December 19, 2014

PAYGO Loopholes Add Hundreds of Billions to Deficit

  • The federal budget is an expression of our country's values. Where we choose to spend and at what levels, how and who we tax, and the borrowing we...

An OMB report concludes that exemptions in the PAYGO law have been used for legislation adding hundreds of billions of dollars to the deficit. PAYGO generally requires legislation affecting direct spending or revenues to be offset, though last year's law included costly exceptions for several revenue and spending priorities.

OMB's official scorecard shows that legislation subject to PAYGO and enacted since last February would save $55.2 billion over 2010-2015 and $63.7 billion over 2010-2020. However, when adjustments for loopholes such as emergency designations and exemptions are taken into account, the same laws would increase the deficit by $899.4 billion over 2010-2015 and by $820.1 billion over 2010-2020.

Both parties are guilty of weakening PAYGO with loopholes, whether it is the new House rule excluding revenues or the exemptions in the PAYGO law signed by President Obama. OMB's report is a timely reminder that these exemptions add to federal deficits that are already unsustainable. Congress should end the exemptions and return to a classic PAYGO rule that simply pays as you go.