Why It Matters

The Statutory Pay-As-You-Go Act of 2010 (PAYGO) was designed as a budget enforcement mechanism to ensure that new laws affecting mandatory spending or revenues would not, in aggregate, increase federal budget deficits. A Congressional Research Service (CRS) report titled "Budgetary Effects Excluded or Eliminated from the Statutory Pay-As-You-Go Scorecards" raises the question of whether the Statutory PAYGO law, as currently structured, is an effective tool for controlling deficits.

The Office of Management and Budget (OMB) maintains two rolling scorecards tracking the estimated average annual net deficit effects of enacted legislation over five and 10 years, and if either shows a net increase in the deficit by the end of a congressional session, the President must issue a sequestration order within 14 days to impose automatic spending cuts. Despite the enactment of numerous laws estimated to increase federal budget deficits since 2010, a sequester under the Statutory PAYGO Act has never been triggered.

The Big Picture

Every time PAYGO scorecards have threatened to trigger a sequester, Congress has either exempted the relevant legislation from the scorecards or legislatively zeroed out the balances, ensuring the enforcement mechanism has never been allowed to fire. The original Statutory PAYGO Act excluded extensions of Medicare physician payments under the Sustainable Growth Rate formula, extensions of estate and gift tax policies, extensions of alternative minimum tax policies, and extensions of certain middle-class tax cuts from the scorecards. Between 2010 and 2025, these original exclusions accounted for $396.5 billion excluded from the five-year scorecard and $355.2 billion excluded from the 10-year scorecard.

Five laws enacted between 2010 and 2025 eliminated existing accumulated balances on the PAYGO scorecards, with the most recent being the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026. Section 8001(d) of Division H of P.L. 119-371 eliminated all balances on the 2025 scorecards.

The Bottom Line

Congress has systematically dismantled the PAYGO enforcement mechanism by exempting or eliminating deficit-increasing legislation from the scorecards, leaving no path for the sequestration tool to act. The pattern has persisted across administrations, suggesting that (absent legislative reform) the Statutory PAYGO Act will remain a symbolic rather than binding constraint on federal spending.

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