Understanding Government

The House of Representatives passed a bill yesterday that re-establishes pay-go rules, reports the Associated Press. For those uninitiated with lawmaker’s periodic zest for pay-go legislation, it means that every tax cut or spending increase must be counter-balanced by an equal spending cut or tax increase. In other words, the idea is to promote a balanced federal budget. But the federal deficit is now $1.8 trillion and even if this pay-go bill becomes law the debt should only get larger in the next few years, according to the Congressional Budget Office. Plus entitlement programs (Social Security, Medicaid, Medicare) and a re-authorization of the George W. Bush tax cuts for the rich are exempt from pay-go.

Pay-go isn’t necessarily ineffectual legislation but it underscores how much easier the federal government has it than state governments. Members of Congress have the luxury of mulling over whether they want to do something about the gap between how much revenue they get and how much they spend. State governments meanwhile must pass a balanced budget each year even during a great recession and extreme revenue shortfalls. California is ripped (and justifiably) for a $27 billion budget deficit. But that’s 1.5 percent of how much the federal debt is.-MB