Leggo My Pay-Go

Why Ro Khanna and Alexandria Ocasio-Cortez are making a stink about a symbolic House spending rule.

Nancy Pelosi
House Democratic Leader Nancy Pelosi is interviewed while walking through the Capitol on Wednesday in Washington.
Win McNamee/Getty Images

House Democratic leaders made public on Tuesday night one of the first big pieces of legislation they would vote on: the rules governing the 116th Congress. The package makes substantial changes to the rules under which House Republicans had governed for the past eight years. It eliminates the need for stand-alone votes to increase the debt ceiling, the rule requiring three-fifths support for tax increases to pass, and the “cut-as-you-go” (or cut-go) rule, which requires that spending increases be met with matching spending cuts elsewhere. The package also creates the Select Committee on the Climate Crisis, authorizes the House to intervene in the current lawsuit against the Affordable Care Act, and removes term limits on committee chairs.

But the change that garnered the most attention Wednesday morning was what Speaker-designate Nancy Pelosi and incoming Rules Committee Chairman Jim McGovern chose to replace CUTGO with (instead of, say, nothing). The rules package reinstates a “pay-as-you-go” (or pay-go) rule, meaning that certain measures that increase the deficit would have to be matched with spending cuts or revenue increases. Democrats obeyed the pay-go rule during their last majority, only to watch Republicans eliminate it when they took control in 2011.

Pelosi had said during the 2018 campaign that Democrats were “committed” to pay-go, but some progressives hoped to talk her out of it. Republicans never follow pay-go rules, they argued, so why should Democrats bother with “fiscal responsibility” when they want to pass their own agenda?

But Pelosi didn’t budge. And after the rules package was released, two prominent progressives—California Rep. Ro Khanna and incoming New York Rep. Alexandria Ocasio-Cortez—tweeted that they wouldn’t support it.

With all but one Republican expected to vote against the rules package, Democrats can afford only 19 defections on the floor. Khanna and Ocasio-Cortez’s opposition seemed to signal a potential flood of defections that could force a last-minute rewrite. But neither Khanna nor the Progressive Caucus were actively whipping against the rules package Wednesday, and few others seemed willing to publicly threaten votes against it. Progressive Caucus Co-Chair Mark Pocan, meanwhile, tweeted that he had gotten assurances from Democratic leaders that the new PAYGO rule “will not be an impediment to advancing key progressive priorities in the 116th Congress.” In other words: He had gotten assurances that the rule, when inconvenient, would just be waived by a simple majority vote in the House.

That gets to a bigger point that Pocan also makes in his tweets: The real pay-go problem for progressives is the pay-go law that Congress passed in 2010, not the House’s pay-go rule, which comes and goes and gets waived or circumvented over and over.

The 2010 law requires that tax cuts and mandatory spending increases not boost the deficit. (It does not pertain to discretionary spending considered through the appropriations process.) If Congress violates the rule, then the Office of Management and Budget is authorized to make cuts to mandatory-spending programs to match the violation. Since this is law, waiving statutory pay-go for any particular violation would require legislation that’s subject to the 60-vote Senate filibuster. Republicans, for example, passed a pay-go waiver for their tax-reform bill last year in a separate spending bill. Democrats went along with that after the tax bill already had enough Republican votes to protect harmful, automatic Medicare cuts. Some Democrats argue, though, that if the tables were reversed, and Democrats were passing big legislation, Republicans might be less willing to go along with Democratic waivers to block automatic, mandatory spending cuts.

So, as Pelosi’s deputy chief of staff, Drew Hammill, tweeted in response to Khanna and other critics of the new pay-go rule, the rule at least offers them an opportunity to put forward their own pay-fors for their progressive legislation—including tax increases—as the alternative to the “indiscriminate, across-the-board cuts in federal mandatory spending” that would arise without a waiver for statutory pay-go. (As a side note, this is an interesting way to describe the effects of a bill that Pelosi ushered through when she was speaker.)

But if the House rule can be waived or circumvented whenever necessary, and the real pay-go problem is the pay-go law, then why does anyone have a strong position about the new rule? Why is Pelosi so adamant on including it? Why is Khanna so adamant about rejecting it?

For House Democratic leaders, it could be that they’re trying to protect vulnerable Democrats in purple or red districts after a campaign when many of those candidates called out Republicans’ reckless fiscal management. “Acknowledging the value of fiscal responsibility helps many of our front-line colleagues,” a senior Democratic aide said.

For Khanna, though, reinstating any pay-go rule, even a porous one, is just “bad politics,” as he told me in an interview Wednesday. On the granular level, the waiver process creates its own unnecessary problems. “Why have a waiver and give Republicans a talking point every time you’re asking for a waiver?” he said.

He acknowledged that statutory pay-go was a problem but didn’t believe that coming up with pay-fors should be the House’s initial priority when presenting its ideas.

“We can pass things in the House and not have offsets, then the Senate could come up with its offsets, and then we can negotiate,” Khanna said. “What we shouldn’t do is send the Senate a package with a trillion dollars in cuts before negotiations.” (Hammill countered that this approach “would empower McConnell to devastate Democratic priorities in the budget.”)

More broadly, though, Khanna believes that Democrats need to stop nodding in the direction of austerity, as “we now have conclusive proof that austerity politics don’t work.

“I think this would be a great provision if we were in the 1990s,” he said.