The Blue Dog-PAYGO conundrum

The debate over health reform legislation raises many questions for our nation’s representatives: whether it’s appropriate to use special budget rules to move a second health care bill through the Senate with limited debate, whether the House should vote directly on the 2,700-page bill that the Senate passed last year or just “deem” it passed, and whether the Senate should hustle a House-passed bill to the floor and consider it under reconciliation rules without the involvement of any Senate committees.

All of these thorny procedural issues have been hotly debated, but another has gone largely unnoticed.  The Congressional Budget Office this week determined that the Senate-passed health care bill doesn’t comply with PAYGO.   The bill’s reliance on Social Security payroll taxes and premiums from the newly-established CLASS Act to help pay for the creation of a new health care entitlement doesn’t square with the freshly minted PAYGO rules. 

That puts moderate Democrats in an awkward position.  Just last month, the Blue Dogs demanded enactment of PAYGO as their price for approving an increase in the government’s borrowing authority.  They got their way.  Earlier this month, they used the new PAYGO rules to stop a $15 billion Senate-passed jobs bill in its tracks, demanding that their leaders change it to bring it in line with PAYGO.  Their leaders complied.

Now those same leaders are asking those same Blue Dogs to help pass – or deem passed – a much larger bill with a PAYGO problem.   Some may see this as a mere technicality.   It’s not.  Blue Dogs helped write these rules and pressed for their enactment, insisting that they are essential to restoring fiscal discipline.  It’s not easy to see how they can ignore those rules scarcely a month after they were put in place on the biggest spending bill Congress has ever considered.

Besides, the PAYGO issue is merely a symptom of larger concerns that many moderates of both political parties have about this legislation.  They question the wisdom of creating a new health care entitlement program at a time when the Treasury Department puts the unfunded liability of the largest existing health entitlement, Medicare, at over $38 trillion.

The White House and House Democratic leaders are asking moderates in their own party to clear for the President’s signature a Senate bill that is loaded with special deals they abhor and that violates a budget rule they helped write, using a process that side-steps a direct vote.

As a former Whip, I can tell you that’s a lot to ask. 
Beyond the procedural logistics of the health reform bill, Blue Dogs and their fellow deficit-hawk Congressional members should also worry about how the health care mess is threatening the enactment of a new budget.  Normally, this week and next would feature markups in the budget committees and passage by the House and Senate of a new budget resolution.  However, Congressional Democrats can’t start writing a new budget resolution.  Why?  Because doing so threatens their ability to use the reconciliation instructions in last year’s budget. 

Pushing back work on a new budget resolution until April or later creates cascading delays in consideration of supplemental appropriations, fiscal 2011 appropriations bills, extension of expiring tax relief, and other necessary work. I sympathize with Chairman Conrad’s already difficult job made harder.

Postponing budget resolution action also heightens the risk that no budget at all will be completed this year.  That sends an alarming message to the American people and our creditors that we’re not taking our budget crisis seriously. 

In fact, Congress failed to produce a final budget resolution in several recent election years, including 1998, 2002, 2004, and 2006.  In 2002, the Democrat majority failed to even pass a budget through the Senate.

Congress can’t afford to ignore its own budget rules and the country can’t afford to operate without a budget, whether we pass a health care bill or not.

A U.S. Senator for 24 years, Don Nickles (R-Okla.) served as Senate Majority Whip from 1997-2003 and Senate Budget Chairman from 2003-2005.  He is a founding partner of The Nickles Group.