Alaska's Arctic National Wildlife Refuge introduced a bill to make a drilling ban permanent. The bill would designate an oil-rich 1.2 million-acre strip along Alaska's north coast a permanently protected wilderness area.

· Senate Democrats said they are willing to consider tax cuts aimed for small businesses as part of a minimum wage increase. Democrats in the House plan a vote Wednesday on a bill that would raise the federal wage floor from $5.15 to $7.25 an hour over two years but without tax relief for small businesses to help them meet higher payroll costs. Senate Democrats said they will need several "yes" votes from Republicans to pass a bill. "We're not going to go butting our heads against the wall because, first of all, it doesn't feel good, and number two it doesn't accomplish anything," said Majority Leader Harry Reid, D-Nev.

Democrats have promised to eliminate earmarks in a catchall spending bill that will clear away budget work left from last year — and say the upcoming round of appropriations bills will contain far fewer home-state projects, criticized as wasteful "pork" by taxpayer advocates.

Earmarks such as the "bridge to nowhere," a much-mocked proposal to build a $223 million span in Alaska to link Ketchikan and lightly populated Gravina Island, have captured the attention of voters, and Republicans say they're one of the reasons the party fared so badly in November.

The pay-as-you-go rule — if strictly enforced — promises to have a far bigger impact on the deficit. It would make it difficult for Democrats to pass increases in federal benefit programs such as Medicare or the Medicaid health care program for the poor or disabled.

The rule requires that tax cuts have corresponding cuts in government spending or increases in taxes elsewhere to pay for them. Likewise, any increase in entitlement programs such as Medicare would have to have corresponding tax increases, or equal cuts in other government programs.

In the near term, the rule, also known as PAYGO, means the Democrats' bill to cut student loan rates will be less generous than they'd like. The rule would also threaten efforts to extend Bush's tax cuts.

And it gives lawmakers such as Rep. Charles Rangel, D-N.Y., chairman of the tax-writing Ways and Means Committee, an enormous headache as he tries to stop the alternative minimum tax from hitting more and more middle-class taxpayers.

"Today, we are cutting our national credit card," said Heath Shuler, D-N.C., during floor debate Friday. To underscore the point, Shuler cut a credit card in half at a news conference held by moderate-to-conservative "Blue Dog" Democrats.

Democratic budget hawks say restoring the PAYGO rule is crucial to curbing the budget deficit. Various forms of the rule were in place from 1990-2002, however, and Congress often found ways around it.

The version adopted Friday can be waived. But Democrats say to try to do so would invite criticism — and a revolt by the conservative Blue Dogs so crucial to the Democratic majority.

Another rule change, adopted 430-0, would curb past abuses in which GOP leaders held votes open for hours and excluded Democratic lawmakers from House-Senate negotiations on the language of final bills sent to the White House.

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