Tag: PAYGO rules

Using Congressional Budget Rules To (Not) Save Money

A new health club opened in my neighborhood recently and I told my wife I wanted to join it. She agreed, providing that I gave up something we were spending elsewhere to pay for the $1,200 annual membership.  I don’t want to give up anything fun so I decided to adopt the Congressional approach to budgeting to achieve such savings.  It turned out to be a snap.

The first thing I did was claim $150 in credit from a restaurant app I use called Open Table.  Each time I use the app to reserve a table it gives me the equivalent of $1 towards a future meal.  Since I got the app five years ago I’ve never gotten around to using these, but now seems a propitious time.

Next, I let our discount deals expire with the cable company and the newspaper. Each has a base price it offers subscribers, but if I call and threaten to stop my subscription they give me the discount for new subscribers. So I let each expire for a week and then called to get the new subscriber deal again. Together, that saved me $850.

PAYGO, the CBO, and Repealing ObamaCare

One could argue that exempting ObamaCare from the PAYGO requirement is appropriate given the defects in current budget rules.

By law, the CBO must follow certain rules when doing cost estimates of legislation and projecting federal spending under current law. Under those rules, CBO projects ObamaCare will reduce the deficit. No question.

But Congress often defeats those budget rules by passing legislation with “pay fors” (i.e., spending cuts) that make the budget look better, yet are highly unlikely to be sustained because they are politically implausible. A good example of this is the “sustainable growth rate” formula, where Congress promises to ratchet down the government price controls that Medicare uses to pay physicians in future years. Congress has consistently reneged when those cuts come due. The pretense of future cuts that Congress writes into law makes 10-year budget projections/deficits look better than actual, unwritten policy would suggest.

This is a recognized problem. When the CBO believes that the law and actual policy are at variance, they actually do two types of cost projections: one based on the law as written and one based on the policy they think Congress is likely to adopt, based on past performance. They call the latter their “alternate fiscal scenario.”

ObamaCare opponents submit that this law is one of those instances where law and policy are at variance. So even though ObamaCare will reduce the deficit under existing budget rules, the spending cuts (actually, reductions in future spending growth) in the law were never going to take effect anyway. The CBO, CMS, and even the IMF have all discredited the idea that ObamaCare would reduce the deficit, because they all question the sustainability of ObamaCare’s spending “cuts.” Exempting ObamaCare repeal from PAYGO rules is appropriate if those rules have failed to protect taxpayers.