Senate Version Requires Offsets for Tax Cuts

(Washington, D.C.) – The Council for Citizens Against Government Waste (CCAGW) today blasted the Senate for passing a budget resolution that requires offsets for both tax cuts.  The House version stays true to President Bush’s tax-cutting plans by exempting future tax cuts from pay-as-you-go budget rules. Pay-as-you-go, or PAYGO, expired in 2002 but are being revived to deal with the projected $521 billion deficit.  Republican leaders will meet next week to negotiate a final resolution to be voted on by both chambers of Congress.

effort by moderate Republicans - especially in the Senate - and Democrats for procedures aimed at preventing budget shortfalls from worsening.

The House passed the budget resolution crafted by Budget Committee Chairman Jim Nussle on a 215 to 212 vote.

commended the House Budget Committee, especially Chairman Jim Nussle (R-Iowa), for approving a budget enforcement bill that would establish discretionary spending caps and revive pay-as-you-go rules to limit mandatory spending.  The old budget rules expired in 2002.  The bill will require offsets for new spending increases but not for tax cuts.

“With a record budget deficit of $521 billion, it is time for Congress to save itself from wasting even more of our money,” CCAGW President Tom Schatz said.  “Although budget rules don’t work perfectly, they temper politicians’ natural desire to spend beyond the government’s means.”

Chairman Nussle, who pursued the enforcement rules over the past week to ensure that the spending limits set in Budget Committee resolutions would be adhered to, succeeded in turning back a Democratic amendment that would have subjected future tax cuts to fiscal offsets.  The committee’s top Democrat, John M. Spratt, Jr. (D-S.C.) claimed that two-thirds of the budget deficit is the result of tax cuts.  Even Republicans who were not completely satisfied with the bill, such as Reps. Christopher Shays (Conn.) and Gil Gutknecht (Minn.) rallied behind Nussle to defeat the Democratic amendment.  In the Senate, however, Democrats succeeded in imposing controls on spending and tax-cutting alike.

“Chairman Nussle is correct in making the connection between tax reductions and economic growth,” Schatz continued.  “The new rules should not make it harder to pass tax cuts.  Cutting taxes is always a good idea regardless of what happens on the spending side.”

Nussle’s bill would require any boost in entitlement spending to be offset by spending reductions elsewhere. The proposal disallows tax increases as a way to pay for more entitlement spending.  The bill also would re-establish caps on discretionary spending through 2009, with the precise levels to be determined by negotiations between the House and Senate.