March 13, 2006

Senator Chafee's PAYGO Proposal & Automatic Tax Increases

Carroll Andrew Morse

Senator Lincoln Chafee is once again trying to pass off his preference for high tax rates as "fiscal responsibility". This is from a recent press release on the Senator's campaign website...

Leading deficit hawk, U.S. Senator Lincoln Chafee today joined with Senator Bill Frist and Senator John McCain to co-sponsor legislation that will help get federal spending under control by establishing a Presidential Line Item Veto. Like Senator Chafee's proposed Pay-As-You-Go approach to the federal budget, this will help return fiscal responsibility to the federal government and ensure that our legacy to our children is not billions and billions of dollars of debt.
We'll take up the line-item veto a little later. For now, let's discuss the "pay-as-you go" proposal, also known as PAYGO.

The problem with Senator Chafee's most recent version of PAYGO was that it placed no limit on the overall increase in Federal spending. It only limited spending on the creation of new programs. PAYGO 2005 didn't apply to already existing entitlements -- or their automatic increases. (According to statistics quoted by Isabel Sawhill of the Brookings Institution, entitlements now account for 53% of the budget, a total that grows each year.)

To meet the requirements of PAYGO, the automatic growth of established entitlements like Medicare and Medicaid (Social Security is defined as "off-budget" and not considered for the purposes of PAYGO) would have to be offset by either yearly tax-increases or yearly cuts in existing programs -- real cuts, not just reductions in the rate of growth or limits on new spending.

Brian Riedl of the Heritage Foundation explains why a PAYGO program that ignores entitlement spending would almost certainly force automatic tax increases...

While PAYGO allows current entitlement programs to grow on autopilot, it would likely lead to the expiration of the current tax cuts. Merely retaining the tax relief that Americans now enjoy would, under PAYGO, require 60 votes in the Senate and a waiver in the House. To avoid this supermajority requirement, lawmakers seeking to prevent tax increases would have to either: A) raise other taxes; or B) reduce mandatory spending by a larger amount than has ever been enacted. Option A is still a net tax increase (raising one tax to avoid raising another), and Option B is probably politically unrealistic.

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Do you want to see a real plan for fiscal responsibility? Here it is...

Posted by: oz at March 13, 2006 9:05 PM

We're on break at the loading dock and trying to think this through... The way Chafee's logic goes, he must want George H.W. Bush to have the line item veto, since that's who he voted for. But with Linc so dedicated to pork barrel spending, is he just looking for someone to blame when an earmark gets vetoed? "Hey, I tried to deliver some fat juicy pork, but the Pres shot it down." Maybe he just can't help himself from spending like a drunken campaign manager, so he wants the line item veto as a kind of designated driver. This PAYGO sounds kinda ponzi to me...just a sneaky way to raise taxes and spending...right up Chafee's alley. Laffey has a brilliant plan to balance the budget without raising taxes. Listen to the man behing the curtain and follow the yellow and blue brick road to

Posted by: Stretch Cunningham at March 13, 2006 10:23 PM

Trotting out a tired line item veto proposal is a vintage Chafee tactic - it looks good on the surface yet upon deeper analysis one quickly realizes that it is a non-starter. Line item veto authority was asked for by every President since Lincoln and was finally given by the Ginrich Congress to, of all people, Bill Clinton. Unfortunately, in 1997 the Supreme Court found this veto power to be unconstitutional.

Thus, the well-known marshmellow, fence sitter, and advocate-of-nothing Linc Chafee has apparently just received a major infusion of cojones and is now going to promote legislation that runs counter to a Supreme Court decision. It is just one more Chafee dog and pony act.

This Chafee PAYGO idea of "don't spend it if you can't pay for it" won't fool anyone either. It doesn't attack the root of the problem, which is reckless and wasteful spending. Instead, only platitudes are offered up in single syllable fashion. $2.7 trillion dollars of federal spending per year is anything but simple, unfortunately. More than a little analysis is required. Steve Laffey's focus on elimination of $125 billion-plus in corporate welfare to cut the deficit is an example of a well thought out plan that goes directly to the heart of the problem.

Laffey's advocacy of a requirement stipulating that earmarks (pork) be voted on individually - rather than lumped in with legislation (oftentimes totally unrelated) and presented on an all-or-nothing basis - is another example of his getting right to the core of the problem versus Chafee's vapid and sugary meanderings with this so-called PAYGO scheme. If earmarks were eliminated, there would be little need for a line-item veto anyway.

Corporate welfare and pork are among the most egregious usurpations of citizens' money on the part of the unholy federal government-special interests alliance. Laffey goes right after these items. Chafee goes the vapid slogan route.

Posted by: bountyhunter at March 14, 2006 12:15 AM

When Senator "deficit hawk" Chafee is voicing support for something, you should really reconsider your own support for it. In this case, while he tries to use the term "line item veto," it in reality is nothing more than a mechanism for members of Congress to avoid taking responsibility over their many irresponsible actions.

This is the equivalent of Chafee saying "I can't stop myself from putting in all these wasteful earmarks, so I hope the President will do my job for me and veto them!" Of course, if the President does cut out one of his pet programs, he can just blame him, like he does for everything else. Is anyone buying this scam? If you think our tax burden is too low, be honest enough to admit it.

Posted by: Will at March 14, 2006 12:55 AM

..."reconsider your support" most definitely and I would add HOLD ON TO YOUR WALLET!!

Posted by: bountyhunter at March 14, 2006 8:18 AM

But didn't Laffey reall yhike taxes while he was Mayor of Cranston? I'm pretty sure he did. What's with this hypocrisy?

Posted by: Sam Coale at March 14, 2006 3:40 PM

Sam, either you just arrived from Neptune or you're still drunk from that Lackey Green Label cider they drink over at Chafee HQ. The Cranston tax hikes were caused by the incompetent buffoons who ran Cranston Chafee-style before Laffey came in and saved the city.

Chafee raised taxes in every year he was mayor and so has his hand picked successor.

The Cranston tax increases were necessary to prevent the city from going bankrupt. Laffey has brought the bond rating from junk to investment grade through smart and courageous leadership despite the obstruction tactics of a mostly-hostile union-backed city council.

Chafee just acquiesced to the unions. Just look at the lucritive Crossing Guard deal in Warwick.

The only hypocrisy taking place here is when the Chafee hacks come on and claim he is a conservative or even a Republican.

Posted by: Warbucks at March 14, 2006 4:50 PM

The main difference is that Laffey raised property taxes because he had to, not because he wanted to. Chafee simply thinks that many of us don't pay enough in taxes already. He also thinks nothing of spending our hard-earned money on wasteful pork projects.

Unlike the federal government, the mayor cannot just print money when the city is running in the red. He made a very deliberate effort to cut city spending anywhere he legally could, before being forced to raise taxes to cover the budget gap, to avoid Cranston having to go into bankruptcy. He fixed the mess that others made, dramtically improved the city's bond rating, and now Cranston has a bright future ahead of it. It should also be noted that he did not raise any taxes in his last budget, which is running a surplus at present.

Here's all you need to know about Laffey and taxes. When he has the opportunity to do so, he wants them to be LOWER, not higher. He has promised to do that in the Senate. It's all about political philosophy. He knows the problem is with spending, not that taxes aren't high enough. You just cannot say that about Chafee.

Posted by: Will at March 15, 2006 12:58 AM

I have been around a long time young people. Never has anyone attacked the special interests like Mr. Laffey. He has changed the very nature of the debate here in RI and I know he will do so for the whole nation.

Mr. Coals , sir, I trust you just moved here yesterday. However I suspect you must be related to Mr Gary Reilly who tried this trick in his and the special interests bid to take out Mr. Laffey in 2004. Laffey got 75% of the vote. Let me repeat ---He got 75% of the vote and crushed his opponents.

I pity you Sir. Try something new. By the way why is Senator Chafee uniting with Senator Feingold on censuring the President? Only two Senators who want to do this. Very sad to watch.

Posted by: Ivan the elder at March 15, 2006 9:40 AM