Congress and President Trump have increased the deficit by simultaneously increasing spending while cutting revenue. The Department of Treasury found that the deficit has ballooned to $779 billion per year. Partly in response to the ballooning deficit, Congress formed the Joint Select Committee on Budget and Appropriations Process Reform to propose reforms to the appropriations and budget process. As part of this reform process, I suggest that Congress ensure that it follows the procedural requirements of the Pay-As-You-Go Act (PAYGO).
PAYGO requires that authorizing legislation (i.e., not appropriations) cannot increase the deficit within a five-year or ten-year window. If legislation would increase the deficit in either window, an offsetting, automatic sequestration would kick in.
When determining whether legislation would increase the deficit, the Congressional Budget Office (CBO) estimates the potential costs. Even though Congress traditionally defers to CBO, PAYGO gives the House and/or Senate Budget Committees the official authority to estimate the costs. Specifically, PAYGO requires the Budget Committees to officially record a PAYGO estimate by 1) including in a bill the following statement: “The budgetary effects of this Act, for the purpose of complying with the Statutory Pay-As-You-Go-Act of 2010, shall be determined by reference to the latest statement titled ‘Budgetary Effects of PAYGO Legislation’ for this Act, submitted for printing in the Congressional Record by the Chairmen of the [House or Senate] Budget Committee, provided that such statement has been submitted prior to the vote on passage,” and 2) printing in the Congressional Record a statement titled “Budgetary Effects of PAYGO Legislation,” which shall include an estimate of the budgetary effects of the legislation. If both conditions are not satisfied, PAYGO provides that “OMB [Office of Management and Budget] shall estimate the budgetary effects of that legislation upon its enactment.”
Congress is not following the procedures for recording PAYGO estimates. First, Congress has routinely not included the required PAYGO statement in legislation. Specifically, out of the 28 PAYGO laws passed in 2017, only 2 included the required statement. Likewise, out of the 15 PAYGO laws already passed this year, only 1 included the required statement.
Second, Congress has consistently not followed the printing in the Congressional Record requirement. Although in 2017 and 2018 Congress has printed some PAYGO estimates in the Congressional Record, Congress has not used the required “Budgetary Effects of PAYGO Legislation” title since December 13, 2011. Further, Congress has often not published any estimate in the Congressional Record, even when CBO has conducted an estimate. For instance, even though Congress waited for a CBO estimate before voting on the final version of the Tax Cuts and Jobs Act, Congress did not include the PAYGO estimate in the Congressional Record.
To show that Congress takes PAYGO seriously, it should begin ensuring that it follows the basic procedural requirements of the Act. Additionally, by not following the PAYGO procedural requirements, Congress is ceding its role as arbiter of costs to OMB. OMB could use this authority to supplant a non-partisan CBO estimate with an unrealistic, partisan estimate. For instance, President Trump offered an alternative estimate of the Tax Cuts and Jobs Act, which economists generally attacked as unrealistic. Only by following PAYGO’s procedural requirements can Congress ensure that the government uses realistic estimates to determine the costs of legislation.