The Statutory PAYGO Process for Budget Enforcement: 1991-2002

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The Statutory PAYGO Process for Budget

Enforcement: 1991-2002

(name redacted)

Specialist in American National Government

December 30, 2009

Congressional Research Service

7-....

www.crs.gov

R41005

CRS Report for Congress

Prepared for Members and Committees of Congress

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

Summary

“Pay-as-you-go” (PAYGO) procedures play an important role in enforcing budget policies with

respect to the consideration of revenue and direct spending legislation. Generally, the purpose of

PAYGO procedures is to discourage or prevent the enactment of legislation that would cause, or

increase, a deficit or reduce a surplus in the federal budget. PAYGO procedures are not a

comprehensive means of budget enforcement because they do not apply to discretionary

spending, which is provided in annual appropriations acts; such spending is subject to other

enforcement procedures. Further, PAYGO rules deal only with the budgetary impact of legislation

considered by Congress; they do not address changes in direct spending and revenue levels under

current law stemming from changes in the economy, demographic trends, and other factors.

Over the years, several different PAYGO procedures have been used for budget enforcement

purposes. The PAYGO procedures have been based in statute as well as congressional rules.

Statutory and rules-based PAYGO procedures have been in effect simultaneously at times, while

at other times only one form of PAYGO procedures was in effect.

This report examines the statutory PAYGO process that was in effect from 1991 through 2002,

beginning with a discussion of the complex and evolving budget enforcement framework of

which it was an important part. The report continues with an explanation of the origin, extension,

and termination of the PAYGO process; a review of its regular operation and statutory

interventions in that operation involving directed scorekeeping; and an identification of major

direct spending and revenue legislation subject to the PAYGO process. It concludes with a brief

discussion of proposals to restore the PAYGO process.

The statutory PAYGO process was established in 1990 as Section 252 of an underlying law, the

1985 Balanced Budget Act. As extended in 1993 and 1997, the PAYGO process applied to

legislation enacted through the end of FY2002, but it covered the effects of such legislation

through FY2006. The PAYGO process was effectively terminated in December 2002 by the

enactment of P.L. 107-312, which set all remaining balances on the PAYGO scorecard to zero.

Under the PAYGO process, if the OMB director determined that there was a positive balance for

a fiscal year on the PAYGO scorecard, then the President was required to issue a sequestration

order implementing across-the-board cuts in nonexempt direct spending to eliminate the balance.

The OMB director issued 12 final sequestration reports under the PAYGO process, for FY1992FY2003. The final balances on the PAYGO scorecard for all years were either negative amounts

(reflecting net savings) or zero. Accordingly, no PAYGO sequester was required for any fiscal

year during this period. While the OMB director’s final determinations indicated compliance with

the PAYGO requirement in all years, in some cases the balances reflected adjustments due to

emergency requirements, provided for under the process, or directed scorekeeping provisions in

law that intervened in the normal operation of the process in order to prevent a sequester.

Emergency designations and directed scorekeeping provisions sometimes involved amounts

ranging from tens of billions to more than one hundred billion dollars for a year.

This report will be updated as developments warrant.

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

Contents

Budget Enforcement Framework.................................................................................................1

Congressional Budget Act of 1974 ........................................................................................1

Balanced Budget Act of 1985 ................................................................................................2

Budget Enforcement Act of 1990 ..........................................................................................3

House and Senate PAYGO Rules...........................................................................................4

Origin, Extension, and Termination of the PAYGO Process .........................................................4

Origin of PAYGO: Budget Enforcement Act of 1990.............................................................4

Extension of PAYGO: OBRA of 1993 and the BEA of 1997 ..................................................6

Termination of PAYGO: P.L. 107-312 ...................................................................................6

Regular Operation of the PAYGO Process ...................................................................................7

Main Elements of the PAYGO Process ..................................................................................7

Final PAYGO Determinations Made by the OMB Director .................................................. 10

Emergency Requirements.................................................................................................... 13

Statutory Interventions Involving Directed Scorekeeping .......................................................... 16

Successful Interventions...................................................................................................... 16

FY2000......................................................................................................................... 25

FY2001......................................................................................................................... 25

FY2002......................................................................................................................... 25

FY2003 and Subsequent Years ...................................................................................... 26

Unsuccessful Efforts to Intervene in the PAYGO Process .................................................... 27

Major PAYGO Legislation ........................................................................................................ 27

Proposals to Restore the Statutory PAYGO Process ................................................................... 36

Tables

Table 1. Final PAYGO Determinations by the OMB Director: Scorecard Balances for

FY1992-FY2006.................................................................................................................... 11

Table 2. Five-Year Total Balances on the PAYGO Scorecard for FY1992-FY2006 in

OMB Final Sequestration Reports .......................................................................................... 12

Table 3. Final PAYGO Scorecard Balances for FY1992-FY2006: Multi-Year Balances

(by Varying Timeframes)........................................................................................................ 14

Table 4. Summary of Statutory Interventions in the PAYGO Process ......................................... 18

Table 5. Text of Major Statutory Provisions Intervening in the Operation of the PAYGO

Process .................................................................................................................................. 20

Table 6. Adjustments to PAYGO Balances Through Statutory Intervention (Directed

Scorekeeping): FY1994-FY2006............................................................................................ 23

Table 7. Five-Year Balances of 65 Major PAYGO Measures Enacted by Calendar Year

(CY1991-CY2002) ................................................................................................................ 28

Table 8. Five-Year Total Balances of 17 Major PAYGO Measures, Ranked in Ascending

Order ..................................................................................................................................... 30

Table 9. Major PAYGO Legislation Enacted in Calendar Years 1991-2002 ................................ 31

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The Statutory PAYGO Process for Budget Enforcement: 1991-2002

Appendixes

Appendix A. Section 252 of the 1985 Balanced Budget Act, As Amended (2 U.S.C. 902).......... 38

Contacts

Author Contact Information ...................................................................................................... 40

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

“P

ay-as-you-go” (PAYGO) procedures play an important role in enforcing budget

policies with respect to the consideration of revenue and direct spending legislation.

Generally, the purpose of PAYGO procedures is to discourage or prevent the

enactment of legislation that would cause, or increase, a deficit or reduce a surplus. PAYGO

procedures are not a comprehensive means of budget enforcement because they do not apply to

discretionary spending, which is provided in annual appropriations acts; such spending is subject

to other budget enforcement procedures. Further, PAYGO rules deal only with the budgetary

impact of legislation considered by Congress; they do not address changes in direct spending and

revenue levels under current law stemming from changes in the economy, demographic trends,

and other factors.

Over the years, several different PAYGO procedures have been used for budget enforcement

purposes. The PAYGO procedures have been based in statute as well as congressional rules.

Statutory and rules-based PAYGO procedures have been in effect simultaneously at times, while

at other times only one form of PAYGO procedures was in effect.

This report examines the statutory PAYGO process that was in effect from 1991 through 2002,

beginning with a discussion of the complex and evolving budget enforcement framework of

which it was an important part. The report continues with an explanation of the origin, extension,

and termination of the PAYGO process, a review of its regular operation and statutory

interventions in that operation involving directed scorekeeping, and an identification of major

direct spending and revenue legislation subject to the PAYGO process. It concludes with a brief

discussion of proposals to restore the PAYGO process.

Budget Enforcement Framework

The modern congressional budget process commenced with the Congressional Budget and

Impoundment Control Act of 1974. With respect to budget enforcement procedures, significant

revisions and augmentations occurred under the Balanced Budget and Emergency Deficit Control

Act of 1985, the Budget Enforcement Act of 1990, and other laws. In addition, the House and

Senate established their own PAYGO rules.1 These laws and rules are summarized briefly below.

Congressional Budget Act of 1974

The Congressional Budget and Impoundment Control of 1974 established the congressional

budget process that is in use today.2 Under current practices, the process centers around the

annual adoption of a multiyear budget plan in the form of a concurrent resolution. 3 The budget

The text of various budget process laws and rules is presented in: House Budget Committee, Compilation of Laws and

Rules Relating to the Congressional Budget Process, committee print CP-3, November 2008, available on the

Committee’s website at http://budget.house.gov/laws.shtml (the first item listed). The acts addressed in this section are

discussed in more detail in CRS Report RL30795, General Management Laws: A Compendium, by (name redacted) et

al.

For an explanation of the congressional budget process, see CRS Report 98-721, Introduction to the Federal Budget

Process, by (name redacted). The 1974 act was P.L. 93-344 (88 Stat. 297-339), signed into law by President Richard

Nixon on July 12, 1974; the portions of the act affecting Congress are codified beginning at 2 U.S.C. 621. Titles I-IX of

the act are referred to as the Congressional Budget Act of 1974; Title X is the Impoundment Control Act of 1974.

Extensive information on budget resolutions is presented in CRS Report RL30297, Congressional Budget

Resolutions: Historical Information, by (name redacted) and (name redacted).

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The Statutory PAYGO Process for Budget Enforcement: 1991-2002

resolution, as a concurrent resolution (rather than a bill or joint resolution), is not sent to the

President for his approval or veto and serves as an internal “blueprint” for congressional action on

budgetary legislation.

The act established House and Senate Budget Committees, which exercise jurisdiction over

budget resolutions, and an independent, nonpartisan agency, the Congressional Budget Office

(CBO), which provides Congress with budgetary information and analysis. The policies of the

budget resolution, which pertain to the aggregate levels of revenue, spending, the deficit or

surplus, and the public debt, as well as functional allocations of spending, are enforced during the

subsequent consideration of revenue, spending, and debt-limit legislation by various means,

including points of order, the optional budget reconciliation process, scorekeeping procedures,

and CBO (and Joint Tax Committee) estimates of the budgetary effects of individual measures.4

Balanced Budget Act of 1985

By 1985, the emergence of large deficits in the preceding few years, and the forecast of even

larger deficits in the future, motivated Congress in part to augment the congressional budget

process with strengthened budget enforcement procedures. The actual budget deficits for FY1983

and FY1984 were $208 billion and $185 billion, respectively, and President Ronald Reagan’s

budget for FY1986 estimated the current services deficit at $230 billion for FY1986 and at

comparable levels through FY1990.5 There was widespread concern that procedures under the

1974 act were not sufficient to cope with persistent deficits of such size.

The Balanced Budget and Emergency Deficit Control Act of 1985 provided strengthened

procedures in the form of declining annual deficit targets, set in statute, that were expected to lead

from a deficit of $171.9 billion for FY1986 to a balanced budget by FY1991.6 The deficit targets

were enforced by a process known as sequestration, which involved largely across-the-board

spending cuts in nonexempt programs that would be triggered automatically toward the beginning

of the fiscal year if the Comptroller General determined that the applicable deficit target was not

expected to be met.7 A sequester was viewed as such a draconian approach, and the consequences

of it so unacceptable, that the threat of one would force Congress and the President to reach

agreement on needed budgetary legislation under regular legislative procedures.

For further information on budget enforcement procedures under the 1974 act, see CRS Report 97-865, Points of

Order in the Congressional Budget Process, by (name redacted), and CRS Report RL33030, The Budget

Reconciliation Process: House and Senate Procedures, by (name redacted) and (name redacted)

Office of Management and Budget, Budget of the United States Government, Fiscal Year 1986, Special Analyses,

Feb. 4, 1985, Special Analysis A, p. A-5. Current service estimates project budget levels into the future without policy

changes.

The 1985 Balanced Budget Act was Title II (99 Stat. 1038-1101) of P.L. 99-177, signed into law by President Ronald

Reagan on December 12, 1985. The measure originated as a joint resolution increasing the statutory limit on the public

debt. Title II of the act contained five parts, each dealing with a different aspect of budget procedure. Part C

(Emergency Powers to Eliminate Deficits in Excess of the Maximum Deficit Amount) of Title II set forth the

sequestration procedures used to enforce the deficit targets (“maximum deficit amounts”), but the targets themselves

were placed in Section 3(7) of the Congressional Budget Act of 1974 by a provision in Part A (99 Stat. 1039). The

1985 Balanced Budget Act initially was referred to as the “Gramm-Rudman-Hollings Act” after its three sponsors—

Senators Phil Gramm, Warren Rudman, and Ernest Hollings.

Sequestration procedures are explained in CRS Report RL31137, Sequestration Procedures Under the 1985 Balanced

Budget Act, by (name redacted).

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The Statutory PAYGO Process for Budget Enforcement: 1991-2002

The 1985 Balanced Budget Act was modified two years later by the Balanced Budget and

Emergency Deficit Control Reaffirmation Act of 1987, signed into law by President Reagan on

September 29, 1987.8 The two major modifications were: (1) in order to overcome constitutional

objections, placing the authority to trigger a sequester in the hands of the director of the Office of

Management and Budget (OMB); and (2) revising the deficit targets and extending the goal of a

balanced budget by two years, to FY1993.9

Unlike the congressional budget process under the 1974 act, in which enforcement procedures

were internal to Congress, the sequestration process relied on actions by the executive: the OMB

director determined whether a sequester would occur and the amount of the required spending

cuts; the President issued any required sequestration order; and executive agencies implemented

the bulk of the spending cuts (sequestration also applied to legislative and judicial agencies,

which constitute a relatively small portion of the federal budget).

During the period that deficit targets were in effect, three deficit sequesters occurred, for FY1986,

FY1988, and FY1990.10 Initial outlay savings associated with the three deficit target sequesters

were substantial: $11.7 billion for FY1986; $20.0 billion for FY1988; and $16.1 billion for

FY1990. The across-the-board cuts made in different categories of spending ranged in size from

4.3% to 10.5%. Except for FY1986, these savings subsequently were rescinded as part of a

budget agreement (FY1988) or were reduced by a later law (to $4.55 billion for FY1990).

Notwithstanding the implementation of a sequester for each of these three fiscal years, the deficit

targets proved to be ineffective on the whole. The actual deficit for each of these years exceeded

the applicable target by an average of about $60 billion.

Budget Enforcement Act of 1990

Continuing difficulties associated with the use of deficit targets prompted Congress and the

President to enact the Budget Enforcement Act (BEA) of 1990, which fundamentally revised the

procedures under the 1985 Balanced Budget Act.11 In mid-October of 1990, the OMB director

estimated that the deficit for FY1991 would amount to $147.3 billion, representing an excess of

$83.3 billion over the revised deficit target for that year of $64 billion. The required deficit target

sequester for FY1991, had it been allowed to remain in effect, would have required across-theboard cuts of 34.5% for defense programs and 31.6% for nondefense programs.12 Although the

The 1987 Reaffirmation Act was Title I (101 Stat. 754-784) of P.L. 100-119, signed into law by President Ronald

Reagan on September 29, 1987. The measure originated as a joint resolution increasing the statutory limit on the public

debt.

In Bowsher v. Synar (478 U.S. 714), decided on July 7, 1986, the Supreme Court determined that placing the

authority to trigger a sequester in the hands of the Comptroller General, an officer of the legislative branch, violated the

separation of powers required under the Constitution.

For a discussion of deficit sequesters, see CRS Report RS20398, Budget Sequesters: A Brief Review, by (name r

edacted).

The BEA of 1990 was Title XIII (104 Stat. 1388-573 through 630) of P.L. 101-508, the Omnibus Budget

Reconciliation Act of 1990, signed into law by President George H.W. Bush on November 5, 1990.

The final sequestration order for FY1991, issued by President George H.W. Bush on October 15, 1990, was

rescinded by Section 13401 of the BEA of 1990 (104 Stat. 1388-628) and amounts that had been sequestered were

restored.

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The Statutory PAYGO Process for Budget Enforcement: 1991-2002

BEA of 1990 extended the deficit targets through FY1995, it effectively replaced them with

statutory limits on discretionary spending and the PAYGO process, covering FY1991-FY1995.13

As discussed in more detail in the next section, the main purpose of these enforcement procedures

was to preserve deficit savings reached in a budget summit agreement between President George

H.W. Bush and Congress and implemented in reconciliation and other budgetary legislation.

Sequestration was retained as the means of enforcing the new procedures. The procedures were

revised and extended by budget reconciliation legislation enacted in 1993 and 1997, and were

modified by other laws.

House and Senate PAYGO Rules

In 1993, the Senate established its own PAYGO rule as a means of buttressing the statutory

PAYGO process. The rule has been revised significantly several times during its existence and

currently is in effect through September 30, 2017.14 The House established its own PAYGO rule

in 2007, long after the statutory process had been terminated, and revised it in 2009.15 The

PAYGO rules of the two chambers operate in a roughly similar manner, but differ significantly

from the way the statutory PAYGO process operated.16

Origin, Extension, and Termination of the

PAYGO Process

The statutory PAYGO process originated in the Budget Enforcement Act of 1990, was extended

by the Omnibus Budget Reconciliation Act of 1993 and the Budget Enforcement Act of 1997, and

effectively was terminated by P.L. 107-312. The first three of these acts were budget

reconciliation measures, while the last act was a freestanding measure devoted solely to the

purpose of terminating the PAYGO process before its scheduled expiration.17 Each of these

measures is discussed in more detail below.

Origin of PAYGO: Budget Enforcement Act of 1990

The Omnibus Budget Reconciliation Act (OBRA) of 1990 was signed into law, as P.L. 101-508,

by President George H.W. Bush on November 5, 1990. The act largely represented the

With the extension of the deficit targets through FY1995, the President was given the authority to adjust them for

changing economic and technical assumptions, thereby making them moot.

The Senate’s PAYGO rule is Section 201 of S.Con.Res. 21 (110th Congress), the FY2008 budget resolution; see pp.

12-13 (legislative text) and 96-97 and 102-103 (joint explanatory statement) of the conference report to accompany the

measure, H.Rept. 110-153, May 16, 2007. The rule is examined in detail in CRS Report RL31943, Budget Enforcement

Procedures: Senate Pay-As-You-Go (PAYGO) Rule, by (name redacted)

The House PAYGO rule is summarized in CRS Report RL33850, The House’s “Pay-As-You-Go” (PAYGO) Rule in

the 110th Congress: A Brief Overview, by (name redacted).

The differences between the statutory and rules-based PAYGO procedures are discussed in CRS Report RL34300,

Pay-As-You-Go Procedures for Budget Enforcement, by (name redacted).

For a perspective on budget reconciliation legislation, see CRS Report R40480, Budget Reconciliation Measures

Enacted Into Law: 1980-2008, by (name redacted).

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The Statutory PAYGO Process for Budget Enforcement: 1991-2002

culmination of bipartisan budget summit negotiations between congressional and administration

negotiators, occurring at Andrews Air Force Base, that began in early May of 1990 and concluded

on September 30, 1990. According to CBO estimates, OBRA of 1990 reduced the deficit by $482

billion over five years (FY1991-FY1995), including $158 billion in revenue increases and $324

billion in spending cuts and debt service savings. 18

Title XIII of the act (104 Stat. 1388, 1-630), referred to as the Budget Enforcement Act (BEA) of

1990, amended the 1985 Balanced Budget Act, the 1974 Congressional Budget Act, and other

laws and rules. The BEA of 1990 established special deficit-reduction procedures for FY1991FY1995 and made other permanent changes in the budget process.

The budget process changes made by the BEA of 1990 fulfilled commitments that had been made

during the lengthy negotiations to promote fiscal responsibility. On June 26, 1990, for example,

the President issued a statement that he and congressional negotiators were in accord that any

bipartisan budget agreement should include budget process reform “to assure that any Bipartisan

agreement is enforceable and that the deficit problem is brought under responsible control.” On

September 11, 1990, in an address to a joint session of Congress, the President reiterated his

position that any budget agreement “must reform the budget process.”

Initial House consideration of the reconciliation bill, H.R. 5835, occurred under the terms of a

special rule (H.Res. 509, 101st Congress), reported by the House Rules Committee, that provided

for the automatic adoption of a budget process title under a “self-executing” feature of the rule.

The special rule was adopted by the House on October 16, 1990, and the bill, as amended, was

approved later that day, by a vote of 227-203.19

During Senate consideration of a companion measure, S. 3209, on October 18, Senate Majority

Leader George Mitchell offered a leadership amendment (numbered 3046) to the bill adding a

budget process title. A point of order was raised that the leadership amendment was nongermane;

after a waiver motion was approved by a vote of 77-22, the amendment was agreed to by a voice

vote. Following the adoption of further amendments, the Senate passed its version of the

reconciliation legislation on October 18, by a vote of 54-46.

House and Senate conferees filed a conference report on H.R. 5835 on October 26 (H.Rept. 101964). Both chambers agreed to the conference report the next day; the House approved it by a

vote of 228-200, and the Senate approved it by a vote of 54-45.

The BEA of 1990 established a PAYGO process, covering FY1991-FY1995, to impose a deficit

neutrality requirement on direct spending and revenue legislation. The process was set forth in

Section 252 of an underlying law, the 1985 Balanced Budget Act. Under the process, legislation

proposing new direct spending or decreasing revenues for a fiscal year could not result in a net

cost for that year. The PAYGO process generally was intended to preserve the deficit reduction

achieved in OBRA of 1990 by keeping an on-budget deficit from being increased or an on-budget

surplus from being reduced.

For information on the budgetary impact of OBRA of 1990 and the other two reconciliation acts discussed here, see

CRS Report RS22098, Deficit Impact of Reconciliation Legislation Enacted in 1990, 1993, 1997, and 2006, by (name r

edacted).

The legislative history of the BEA of 1990 is summarized in CRS Report 90-518, Budget Enforcement Act of 1990:

Legislative History, by Edward Davis and (name redacted) (archived, available from (name redacted)).

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The Statutory PAYGO Process for Budget Enforcement: 1991-2002

Extension of PAYGO: OBRA of 1993 and the BEA of 1997

The statutory PAYGO process, as well as the discretionary spending limits, were extended later in

the 1990s by provisions in budget reconciliation acts that resulted from budget agreements

between the President and Congress.

In 1993, the enforcement procedures were modified by the Omnibus Budget Reconciliation Act

(OBRA) of 1993, signed into law by President Bill Clinton on August 10, 1993, as P.L. 103-66.

Title XIV (107 Stat. 683-685) of the act extended the procedures for three more fiscal years,

through FY1998, and made some relatively minor adjustments in them. The extension of the

procedures was intended to help preserve the $433 billion in deficit reduction over FY1994FY1998 that CBO estimated would be achieved by OBRA of 1993 and other acts. (The title also

included an adjustment to the PAYGO scorecard under a directed scorekeeping provision, as

discussed in a later section.)

In 1997, the enforcement procedures were modified by the Balanced Budget Act of 1997, signed

into law by President Bill Clinton on August 5, 1997, as P.L. 105-33. The act was one of two

budget reconciliation measures considered that year, the other being the Taxpayer Relief Act of

1997 (P.L. 105-34), which also was signed into law on August 5. Together, the two reconciliation

acts implemented most of the deficit reduction, estimated by CBO to amount to $118 billion over

FY1998-FY2002, and tax relief policies underlying the bipartisan budget agreement between

President Clinton and congressional leaders reached on May 2, 1997.

Title X (111 Stat. 677-712) of the Balanced Budget Act of 1997, referred to as the Budget

Enforcement Act (BEA) of 1997, generally extended the enforcement procedures through the end

of FY2002 and made various adjustments in them. 20 In the case of the PAYGO process, the BEA

of 1997 extended it to legislation enacted through the end of FY2002 (i.e., September 30, 2002),

but it covered the effects of such legislation through FY2006.

Termination of PAYGO: P.L. 107-312

The PAYGO requirement effectively was terminated toward the end of 2002 by the enactment of

P.L. 107-312 in December of that year.21

Shortly after the second session of the 107th Congress began on January 23, 2002, OMB indicated

that the balance on the PAYGO scorecard for FY2003 exceeded $110 billion and that the balances

for the remaining years on the scorecard, FY2004-FY2006, were over $130 billion for each year.

Although the House and Senate did not reach agreement in 2002 on a budget resolution for

FY2003, it was clear that neither house intended to pursue policies that would eliminate the

FY2003 balance on the PAYGO scorecard through revenue increases or direct spending

reductions. Rather, it was expected that Congress and the President would agree to use procedural

means for preventing a PAYGO sequester from occurring, as had been done in other years.

Background information on the BEA of 1997 is provided in CRS Report 97-931, Budget Enforcement Act of 1997:

Summary and Legislative History, by (name redacted).

For a discussion of the enactment of P.L. 107-312, see CRS Report RS21378, Termination of the "Pay-As-You-Go"

(PAYGO) Requirement for FY2003 and Later Years, by (name redacted).

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The Statutory PAYGO Process for Budget Enforcement: 1991-2002

As the session unfolded, Congress and the President enacted legislation that added several billion

dollars more in net costs to the PAYGO scorecard. According to OMB estimates, only $31 billion

could be cut under a PAYGO sequester because most direct spending was exempt from

sequestration; consequently, a violation of more than $90 billion would have remained even if a

full PAYGO sequester had occurred.

In order to prevent a PAYGO sequester for FY2003 from occurring after the end of the session,

the House and Senate passed H.R. 5708, which President George W. Bush signed into law on

December 2, 2002, as P.L. 107-312 (116 Stat. 2456). In addition to eliminating the imminent

threat of a sequester by reducing the PAYGO balance for FY2003 (and FY2002) to zero, it also

eliminated the sequester threat for FY2004-FY2006 by setting those balances at zero as well.

Regular Operation of the PAYGO Process

This section identifies and describes the main elements of the statutory PAYGO process as it was

intended to operate. Further, it analyzes the operation of the process by focusing on the final

PAYGO determinations made each year by the OMB director and the use of emergency

designations. Statutory interventions in the process involving directed scorekeeping, and the

major direct spending and revenue legislation enacted under PAYGO procedures, are discussed in

later sections.

Main Elements of the PAYGO Process

The PAYGO process unfolded during the course of a congressional session, with several actions

scheduled to occur under a fixed timetable. The timetable was designed to give Congress and the

President ample notice regarding the implications of its actions on budgetary legislation with

respect to the possibility of a sequester occurring at the end of the session, after the beginning of

the fiscal year to which it applied. As indicated earlier, the sequestration process was modified by

several laws over the years and these modifications revised the timetable; the timetable in its most

recent form is used in this report. Actions under the PAYGO process were synchronized with

actions pertaining to the discretionary spending limits (and, for the remainder of their existence,

the deficit targets).

As a general rule, the enforcement procedures for the PAYGO process, on the one hand, and the

discretionary spending limits, on the other, were separated by a “firewall.” Violations of the

PAYGO requirement were corrected by reductions solely in direct spending programs, while

violations of the discretionary spending limits were remedied by reductions only in discretionary

spending programs.22 Further, savings made on one side of the firewall could not be used to the

advantage of programs on the other side. For example, the cost of tax-cut legislation could not be

Direct spending programs, which typically are funded in substantive legislation, are under the jurisdiction of the

legislative committees of the House and Senate; direct spending includes such programs as Social Security, Medicare,

Medicaid, federal military and civilian retirement programs, and unemployment compensation. Discretionary spending

is provided in, and controlled by, annual appropriations acts under the jurisdiction of the House and Senate

Appropriations Committees. Direct spending also is referred to as mandatory spending. Discretionary spending, for the

most part, funds the routine operations of federal departments and agencies. Direct spending and discretionary spending

together make up all federal spending.

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The Statutory PAYGO Process for Budget Enforcement: 1991-2002

offset by reductions in discretionary spending in annual appropriations acts in order to avoid a

PAYGO sequester.

As mentioned previously, the PAYGO process was set forth in Section 252 of the 1985 Balanced

Budget Act. Procedures dealing with the enforcement of the discretionary spending limits were

set forth in Section 251 of the act, and procedures for the enforcement of the deficit targets were

contained in Section 253. Aside from these core elements, the act also contained sections

providing definitions (Section 250), dealing with the timetable for, and contents of, sequestration

reports and orders (Section 254), exempt programs and activities (Section 255), general

sequestration rules and special rules for selected programs (Section 256), construction of the

budget baseline (Section 257), as well as other sections.23

With regard to direct spending, the PAYGO requirement applied to outlay levels rather than levels

of budget authority. Outlays, rather than budget authority, are compared to revenue levels to

determine the amount of the surplus or deficit.

During the course of the session, OMB was required to provide Congress with a cost estimate for

each budgetary measure within seven days of its enactment, so that compliance with the PAYGO

requirement and discretionary spending limits could be monitored. The cost estimates had to be

based on the economic and technical assumptions used in the President’s most recent budget, and

had to include similar cost estimates prepared by CBO together with an explanation of any

differences between the two sets of estimates.

The PAYGO balances for each fiscal year were recorded on a rolling PAYGO “scorecard,”

maintained by the OMB director, that accumulated the budgetary effects of laws enacted during

the session and in prior years. The threshold test for a PAYGO sequester dealt with how

legislation affected the net cost for a fiscal year on the PAYGO scorecard, not how it changed the

surplus or deficit for that fiscal year in the federal budget.

Under the timetable for the sequestration process, the OMB director issued a sequestration report

at the time the President’s budget was submitted to Congress (the preview report), midway

through the congressional session (the update report), and within 15 days after the end of the

session (the final report). In preparing its update and final sequestration reports, OMB had to use

the economic and technical assumptions that were used in the earlier preview report. The CBO

director issued sequestration reports in advance of the OMB reports, but they were advisory only.

(CBO sequestration reports are not addressed in this report.)

If the OMB director’s final sequestration report indicated that enacted direct spending and

revenue levels had incurred a net cost for the fiscal year on the PAYGO scorecard, then the

President was required to immediately issue a sequestration order to remedy the violation through

automatic, across-the-board spending reductions. If a sequester under this process was required, it

had to occur within 15 calendar days after Congress adjourned at the end of a session and on the

same day as any sequestration tied to enforcement of the discretionary spending limits.

The sequester had to eliminate any net positive balance on the PAYGO scorecard, for that fiscal

year and the prior fiscal year combined, caused by the enactment of legislation during the session

All of these sections, which stem from Part C of the 1985 Balanced Budget Act, are codified beginning at 2 U.S.C.

900.

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

and in prior years. (In order to close any enforcement loophole, the budgetary impact of direct

spending and revenue legislation enacted during a session, but after the OMB director’s final

sequestration report had been issued, was recorded on the PAYGO scorecard in the following

session. Hence, this balance was combined with the balance for the budget year to determine if a

violation had occurred.)

Any required reductions would have been made in non-exempt direct spending programs.

Emergency direct spending and revenue legislation, so designated by the President and in statute,

was not subject to the PAYGO sequestration process. Spending for the Social Security program,

except for administrative expenses, was exempt from sequestration, as were many other direct

spending programs. Any reductions in Medicare spending were limited to 4% and other special

sequestration rules applied to selected programs.

Section 258 of the 1985 Balanced Budget Act provided for the suspension of selected budget

enforcement procedures because of low economic growth or war.24 With regard to low economic

growth (i.e., at least two consecutive quarters of GDP growth below 1% or negative growth), the

suspension procedure would have been triggered automatically by the issuance of a “low-growth

report” by CBO. Under the suspension procedure, certain budget enforcement procedures would

have been suspended if Congress and the President subsequently enacted a “suspension

resolution.” Action on a suspension resolution was required in the Senate but was optional in the

House.

During the years that these suspension provisions were available, the United States was in a

period of sustained low economic growth only twice—in late 1990 through early 1991 and in late

2001 through early 2002. CBO issued low-growth reports three times in 1991, but in each

instance a measure to suspend enforcement procedures was defeated in the Senate by a wide

margin. More recently, CBO issued low-growth reports on October 31, 2001, and on January 30,

2002. In each instance, the Senate Budget Committee reported unfavorably a suspension

resolution that subsequently was defeated on the floor.

No suspension resolutions were enacted, although the Senate considered (and rejected) a total of

five such measures in the 102nd and 107th Congresses. The House did not consider any suspension

resolutions under this procedure. The suspension procedure expired on September 30, 2006.

The suspension of enforcement procedures due to war was not triggered, despite the involvement

of the United States in military operations in Iraq and Afghanistan, because a declaration of war

was not enacted.

In the late 1990s, as the budget moved from an overall deficit to an overall surplus, and as the

prospect of an on-budget surplus emerged, there was some confusion regarding whether the

PAYGO requirement would continue to apply. The concern arose from the fact that the stated

purpose of the PAYGO requirement (in Section 252(a) of the 1985 Balanced Budget Act) referred

only to legislation “that increases the deficit.” In the report accompanying the FY2000 budget

resolution, the House Budget Committee stated:

For more information, see CRS Report RL31068, Suspension of Budget Enforcement Procedures During Low

Economic Growth, by (name redacted) and CRS Report RS20182,

Suspension of Budget Enforcement Procedures During

Hostilities Abroad, by (name redacted).

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

The law is somewhat unclear whether PAYGO lapses when there is an on-budget surplus.

OMB has hinted that PAYGO would indeed lapse if the budget was in balance without

counting excess Social Security receipts.25

In response to this concern, OMB Director Jacob Lew issued a statement indicating that such a

position was not correct, stating “we believe that PAYGO does apply when there is an on-budget

surplus.”26 The controlling factor, as stated previously, was how legislation changed the balance

on the PAYGO scorecard.

Final PAYGO Determinations Made by the OMB Director

Under Section 252 of the 1985 Balanced Budget Act, as amended, the OMB director was required

to issue a final sequestration report each year after the end of the congressional session indicating

whether a PAYGO sequester was required. Although Section 252 required the issuance of such

reports for each year over the 15-year period covering FY1992-FY2006, the OMB director only

issued 12 reports. As mentioned previously, P.L. 107-312 effectively terminated the PAYGO

requirement in late 2002; the final sequestration report for FY2003, issued by the OMB director

on December 6, 2002, was the last report in the series.

In order to determine whether a PAYGO sequester for a fiscal year was required, the OMB

director had to combine the balance for that fiscal year (known as the “budget year”) with the

balance for the preceding fiscal year (known as the “current year”). The purpose behind adding in

the balance for the current year was to fully capture the budgetary effects of any direct spending

and revenue legislation enacted into law after the final sequestration report for a fiscal year had

been issued but before the next congressional session got underway, thereby closing any

enforcement loophole.

Positive balances on the PAYGO scorecard were reflected to the extent that direct spending

increases and revenue reductions in the net were greater than direct spending reductions and

revenue increases in the net. A combined balance for the current year and the fiscal year that was

zero or a negative amount indicated that no sequester was necessary.

Table 1 shows the PAYGO determinations made by the OMB director in his final sequestration

reports for FY1992-FY2003. As the table shows, the final combined balances on the PAYGO

scorecard for all years either were negative amounts or zero. Accordingly, no PAYGO sequester

was required for any fiscal year during this period.

For the first nine fiscal years, FY1992-FY2000, the final combined balances were all negative

amounts, ranging from -$0.011 billion (for FY1998) to -$7.532 billion (for FY1997). The average

combined balance for these nine years was -$2.130 billion. In eight of the nine years, the balance

for the budget year was a negative amount; for the other fiscal year (FY1996), a positive balance

of $0.717 billion for the budget year was more than offset by a negative balance of -$1.822 for

the current fiscal year.

See the report of the House Budget Committee to accompany H.Con.Res. 68 (H.Rept. 106-73), Mar. 23, 1999, at

page 87.

Letter of April 6, 1999, from OMB Director Jacob Lew to the Honorable John Spratt, then the ranking minority

member of the House Budget Committee.

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

Table 1. Final PAYGO Determinations by the OMB Director:

Scorecard Balances for FY1992-FY2006

(amounts in $ billions)

Final PAYGO Balancesb

Budget Year

Combined

Balance

PAYGO

Sequester

Required?

-a

-1.095

102/2

1.753

-1.813

-0.059

1994

103/1

-2.696

-0.026

-2.722

1995

103/2

-0.480

-2.009

-2.489

1996

104/1

-1.822

0.717

-1.105

1997

104/2

-1.231

-6.301

-7.532

1998

105/1

-0.011

1999

105/2

-0.271

-0.872

-1.143

2000

106/1

0.058

-3.072

-3.014

2001

106/2

2002

107/1

2003

107/2

2004

—c

2005

—c

2006

—c

Fiscal

Year

Congress/

Session

1992

102/1

1993

Current Year

Source: Prepared by the Congressional Research Service using information provided in the OMB director’s final

sequestration reports for FY1992-FY2003.

Impact less than $500,000.

The final PAYGO balances reflect the removal of both costs and savings from the scorecard due to

emergency designations and directed scorekeeping provisions in law.

The final PAYGO balances for FY2003-FY2006, as set forth in the OMB final sequestration report for

FY2003, were reduced to zero in compliance with P.L. 107-312.

For the remaining six fiscal years, FY2001-FY2006, the final combined balances on the PAYGO

scorecard all were zero.

While the OMB director’s final determinations indicated compliance with the PAYGO

requirement in all years, in some cases the balances reflected adjustments due to emergency

requirements or directed scorekeeping provisions in law that prevented a sequester from

occurring, as discussed in subsequent sections of this report.

Table 2 shows the 5-year total balances on the PAYGO scorecard (including the current year, the

budget year, and the three succeeding outyears) as scored by the OMB director in each of his final

sequestration reports. While the outyear balances were not used in a sequestration report to

determine whether a PAYGO sequester was required for that year, they had to be taken into

account in sequestration reports for succeeding years.

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

Table 2. Five-Year Total Balances on the PAYGO Scorecard for FY1992-FY2006

in OMB Final Sequestration Reports

(amounts in $ billions)

Fiscal Year

Congress/Session

Combined Balancea

Five-Year Total

Balance

1992

102/1

-1.095

-3.712

1993

102/2

-0.059

-3.097

1994

103/1

-2.722

-4.576

1995

103/2

-2.489

-3.003

1996

104/1

-1.105

1.188b

1997

104/2

-7.532

-25.852

1998

105/1

-0.011

0.004

1999

105/2

-1.143

-5.067

2000

106/1

-3.014

10.187

2001

106/2

53.854

2002

107/1

371.122

2003

107/2

0.000

2004

—c

0.000

2005

—c

0.000

2006

—c

0.000

Source: Prepared by the Congressional Research Service using information provided in the OMB director’s final

sequestration reports for FY1992-FY2003.

The final PAYGO balances reflect the removal of both costs and savings from the scorecard due to

emergency designations and directed scorekeeping provisions in law. The “combined balance” is the balance

for the current year and the budget year combined.

The sequestration report for FY1996 provided balances only for four fiscal years (FY1995-FY1998).

The final PAYGO balances for FY2003-FY2006, as set forth in the OMB final sequestration report for

FY2003, were reduced to zero in compliance with P.L. 107-312.

In six of the first eight fiscal years (FY1992-FY1999), according to Table 2, the 5-year total

balances remained negative. They ranged in total from -$3.003 billion (for FY1995) to -$25.852

billion (for FY1997). In the other two years, the 5-year total balances changed to a modest

positive amount, ranging in total from $0.004 billion (for FY1998) to $1.188 billion (for

FY1996).

In the next three fiscal years, FY2000-FY2002, the pattern changed significantly. A negative

combined balance for FY2000 of -$3.014 billion changed to a positive 5-year total balance of

$10.187 billion. The combined balances of zero for each of FY2001 and FY2002 changed to

positive 5-year total balances of $53.854 billion and $371.122 billion, respectively.

As indicated previously, the final PAYGO balances for FY2003-FY2006, as set forth in the OMB

final sequestration report for FY2003, were reduced to zero in compliance with P.L. 107-312.

The multi-year balances on the PAYGO scorecard, as scored by the OMB director on a year-byyear basis in each of his final sequestration reports, are presented in Table 3. In some years, as

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

Table 3 shows, the OMB director provided balances for more than five fiscal years; in the

sequestration report for FY1996, balances were provided only for four fiscal years (FY1995FY1998).

Emergency Requirements

Section 252 of the 1985 Balanced Budget Act provided that any provision of direct spending or

revenue legislation could be designated by the President and Congress as an “emergency

requirement.” While the President could make his designation in various ways, a designation by

Congress had to be made in the statute. The budgetary impact of any provision so designated was

not scored on the PAYGO scorecard. An emergency exemption also was authorized for

discretionary spending provisions under the parallel enforcement mechanism, the discretionary

spending limits.

Although the emergency designation was used often for discretionary spending provisions in

annual appropriations acts, it rarely was used for direct spending or revenue provisions. The most

significant emergency designation under the PAYGO process applied to the Job Creation and

Worker Assistance Act (P.L. 107-147), which was signed into law on March 9, 2002. Section 502

(116 Stat. 58) of the act stated:

Congress designates as emergency requirements pursuant to section 252(e) of the Balanced

Budget and Emergency Deficit Control Act of 1985 the following amounts:

(1) An amount equal to the amount by which revenues are reduced by this Act below the

recommended levels of Federal revenues for fiscal year 2002, the total of fiscal years 2002

through 2006, and the total of fiscal years 2002 through 2011, provided in the conference

report accompanying H. Con. Res. 83, the concurrent resolution on the budget for fiscal year

2002.

(2) Amounts equal to the amounts of new budget authority and outlays provided in this

Act in excess of the allocations under section 302(a) of the Congressional Budget Act of

1974 to the Committee on Finance of the Senate for fiscal year 2002, the total of fiscal years

2002 through 2006, and the total of fiscal years 2002 through 2011.

According to the OMB director’s final sequestration report for FY2003, the effect of the

emergency designation for P.L. 107-147 was to remove net costs of $88.723 billion from the

PAYGO scorecard over the period covering FY2002-FY2006, as follows:

•

FY2002, costs of $46.538 billion;

•

FY2003, costs of $36.878 billion;

•

FY2004, costs of $29.022 billion;

•

FY2005, savings of $3.001 billion; and

•

FY2006, savings of $20.714 billion.

Congressional Research Service

Table 3. Final PAYGO Scorecard Balances for FY1992-FY2006: Multi-Year Balances (by Varying Timeframes)

(amounts in $ billions)

Calendar Year

(Congress/Session)

Timeframe 1

Fiscal Year

1991

1992

1993

1994

1995

1996

1997

1998

-a

-1.095

-1.136

-0.476

-1.005

—

+1.753

-1.813

-0.182

-0.507

-2.348

+0.348

—

-2.696

-0.026

-0.971

-0.473

-0.410

-0.521

—

-0.480

-2.009

-0.148

-0.357

-0.009

1995 (104/1)

—

-1.822

+0.717

+0.778

+1.515

Timeframe 2

1996

1997

1998

1999

2000

2001

2002

2003

-1.231

-6.301

-3.401

-6.449

-8.470

-9.266

-11.078

—

-0.011

+0.006

+0.003

+0.001

—

-0.271

-0.872

-2.927

-0.833

-0.164

-1.092

FY1992 PAYGO Report

1991 (102/1)

FY1993 PAYGO Report

1992 (102/2)

FY1994 PAYGO Report

1993 (103/1)

FY1995 PAYGO Report

1994 (103/2)

FY1996 PAYGO Report

FY1997 PAYGO Report

1996 (104/2)

FY1998 PAYGO Report

1997 (105/1)

FY1999 PAYGO Report

1998 (105/2)

CRS-14

Calendar Year

(Congress/Session)

Fiscal Year

Timeframe 3

1999

2000

2001

2002

2003

2004

2005

2006

+0.058

-3.072

+4.055

+7.384

+1.762

+2.562

—

+16.053

+18.465

+19.336

+20.673

—

+110.694

+129.857

+130.571

+134.698

—

FY2000 PAYGO Report

1999 (106/1)

FY2001 PAYGO Report

2000 (106/2)

FY2002 PAYGO Report

2001 (107/1)

FY2003 PAYGO Report

2002 (107/2)

Source: Prepared by the Congressional Research Service using information provided in the OMB director’s final sequestration reports for FY1992-FY2003. These reports

subsequently were printed as House documents (except for FY1996, FY2002, and FY2003), as follows:

FY1992—January 13, 1992, H.Doc. 102-181 (January 28, 1992);

FY1993—October 23, 1992, H.Doc. 103-27 (January 21, 1993);

FY1994—December 10, 1993, H.Doc. 103-201 (January 26, 1994);

FY1995—December 16, 1994, H.Doc. 104-16 (January 4, 1995);

FY1997—November 15, 1996, H.Doc. 105-30 (February 4, 1997);

FY1998—November 24, 1997, H.Doc. 105-188 (February 3, 1998);

FY1999—December 10, 1998, H.Doc. 105-356 (December 19, 1998);

FY2000—January 25, 2000, H.Doc. 106-182 (January 31, 2000); and

FY2001—January 16, 2001, H.Doc. 107-31 (January 30, 2001).

Note: Negative amounts (-) equal savings; positive amounts (+) equal costs.

CRS-15

Less than $500 million.

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

Another significant emergency designation occurred with respect to the Air Transportation Safety

and System Stabilization Act (P.L. 107-42), which was signed into law on September 22, 2001.

Section 101(b) (115 Stat. 230) of the act designated direct spending provisions in Title I as an

emergency requirement. According to OMB, these provisions amounted to $8.000 billion over

three years ($2.328 billion for FY2001, $4.172 billion for FY2002, and $1.500 billion for

FY2003). The act also included direct spending and revenue provisions, not designated an

emergency requirement, that were expected to yield costs of $6.130 billion over FY2001-FY2004

and no costs for FY2005-FY2006.

According to CBO, provisions in two other measures, Section 6 (107 Stat. 34-35) of the

Emergency Unemployment Compensation Amendments of 1993 (P.L. 103-6) and Section 3309(c)

(112 Stat. 745) of the Internal Revenue Service Restructuring and Reform Act of 1996 (P.L. 105206) contained costs designated as emergency requirements (for extended unemployment benefits

and a waiver of interest penalties on underpayments of income taxes filed by taxpayers in a

presidentially-declared disaster area). CBO estimated the impact on the 1993 and 1996 acts,

respectively, at $5.7 billion for FY1993-FY1994 and $0.130 billion for FY1998-FY2003. No

information on the budgetary impact of the emergency requirements was provided by the OMB

director in his sequestration reports.

Statutory Interventions Involving Directed

Scorekeeping

In addition to availing itself of the authority under the 1985 Balanced Budget Act to designate

direct spending and revenue changes in legislation as emergency requirements, Congress and the

President also modified the operation of the PAYGO process through interventions using regular

legislative procedures. In these instances, Congress and the President included “directed

scorekeeping” provisions in legislation instructing the OMB director on how to treat the

budgetary effects of legislation with regard to the PAYGO scorecard.

Successful Interventions

Congress and the President enacted legislation intervening in the operation of the PAYGO process

largely to deal with two different types of problems. First, in some years, the enactment of deficitreduction measures would have resulted in large negative balances on the PAYGO scorecard that

were not intended. The savings reflected in these balances could have been used to offset direct

spending increases or revenue reductions that were not contemplated by the budget resolution.

Second, in more recent years, the budget resolution recommended significant reductions in

revenues, coupled with increases in direct spending, that would have incurred substantial positive

balances (reflecting net costs) on the PAYGO scorecard. The barrier between the PAYGO process

and procedures to enforce the discretionary spending limits did not permit savings from

constraints on the growth of discretionary spending to offset or “pay for” revenue reductions.

Consequently, the enactment of legislation imposing tax cuts and direct spending increases

threatened to trigger a PAYGO sequester in some years.

As a result of these two concerns, Congress and the President enacted provisions in at least seven

different laws intervening significantly in the normal operation of the PAYGO requirement. The

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

interventions involved scorekeeping directions to the OMB director that prohibited him from

counting direct spending or revenue changes in certain legislation on the PAYGO scorecard, or

that instructed him to reduce balances on the PAYGO scorecard or to set them to zero.

Additionally, the OMB director sometimes was directed in statute to reclassify direct spending or

revenue provisions in annual appropriations acts so that they would not be scored under the

discretionary spending limits. In recent years, Congress and the President several times used

omnibus appropriations measures to bring action on regular appropriations acts for a fiscal year to

a close. Because the congressional leadership sometimes used such measures as a legislative

vehicle for direct spending and revenue provisions, the directed scorekeeping provisions

prevented the Appropriations Committees from being held responsible under budget enforcement

procedures for budgetary provisions that were the responsibility of other House and Senate

committees.

Statutory interventions in the PAYGO process involving directed scorekeeping, and their

implications for sequesters, are summarized in Table 4. The text of the directed scorekeeping

provisions is provided in Table 5. Table 6 provides year-by-year detail on the budgetary effects

of the directed scorekeeping provisions; the table divides them into two categories—those in

which savings were removed from the PAYGO scorecard or not counted, and those in which costs

were removed or not counted.

As Table 4 and Table 6 show, in the first three instances of directed scorekeeping, the OMB

director was instructed not to count savings from legislation on the scorecard, to remove savings

balances from the scorecard, or to do both (so that the savings could not be used to offset

legislation considered in subsequent sessions). The OMB director

•

removed a total of $504.763 billion in savings stemming from the Omnibus

Budget Reconciliation Act of 1993 from the FY1994-FY1998 balances on the

scorecard;

•

removed $6.301 billion in savings stemming from the Omnibus Consolidated

Appropriations Act for FY1997 from the FY1997 balance on the scorecard; and

•

removed $41.144 billion in prior savings from the FY1997-FY2002 balances on

the scorecard and did not count $73.700 billion in savings for the same period

stemming from the Balanced Budget Act of 1997 and the Taxpayer Relief Act of

1997.

The fourth measure, the Consolidated Appropriations Act for FY2000, prohibited counting net

costs of $15.193 billion for FY2000-FY2004 on the scorecard. (Even if the costs of $1.552 billion

for FY2000 had been counted, a sequester for FY2000 would not have occurred because a

combined savings balance of $1.462 billion would have remained). In addition, the act set

balances for FY2000-FY2004 on the scorecard to zero (effective January 3, 2000). This action

both removed savings from the scorecard ($3.072 billion for FY2000) and costs (total costs of

$15.820 billion for FY1999 and FY2001-FY2004).

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

Table 4. Summary of Statutory Interventions in the PAYGO Process

Did Intervention

Prevent a Sequester?

Fiscal

Year

Congress/

Session

Budget

Year

Future

Years

1992

102/1

[none]

—

1993

102/2

[none]

—

1994

103/1

Omnibus Budget Reconciliation Act of 1993: removed

a total of $504.763 billion in savings from the FY1994-FY1998

balances on the scorecard.

1995

103/2

[none]

—

1996

104/1

[none]

—

1997

104/2

Omnibus Consolidated Appropriations Act for

FY1997: removed $6.301 billion in savings from the FY1997

balance on the scorecard.

1998

105/1

Balanced Budget Act (BBA) of 1997: removed a total of

$41.144 billion in savings from the FY1997-FY2002 balances

on the scorecard. Also, prohibited counting net savings of

$73.700 billion for FY1997-FY2002 from the BBA of 1997 and

the Taxpayer Relief Act of 1997.

1999

105/2

[none]

—

2000

106/1

Consolidated Appropriations Act for FY2000:

prohibited counting net costs of $15.193 billion for FY2000FY2004 on the PAYGO scorecard (even if the costs of $1.552

billion for FY2000 had been counted, a sequester for FY2000

would not have occurred because a combined savings balance

of $1.462 billion would have remained). Also, set balances for

FY2000-FY2004 on the scorecard to zero (effective January 3,

2000), thereby removing from the scorecard FY2000 savings

of $3.072 billion and FY1999 and FY2001-FY2004 costs of

$15.820 billion.

Yes

2001

106/2

Consolidated Appropriations Act for FY2001:

prohibited scoring the direct spending and revenue changes

made in the act under the discretionary spending limits, but

required them to be scored on the PAYGO scorecard. Also,

set the balance on the scorecard for FY2001 to zero, thereby

removing the combined FY1999-FY2000 costs of $10.542

billion from the scorecard.

Yes

2002

107/1

Defense Appropriations Act for FY2002: removed

costs of $75.271 billion for the current year (FY2001) and

$55.008 billion for the budget year (FY2002) from the

scorecard.

Yes

2003

107/2

Act to Reduce Preexisting PAYGO Balances: removed

a total of $559.693 billion in costs from the FY2002-FY2006

balances on the scorecard.

Yes

Intervention in the PAYGO Process

Source: Prepared by the Congressional Research Service using information provided in the OMB director’s

final sequestration reports for FY1992-FY2003.

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

In the remaining three cases, directed scorekeeping resulted in the removal from the PAYGO

scorecard of costs that would have led to a $10.5 billion sequester for FY2001, a $130.279 billion

sequester for FY2002, and sequesters in excess of $100 billion from FY2003 through FY2006. In

the first two of these cases, the legislative vehicles were annual appropriations acts considered

toward the very end of the session (the Consolidated Appropriations Act for FY2001 and the

Defense Appropriations Act for FY2002); in the final instance, the legislative vehicle was a freestanding law devoted solely to this purpose.

The seven measures containing directed scorekeeping provisions did not make adjustments in the

FY1991-FY1993 balances on the PAYGO scorecard. For FY1994-FY2000, the net effect of the

adjustments each year was to remove savings balances from the scorecard or to not count savings

provisions in legislation. These net effects ranged from $13.991 billion (for FY1999) to $140.221

billion (for FY1998). The cumulative effect of all provisions to remove or not count savings

through FY2006 was $628.980 billion.

For FY2001-FY2006, the net effect of the adjustments each year was to remove cost balances

from the scorecard or to not count cost provisions in legislation. These net effects ranged from

$9.214 billion (for FY2002) to $150.790 billion (for FY2004). The cumulative effect of all

provisions to remove or not count costs through FY2006 was $731.527 billion.

In the net, the cumulative effect of all directed scorekeeping provisions through FY2006 was to

remove or not count costs of $102.547 billion.

Circumstances surrounding the cases in which costs were removed from the PAYGO scorecard

are discussed by fiscal year in more detail below.

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

Table 5.Text of Major Statutory Provisions Intervening

in the Operation of the PAYGO Process

Statutory Provision

Omnibus Budget Reconciliation

Act of 1993

P.L. 103-66 (August 10, 1993)

Section 14003(c); 107 Stat. 685

Omnibus Consolidated

Appropriations Act for FY1997

P.L. 104-208 (September 30, 1996)

Division A, Section 4001; 110 Stat.

3009-500

Text of Provision

Sec. 14003. Enforcing Pay-As-You-Go.

and Budget shall reduce the balances of direct spending and receipts

legislation applicable to each fiscal year under section 252 of the Balanced

Budget and Emergency Deficit Control Act of 1985 by an amount equal to

the net deficit reduction achieved through the enactment in this Act of

direct spending and receipts legislation for that year.

Sec. 4001. Adjustment of PAYGO Balances.

For purposes of section 252 of the Balanced Budget and Emergency Deficit

Control Act of 1985, on the calendar day after the Director of the Office

of Management and Budget issues the final sequestration report for fiscal

year 1997, the Director and the Director of the Congressional Budget

Office shall change the balances (as computed pursuant to section 252(b)

of that Act) of direct spending and receipts legislation—

(1) for fiscal year 1997 to zero if such balance for the fiscal year is not an

increase in the deficit.

Balanced Budget Act of 1997

P.L. 105-33 (August 5, 1997)

Section 10213; 111 Stat. 712

Sec. 10213. Reduction of Preexisting Balances and Exclusion of Effects of

This Act From PAYGO Scorecard.

Upon the enactment of this Act, the Director of the Office of Management

and Budget shall—

(1) reduce any balances of direct spending and receipts legislation for any

fiscal year under section 252 of the Balanced Budget and Emergency Deficit

Control Act of 1985 to zero; and

(2) not make any estimates of changes in direct spending outlays and

receipts under subsection (d) of that section for any fiscal year resulting

from the enactment of this Act or of the Taxpayer Relief Act of 1997.

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

Statutory Provision

Consolidated Appropriations Act

for FY2000

P.L. 106-113 (November 29, 1999)

Division B, Section 1001(a)-(c); 113

Stat. 1536-1537

Text of Provision

Sec. 1001. Paygo Adjustments.

(a) Notwithstanding Rule 3 of the Budget Scorekeeping Guidelines set

forth in the joint explanatory statement of the committee of conference

accompanying Conference Report No. 105-217, legislation enacted in this

division by reference in the paragraphs after paragraph 4 of subsection

1000(a) that would have been estimated by the Office of Management and

Budget as changing direct spending or receipts under section 252 of the

Balanced Budget and Emergency Deficit Control Act of 1985 were it

included in an Act other than an appropriations Act shall be treated as

direct spending or receipts legislation as appropriate, under section 252 of

the Balanced Budget and Emergency Deficit Control Act of 1985, but shall

be subject to subsection (b).

(b) The Director of the Office of Management and Budget shall not make

any estimates of changes in direct spending outlays and receipts under

section 252(d) of the Balanced Budget and Emergency Deficit Control Act

of 1985 for any fiscal year resulting from enactment of the legislation

referenced in the paragraphs after paragraph 4 of subsection 1000(a) of this

division.

Budget shall change any balances of direct spending and receipts legislation

for any fiscal year under section 252 of the Balanced Budget and

Emergency Deficit Control Act of 1985 to zero.

Consolidated Appropriations Act

for FY2001

P.L. 106-554 (December 21, 2000)

Section 2; 114 Stat. 2763-2764

Sec. 2. (a) Notwithstanding Rule 3 of the Budget Scorekeeping Guidelines

set forth in the joint explanatory statement of the committee of

conference accompanying Conference Report 105-217, legislation enacted

in section 505 of the Department of Transportation and Related Agencies

Appropriations Act, 2001, section 312 of the Legislative Branch

Appropriations Act, 2001, titles X and XI of H.R. 5548 (106th Congress) as

enacted by H.R. 4942 (106th Congress), division B of H.R. 5666 (106th

Congress) as enacted by this Act, and sections 1(a)(5) through 1(a)(9) of

this Act that would have been estimated by the Office of Management and

Budget as changing direct spending or receipts under section 252 of the

Balanced Budget and Emergency Deficit Control Act of 1985 were it

included in an Act other than an appropriations Act shall be treated as

direct spending or receipts legislation, as appropriate, under section 252 of

the Balanced Budget and Emergency Deficit Control Act of 1985.

(b) In preparing the final sequestration report required by section 254(f

)(3) of the Balanced Budget and Emergency Deficit Control Act of 1985 for

fiscal year 2001, in addition to the information required by that section, the

Director of the Office of Management and Budget shall change any balance

of direct spending and receipts legislation for fiscal year 2001 under section

252 of that Act to zero.

Defense Appropriations Act for

FY2002

P.L. 107-117 (January 10, 2002)

Division C, Section 102; 115 Stat. 2342

Congressional Research Service

Sec. 102. Pay-As-You-Go Adjustment.

In preparing the final sequestration report for fiscal year 2002

required by section 254(f)(3) of the Balanced Budget and Emergency Deficit

Control Act of 1985 (2 U.S.C. 904(f)(3)), the Director of the Office of

Management and Budget shall change any balance of direct spending and

receipts legislation for fiscal years 2001 and 2002 under section 252 of that

Act to zero.

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

Statutory Provision

To Reduce Preexisting PAYGO

Balances, and for Other Purposes

P.L. 107-312 (December 2, 2002)

Section 1; 116 Stat. 2456

Text of Provision

Sec. 1. Reduction of Preexisting PAYGO Balances.

Upon the enactment of this Act, the Director of the Office of

Management and Budget shall reduce any balances of direct spending and

receipts legislation for all fiscal years under section 252 of the Balanced

Budget and Emergency Deficit Control Act of 1985 to zero.

Source: Prepared by the Congressional Research Service using information obtained from the Legislative

Information System.

Congressional Research Service

Table 6. Adjustments to PAYGO Balances Through Statutory Intervention

(Directed Scorekeeping): FY1994-FY2006

(amounts in $ billions)

Fiscal Year

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Savings Removed or Not Counted

Omnibus Budget Reconciliation Act of 1993

-46.8

-82.7

-100.6

-128.9

-145.8

—

Omnibus Consolidated Appropriations Act for FY1997

—

-6.3

—

-1.1

+5.6

-14.0

-22.1

-23.2

-60.1

—

-3.1

—

-140.2

-14.0

-25.1

-23.26

-60.1

—

Balanced Budget Act of 1997

—

Consolidated Appropriations Act for FY2000

—

Total, Savings Removed or Not Counted

-46.8

-82.7

-100.6

-136.3

Costs Removed or Not Counted

Consolidated Appropriations Act for FY2000

—

+0.1

+1.6

+9.6

+12.0

+4.0

+3.9

—

+10.5

—

+75.3

+55.0

—

+2.3

+125.1

+146.9

+141.6

+143.7

Consolidated Appropriations Act for FY2001

—

Defense Appropriations Act for FY2002

—

Act to Reduce Preexisting PAYGO Balances

—

CRS-23

—

Fiscal Year

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

—

+0.1

+1.6

+95.3

+69.3

+129.1

+150.8

+141.6

+143.7

+141.6

+143.7

Total, Costs Removed or Not Counted

—

Net Impact of Savings Removed or Not Counted (-) and Costs Removed or Not Counted (+)

-46.8

-82.7

-100.6

-136.3

-140.2

-14.0

-23.5

+72.2

+9.2

+129.1

+150.8

Source: Prepared by the Congressional Research using information provided in the OMB director’s final sequestration reports for FY1992-FY2003. These reports

subsequently were printed as House documents (except for FY1996, FY2002, and FY2003), as follows:

FY1992—January 13, 1992, H.Doc. 102-181 (January 28, 1992);

FY1993—October 23, 1992, H.Doc. 103-27 (January 21, 1993);

FY1994—December 10, 1993, H.Doc. 103-201 (January 26, 1994);

FY1995—December 16, 1994, H.Doc. 104-16 (January 4, 1995);

FY1997—November 15, 1996, H.Doc. 105-30 (February 4, 1997);

FY1998—November 24, 1997, H.Doc. 105-188 (February 3, 1998);

FY1999—December 10, 1998, H.Doc. 105-356 (December 19, 1998);

FY2000—January 25, 2000, H.Doc. 106-182 (January 31, 2000); and

FY2001—January 16, 2001, H.Doc. 107-31 (January 30, 2001).

Note: Negative amounts (-) equal savings; positive amounts (+) equal costs.

CRS-24

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

FY2000

On November 29, 1999, the Consolidated Appropriations Act for FY2000 was enacted into law as

P.L. 106-113. In addition to prohibiting the scoring of direct spending and revenue changes made

in the act under the discretionary spending limits, Section 1001 (in Division B) of the act also

prohibited the scoring of these changes on the PAYGO scorecard. This prevented costs of $1.552

billion for FY2000 (and costs of $15.193 billion for FY2000-FY2004) from being added to the

PAYGO scorecard. However, even if the $1.552 billion for FY2000 had been added to the

PAYGO scorecard, it would not have triggered a PAYGO sequester for that year because a

savings balance of $1.462 billion would have remained.

Section 1001 of the act also instructed the OMB director to change any balances on the scorecard

to zero on January 3, 2000. This action removed from the scorecard the FY2000 savings of

$3.072 billion and costs for FY1999 and FY2001-FY2004 of $15.820 billion (from the

Consolidated Appropriations Act and other measures) that could have triggered PAYGO

sequesters in those years if not offset or otherwise prevented.

FY2001

At the end of the 2000 session, Congress and the President wrapped up business by enacting the

Consolidated Appropriations Act for FY2001. The measure, which became P.L. 106-554 on

December 21, 2000, enacted regular appropriations as well as significant direct spending and

revenue legislation by cross-reference. Section 2 of the act prohibited scoring the direct spending

and revenue changes made in the act under the discretionary spending limits, but did require them

to be scored on the PAYGO scorecard. This resulted in costs of $7.170 billion for FY2001 (and

costs of $49.463 billion for FY2001-FY2005) being added to the PAYGO scorecard.

Further, Section 2 of the act instructed the OMB director to change the balance on the scorecard

for FY2001 to zero in the course of preparing the final sequestration report for that year. This

action removed the net combined FY2000-FY2001 cost of $10.542 billion from the scorecard,

thereby preventing a PAYGO sequester. Costs on the PAYGO scorecard for FY2002-FY2005

amounting to $74.527 billion, which would have triggered PAYGO sequesters for those years if

not subsequently offset or otherwise prevented, were not affected.

FY2002

One of the last of the regular appropriations acts for FY2002 to be considered during the 2001

session, the Defense Appropriations Act, became the legislative vehicle for preventing a PAYGO

sequester that year. The bill was signed into law on January 10, 2002, as P.L. 107-117.

Section 102 (in Division C) of the act prevented a PAYGO sequester for FY2002 by requiring the

OMB director to set the balances on the PAYGO scorecard for FY2001 and FY2002 to zero.

According to the OMB director’s final sequestration report, the combined balance for FY2001FY2002 on the scorecard before the required adjustment was $130.279 billion in costs.

In its earlier sequestration update report, OMB had noted maximum savings achievable from a

PAYGO sequester for FY2002 of $33.3 billion. Consequently, had a full PAYGO sequester

(including a 4% cut in Medicare) been implemented, there still would have been a balance on the

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

scorecard of nearly $100 billion. The remaining PAYGO balances for FY2003-FY2006, ranging

from $110 billion to $135 billion a year, were not affected by the required adjustment.

FY2003 and Subsequent Years

On January 23, 2002, shortly after the second session of the 107th Congress began, OMB

indicated in the preview sequestration report for FY2003 that the balance for that fiscal year on

the PAYGO scorecard was $110.694 billion. The balance for FY2002, which was to be combined

with the FY2003 balance to determine whether a sequester for FY2003 would be required,

previously had been reduced to zero. The balances for the remaining years on the scorecard,

FY2004-FY2006, were $130 billion, $131 billion, and $135 billion, respectively.

As discussed earlier, although the House and Senate did not reach agreement in 2002 on a budget

resolution for FY2003, it was clear that neither house intended to pursue policies that would

eliminate the FY2003 balance on the PAYGO scorecard through revenue increases and direct

spending reductions. Rather, it was expected that Congress and the President would agree to use

procedural means for preventing a PAYGO sequester from occurring, as had been done in recent

years.

During the session, Congress and the President enacted legislation that added net costs to the

PAYGO scorecard for FY2002 and increased the existing net costs for FY2003. In the update

sequestration report for FY2003, OMB indicated that the combined balance had increased to

$125.6 billion ($2.2 billion for FY2002 and $123.4 billion for FY2003). According to OMB

estimates, only $31.1 billion could be cut under a PAYGO sequester because most direct spending

was exempt from sequestration; consequently, a violation of more than $90 billion would have

remained even if a full PAYGO sequester had occurred.

The PAYGO measure with the largest budgetary impact enacted during the 2002 session was an

economic stimulus measure, the Job Creation and Worker Assistance Act (P.L. 107-147), signed

into law on March 9, 2002. OMB estimated the net cost of the act as $46.538 billion for FY2002,

$36.878 billion for FY2003, and $88.723 billion over the five-year period covering FY2002FY2006. (As indicated previously, Section 502 of the act designated these amounts as emergency

requirements, thereby preventing them from being added to the scorecard.)

The House and Senate, in order to prevent a PAYGO sequester for FY2003 from occurring after

the end of the session, passed H.R. 5708 (entitled “To Reduce Preexisting PAYGO Balances, and

Other Purposes”). In addition to eliminating the threat of a sequester for FY2003 by reducing the

PAYGO balances for FY2002 and FY2003 to zero, it also eliminated the sequester threat for

FY2004-FY2006 by setting those balances at zero as well. President George W. Bush signed the

bill into law on December 2, 2002, as P.L. 107-312.

The House passed the bill on November 14 by a vote of 366-19. During House consideration of

the bill, the PAYGO balance reductions for FY2004-2006 engendered some controversy. A

motion to recommit with instructions that would have made reductions in the PAYGO balances

for FY2004-FY2006 contingent upon the submission by the President of a balanced budget (on an

on-budget basis), offered by Representative Dennis Moore, a Democratic member of the House

Budget Committee, was rejected by a vote of 187-201. The Senate passed H.R. 5708 the next day

without amendment by unanimous consent.

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

In his final sequestration report for FY2003, issued on December 6, 2002, the OMB director

indicated that the combined balance for legislation enacted through September 30, 2002, was

$127.386 billion, reflecting a $2.320 billion balance for FY2002 and a $125.066 billion balance

for FY2003. Balances over the full period, covering FY2002-FY2006, amounted to $559.693

billion. As required by P.L. 107-312, the OMB director set the final balances for all fiscal years

on the PAYGO scorecard to zero.

Unsuccessful Efforts to Intervene in the PAYGO Process

In addition to the successful efforts to intervene in the PAYGO process discussed above, there

were several unsuccessful ones involving instructions to the OMB director to reset PAYGO

balances or not to score direct spending and revenue changes. The discussion below provides

several examples.

In the 105th Congress, the House considered the Taxpayer Relief Act of 1998 (H.R. 4579), its

principal vehicle for implementing large revenue reductions. As passed by the House on

September 26, 1998, the measure instructed the OMB director “not to make any estimates of

changes in receipts” on the PAYGO scorecard due to the enactment of the bill (see Section 607).

Had the measure been enacted into law, the tax cuts would have taken effect without triggering a

PAYGO sequester for FY1999.

One obstacle to this approach is that any legislation directly or indirectly changing the budget

process is prohibited by Section 306 of the 1974 Congressional Budget Act unless it was reported

by the House or Senate Budget Committee, as appropriate (or unless the committee was

discharged from further consideration). In the case of H.R. 4579, therefore, the House needed to

waive the prohibition so that it could consider the bill; the House did so by adopting a special

rule, H.Res. 552, that waived all points of order against its consideration.

During the first session of the 106th Congress, a similar directed scorekeeping provision was

included by the House in Section 1801 of the Taxpayer Relief Act of 1999 (H.R. 2488), but was

dropped in the Senate due to difficulties in securing the 60 votes needed to obtain a waiver of

Section 306. President Clinton vetoed the measure on September 23, 1999, in part because the

absence of the directed scorekeeping provision would have led to a sequester.

Toward the end of the 106th Congress, the congressional leadership attempted to use a Housepassed bill amending the Small Business Investment Act, H.R. 2614, as a vehicle for wideranging issues, including significant revenue reductions. Under the conference agreement on H.R.

2614, the bill would have enacted five other measures by cross-reference, including H.R. 5542,

the Taxpayer Relief Act of 2000 (as introduced on October 25, 2000). Section 731(a) of H.R.

5542 would have prevented a PAYGO sequester for FY2001 by instructing the OMB director to

reset the PAYGO balance for that year to zero when preparing the final sequestration report. Final

congressional action on the measure faltered at the end of October 2000.

Major PAYGO Legislation

During the 12 calendar years that the PAYGO process operated, from 1991 through 2002, the

OMB director issued separate cost estimates on nearly 600 direct spending and revenue measures.

In addition, hundreds of other direct spending and revenue measures—each with an impact of less

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

than $500 thousand—were identified by the OMB director, but separate cost estimates were not

prepared for them.

Of these hundreds of PAYGO measures, 65 may be considered to be “major” PAYGO legislation

on the basis that the OMB director determined that they had an impact of $100 million or more in

at least one of the first five fiscal years scored (including the current year, the budget year, and the

first three outyears).

Table 7 shows the net budgetary impact of the 65 major PAYGO measures on a calendar year

basis for 1991-2002. For each calendar year, the balances reflect the 5-year impact of all PAYGO

measures enacted during that year.

Table 7. Five-Year Balances of 65 Major PAYGO Measures

Enacted by Calendar Year (CY1991-CY2002)

(amounts in $ billions)

Calendar

Year

Congress/

Session

Current

Year

Budget

Year

Outyear 1

Outyear 2

Outyear 3

Five-Year

Total

Balancea

1991

102/1

0.000

-1.131

-1.191

-0.511

-1.043

-3.876

1992

102/2

2.885

-0.699

0.361

0.508

-0.993

2.062

1993

103/1

-46.752

-81.860

-100.765

-129.430

-146.315

-505.122

1994

103/2

-0.476

-1.034

0.224

0.066

1.163

-0.057

1995

104/1

0.187

0.974

1.243

1.633

—b

4.037 b

1996

104/2

-2.010

-7.109

-4.748

-6.596

-8.269

-28.732

1997

105/1

-1.106

9.100

-7.600

-13.600

-13.900

-27.106

1998

105/2

-0.119

-0.764

-2.884

-0.856

-0.258

-4.881

1999

106/1

0.000

1.439

10.384

12.112

5.131

29.066

2000

106/2

0.040

10.279

15.922

18.334

19.165

63.740

2001

107/1

77.596

43.115

93.667

110.483

109.859

434.720

2002

107/2

48.856

51.251

46.104

8.050

-11.680

142.582

Source: Prepared by the Congressional Research Service using information provided in the OMB director’s final

sequestration reports for FY1992-FY2003.

The PAYGO balances in this table reflect emergency requirements in two acts (the Air Transportation

Safety and System Stabilization Act, P.L. 107-42, and the Job Creation and Worker Assistance Act, P.L. 107147); they do not reflect the costs and savings removed from the scorecard pursuant to directed

scorekeeping provisions.

The sequestration report for FY1996, which covered PAYGO legislation enacted in calendar year 1995,

only provided balances for four fiscal years.

These balances, unlike the final determinations presented in the preceding tables, do not reflect

the impact of PAYGO legislation enacted in prior years or the removal of costs or savings from

the scorecard due to directed scorekeeping provisions. Further, net costs of $96.723 billion over

five years designated as emergency requirements (in the Job Creation and Worker Assistance Act

and the Air Transportation Safety and System Stabilization Act) are counted in the table. Other

PAYGO spending containing emergency requirements is not counted in the table because the

necessary information was not provided in the OMB director’s final sequestration reports.

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

During the first eight calendar years, 1991-1998, the 5-year total balances either were negative

amounts (in six instances) or positive amounts less than $5 billion (in two instances). The total

balances ranged from a low of -$505.122 billion (for 1993) to a high of $4.037 billion (for 1995).

In the remaining four calendar years, 1999-2002, the 5-year total balances all were positive

amounts. They ranged from $29.066 billion (for 1999) to $434.720 billion (for 2001).

Nearly three-quarters (48) of the 65 major PAYGO measures had a 5-year total balance of less

than $5 billion, amounting to an average annual impact of less than $1 billion. The remaining 17

PAYGO measures, each with a 5-year total balance greater than $5 billion, are shown in Table 6.

(The OMB director scored two measures, the Balanced Budget Act of 1997 and the Taxpayer

Relief Act of 1997, as a single entry.)

As indicated in Table 8, five measures had five-year total balances that were negative, ranging

from -$5.254 billion for the Omnibus Consolidated and Emergency Supplemental Appropriations

Act for FY1998 to -$504.763 billion for the Omnibus Budget Reconciliation Act of 1993. The

other dozen measures all had positive 5-year total balances, ranging from $5.192 billion for the

Agricultural Risk Protection Act of 2000 to $403.378 billion for the Economic Growth and Tax

Relief Reconciliation Act of 2001.

With regard to the 17 major PAYGO measures identified in Table 6, the five acts with negative 5year total balances were enacted before or during the 1998 session. On the other hand, the 12 acts

with positive 5-year total balances were enacted during or after the 1999 session.

Table 9 provides detailed information on the 65 major PAYGO measures.

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

Table 8. Five-Year Total Balances of 17 Major PAYGO Measures,

Ranked in Ascending Order

(amounts in $ billion)

Calendar

Year

Enacted

Congress/

Session

Five-Year

Total

Balancea

Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66)

1993

103/1

-504.763

Personal Responsibility and Work Opportunity Reconciliation Act of

1996 (P.L. 104-193)

1996

104/2

-31.349

Balanced Budget Act of 1997 (P.L. 105-33) and Taxpayer Relief Act of

1997 (P.L. 105-34)b

1997

105/1

-24.700

Omnibus Consolidated and Emergency Supplemental Appropriations

Act, FY1998 (P.L. 105-277)

1998

105/2

-5.254

Agricultural Risk Protection Act of 2000 (P.L. 106-224)

2000

106/2

+5.192

Crop Year 2001 Agricultural Economic Assistance Act (P.L. 107-25)

2001

107/1

+5.500

Investor and Capital Markets Fee Relief Act (P.L. 107-123)

2001

107/1

+8.005

Trade Act (P.L. 107-210)

2002

107/2

+8.051

National Defense Authorization Act for Fiscal Year 2001

(P.L. 106-398)

2000

106/2

+12.858

Consolidated Appropriations Act for FY2000 (P.L. 106-113)

1999

106/1

+13.905

Air Transportation Safety and System Stabilization Act (P.L. 107-42)c

2001

107/1

+14.130

Ticket to Work and Work Incentives Improvement Act (P.L. 106-170)

1999

106/1

+15.277

Consolidated Appropriations Act for FY2001 (P.L. 106-554)

2000

106/2

+38.226

Farm Security and Rural Investment Act of 2002 (P.L. 107-171)

2002

107/2

+45.021

Job Creation and Worker Assistance Act (P.L. 107-147)d

2002

107/2

+88.723

Economic Growth and Tax Relief Reconciliation Act of 2001

(P.L. 107-16)

2001

107/1

+403.378

Title (and Public Law Number)

Acts With Negative Balances (Savings)

Acts With Positive Balances (Costs)

Source: Prepared by the Congressional Research Service using information provided in the OMB director’s final

sequestration reports for FY1992-FY2003.

The PAYGO balances in this table reflect emergency requirements in two acts (the Air Transportation

scorekeeping provisions.

The OMB director scored these two measures, the Balanced Budget Act of 1997 and the Taxpayer Relief

Act of 1997, as a single entry.

This act included costs over five years of $8.000 billion designated as an emergency requirement and $6.130

billion not designated as an emergency requirement.

All of the costs of this measure were designated as an emergency requirement.

Congressional Research Service

Table 9. Major PAYGO Legislation Enacted in Calendar Years 1991-2002

(amounts in $ billions)

Savings (-) or Cost (+) Impact on PAYGO Scorecard by Fiscal Year

Public Law

Number

Title

Current

Year

Budget

Year

Outyear 1

Outyear 2

Outyear 3

Five-Year

Total

Calendar Year 1991

P.L. 102-164

Emergency Unemployment Compensation Act of 1991a

-0.053

-0.421

-0.406

-0.427

-1.307

P.L. 102-227

Tax Extension Act of 1991

-0.566

-0.244

-0.005

-0.514

-1.329

P.L. 102-240

Intermodal Surface Transportation Infrastructure Act of 1991

-0.123

-0.326

-0.002

-0.451

P.L. 102-242

Federal Deposit Insurance Improvement Act of 1991

-0.389

-0.200

-0.100

-0.789

Calendar Year 1992

P.L. 102-244

Emergency Unemployment Compensation Extension

+2.500

-0.270

-0.100

+0.600

+0.100

+2.830

P.L. 102-318

Unemployment Compensation Amendments of 1992

+0.593

-0.902

+0.479

-0.053

-1.098

-0.981

P.L. 102-325

Higher Education Amendments of 1992

-0.208

-0.163

-0.118

-0.039

+0.005

-0.523

P.L. 102-351

Prohibition on Reducing Food Stamp Benefits in FY1993

+0.386

P.L. 102-371

Civil Liberties Act Amendments

+0.250

+0.100

+0.350

-46.752

-82.713

-100.554

-128.898

-145.846

-504.763

Calendar Year 1993

P.L. 103-66

Omnibus Budget Reconciliation Act of 1993

P.L. 103-130

Phase Out of the Department of Agriculture Programs for

Wool and Mohair

-0.047

-0.103

-0.183

-0.333

P.L. 103-152

Unemployment Compensation Amendments of 1993

+0.853

-0.164

-0.429

-0.286

-0.026

-0.476

-0.166

+0.019

+0.007

-0.031

-0.171

Calendar Year 1994

P.L. 103-233

Multifamily Housing Property Disposition Reform Act of 1994

P.L. 103-354

Federal Crop Insurance Reform and Department of

Agriculture Reorganization Act of 1994

CRS-31

Savings (-) or Cost (+) Impact on PAYGO Scorecard by Fiscal Year

Public Law

Number

P.L. 103-465

Title

The Uruguay Round Agreements Act of 1994

Current

Year

Budget

Year

Outyear 1

Outyear 2

Outyear 3

Five-Year

Total

-0.868

+0.205

+0.059

+1.194

+0.590

Calendar Year 1995

P.L. 104-7

Self-Employed Health Insurance Act

+0.147

+0.074

-0.157

-0.167

—

-0.103

P.L. 104-18

Medicare SELECT Policies

+0.040

+0.900

+1.400

+1.800

—

+4.140

Calendar Year 1996

P.L. 104-106

National Defense Authorization Act for FY1996

+0.315

+0.609

+0.852

+0.405

+0.383

+2.564

P.L. 104-121

Contract with America Advancement Act

-0.026

-0.212

-0.379

-0.440

-0.531

-1.588

P.L. 104-127

Federal Agricultural Improvement and Reform Act of 1996

-1.941

-3.746

+2.202

+1.952

+2.052

+0.519

P.L. 104-188

Small Business Job Protection Act of 1996

-0.255

+0.126

+0.588

-0.070

-0.134

+0.255

P.L. 104-191

Health Insurance Portability and Accountability Act of 1996

-0.010

+0.191

+0.612

+0.379

-0.052

+1.120

P.L. 104-193

Personal Responsibility and Work Opportunity Reconciliation

Act of 1996

-0.018

-3.932

-8.625

-8.824

-9.950

-31.349

P.L. 104-286

Central Utah Project Completion Act Amendments

-0.075

-0.145

+0.002

-0.037

-0.253

Calendar Year 1997

P.L. 105-2

Airport and Airway Trust Fund Tax Reinstatement Act of 1997

-2.406

P.L. 105-33 (and

P.L. 105-34)

Balanced Budget Act of 1997 (and Taxpayer Relief Act of

1997)b

+1.300

+9.100

-7.600

-13.600

-13.900

-24.700

-0.421

-0.306

-0.093

-0.091

-0.275

-1.186

-0.107

-0.136

-0.063

-0.045

-0.351

-0.036

-0.048

-0.091

-0.121

-0.181

-0.477

Calendar Year 1998

P.L. 105-178

Transportation Equity Act for the 21st Century

P.L. 105-186

Agriculture Research, Extension, and Education Reform Act of

1998

P.L. 105-200

Child Support Performance and Incentive Act of 1998

CRS-32

Savings (-) or Cost (+) Impact on PAYGO Scorecard by Fiscal Year

Public Law

Number

Title

Current

Year

Budget

Year

Outyear 1

Outyear 2

Outyear 3

Five-Year

Total

+0.338

+0.082

-0.033

+0.543

+1.018

+1.948

P.L. 105-208

Internal Revenue Service Restructuring and Reform Act of

1998

P.L. 105-244

Higher Education Amendments of 1998

-0.635

+0.349

+0.382

+0.343

+0.439

P.L. 105-277

Omnibus Consolidated and Emergency Supplemental

Appropriations Act for FY1998

+0.250

-2.880

-1.506

-1.118

-5.254

Calendar Year 1999

P.L. 106-65

National Defense Authorization Act for FY2000

-0.018

+0.112

+0.087

+0.036

+0.217

P.L. 106-102

Gramm-Leach-Bliley Act to Enhance Competition in the

Financial Services Industry

-0.015

-0.106

-0.333

P.L. 106-113

Consolidated Appropriations Act for FY2000

+1.552

+5.504

+4.581

+2.268

+13.905

P.L. 106-170

Ticket to Work and Work Incentives Improvement Act

-0.080

+4.874

+7.550

+2.933

+15.277

+0.040

+0.477

+0.588

+0.636

+0.671

+2.412

Calendar Year 2000

P.L. 106-200

Trade and Development Act of 2000

P.L. 106-224

Agricultural Risk Protection Act of 2000

+0.739

+1.408

+1.480

+1.565

+5.192

P.L. 106-249

Griffith Project Prepayment and Conveyance Act

-0.103

+0.009

-0.076

P.L. 106-311

Increase in H-1B Visa Petition Fees

-0.074

-0.127

-0.068

+0.159

-0.110

P.L. 106-313

American Competitiveness in the Twenty-first Century

-0.113

-0.066

-0.036

+0.128

-0.087

P.L. 106-386

Victims of Trafficking and Violence Protection Act

+0.404

+0.026

+0.008

+0.014

+0.452

P.L. 106-393

Secure Rural Schools and Community Self-Determination Act

of 2000

+0.021

+0.242

+0.258

+0.251

+0.772

P.L. 106-398

National Defense Authorization Act for Fiscal Year 2001

+0.428

+0.853

+5.694

+5.883

+12.858

P.L. 106-419

Veterans Benefits and Health Care Improvement Act of 2000

+0.219

+0.260

-0.077

-0.045

+0.357

P.L. 106-519

FSC Repeal and Extraterritorial Income Exclusion Act

+0.330

+0.355

+0.380

+0.405

+1.470

P.L. 106-554

Consolidated Appropriations Act for FY2001

+7.170

+11.510

+9.551

+9.995

+38.226

P.L. 106-573

Installment Tax Correction Act

+0.781

+0.864

+0.499

+0.130

+2.274

CRS-33

Savings (-) or Cost (+) Impact on PAYGO Scorecard by Fiscal Year

Public Law

Number

Title

Current

Year

Budget

Year

Outyear 1

Outyear 2

Outyear 3

Five-Year

Total

P.L. 107-16

Economic Growth and Tax Relief Reconciliation Act of 2001

+69.501

+35.691

+86.399

+105.457

+106.330

+403.378

P.L. 107-25

Crop Year 2001 Agricultural Economic Assistance Act

+5.500

P.L. 107-42

Air Transportation Safety and System Stabilization Actc

+2.595

+5.235

+4.500

+1.800

+14.130

P.L. 107-56

Uniting and Strengthening America by Providing Appropriate

Tools Required to Intercept and Obstruct Terrorism (USA

PATRIOT)

+0.117

+0.024

+0.021

+0.017

+0.179

P.L. 107-90

Railroad Retirement and Survivor’s Improvement Act of 2001

+0.195

+0.448

+0.623

+0.682

+1.948

P.L. 107-103

Veterans’ Education and Benefits Expansion Act of 2001

+0.201

+0.504

+0.606

+0.650

+1.961

P.L. 107-107

National Defense Authorization Act for 2002

+0.086

-0.234

-0.208

-0.253

-0.609

P.L. 107-123

Investor and Capital Markets Fee Relief Act

+1.455

+1.947

+2.174

+2.429

+8.005

P.L. 107-134

Victims of Terrorism Relief Act of 2001

+0.135

+0.079

+0.010

+0.004

+0.228

Calendar Year 2001

Calendar Year 2002

P.L. 107-139

Student Loan Interest Rate Amendments

-0.180

+0.345

+0.875

+1.005

+0.995

+3.040

P.L. 107-147

Job Creation and Worker Assistance Actd

+46.538

+36.878

+29.022

-3.001

-20.714

+88.723

P.L. 107-171

Farm Security and Rural Investment Act of 2002

+2.384

+10.195

+11.453

+11.065

+9.924

+45.021

P.L. 107-195

Spectrum Auction Reform Act

+2.150

+3.150

-3.900

-3.850

-2.450

P.L. 107-210

Trade Act

+0.114

+1.521

+1.589

+2.867

+1.960

+8.051

P.L. 107-229

Continuing Appropriations Act

+0.162

+0.015

+0.014

+0.005

+0.197

Source: Prepared by the Congressional Research Service using information provided in the OMB director’s final sequestration reports for FY1992-FY2003. These reports

subsequently were printed as House documents (except for FY1996, FY2002, and FY2003), as follows:

FY1992—January 13, 1992, H.Doc. 102-181 (January 28, 1992);

FY1993—October 23, 1992, H.Doc. 103-27 (January 21, 1993);

FY1994—December 10, 1993, H.Doc. 103-201 (January 26, 1994);

CRS-34

FY1995—December 16, 1994, H.Doc. 104-16 (January 4, 1995);

FY1997—November 15, 1996, H.Doc. 105-30 (February 4, 1997);

FY1998—November 24, 1997, H.Doc. 105-188 (February 3, 1998);

FY1999—December 10, 1998, H.Doc. 105-356 (December 19, 1998);

FY2000—January 25, 2000, H.Doc. 106-182 (January 31, 2000); and

FY2001—January 16, 2001, H.Doc. 107-31 (January 30, 2001).

The PAYGO estimate for P.L. 102-164 also included a PAYGO estimate for P.L. 102-182, Termination of Application of Title IV of the Trade Act to Czechoslovakia &

Hungary.

The OMB director issued a single, combined estimate on the budgetary impact of P.L. 105-33 and P.L. 105-34 (see OMB’s Mid-Session Review of the Budget for

FY1998, September 5, 1997, pages 32-34).

This act included costs over five years of $8.000 billion designated as an emergency requirement and $6.130 billion not designated as an emergency requirement.

All of the costs of this measure were designated as an emergency requirement.

CRS-35

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

Proposals to Restore the Statutory PAYGO Process

Proposals have been made from time to time to restore the statutory PAYGO requirement, but

disagreements have centered principally on whether it should apply to both direct spending and

revenue legislation (as originally framed) or only to direct spending legislation (as proposed

mainly by some Republicans).

In the 108th Congress, President George W. Bush submitted draft legislation to Congress, the

Spending Control Act of 2004, that would have restored the discretionary spending limits and the

PAYGO process for direct spending legislation only. The House Budget Committee reported a

bill, H.R. 3973 (H.Rept. 108-442; March 19, 2004), reflecting the President's proposal; a

comparable measure, H.R. 4663, was considered in the House on June 25, 2004, but failed to pass

by a vote of 146-268.

In the 110th Congress, interest was renewed in restoring a comprehensive PAYGO requirement. 27

Section 508 (Sense of Congress Regarding Extension of the Statutory Pay-As-You-Go Rule) of

the FY2008 budget resolution, S.Con.Res. 21, stated: “It is the sense of Congress that in order to

reduce the deficit Congress should extend PAYGO consistent with provisions of the Budget

Enforcement Act of 1990.” A similar provision was included, as Section 515, in the FY2009

budget resolution (S.Con.Res. 70).

On June 9, 2009, President Obama announced that he would submit a PAYGO proposal to

Congress, the Statutory Pay-As-You-Go Act of 2009, that would restore a process applying to

both direct spending and revenue legislation.28 House Majority Leader Steny Hoyer introduced

the proposal on June 17 as H.R. 2920; the proposal did not include discretionary spending limits.

On June 25, the House Budget Committee held a hearing on the proposal, receiving testimony

from OMB Director Peter Orszag, among others.29

On July 22, 2009, the House considered and passed H.R. 2920. Prior to action on the bill, the

House considered and agreed to (by a vote of 243-182) a special rule, H.Res. 665, providing for

the bill’s consideration. A modified substitute amendment was incorporated into the bill

automatically under a “self-executing” provision in the rule, and a substitute amendment offered

by Representative Paul Ryan, the ranking minority Member of the House Budget Committee, was

defeated, by a vote of 196-234.30 Following the defeat, by a vote of 196-234, of a motion to

recommit with instructions offered by Representative Ryan, the House passed the bill, by a vote

of 265-166.31

The House Budget Committee held a hearing on the matter, “Perspectives on Renewing Statutory PAYGO,” on July

25, 2007.

The legislative text of the proposal, along with a section-by-section summary and related documentation, is provided

on the OMB website at http://www.whitehouse.gov/omb/news_060909_paygo/.

The hearing testimony is accessible on the Budget Committee’s website at http://budget.house.gov/

hearings.aspx#06182009.

The substitute amendment made in order under H.Res. 665 was printed in Part A (pp. 3-18) of the report of the

House Rules Committee (H.Rept. 111-217, July 21, 2009); the modification to the substitute amendment was printed in

Part B (p. 18) and the Ryan-submitted amendment was printed in Part C (pp. 18-26). The three amendments were

summarized on pp. 2 and 3 of the report.

CQ Today, “Pay-as-You-Go Plan Passes House,” by David Clarke, July 22, 2009.

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

Section 421 of the budget resolution for FY2010 (S.Con.Res. 13) set forth a procedure, applicable

only in the House, effectively exempting from the House PAYGO rule and other budget

enforcement procedures the costs of legislation in four policy areas: (1) payments to physicians

under Medicare (“Doc Fix”), (2) middle class tax reform, (3) reform of the alternative minimum

tax (AMT), and (4) reform of the estate and gift tax. In each case, a limitation on the amount of

costs subject to exemption was specified in Section 421.32

Pursuant to this procedure, the House considered H.R. 3961 (the Medicare Physician Payment

Reform Act of 2009) on November 19, 2009, passing the bill by a vote of 243-183. Under the

terms of the special rule governing consideration of the bill, H.Res. 903, the text of the Statutory

Pay-As-You-Go Act of 2009, as passed earlier by the House, was added to the engrossed version

of H.R. 3961, as Division B.

Toward the end of the 2009 session, the House appended the text of H.R. 2920 to another

measure under a similar procedure. Pursuant to Section 5 of a special rule, H.Res. 976, providing

for the consideration of H.R. 3326, the Defense Appropriations Act for FY2010, and other

measures, the text of the Statutory Pay-As-You-Go Act of 2009 was added to H.R. 2847 in an

exchange of amendments with the Senate.33 The text of the “Jobs for Main Street Act, 2010” was

incorporated into H.R. 2847 as a substitute, and the statutory PAYGO act was appended thereto.

Prospects for consideration in the Senate of H.R. 2920 or another bill reinstating the statutory

PAYGO process are uncertain at this time. 34 On December 22, 2009, the Senate entered into a

unanimous consent agreement providing for the consideration of H.J.Res. 45, a long-term

increase in the debt limit, on January 20, 2010. Several of the amendments made in order under

the agreement pertain to budget enforcement issues, including an amendment to be offered by

Senate Majority Leader Harry Reid on “pay go.”35 All of the amendments are subject to a 60-vote

threshold for passage.

The limitations under Section 421 were modified by Section 2 of H.Res. 665, the rule providing for the consideration

of H.R. 2920, the Statutory Pay-As-You-Go Act of 2009, as they applied to the “Doc Fix” and “AMT” exemptions.

H.R. 2847 originated as one of the regular appropriations acts for FY2010, but pursuant to the special rule was used

as a “shell” for other legislation; the regular appropriations in the original bill were provided instead in another bill, the

Consolidated Appropriations Act, 2010 (P.L. 111-117).

BNA’s Daily Report for Executives, “Conrad Reiterates His Opposition to House Pay-As-You-Go Bill; Floor Action

Seen July 22,” by Jonathan Nicholson, July 22, 2009, 138 DER G-3; and CongressNow, “House PAYGO Bill Faces

Steep Senate Climb,” by Geof Koss, July 22, 2009.

See the remarks of Senator Reid in the Congressional Record (daily ed.) of Dec. 22, 2009, p. S13747.

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

Appendix A. Section 252 of the 1985 Balanced

Budget Act, As Amended (2 U.S.C. 902)

SEC. 252. ENFORCING PAY-AS-YOU-GO.

(a) Purpose.—The purpose of this section is to assure that any legislation enacted before

October 1, 2002, affecting direct spending or receipts that increases the deficit will trigger an

offsetting sequestration.

(b) Sequestration.—

(1) Timing.—Not later than 15 calendar days after the date Congress adjourns to end a

session and on the same day as a sequestration (if any) under section 251 or 253, there shall

be a sequestration to offset the amount of any net deficit increase caused by all direct

spending and receipts legislation enacted before October 1, 2002, as calculated under

paragraph (2).

(2) Calculation of Deficit Increase.—OMB shall calculate the amount of deficit increase

or decrease by adding—

(A) all OMB estimates for the budget year of direct spending and receipts legislation

transmitted under subsection (d);

(B) the estimated amount of savings in direct spending programs applicable to budget

year 1 resulting from the prior year’s sequestration under this section or section 253, if

any, as published in OMB’s final sequestration report for that prior year; and

estimates for the current year of direct spending and receipts legislation transmitted under

subsection (d) that were not reflected in the final OMB sequestration report for the

current year.

year under subsection (b) shall be obtained from non-exempt direct spending accounts from

actions taken in the following order:

(A) First.—All reductions in automatic spending increases specified in section 256(a)

shall be made.

(B) Second.—If additional reductions in direct spending accounts are required to be

made, the maximum reductions permissible under sections 256(b) (guaranteed and direct

student loans) and 256(c) (foster care and adoption assistance) shall be made.

made, each remaining non-exempt direct spending account shall be reduced by the

uniform percentage necessary to make the reductions in direct spending required by

paragraph (1) 2; except that the medicare programs specified in section 256(d) shall not

be reduced by more than 4 percent and the uniform percentage applicable to all other

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

direct spending programs under this paragraph shall be increased (if necessary) to a level

sufficient to achieve the required reduction in direct spending.

(ii) For purposes of determining reductions under clause (i), outlay reductions (as

a result of sequestration of Commodity Credit Corporation commodity price support

contracts in the fiscal year of a sequestration) that would occur in the following fiscal

year shall be credited as outlay reductions in the fiscal year of the sequestration.

(2) For purposes of this subsection, accounts shall be assumed to be at the level in the

baseline.

(d) Estimates.—

(1) CBO Estimates.—As soon as practicable after Congress completes action on any

direct spending or receipts legislation, CBO shall provide an estimate to OMB of that

legislation.

(2) OMB Estimates.—Not later than 7 calendar days (excluding Saturdays, Sundays, and

legal holidays) after the date of enactment of any direct spending or receipts legislation, OMB

shall transmit a report to the House of Representatives and to the Senate containing—

(A) the CBO estimate of that legislation;

(B) an OMB estimate of that legislation using current economic and technical

assumptions; and

(3) Significant Differences.—If during the preparation of the report under paragraph (2)

OMB determines that there is a significant difference between the OMB and CBO estimates,

OMB shall consult with the Committees on the Budget of the House of Representatives and

the Senate regarding that difference and that consultation, to the extent practicable, shall

include written communication to such committees that affords such committees the

opportunity to comment before the issuance of that report.

(4) Scope of Estimates.—The estimates under this section shall include the amount of

change in outlays or receipts for the current year (if applicable), the budget year, and each

outyear excluding any amounts resulting from—

(A) full funding of, and continuation of, the deposit insurance guarantee commitment

in effect under current estimates; and

(B) emergency provisions as designated under subsection (e).

(5) Scorekeeping Guidelines.—OMB and CBO, after consultation with each other and

the Committees on the Budget of the House of Representatives and the Senate, shall—

(A) determine common scorekeeping guidelines; and

(B) in conformance with such guidelines, prepare estimates under this section.

Congressional Research Service

The Statutory PAYGO Process for Budget Enforcement: 1991-2002

(e) Emergency Legislation.—If a provision of direct spending or receipts legislation is

enacted that the President designates as an emergency requirement and that the Congress so

designates in statute, the amounts of new budget authority, outlays, and receipts in all fiscal years

resulting from that provision shall be designated as an emergency requirement in the reports

required under subsection (d). This subsection shall not apply to direct spending provisions to

cover agricultural crop disaster assistance.

Author Contact Information

(name redacted)

Specialist in American National Government

#redacted#@crs.loc.gov, 7-....

Congressional Research Service

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