Tags: US | Congress | Deficit | Curbs

Top Senate Democrat Lays out Deficit Curbs

Monday, 25 Jan 2010 11:51 AM

The top Senate Democrat is proposing tough anti-deficit rules to make it harder to run up the deficit with new tax cuts or expansions of federal benefit programs.

If approved, the plan by Majority Leader Harry Reid of Nevada would have an almost immediate impact on Congress' free-spending ways by requiring spending cuts or revenue increases to pay for new spending.

In the near term, Reid's "pay-as-you-go" plan would make it difficult to pass an extension next month of emergency unemployment benefits and health insurance subsidies for laid-off workers. It would also make it tougher to give states help with Medicaid budgets.

Under the pay-as-you-go concept, program cuts or revenue increases would be required to cover the cost of any new policies or programs. That means, for example, the tens of billions of dollars it would take to extend unemployment benefits beyond the six months regularly permitted would have to be "paid for" with tax hikes or cuts to other benefit programs.

Congress already lives within similar budget rules but routinely waives them. But the new rules would carry the force of law and be enforced by the threat of across-the-board spending cuts if they are violated.

Reid is a reluctant convert to the idea and is pressing to add the plan to an unpopular bill that would permit the government to borrow a whopping $1.9 trillion to continue to finance its operations. He did not speak on the amendment when introducing it late Friday afternoon.

The real force behind the tougher budget rules are House moderate "Blue Dog" Democrats, who are insisting on giving the pay-as-you-go rules the force of law. They have vowed to kill such a huge increase in the so-called debt limit unless it is accompanied by the new budget rules.

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