Budget Enforcement Procedures: Senate's Pay-As-You-Go (PAYGO) Rule

Publication Date: June 2003

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Government

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Abstract:

The Senate's "pay-as-you-go," or PAYGO, rule generally prohibits the consideration of direct spending and revenue legislation that is projected to increase (or cause) an on-budget deficit in any one of three time periods: the first year, the first 5 years, and the second 5 years, covered by the most recently adopted budget resolution. Any increase in direct spending or reduction in revenues resulting from such legislation must be offset by an equivalent amount of direct spending cuts, tax increases, or a combination of the two. Without an offset, such legislation would require the approval of at least 60 Senators to waive the rule and be considered on the Senate floor.

The Senate's PAYGO rule does not apply to direct spending or revenues generated under existing law; it applies only to legislation considered by the Senate. Consequently, direct spending may increase and revenues may decline in any fiscal year due to factors beyond the control of the PAYGO rule.

The Senate's PAYGO rule differs from the statutory PAYGO requirement, established by the Budget Enforcement Act of 1990, in that it is enforced by a point of order during consideration of legislation instead of by sequestration after legislation is enacted into law. In addition, the Senate's PAYGO rule has a 10-year time frame whereas the statutory PAYGO requirement covers, through FY2006, the effects of legislation enacted before the end of FY2002.

The Senate's PAYGO rule originated in a budget resolution in 1993 and has been modified and extended four times in subsequent budget resolutions over the years. Most recently, the Senate modified and extended the rule through September 30, 2008, by agreeing to the FY2004 budget resolution (H.Con.Res. 95). Under the Senate's PAYGO rule in its current form, the spending and revenue policy changes assumed in the FY2004 budget resolution are exempt from the rule's provisions.

Beginning in 1993, six points of order under the Senate's PAYGO rule have been raised against an entire bill or an amendment. Of these six points of order, four were sustained and two fell upon the adoption of a waiver motion.

This report will be updated as developments warrant.