Steny Hoyer on Everything Fiscal

In remarks at the think tank Third Way, House Majority Leader Steny Hoyer covered the bases in talking about our deficits and debt. Among the topics he covered were timing of deficit reduction, PAYGO, temporary policies, entitlements, defense, and the fiscal commission.

First, he defended the stimulus as necessary in order to save the economy from a nose-dive and made the case for more stimulus. He did, however, say that we should not simply deficit spend:

And many Members of Congress agree with the Washington Post, when it argued in an editorial this month, ‘We’d find the stimulus-now, spinach-later argument more credible if its advocates gave some hint of where the long-term belt-tightening will take place.’ I agree. An excellent way to build support for the job creation we still need is making credible and detailed plans to tackle the long-term debt. So now is the time to start talking about a solution to the structural deficit—one we’ll be ready to put in place once the economy is fully recovered.

Hoyer then went on to talk about the necessity of PAYGO and, interestingly, the necessity of a loophole-ridden PAYGO:

Some have criticized PAYGO for exempting the extensions of current policy on middle-income tax cuts, the estate tax, the alternative minimum tax, and the ‘doc fix’ that helps seniors see their Medicare doctors. I understand that criticism—but it neglects the fact that a PAYGO law without those exemptions would simply be waived again and again and would become toothless.

He also pointed out that PAYGO's effect goes beyond bills that Congress passes. Rather, its effect is more fully measured in "the bills that never see the light of day because we can't find offsets for them." Obviously, it's impossible for the public to know exactly how much PAYGO has stifled potential bills, but as Majority Leader, Hoyer has claimed to have seen it alot.

As for some of those exempted policies, Hoyer called for permanent fixes. The AMT, the estate tax, and the doc fix, he said, should all be fixed permanently. He also said that "at a minimum," the House will not extend the 2001/2003 tax cuts for those making $250,000 or more, opening up the possibility that he may take a bigger bite out of those tax cuts than his own Democrats prefer.

Hoyer also said that no part of the budget should be off limits. He praised Defense Secretary Robert Gates' efforts to scrub the defense budget clean of unwanted or unnecessary spending. He also said that revenue has to be on the table, especially since "the Republican Party has run away from Paul Ryan’s plan, even though you’d expect it to rush to embrace a proposal based on spending cuts."

The Majority Leader also brought up a "budget enforcement resolution" that the House was working on that would "set limits on discretionary spending that require further cuts below the President’s budget; reinforce our commitment to PAYGO; direct committees to identify reforms to eliminate waste, duplication, and inefficiencies within their jurisdiction; endorse the goals of the president’s bipartisan fiscal commission; and reiterate the commitment to vote on the commission’s recommendations." He seemed to be hopeful that the executive fiscal commission could provide the starting point for a bipartisan deficit reduction plan.

On the entitlement side, he offered a few solutions: raise the retirement age and peg it to life expectancy, and make Social Security and Medicare benefits more progressive (presumably by instituting progressive benefit indexing and raising premiums for upper-income recipients, respectively).

Overall, Hoyer's remarks are very much in line with our own. He emphasized pairing short-term stimulus with a longer-term deficit reduction plan to take effect when the economy recovers, much like what we have said (see here, here, here, and here for example.) He also said to keep no part of the budget untouched in order to keep a sense of fairness and balance. We appreciate Rep. Hoyer's remarks on dealing with our debt issues, and we hope he has success in enacting a successful plan.