Republicans Hold Cards to Ensuring $130B in Wasteful Spending Is Cut by End of Year

COMMENTARY Budget and Spending

Republicans Hold Cards to Ensuring $130B in Wasteful Spending Is Cut by End of Year

Oct 7, 2022 3 min read
COMMENTARY BY
Matthew D. Dickerson

Director, Grover M. Hermann Center for the Federal Budget

Matthew is the director for the Grover M. Hermann Center for the Federal Budget at The Heritage Foundation.
PAYGO requires Congress—or the president—to trim more than $130 billion this year. jayk7 / Getty Images

Key Takeaways

Biden’s multitrillion-dollar spending blowout violated the budgetary rules put in place more than a decade ago to prevent this sort of abuse.

They can do nothing, thereby forcing Biden to make the specific cuts prescribed by PAYGO, or they can pass legislation that specifies a different set of cuts.

Statutory PAYGO rules are the law of the land. Senate Republicans should make sure that Congress and the president use them.

It’s no secret that government spending has been out of control for years. But come December, Congress will have a golden opportunity to stem the tide of red ink.

Whether or not that happens is entirely up to Senate Republicans.

Congressional Democrats have been on an unprecedented spending spree ever since Joe Biden took the White House. This has fueled crippling inflation, which has cost the average U.S. worker $3,000 in purchasing power and added more than $3 trillion to the national debt.

But there is a way for senators to rein in some of this irresponsible spending and start getting the economy back on track. That’s because Biden’s multitrillion-dollar spending blowout—including the bloated American Rescue Plan and the misleadingly named Inflation Reduction Act—violated the budgetary rules put in place more than a decade ago to prevent this sort of abuse.

>>> Statutory PAYGO Presents an Opportunity to Cut Spending: Myths and Facts

The Statutory Pay-As-You-Go Act of 2010 (PAYGO) requires any new spending that increases the federal deficit to be offset with spending cuts elsewhere. If Congress fails to pass the necessary spending reductions by year’s end, the president is required to make the cuts.

Bottom line: The act requires Congress—or the president—to trim more than $130 billion this year. In comparison to the $6 trillion in deficit spending they’ve pushed through over the last year and a half, that’s a relatively small amount. But it would be an important step in the right direction and signal that the spending binge will no longer be considered “business as usual.”

Of course, neither Biden nor the liberal majority in Congress want any part of this. They’d much prefer to waive the PAYGO rules and keep spending wildly—just as they did last year.

But waiving the statutory PAYGO requirement to cut spending requires Congress to pass a new law. That poses no obstacle in the Democrat-controlled House, but to get through the evenly divided Senate, a number of Republicans would need to join ranks with the Democrats to overcome the required 60-vote threshold.

What would be the consequences if Senate Republicans helped Biden waive statutory PAYGO? Government spending would be more than $100 billion higher than what is required under the current law. That would mean higher deficits financed by money printed by the Federal Reserve, which would translate into even higher inflation—with higher prices for gas, groceries and other necessities for already-struggling American families.

Lawmakers cannot allow this to happen. Spending cuts are needed now more than ever.

Congress has two options to make that happen. They can do nothing, thereby forcing Biden to make the specific cuts prescribed by PAYGO, or they can pass bipartisan legislation that specifies a different set of spending cuts totaling $130 billion.

And specifics matter. PAYGO would not force the president to make “across-the-board” cuts. The act explicitly exempts many popular programs: Social Security, military spending, veterans’ programs, welfare and more. Only about 2 percent of the $5.9 trillion budget is subject to presidential cuts under statutory PAYGO.

Biden might trot out the old scare tactic that PAYGO would force him to slash seniors’ Medicare benefits. That just isn’t accurate either. Any reduction of payments to providers would be capped at no more than 4 percent out of the $923 billion in anticipated Medicare spending this year. The nonpartisan Congressional Research Service says that Medicare beneficiaries would “see few direct impacts” as a result of the slightly smaller payments to providers and plans.

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If the president doesn’t like the specific cuts that PAYGO says he has to make, Biden can always ask Congress to replace them with other targeted cuts and reforms.

A good place to start would be rolling back the $80 billion IRS slush fund, which will nearly double the number of IRS agents and subject more small businesses to audits. Another ripe-for-the-cutting program is the student loan bailout for lawyers and doctors, which will cost taxpayers up to $1 trillion.

Washington has flouted the budget rules meant to control deficit spending for far too long. Now excessive government spending has pushed the American economy into stagflation.

Statutory PAYGO rules are the law of the land. Senate Republicans should make sure that Congress and the president use them to make responsible spending cuts and start steering the economy back on track.

This piece originally appeared in The Sacramento Bee