House passes pay/go bill, but Senate action seems unlikely

The House Wednesday passed pay/go legislation requiring that any new tax and mandatory spending bills that would add to the deficit be offset, after defeating a Republican substitute that included a limit on discretionary spending.

The House passed the bill, 265-166, following the 259-169 defeat of the Republican recommendation.

"I knew we were going to win this," House Speaker Nancy Pelosi, D-Calif., said after the vote at a leadership briefing.

President Obama lauded the bill's passage, saying in a release, "I appreciate the House's quick response to my call for pay/go legislation, a central budget-reform priority. "

During the debate, Budget Committee Chairman John Spratt, D-S.C., urged passage of the bill stressing that the measure "is not a panacea" and "not the ultimate solution to deficits, but it is a significant step in the right direction and was proven to work in the 1990s and needs to be reinstated for that purpose now."

Republicans said passage would make it easier for Democrats to raise taxes and will not help reduce the deficit, in part, because there are no restrictions on discretionary spending.

Budget ranking member Paul Ryan, R-Wis., said, "This bill has good intentions. This bill, however, is a fiscal facade. It doesn't work."

Under the GOP substitute, federal spending would not be permitted to grow faster than the economy, and it would establish a cap on discretionary spending increases at no more than the rate of inflation.

Majority Leader Steny Hoyer, D-Md., said spending caps were left out of the bill to secure support, especially from appropriators who typically resist such limits.

"We knew we had to pass a bill," Hoyer said after the vote.

Hoyer said he hopes the Senate takes up the bill, but it is unclear if they will.

The House bill would exempt four types of legislation: middle-class tax cuts, the estate tax, patching the alternative minimum tax and providing higher Medicare payments to physicians.

Supporters have said the exemption is needed because Congress has typically failed to offset these items and it prevents weakening the pay/go bill as a result of having to waive it for these bills.

But Senate Budget Committee Chairman Kent Conrad, D-N.D., has said he is not a supporter of the bill because he is concerned about the exemptions. He is concerned the bill would give control of the baseline to the White House.

Hoyer said he has had discussions with Conrad and told him that if he can get the Senate to pass these four items with offsets, he will fight to pass them.

"But our experience has been" that the Senate has refused to pay for the bills, Hoyer said. "We are hopeful and willing to support any one of these bills the Senate sends us that's paid for."