Bills keep coming due

Claiming they were more fiscally responsible than their GOP counterparts, Democrats this year adopted pay-as-you-go budgetary rules, referred to on Capitol Hill as pay-go.

Pay-go has been a blessing and a curse for Democrats. It has allowed party leaders to reject costly and therefore controversial bills from their members simply because of their price tags.

Republicans in the House, meanwhile, have used pay-go to their advantage by forcing floor votes on issues that many Democrats do not want to vote on; an example was when the GOP temporarily derailed the D.C. voting rights measure with a controversial gun rights amendment.

So while pay-go has allowed Democrats to claim contested political high ground, it has also been a procedural headache.
Democrats are struggling to find offsets to pay for a one-year Alternative Minimum Tax (AMT) “patch,” which would cost at least $50 billion. And that bill doesn’t include non-controversial, business-friendly tax cut extenders that will be part of the AMT package.

During a press conference last week, House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) would not show his offset cards, saying, “I don’t think it would make a lot of sense for me to be talking about these things. It’s going to be politically painful, as usual.”

Some on the Hill have floated the idea of waiving pay-go to deal with AMT. Rangel suggested he’s open to the idea, though others say waiving pay-go in certain situations is a slippery slope.

Another pay-go challenge is the so-called physician fix in Medicare. Both Democrats and Republicans agree that the complicated formula for paying doctors is insufficient and should be adjusted. Like the AMT, the cost of permanently fixing the doctor reimbursement system is astronomical. Lawmakers are expected to move a bill that will cover the physician fix for next year and perhaps 2009.

Healthcare lobbyists, notably those in the insurance industry, are urging Congress not to take the money out of their sectors. Democratic leaders claim that health plan payments from Medicare need to be pared back.

Paying for the AMT and physician fixes will not be easy, though they are both doable. President Bush wants Congress to act on them, though he may balk at the offsets.

The problem for Democrats is the Groundhog Day effect: These issues are not going away; they are certain to resurface next year and in the next Congress. That’s part of the reason why Rangel will be introducing the “mother of all” tax bills this fall, which is expected to include a permanent repeal of AMT. The legislation, however, is viewed by many as just an indication of intent; it is unlikely to move in the 110th Congress.

The retirement of the baby-boom generation is forcing politicians into fiscal corners. Whatever the merits or otherwise of pay-go, discussions about waiving it less than a year after its adoption send a message that could make future financial decisions even harder.