House leaders insist on statutory pay/go

House negotiations with the Senate on a final fiscal 2010 spending measure that Congress must clear by Dec. 18 are looking shakier now that the House plans to include pay/go legislation it passed this year.

House Majority Leader Steny Hoyer, D-Md., said on Friday he and House Speaker Nancy Pelosi, D-Calif., are "committed to enacting pay/go into law," a move he said helped create budget surpluses in the 1990s.

Pay/go requires offsets for any tax and mandatory spending bills that would add to the deficit. It is currently a rule in the House and Senate, but House Democratic leaders and members of the Blue Dog Coalition want to give it the force of law.

Earlier this year, House Democratic leaders pledged to push the statutory pay/go issue to secure Blue Dog support for the fiscal 2010 budget resolution and the $787 billion stimulus package.

The Blue Dogs also want pay/go in the final fiscal 2010 package, which will include the Defense spending bill, because Hoyer said Democratic leaders intend to add a $1.8 trillion to $1.9 trillion increase for the $12.1 trillion debt limit in the measure.

"The Blue Dogs are ready to make some very tough decisions about some legislation that is still pending if we don't get statutory pay/go," said Rep. Baron Hill, D-Ind., the Blue Dog's co-chairman for policy. "It's time to deliver now."

Hoyer noted the statutory pay/go is supported by President Obama, who wants tools to help bring down the $1.4 trillion deficit.

But Senate Democrats are resisting the idea, including Senate Budget Commitee Chairman Kent Conrad, D-N.D., who opposes the House bill because it exempts four items: cutting middle-class taxes, reducing the estate tax, patching the alternative minimum tax and providing higher Medicare payments to physicians.

Conrad and 11 Senate Democrats have said they will not support a debt ceiling increase if they cannot get a vote on a Conrad measure that would create a commission to make recommendations on lowering the deficit. Adding another wrinkle is Pelosi's opposition to the commission idea.

Both Hoyer and Senate Majority Whip Dick Durbin, D-Ill., said discussions are ongoing.

Asked whether the Senate will pass the package with a pay/go provision attached, Durbin said if the bill comes over without an agreement, "it is not likely to pass the Senate."

If Congress does not act by Dec. 18, when the current funding extension expires, another continuing resolution would be needed.

The Defense package will likely include a six-month extension of unemployment insurance and COBRA benefits, both of which would not be paid for because they would be deemed an emergency, Hoyer said. He added there will also likely be a "jobs part" that will be paid for, expected to include infrastructure and other items, but that provision "is still being worked on."

On the estate tax, Hoyer said that negotiations with the Senate continue on whether to include it and how long to make it.

Dan Friedman contributed to this report.