Amidst the hoopla surrounding the launch of the 110th Congress, taxpayers are hoping that the fiscal responsibility House and Senate leaders ultimately implement will be as good as the image they’ve painted over the past several months.

There are some encouraging developments. For one, Democrats should be commended for their relatively strong earmark disclosure package. Though disclosure will not prevent a single earmark, it will serve as a first step to curbing abuses that allowed absurd provisions to be inserted in the dead of night with no clue as to who was responsible.

Democrats have also implemented “pay-as-you-go� (PAYGO) budgeting rules. Such rules require any tax cuts or mandatory spending increases to be offset elsewhere in the budget to ensure that there is no addition to the deficit. While steps are desperately needed to start reining in entitlements, the spending limits are weak at best. And, on the tax side, this provision is bad news.

As a spending restraint mechanism, the PAYGO provision is relatively weak. It’s not statutory, meaning that it can be waived by a simple majority vote in the House. The 233-seat Democratic majority can easily muster 218 votes to do so. In addition, this only focuses on new additions to existing entitlements. The regular, annual growth in programs such as Social Security, Medicare, and Medicaid is not subject to any limits and will continue unchecked. It is these very programs that account for the majority of federal spending.

But on the tax side of the ledger, the situation is worse. For those who support President Bush’s tax relief measures, this PAYGO provision makes it harder still to make these tax cuts permanent when they expire in a couple of years. While Washington is currently running a deficit, it’s not the result of Americans being under-taxed – annual federal revenues were less than $2 trillion when George W. Bush entered the White House. According to the latest estimates of the Congressional Budget Office, the federal government will collect over $2.5 trillion in 2007. Rules that make it easier for this burden to increase further are a mistake.

Poll after poll finds that Americans prefer a limited government with low taxes. For example, the 2006 “National Post-Election Survey of Actual Voters� taken by The Polling Company found that: When given the choice between a ‘larger federal government that provided more services and charged higher taxes’ and a ‘smaller federal government that provided fewer services and charged lower taxes,’ Americans indicated a clear desire to downsize. In fact, 62% of voters preferred the smaller government – and with intensity as 41% would definitely pick a leaner administration. By comparison, just 22% opted for the more expansive government.

In an NTU Policy Paper published last year on budget process reform, we urged then-majority Republicans to implement the following changes: strong, statutory budget caps, earmark reform, emergency supplemental spending reform, a spending “sunset� commission, the Presidential line-item veto, and dynamic scoring of legislation.

If the new Democratic majority, along with chastened Republicans, were to heed that advice, we’d be past campaign-season rhetoric and well along the path to real fiscal responsibility. The next several weeks will be critical in determining how far that journey will go.

This entry was posted on Wednesday, January 10th, 2007 at 9:54 am and is filed under Economy/Budget, Politics, The Administration .