Questions About the Statutory Pay-As-You-Go Act of 2010
Report
In response to a request from Senator Graham, CBO answers questions regarding the use of sequestration (the cancellation of budgetary resources) in accordance with the Statutory Pay-As-You-Go Act of 2010.
Senator Graham has asked CBO to answer questions regarding the use of sequestration (the cancellation of budgetary resources) in accordance with the Statutory Pay-As-You-Go Act of 2010 (S-PAYGO).
Under S-PAYGO the Office of Management and Budget (OMB) maintains 5- and 10-year scorecards that it updates to include estimated cumulative changes in revenues and outlays that are generated by newly enacted legislation.
If, at the end of a session of Congress, either scorecard indicates a net increase in the deficit for the budget year, OMB must order a sequestration to eliminate the overage (any current-year effects are combined with those for the budget year). The balance used to determine the amount sequestered is not the projected increase in the deficit for a particular year. Rather, OMB's 5- and 10-year scorecards identify the average annual effects of a piece of legislation over those periods and assign the average to each year in the period. Before an average is calculated, any current-year effects are combined with those for the budget year.
