House Republicans to Weaken Anti-Deficit Rules to Ease Tax Cut Approvals

House Republicans, in one of their first acts in the majority, weakened the chamber’s anti-deficit budgeting rules to make it easier to approve tax cuts even if they add to the government’s financial shortfall.

The rules approved today, on a 240-191 party-line vote, will let lawmakers cut taxes without having to offset the cost with savings elsewhere in the budget. Proposed spending increases must be paid for with cuts in other areas, though, and tax increases to pay for new spending are prohibited.

That marks a major change from how Democrats set the fiscal rules when they controlled the House from 2007 through 2010. The Democrats often relied on closing what they termed tax loopholes benefiting corporations to produce the revenue needed to pay for their priorities.

Representative Paul Ryan, the House Budget Committee chairman in the Congress that convened today, said in an interview, “We didn’t come here to raise taxes. We came here to cut spending and the rules should reflect that.”

Ryan, a Wisconsin Republican, described the rule as “cut as you go. If you want new spending, you’d better cut spending somewhere else to pay for it.” The Democrats’ rule, known as pay-go, had become “an excuse to raise taxes,” he said.

The new House rules will allow it to permanently extend former President George W. Bush’s tax cuts, now set to expire in 2012, and extend the estate tax and the alternative-minimum tax without having to find equivalent savings.

Health-Care Law

Republicans also will allow a vote next week to repeal the administration’s health-care overhaul without offsetting the financial effect. The health plan is projected by the nonpartisan Congressional Budget Office to save $143 billion over the next 10 years.

Ryan said those savings are phony, accusing Democrats of having used “smoke and mirrors” to produce the numbers.

The drive to repeal the health-care overhaul is expected to stall in the Senate, where Democrats hold the majority.

Democrats and some budget watchdogs blasted the rule changes, saying that Republicans were reneging on campaign promises to cut the federal deficit, which reached $1.3 trillion in the fiscal year that ended last Sept. 30.

“This flies in the face of a House Republican pledge to provide fiscal discipline,” said Representative Chris Van Hollen of Maryland, the top Democrat on the Budget Committee. “Whether we like it or not, the CBO is the referee on the field,” and “the approach they are taking is when you don’t like the ruling of the referee, you throw him off the field.”

‘Has to Be Paid For’

Representative Mike Ross, an Arkansas Democrat and a member of the party’s fiscally conservative Blue Dog Coalition, said pay-go “has been successful in the past because it treats all spending the same: If it adds to the deficit, it has to be paid for.”

Even so, Democrats often waived their rule. Bob Bixby, head of the nonpartisan Concord Coalition, a Washington-based group that promotes balanced budgets, said, “I don’t know what’s worse: setting up a pay-as-you-go rule and then ignoring it or saying we are just going to tell you what our hypocrisies are right up front.”

Republicans also did away with a decades-old mechanism that both parties have used to approve unpopular increases in the debt ceiling without having a vote specifically on the increase.

The changes will set up a clash with the Democratic- controlled Senate, which will continue to use its own budget rules requiring tax cuts and spending increases to be paid for.

To contact the reporter on this story: Brian Faler in Washington at bfaler@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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