For practical budget law purposes, the term pay-as-you-go (paygo) took effect in 1990 with the enactment of the Budget Enforcement Act of 1990 (Pub. L. 101-508). In that form, it refers to the procedure whereby any increase enacted by Congress must be accompanied by an offsetting decrease in the deficit. If Congress fails to do so, spending cuts known as sequestration are automatically triggered for nonexempt direct spending programs. Since 1990, the Paygo concept has taken on different forms.
Statutory Pay-As-You-Go Act of 2010
After fiscal year 2002, the original procedure expired and it lay dormant until it was revived in 2010 by the enactment of the Statutory Pay-As-You-Go Act of 2010 (S-Paygo), which is currently in force and does not have an expiration date. It works much the same as the original Paygo, though with a certain structural difference (e.g. the time periods over which a law must be deficit-neutral).
Senate Paygo Point of Order
Section 12(c) of H. Con. Res. 64 first established the Senate PAYGO point of order. The new rule was designed to prevent deficit reduction from the anticipated reconciliation bill from being used to offset new increases in direct spending or reductions in revenue. The reconciliation bill generated by H. Con. Res. 64, the Omnibus Budget Reconciliation Act of 1993 (Pub. L. 103-66) was subsequently enacted, then estimated as reducing the deficit by $500 billion over five years (fiscal years 1994 through 1998).
While the budget resolution applied to years through fiscal year 1998, the rule prohibited the consideration of any legislation increasing the deficit through fiscal year 2003. In this original form, the rule did not have an expiration date, though these were added later. Sec. 3201(b)(1) of S. Con. Res. 11 (115th Congress) removed the expiration date from the Senate’s Paygo point of order when it was adopted on .
History of Pay-As-You-Go
The concept of “pay-as-you-go” precedes the BEA 1990, though, and is a concept with some longevity. See The History of Pay-As-You-Go for a description and example as to how it was used before its current incarnation.
Budget Enforcement Act of 1990 (Fiscal Years 1991-1995)
Omnibus Budget Reconciliation Act of 1993 (Fiscal Years 1994-1998)
Budget Enforcement Act of 1997 (Fiscal Years 1998-2002)
Statutory Pay-As-You-Go Act of 2010 (Permanent)