Statutory Pay-As-You-Go Act of 2009

July 14, 2009

Today CBO delivered a letter to Representative Paul Ryan that responded to his request for an analysis of H.R. 2920, the Statutory Pay-As-You-Go Act of 2009. H.R. 2920 is virtually identical to the proposal recently advanced by the Administration. It would establish a new statutory form of pay-as-you-go (PAYGO) budget enforcementwhich is generally intended to ensure that laws affecting direct (mandatory) spending or revenues are, in total, budget neutral.

That process, although similar to the statutory PAYGO system that was in place from 1990 through 2002, would differ from the former system in several significant ways. CBOs analysis reviews the statutory PAYGO system that was enacted in 1990 and that remained in place until fiscal year 2002, and the current pay-as-you-go rules adopted by the House of Representatives and the Senate. It then presents an overview of the key features of H.R. 2920 and assesses the possible effects of the legislation on future budget deficits and control of the budget process.

In CBOs view, the PAYGO process specified in H.R. 2920 includes some featuresspecifically, the statutory sequestration mechanismthat could enhance overall budget enforcement. However, the proposed process has other featuresa proposed temporary rule to score certain changes in spending and revenues relative to current policy rather than current law; a modification of the baselines treatment of some expiring mandatory programs; and new procedures for scoring legislation that would convert programs spending from discretionary to mandatorythat could lead to greater spending or reduced revenues in the coming decade than would occur under the existing House and Senate rules. In addition, some features of the bills proposed sequestration mechanism would limit its usefulness in deterring increases in spending.

H.R. 2920 also would shift some control over the budget process from the Congress to the executive branch in ways that could effectively require lawmakers to vote on legislation without a clear indication of the potential impact of their decisions on the triggering of a future sequestration.