Khanna To Vote Against House Democratic Rules Over 'PAYGO' Spending Restraints

WASHINGTON (CBS SF / CNN) -- House progressives, including a lawmaker from the Bay Area, are threatening to reject a rules package backed by Democratic leadership over a requirement they believe could thwart their most ambitious policy plans.

Rep. Ro Khanna (D-Fremont) and New York Rep.-elect Alexandria Ocasio-Cortez said Wednesday they will vote against any guidelines that include a provision known as "PAYGO," or "pay as you go," which requires that new spending be offset by matching cuts or increases in revenue.

Progressives who support programs like "Medicare-for-all" and other policies likely to increase government expenditures worry that the rule would create a self-imposed obstacle with limited political upside -- and come across as a sign that Democrats are committed to the austerity economics championed, at least rhetorically, by conservative groups.

Opponents of the rule say they would need 18 votes from the Democratic conference to scuttle the rules package, which is otherwise widely popular, and potentially send leadership into negotiations with the progressive holdouts.

"I do not understand why the Democrats don't have the courage of our convictions and make the case that our policies will lead to growth," Khanna said, arguing that the rule was ultimately a self-defeating political calculation: "PAYGO is to protect members in vulnerable districts who can say that Democrats are for fiscal responsibility. I'm all for raising taxes on the 1% and multinational corporations and stopping our excessive spending on the bad wars. But we should make an economic growth argument in swing districts instead of thinking the '90s playbook of fiscal responsibility will work."

Ocasio-Cortez also said on Wednesday she would vote against the package when it comes up soon after she is sworn in on Thursday.

"PAYGO isn't only bad economics," she tweeted, "it's also a dark political maneuver designed to hamstring progress on healthcare + other leg. We shouldn't hinder ourselves from the start."

Drew Hammill, Minority Leader Nancy Pelosi's deputy chief of staff, pushed back against Khanna's argument in a tweet of his own.

"We must replace CUTGO to allow Democrats to designate appropriate offsets (including revenue increases)," Hammill said. "A vote AGAINST the Democratic Rules package is a vote to let Mick Mulvaney make across the board cuts, unilaterally reversing Democratic initiatives and funding increases."

"CUTGO," a rule put in place by the outgoing Republican House majority, requires new spending be paid for with cuts to spending. Unlike "PAYGO," it does not make allowances for revenue increases, which typically come in the form of tax hikes.

"There is a PAYGO mechanism within Federal law that requires (the Office of Management and Budget, which is led by Mulvaney) to offset the cost of deficit-increasing legislation by forcing indiscriminate, across-the-board cuts in federal mandatory spending," Hammill added. "It's the law of the land."

Pelosi is expected to regain the speakership as the new Democratic House majority takes the reins this week. Both Ocasio-Cortez and Khanna are backing her bid.

Top Congressional Progressive Caucus officials, in a statement on Wednesday afternoon, expressed their concern over reviving the rule, but said they were confident after talks with party leadership that their priorities wouldn't be blocked.

"We all agree that the real problem with PAYGO exists in the statute that requires it. That is why we will be introducing legislation in the 116th Congress to end PAYGO," they said. "In the meantime, Chairman McGovern and House Leadership have committed to us that PAYGO will not be an impediment to advancing key progressive priorities in the 116th Congress. With the assurances that PAYGO can be waived, we do plan to vote for the House rules package and proceed with legislation to fix the statute."

Khanna praised the work of Massachusetts Rep. Jim McGovern, the incoming Rules Committee chairman, who previously struck a deal with progressives that would lower the bar for raising rates on most taxpayers, but Khanna warned that more ambitious steps were needed.

"I have a lot of respect for Jim McGovern and there are a lot of good things in the rules package -- like allowing members to wear any form of religious garb on the House floor, a diversity office -- and other rules about how committees work," he said. "But for me, austerity politics has been one of the main reasons the working class has been hurt in our country and the recovery was so slow."

The backlash to "PAYGO" is not limited to the party's aggressive progressive bloc. Ohio Rep. Tim Ryan, a leading Pelosi rival, said in a statement that the rule would "handcuff" the new majority and is a "no go for me."

"We all believe we need to ultimately bring our budget into balance, but these investments are too important right now to pass up and will yield significant returns for the US Treasury," Ryan said in a statement, though he stopped short of saying he would vote against the rules package.

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