WASHINGTON – On Thursday Congress passed important legislation that mandates that Congress can’t spend more than it can afford.

The Statutory Pay-As-You-Go-Act (H.J. Res. 45) requires Congress to offset all new policies that reduce revenues or expand entitlement spending.

“This is a good first step towards restoring fiscal discipline to Washington. I’ve been working to pass Pay-As-You-Go legislation, also known as PAYGO, since I was elected to Congress and I carried the measure of the floor of the House during the 108th Congress,” said Congressman Mike Thompson (D-CA). “The federal government’s budget shouldn’t be any different than a family’s budget: you don’t spend more money than you can afford. And if you do make a big purchase, you have to cut back elsewhere.”

The bill passed Thursday is similar to the bipartisan PAYGO law in place in the 1990s, which helped reverse huge deficits, create budget surpluses, and produce an economic boom.

In 2002 these budget rules were allowed to expire, contributing to the dramatic turnaround from a projected 10-year surplus of $5.6 trillion in 2000 to projected deficits of over $11 trillion in 2009.

H.J. Res. 45 makes PAYGO law, so that future Administrations can’t choose whether or not they want to follow pay-as-you-go principles.

There are some protections in the rule, so that during an economic crisis Congress and the president can do what is needed to strengthen our economy.

The bill now heads to President Obama’s desk for signature.