Before Speaker Nancy Pelosi was even handed the gavel, she faced rebellion from the far left of her party over a previously uncontroversial House rule known as “pay as you go,” often referred to as PAYGO. The rule, which is distinct but similar to a federal law by the same name, requires the House to offset entitlement spending with budget cuts or tax increases so they do not create a net increase in the federal deficit, which the Congressional Budget Office predicts will add $12.4 trillion to the national debt over the next decade just based on existing law.
PAYGO was first signed into law by President Bush in 1990, and then again by President Obama in 2010, yet rabble rousing radicals like New York Representative Alexandria Ocasio-Cortez placed the bipartisan measure in their crosshairs because they believe it presents an impediment to their extremist ambitions. Before she was even sworn in, Ocasio-Cortez decried the common sense rule as “bad economics” and a “dark political maneuver.” California Representative Ro Khanna also called it “terrible economics” and urged fellow Democrats not to embrace the “1990s playbook of fiscal responsibility.”
In actuality, though, the rule is an important safeguard that is intended to protect taxpayers from deficit spending that would result from the costly policies that progressive Democrats hope to enact. It is based on the same advice we give our children to spend only what you have. Americans should be able to rely on Congress to do the same. Instead, Democrats such as Ohio Representative Tim Ryan are openly fretting that the measure would “handcuff” the party, in the process revealing that they would have no problem imposing massive new costs on taxpayers with absolutely no plan for how to pay for them.
Especially now, with a growing progressive bloc in Congress pulling the Democrats further to the left, the rule is critical as a check against the Democrats who seek to implement a massive portfolio of socialist policies that would cost taxpayers tens of trillions of dollars in coming years. The “Medicare for All” plan proposed by Senator Bernie Sanders, for instance, would cost $32 trillion over the next decade, which Congress could only pay for by doubling tax rates on working Americans.
Similarly, the progressive dream of “upgrading every residential and industrial building for state of the art energy efficiency, comfort, and safety” would cost more than $1.3 trillion, and that is only a small part of the “Green New Deal” that radicals such as Khanna and Ocasio-Cortez are demanding. In total, the extensive wishlist of the latter, which also includes federal job guarantees with a $6.8 trillion price tag and student loan forgiveness with $1.4 trillion price tag, would cost more than $42.5 trillion over the next decade. In a recent interview with, Ocasio-Cortez dodged questions on how she would pay for these initiatives, but admitted that taxing wealthy individuals and corporations would only produce $2 trillion in new revenue in the span of an entire decade.
This radical economic agenda reveals the new character of the Democrats. Leaders who were once considered progressive firebrands, such as Pelosi, are now the relative moderates in a party that is increasingly dominated by Ocasio-Cortez and her coalition of likeminded extreme liberals. Democratic National Committee Chairman Tom Perez called Ocasio-Cortez “the future of our party.” He is right. According to a University of Chicago survey, 61 percent of millennials view socialism positively, meaning there is a strong possibility that Democrats will only drift further to the left in the near future.
That is why the current battle over PAYGO is so important. The Democratic insurgents who sought to squelch the rule were hoping to deal a major blow to a longstanding precedent that has protected taxpayers from congressional excess for decades. The rule survived their challenge, but the fact that it became an object of controversy in the first place is a worrying sign about the direction in which the Democrats are heading.