The CR Turns Off $1.5 Trillion of Scheduled Spending Cuts By Waiving Statutory PAYGO

President Joe Biden's reckless spending has added trillions in higher spending, deficits, and the debt. As a final act of fiscal irresponsibility, the Continuing Resolution would turn off about $1.5 of scheduled spending cuts over the next decade by completely clearing Biden's spending off the Statutory PAYGO scorecards.

Biden's Reckless Spending Triggers Statutory PAYGO

The Statutory Pay-As-You-Go (PAYGO) Act requires the Office of Management and Budget (OMB) to keep scorecards to track the costs of enacted legislation. The law was enacted by President Barack Obama and Congressional Democrats with the purported purpose of controlling deficits. If a balance shows on a PAYGO scorecard at the end of the year, automatic sequestration spending cuts are required in the following January. Biden's excessive spending has generated a massive $1.7 trillion balance on the PAYGO scorecard for 2025. Because the PAYGO scorecard exceeds the amount of spending on programs subject to sequestration, a $190 billion reduction in spending would be required in January 2025.

Implementing the 2025 PAYGO Sequester
Because the required sequestration of $1.698 trillion exceeds the amount available to cut, OMB would be forced to follow this calculation.
	Sequesterable Base	Percentage Reduction	PAYGO Sequestration
Medicare	$1,068.708	4%	$42.748
Other Non-Exempt Programs	$147.440	100%	$147.440
Total	$1,216.147		$190.188
In Billions of Dollars. Source: Author Calculations Based on OMB.

PAYGO Balances Extend Throughout Budget Window, Requiring $1.5 Trillion in Cuts

The spending enacted by President Biden prior to the 118th Congress has created a debit on the Statutory PAYGO scorecards throughout the next decade. As a consequence, a sequestration order would be required each year, except in 2033, when a small credit is on the ten-year scorecard. Enforcement of Statutory PAYGO would trigger about $1.5 in sequestration spending cuts between 2025 and 2034 (conservatively assuming the maximum sequestration that could be carried out averages $200 billion each year, although the actual levels in 2026 and beyond are likely higher).

Biden's Statutory PAYGO Scorecard
	2025	2026	2027	2028	2029	2030	2031	2032	2033	2034	2025 - 2034
Five Year Scorecard	1,698	442	72	-1	0	0	0	0	0	0
Ten Year Scorecard	914	242	242	242	242	242	242	55	-1	0.2
Maximum Sequestration	200	200	200	200	200	200	200	55	0	0.2	1,455
In billions of Dollars. Source: Office of Management and Budget and author estimates. Assumes the maximum sequestration that could be carried out averages $200 billion each year, although the actual levels in 2026 and beyond are likely higher.

CR Completely Waives Biden's Spending From Statutory PAYGO Scorecards, Turns Off $1.5 Trillion in Scheduled Spending Cuts

Section 21306 (4) of the Continuing Resolution resets all of the balances on the Statutory PAYGO scorecards to zero. This will remove the balances on the scorecards from laws enacted prior to and during the second session of the 118th Congress, effectively pretending like Biden's inflationary spending never occurred. This means that the sequestration spending cuts that would have been required will not occur. This would prevent $1.5 trillion in scheduled deficit reduction over the next decade that would have taken place absent Congressional action.

The Failures (and Opportunity) of Statutory PAYGO

As soon as Statutory PAYGO was enacted in 2010, Congressional Democrats set out to undercut it, beginning to exempt legislation from counting just 18 days later. The national debt has nearly tripled since Statutory PAYGO was signed into law, adding about $24 trillion to the debt. The debt is currently skyrocketing at a rate of $99,000 per second. Although Statutory PAYGO has never been enforced, it remains in law today. Lawmakers had an opportunity to use the inflection point of Statutory PAYGO sequestration to find agreement on other targeted spending cuts or budget process reforms.