Transcripts

The House Approves Tax Hikes For Tax Cuts

SUZANNE PRATT: In one of the first major votes of the new session of Congress, the House today approved a rule requiring new tax cuts be paid with tax hikes or reduced spending. House Democrats say it`s a first step toward putting the people`s fiscal house in order. And as Stephanie Dhue reports, experts say that was the easy part.

STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: With the Federal debt nearing $9 trillion, House majority leader Steny Hoyer says the so-call "pay go" rule will help restore fiscal sanity.

REP. STENY HOYER, MAJORITY LEADER: Today is the dawn of new era in American governance. We now have the opportunity to change course and jumpstart a return to fiscal responsibility.

DHUE: Republicans disagree and most voted against it. The ranking Republican on the Budget committee Paul Ryan says "pay go" will raise taxes, but not cut spending.

REP. PAUL RYAN, (R) WISCONSIN: This is putting the American tax payer on a collision course with higher taxes. And why is it doing that? Because this system, this "pay go" system will make the pressure toward raising taxes to pay for new entitlement spending.

DHUE: While the "pay go" rules apply to expansion of entitlement programs and new tax cuts, they don`t apply to hundreds of billions of dollars Congress spends each year on everything from defense to education to national parks. Maya MacGuineas heads up a think tank which promotes a responsible budget. She says Congress still has to do heavy lifting to restore fiscal responsibility.

MAYA MACGUINEAS, EXEC. DIRECTOR, COMMITTEE FOR A RESPONSIBLE BUDGET: "Pay go" is a good thing that`s going to really put up the yellow light and say we don`t want to make things worse. Here`s something that could stop you, but it`s nothing that`s going to force or even really urge the reforms that need to happen, Congress is going to have to do that on their own.

DHUE: Ironically, the new rules will make it harder for Democrats to pass some of their own agenda items, like cutting student loan interest rates and fixing the alternative minimum tax. An AMT fix alone could cost $49 billion a year in lost tax revenues. Representative Stephanie Herseth, a member of a coalition of fiscal conservative Democrats, known as the blue dogs, says her group will enforce the new spending rules. REP. STEPHANIE HERSETH (D) SOUTH DAKOTA: We will be looking at what we need to do, particularly for middle income America and knowing how important an AMT fix is, beyond just the one-year fixes we`ve been passing.

DHUE: Meanwhile in the Senate, leaders of the tax writing committee say they too will work on fixing the AMT in a fiscally responsible way. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.