I say if debt % gdp goes up even if we have a budget surplus, then our debt is a bigger burden to us than before and we're worse off.. Conversely, if the debt % gdp goes down even if we have an increased deficit, then our debt problem is less and we're better off..
Do you agree?
Yes, but that has nothing to do with PAYGO. That has to do with the policies and/or the events that pushed the deficit so high to begin with. It's very difficult to decrease the deficit quickly. The usual approach is to slow down or freeze spending growth and to slowly increase revenues (without a major tax hike, it's difficult to increase revenues quickly). That's why it's taking several years for Bush to halve the deficit. Doing so quickly would be economically and politically difficult.
PAYGO has even less power over the budget. Unlike the President, PAYGO cannot just submit a balanced budget. It can only serve to make NEW tax and spending policies revenue-neutral. It can do nothing about existing taxes and spending. The fact is, the deficit steadily declined under PAYGO and has steadily increased since it expired.
Neither Bush nor the Congress have shown the courage to make the tough choices when it comes to the budget. Only by tying those choices to the easy ones (tax cuts and increased spending) will the tough choices ever get made.
This is exactly why I'm not unimpressed with PAYGO. I suggest we forget PAYGO and focus on actions that do have something to do with the the debt problem. This is not sarcasm. Your argument is that PAYGO affects the deficit which affects the debt which affects the economy which affects whether we're earning and accumulating wealth. My argument is that wealth is important by itself and all other indicators are important only inasmuch as they effect wealth. Sure, we can go further and say that wealth is not important by itself but rather only inasmuch as it makes us safe and allows us to pursue happiness, but then we'd really be getting off topic.
Our central question is the nature of any link that may exist between PAYGO and our ability to accumulate wealth. We seem to agree that the link between PAYGO and the debt (through the deficit) is weak. I see a negative direct impact that PAYGO has on personal wealth in the taxes that it can raise. PAYGO is not justified.