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Introducing the PAYGO Tracker

Oct 10, 2019 | Budget Process

The first rule of getting out of a hole is to stop digging it deeper. Yet with deficits projected to exceed $1 trillion this fiscal year, lawmakers continue to regularly evade or ignore pay-as-you-go (PAYGO) budget rules requiring new spending and tax cuts to be offset.

The PAYGO Tracker will track ongoing and enacted legislation starting in Fiscal Year (FY) 2020 to determine the extent to which policymakers are abiding by PAYGO. We will focus on legislation that has a significant budgetary impact and receives a floor vote by at least one chamber of Congress.

Currently, PAYGO is enforced in three different ways. Rules in the House and Senate require all tax and mandatory spending legislation to be offset; the statutory PAYGO law requires policymakers to offset the five- and ten-year cost of any tax and mandatory spending changes in legislation over the course of a calendar year; and PAYGO principles and norms encourage policymakers to ensure legislation doesn't add to long-term deficits or rely on budget gimmicks, regardless of technicalities.

Our PAYGO Tracker will highlight efforts to waive, evade, cancel, or ignore PAYGO rules, the PAYGO law, or PAYGO principles. We will also show the scored cost or savings and total cost or savings for each bill, and we will include a paragraph description of the legislation and how policymakers are abiding by or circumventing PAYGO rules.

The tracker will be regularly updated and available at http://www.crfb.org/PAYGO-Tracker.

While the PAYGO Tracker will track legislation considered in FY 2020 and later, the following table and description shows how we would apply it to the Tax Cuts and Jobs Act of 2017 and Bipartisan Budget Act of 2019 as examples.

PAYGO Tracker

Legislation House Rule Senate Rule Statutory PAYGO PAYGO Principles Scored Deficit Effect Total Deficit Effect Status
EXAMPLE: Tax Cuts and Jobs Act of 2017 Waived* Waived Excluded^ Violated $1.46T $1.9T Enacted on 12/22/17
EXAMPLE: Bipartisan Budget Act of 2019 Waived* Waived Excluded** Violated $265B $1.7T Enacted on 8/2/19
               
               
               
               
               
               

Key: Waived=PAYGO rule was waived. Waived*=Global waiver from rules. not specific to PAYGO. Excluded=Excluded from PAYGO scorecard. Wiped=Wiped PAYGO scorecard clean. Cancelled=Cancelled PAYGO sequester. Violated=Violated PAYGO principles.
^Excluded from PAYGO scorecard in future legislation rather than the TCJA.
**Excluded savings from PAYGO scorecard, which was fiscally responsible because it prevented the savings from being used to offset other legislation when they did not even offset the bill.

EXAMPLE LEGISLATION: Tax Cuts and Jobs Act of 2017: Tax Cuts and Jobs Act (TCJA) reduced individual and corporate income taxes – mostly for tax years 2018 through 2025 – adding roughly $1.9 trillion to the deficit, inclusive of interest and dynamic feedback. At the time of passage, the legislation was scored as increasing ten-year deficits by $1.46 trillion – including $1.48 trillion of on-budget costs subject to PAYGO.  The House and Senate both waived their PAYGO rules (technically CUTGO in the House) – the House through a global waiver, despite the fact that the legislation clearly added to the deficit and thus violated PAYGO principles. Though the effects of the legislation were counted on the statutory PAYGO scorecard initially, the deficit increase was excluded from the scorecard in future legislation.

EXAMPLE LEGISLATION: Bipartisan Budget Act of 2019: The Bipartisan Budget Act of 2019 increased the discretionary spending caps for FY 2020 and FY 2021 by a combined $320 billion, while reducing mandatory spending by $55 billion. Though the legislation was estimated to cost $265 billion, the costs would not appear because changes to discretionary spending caps do not count toward PAYGO, which only applies to revenue and mandatory spending. The legislation excluded the $55 billion of net mandatory savings from the PAYGO scorecard – a responsible choice that prevents those savings from being used to offset future deficit-increasing legislation. The bill would actually cost $1.7 trillion including future discretionary effects and interest. The House and Senate both waived their PAYGO rules – the House through a global waiver – despite the fact that the legislation was not technically in violation of either. Despite reducing spending subject to PAYGO rules, the legislation clearly violated the spirit of PAYGO. The Bipartisan Budget Act of 2019 increased spending by far more than the offsets it put forward, raising projected debt by $1.7 trillion over a decade -- making it the second most costly piece of legislation since 2013.

The PAYGO Tracker will be regularly updated and available at http://www.crfb.org/PAYGO-Tracker.