updated 1/5/2007 3:18:37 PM ET 2007-01-05T20:18:37

The House has voted to reinstate budget rules designed to curb the budget deficit.

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The vote was 280-to-154 to reinstate the so-called "pay as you go" rule. It requires that any increase in entitlement spending or tax cut be somehow offset so as to not to increase the deficit.

Budget hawks say the move is a good first step toward restoring fiscal discipline.  But the changes could bedevil efforts to appease middle-class voters later.

The House has also approved a Democratic proposal that requires lawmakers to publicly disclose their pet projects, or "earmarks."

Another rule change would curb past abuses in which GOP leaders held votes open for hours and excluded minority party lawmakers from House-Senate negotiations on the language of final bills sent to the White House for enactment.

PAYGO, earmarks and higher taxes
Former GOP Rules Committee Chairman David Dreier of California said he supports the reforms but complained that the new rules could easily be sidestepped -- and that more extensive reforms once demanded by Democrats had been left out.

Many Republicans also voted for a Democratic proposal to require lawmakers to disclose publicly their want for pet projects -- referred to as earmarks in legislative terms -- for their districts or states, such as Alaska's bridge to nowhere in the last Congress. Minority Whip Roy Blunt, R-Mo., said Republicans would tend to vote for the earmark reforms despite its linkage to a "pay as you go" rule that would threaten efforts to extend GOP-passed tax cuts that expire at the end of 2010.

The PAYGO rule would require tax cuts to have corresponding cuts in government spending or tax increases elsewhere to pay for them. Likewise, any increase in entitlement programs like Medicare would have to have corresponding tax increases, or equal cuts in other government programs.

"I give them kudos," said Rep. Jeff Flake, R-Ariz., a fierce but sometimes quixotic foe of Congress' earmarking ways. But, he added, "The PAYGO stuff wreaks havoc on tax cuts."

'Cutting the national credit card'
If strictly enforced, the PAYGO rule would make it difficult for Democrats to pass increases in federal benefit programs such as Medicare. In the near term, it would mean Democrats' bill to cut student loan rates will be less generous than they'd like. The rule would also threaten efforts to extend Bush's tax cuts, most of which expire at the end of 2010.

"This is putting the American taxpayer on a collision course with higher taxes," said Paul Ryan of Wisconsin, top Republican on the Budget Committee.

"Today, we are cutting our national credit card," countered Heath Shuler, D-N.C., during floor debate Friday. To underscore the point, Shuler cut a credit card in half at a news conference populated by moderate-to-conservative "Blue Dog" Democrats who are most responsible for implementing the rule.

The Pelosi effect?
The PAYGO and earmark proposals come a day after Democrats seized control of Congress for the first time in 12 years, with a jubilant Nancy Pelosi becoming the first woman ever to rise to speaker of the House.

"This is an historic moment -- for the Congress, and for the women of this country," Pelosi said Thursday when she took the House gavel. "It is a moment for which we have waited more than 200 years."

Slideshow: A new day on Capitol Hill

Pelosi, D-Calif., will exert vast influence over the congressional agenda and stands second in the line of succession to the presidency. In her first step as speaker, she orchestrated bipartisan 430-1 passage of a measure banning lawmakers from accepting gifts and free trips from lobbyists and discounted trips on private planes. Rep. Dan Burton, R-Ind., cast the sole "nay" vote.

The vote, said Majority Leader Steny Hoyer, D-Md., amounted to "sweeping ethics reforms that begin to address some of the most egregious transgressions of the recent past."

'Blue Dogs' weigh in
Republicans applauded Democrats' efforts to require greater disclosure of lawmakers' earmarks. The Democratic effort largely mirrored a GOP plan passed last year in the wake of the Randy "Duke" Cunningham scandal, in which the former California GOP congressman pleaded guilty to corruption charges for channeling earmarks to defense contractors in exchange for $2.4 million in bribes. Lesser scandals have hit other lawmakers.

Democratic budget hawks, especially the moderate-to-conservative "Blue Dogs," say that restoring the rule is crucial to curbing the budget deficit. Various forms of PAYGO were in place from 1990-2002, however, and Congress often found ways around it.

The version approved Friday can easily be waived. Still, the incoming chairman of the Budget Committee, John Spratt Jr., D-S.C., touted it as better than the status quo.

"You've got to offset those tax cuts," Spratt said. "And if you want to enhance an entitlement, you've got to pay for it."

Democrats left in place -- for now -- a GOP rule limiting committee chairmen to three two-year terms.

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