Introduction

President Obama has proposed a law requiring pay-as-you-go (PAYGO) budgeting for new entitlement spending, including health care reform, and new tax cuts, with the exception of certain existing provisions scheduled to expire. The new PAYGO law would supplement, but not replace, current House and Senate PAYGO rules. It would record the 10-year average costs and savings of new entitlement spending and tax cuts on a 5-year PAYGO ledger for fiscal years 2010-2014. If the net budgetary impact of such legislation would increase the baseline deficit for the...