PAYGO imposes spending restrictions on Congress

As someone who has contacted me with your concerns about the budget deficit and the national debt, I wanted to reach out to you now to let you know about important legislation, known as PAYGO (Pay-As-You-Go), that has just been signed into law. PAYGO imposes spending restrictions on Congress and will help bring down the deficit.


PAYGO rules require spending increases and revenue cuts to be paid for by offsetting cuts or revenue-raisers elsewhere in the budget. For example, a proposal to increase spending on highway construction would have to be balanced by increased fees on drivers or a cut to education spending. PAYGO rules were in effect and contributed to the balanced budget of the 1990s, but they were allowed to expire in 2002, leading to irresponsible budget deficits during the past decade.

PAYGO will require Congress to spend wisely on what works and only fund programs and tax cuts that deliver the most bang for the buck. To this end, the legislation also requires the Government Accountability Office (GAO) to assess initiatives across the government to find inefficient or duplicative programs.

PAYGO will help us bring down the deficit responsibly over the long-term. For now, however, the deficit will remain large because the recession has reduced tax revenues and has required the government to take extraordinary measures to save the economy. Extending unemployment and health insurance benefits to the unemployed, temporary and targeted tax cuts to boost demand, and investments in infrastructure, schools and alternative energy help save jobs now and will deliver benefits for years and decades to come. In fact, the nonpartisan Congressional Budget Office recently concluded that the Recovery Act of last year has already saved or created 1-2 million jobs, and economists agree that many more jobs will be saved or created this year.

Restoring fiscal responsibility will also require us to address several long-term challenges, such as spending on defense and Medicare. Last year, I was pleased to vote in favor of a new law to reform wasteful contracting procedures for military spending. Congress is also continuing to debate health insurance reform legislation that will reduce the deficit over the next decade by spending our health care dollars more effectively. PAYGO will help Congress maintain its discipline in these efforts to reduce spending.

Please do not hesitate to contact me with your views on the budget deficit or any other issue of concern. I also hope you will find my website, carnahan.house.gov, a useful resource for keeping up with my work in Washington and the 3rd District of Missouri, and I welcome you to sign up for my e-newsletter at carnahan.house.gov/update.