Democrats' new spending rule would balance budget by 2012

House Democrats recently passed a budget bill that institutes a 'pay as you go' rule.  In other words, no spending unless there is budget money available to pay for it.  Similar rules led to surpluses during the Clinton years, but were allowed to expire in 2001 after Republicans took control of both the Congress and White house:

Balancing the budget "is an urgent national priority," Rep. DennisCardoza, D-Calif., said during the debate, and "now is the time" tobring back the rules.

The House budget rules, approved 280-152, bar spending increases forany new program unless spending is simultaneously cut elsewhere ortaxes are raised to offset the cost.

Likewise, any reduction in tax revenues must beoffset by spending cuts or tax hikes in other areas. That change coulddoom Republican efforts to permanently extend tax cuts passed duringBush's first term, most of which expire at the end of 2010.

Some Republicans will complain that this bill raises taxes.  Don't let them fool you.  Nowhere in this bill does it say anything about a tax increase.  The bill simply specifies that spending cannot happen unless money is available to pay for it.

The good news is that Bush is not expected to veto it.  The only question is what will the Senate do with it?  If this thing makes it through, expect for there to be a crackdown on the pork and other wasteful spending that both parties have been getting away with for so long.

The only other obstacle is the farm bill, which will end up being rather expensive.  There are some that want to wave the pay-as-you-go rule in order to get the farm bill through -- but it is unlikely that will happen.