PAYGO is often used by Democrats to chest thump "President Clinton's Economy". They blame the repeal of the PAYGO budgetary rule for the current budget deficits, and are now starting to increase calls for its reinstatement.
According to C-Span,
PAYGO means this:
The PAYGO or pay-as-you-go rule compels new spending or tax changes to not add to the federal deficit. New proposals must either be "budget neutral" or offset with savings derived from existing funds.
I read this to mean that under PAYGO rules, any increase in spending or decrease in taxes must be:
Budget Neutral or Offset by Savings.
Budget neutral would mean being offset by either an increase in taxes (in the case of proposed spending increase), or a decrease in spending (in the case of proposed tax cut).
Offset by savings would mean find inefficiencies in other places and use those savings to pay for changes to the budget, whether those changes be tax cuts or spending increases.
During the third 2004 Presidential Debate, Senator John Kerry brought up PAYGO. He told the nation that President Bush's tax cuts were never "paid for". Unfortunately, President Bush responded by calling Senator Kerry a tax and spend liberal, and didn't really address the challenge.
What does it mean to "pay for" tax cuts? Intuitively, it means a cut in spending is required. This is supported by the definition used above.
However, this article reveals the truth behind the Democrats' push for a renewal of the PAYGO rules. See also, here.
Basically, the time had come to vote on renewal of the 2001 and 2003 tax cuts. If PAYGO were reinstituted, either the tax cuts would have to go or a huge spending cut would have to be made. No politician from either party has shown an inclination to cut spending, so the Dems' grandstanding on the PAYGO issue basically amounts to political machinations which disguised their true desire: Raise Taxes.
Now, the Dems will never admit this. But to the perceptive eye it is altogether obvious.
Take Democratic Representative Nancy Pelosi, for instance. Representative Pelosi is in line to become Speaker of the House if the Democrats take Congress this fall. She went on Meet the Press recently and outlined the Dems' plans when/if they take over. There was a very interesting and telling exchange during the interview when Tim Russert pressed Rep. Pelosi on how the Dems would pay for their proposals. Here is an excerpt of that exchange:
MR. RUSSERT: So wait a minute. So they’ll be no increase in spending if the Democrats take control of Congress?
REP. PELOSI: No deficit spending. I pledge that to you. No deficit spending, pay as you go. Pay as you go.
MR. RUSSERT: So even if you had to raise taxes to pay for the new program?
REP. PELOSI: Well, you put everything on the table and you decide what are the priorities for the American people.
Possible Future Speaker of the House Nancy Pelosi wants to raise your taxes. This is not a solution to the deficit that I can support.
Is it not obvious to all that the solution to deficit spending is to cut the spending? There are countless areas to cut. See here and here for some ideas. The answer is to modify PAYGO so as to affect change on the spending side of the equation.