By Walter Alarkon - 07/22/09 04:51 PM EDT
The bill passed 265-166.
Hoyer and Democrats said that the pay-go law, which would require new mandatory spending to be offset with new taxes or spending cuts elsewhere, was a key toward improving the country's fiscal health. The deficit is expected to reach a record level — $1.8 trillion — this year, and it will remain above $600 billion indefinitely, according to Congressional Budget Office projections.
"Nobody likes constraints," Hoyer said. "But if we don't have constraints, our grandchildren will look at us and say we did not do a good job."
Though the bill has strong support from House Democrats and President Obama, it's unlikely to move quickly in the Senate.
Senate Majority Whip Dick Durbin (D-Ill.) said this week that he didn't expect the upper chamber, busy with a Supreme Court nomination and expansive healthcare and climate-change bills, to take up pay-go legislation before August or when lawmakers return from their recess.
Senate Budget Chairman Kent Conrad (D-N.D.), a leading deficit hawk in the upper chamber, has criticized the House bill because it doesn't force Congress to pay for many of the tax cuts enacted during the Bush administration, a patch preventing the Alternative Minimum Tax from hitting the middle class and the extension of Medicare physician payments. Failing to offset those measures, which both the president and Congress back, will add up to $4 trillion in new debt, Conrad said. The Congressional Budget Office said that the exceptions would add up to $3 trillion in debt.
In response to those concerns, House Democrats changed pay-go legislation proposed by the White House so that $700 billion of the tax cuts would need to be offset.
House Republicans also dismissed the bill, saying it would do little to rein in deficits.
Rep. Paul Ryan (R-Wis.) said that the Democrats' pay-go bill was a "facade of fiscal responsibility" because it wouldn't apply to costly items and didn't directly address the deficit. A Republican version of the pay-go bill, which sought to put caps on discretionary and mandatory spending and the deficit, failed 259-169.