Pay-go a commonsense solution to debt
Published on -2/3/2013, 1:19 PM
Families working on a budget understand: Spend more than you earn, and you incur debt. Excessive debt is crippling, yet governments often struggle with that basic concept.
The federal government can tell you from first-hand experience. It's easy to spend money, especially when you can just put it on the credit card. And like some card holders, governments are starting to realize they have racked up so much interest and debt they no longer can make their payments. Kansas' Senate has just enacted a rule that looks to help in keeping the state out of the spending mess that plagues other governments across the U.S. and the world.
On Jan. 16, the Kansas Senate had passed a procedural rule called pay-go. The pay-go concept is a simple one, an acronym for "pay-as-you-go," first implemented by Congress in 1990. A package of tax increases and spending cuts to stabilize a growing debt problem led the legislature to require that any new spending increases passed by Congress must be accompanied either by an equal dollar value in spending cuts on other policy or new revenues. The analogy to family finances is simple: if your budget is maxed out and you want to take a $5,000 vacation, either find ways to economize or raise the extra money before you book the trip.
The model worked well in Congress through the 1990's, budgets boosted by increased revenues from the burgeoning internet economy. By 1999, when a "surplus" budget was announced, fiscal discipline was on the wane in Congress. By 2002, the law sunset so that Congressional Republicans could push through President Bush's new spending programs such as No Child Left Behind and Medicare Part D.
President Obama got a revised pay-go law in 2010 packaged with a debt ceiling increase. Unlike the 1990 law, though, the 2010 pay-go law is riddled with exemptions for budget-expanding services such as Social Security and Medicare.
The core pay-go model remains, and as the state appears to be shifting towards a biennial budget pay-go makes sense. According to current budgeting practice, the legislature could spend as much money as it wants, and if allocated spending exceeds revenues the governor is simply empowered to demand cuts at specific agencies - or across-the-board - to bring spending back down to levels of intake. The intent behind pay-go should keep rosy budget projections that sometimes fail to turn into real cash from causing mid-year reallocation crises in state administrative agencies.
The Kansas House's new conservative power center instituted pay-go in 2011, but the Senate did not. Now that conservative allies of the governor have wrested control of the upper chamber, they have followed suit and built pay-go into their rules. Critics point to hypocrisy among Republicans: talking a good game about fiscal conservatism while needing rules to keep themselves from profligate spending. Those critics need to understand one basic tension all legislators struggle with: being a treasury watchdog while still trying to provide as much revenue and benefits to their districts as possible. Pay-go rules make it much harder for those legislators to give into those instincts to send monetary goodies back to the district, imposing discipline where it sometimes lags.
Another benefit of pay-go is that it disarms members of the legislature from playing "gotcha" campaign games with others. For instance, lawmakers who want a ready-made comparative campaign ad could propose an amendment to existing legislation mandating the legislature spend $20 billion on education in the state every year.
While it sounds appealing, the addition would more than double the entire spending of the state of Kansas so it is infeasible. Anyone in their right mind would vote against it, which then would lead to campaign ads claiming the representative voted against education for Kansas' children. It's a dirty trick, one that should not happen.
Pay-go means the crafty writer would have to zero-out the entire rest of the budget and add almost $4 billion in new revenues before introducing the bill, eliminating the "gotcha" problem.
If the governor and his allies in the Statehouse want Kansas to serve as a model for other states, the new pay-go rules are a good start.
Chapman Rackaway is an associate professor of political science at Fort Hays State University.