Over at Greg Mankiw's weblog, Jason Furman begs him to become a supporter of PAYGO--the principle that tax cuts need to be paid for by accompanying spending reductions, and that spending increases need to be paid for by accompanying tax hikes. He even offers Greg a special deal: PAYGO is to apply only to policies proposed by congress members and by future presidents--George W. Bush's policy proposals get a free pass, and are exempt:
Jason Furman @ Greg Mankiw's Blog: You don't need a lexicographic preference for deficit reduction to join Alan Greenspan, GAO Comptroller David Walker and me in supporting PAYGO rules for tax cuts and spending increases. You should give sincere thought to this, you would have a positive impact on current debates and do tangible good.... In the 1990s, PAYGO was commonsense. Dole and Gingrich supported it -- that's why they proposed Medicare and Medicaid cuts to pay for their tax cuts. Clinton supported it when we had a deficit -- his original prescription drug plan was fully paid for and even the later versions were explicitly contingent on being enacted together with a plan to ensure Social Security solvency. And John McCain, who you traveled on the bus with in 2000, remains a strong supporter of PAYGO.
The 1997 Balanced Budget Act was one product of this consensus. You would be heartened to know that it included about $400 billion in Medicare and Medicaid cuts and $400 billion in gross tax cuts (including capital gains, estate tax, and IRA expansions you would like).
I wouldn't expect you to agree with Alan Greenspan and me that PAYGO should apply to the extension of the tax cuts already enacted. Instead, you could agree with George Bush and the implicit position of the Kerry-Edwards campaign budget that these tax cuts were never intended to be temporary, that not extending them would be a tax increase, and that the baseline should assume they are extended....
It would be consistent with your philosophy -- and helpful in actual debates going on in Washington and not just on economics blogs -- if you argued that PAYGO should apply to all new tax cuts and spending increases. Admittedly it would put some constraint on tax cuts, but it also might put more pressure on Congress to reduce spending -- since they would need to eat their spinach contemporaneously in order to have their desert.
It's not going to happen. To admit that PAYGO discipline is an indispensable help for good fiscal policy--that's too great an implicit critique of George W. Bush for Mankiw to swallow, and the explicit pass for Bush makes it worse. Greg Mankiw is not going to accept Jason Furman's invitation to come into the PAYGO briar patch.