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1 The Statutory Pay-as-You Go Act and the Role of the Congress 1 (August 18, 2020)

handle is hein.congrec/sypyay0001 and id is 1 raw text is: The Statutory Pay-As-You Go Act and the Role of the Congress O Congressional Budget Office Nonpartisan Analysis for the US. Congress The Statutory Pay-As-You-Go Act of 2010 (often called S-PAYGO) established procedures to control the effects of newly enacted legislation on the deficit by constraining increases in spending and reductions in revenues. This document describes how estimates of the budgetary effects of enacted legislation are recorded and used to enforce S-PAYGO requirements. Is All Legislation Subject to S-PAYGO? Yes. All legislation is evaluated for compliance with S-PAYGO. Although the S-PAYGO law sets out per- manent budget-reporting and enforcement proce- dures for all legislation, only provisions that affect mandatory spending and revenues are subject to S-PAYGO enforcement. Mandatory, or direct, spending includes outlays for most federal benefit programs and for certain other payments to people, businesses, nonprofit institutions, and state and local governments. Such spending is generally governed by statutory crite- ria and is not normally constrained by the annual appropriation process. Certain types of payments that federal agencies receive from the public and from other government agencies are classified as offsetting receipts and accounted for in the budget as reductions in mandatory spending. The law applies to provisions in appropriation acts that change mandatory outlays or revenues unless their estimated effects on outlays net to zero over the period encompassing the current fiscal year, the upcoming budget year, and four subsequent fiscal years. If an entire law consists of discretionary spending provisions (that is, appro- priations), the legislation is still subject to S-PAYGO evaluation and reporting, but the costs are recorded by the Office of Management and Budget (OMB) as zero for S-PAYGO purposes. Who Enforces S-PAYGO Requirements and How? In keeping with the law's provisions, OMB enforces S-PAYGO requirements through sequestration-the cancellation of mandatory budgetary resources.' To do that, the agency uses 5- and 10-year scorecards (see the table) to track the projected budgetary effects of new laws subject to S-PAYGO.2 The scorecards align with the budget window that the Congressional Budget Office uses for its baseline projections and legislative cost estimates: the current year, the upcoming budget year, and either four or nine subsequent fiscal years. Unless otherwise directed by law, OMB uses its own esti- mates to create those scorecards. If, at the end of a session of Congress, either scorecard shows a positive balance (indicating a net increase in the projected deficit) for the bud- get year, OMB must reduce budgetary resources for mandatory programs (except for those that are exempted by law) for that year to reduce the deficit by the amount of the larger balance.3 How Does OMB Calculate Scorecard Amounts? The balance used to determine the amount of a sequestration is not the projected increase in the deficit for that particular year. Rather, OMB's score- cards identify average annual effects of legislation over the 5- and 10-year periods and assign that average to each year in the period. Before the averages are calculated, any current-year effects www.cbo.gov I O@uscbo

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