Cyclopedia
Annotated House Paygo Point of Order
Summary
The Paygo Point of Order in the House is a rule that allows a Member of the House to object to the consideration of a bill, joint resolution, amendment, or conference report, that is not deficit neutral. Deficit neutrality is defined as the cumulative increases and decreases, when taken together, in direct spending and revenue. In whatever combination, a measure causes the deficit to increase, then the point of order would be sustained, if raised.
Pay-As-You-Go Point of Order
Clause 10 of Rule XX
(a)(1) Except as provided in paragraphs (b) and (c), it shall not be in order to consider any bill, joint resolution, amendment, or conference report if the provisions of such measure affecting direct spending and revenues have the net effect of increasing the deficit or reducing the surplus for either the period comprising—
(A) the current fiscal year, the budget year, and the four fiscal years following that budget year; or
(B) the current fiscal year, the budget year, and the nine fiscal years following that budget year.
(2) The effect of such measure on the deficit or surplus shall be determined on the basis of estimates made by the Committee on the Budget relative to baseline estimates supplied by the Congressional Budget Office consistent with section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985.
(b) If a bill, joint resolution, or amendment is considered pursuant to a special order of the House directing the Clerk to add as new matter at the end of such measure the provisions of a separate measure as passed by the House, the provisions of such separate measure as passed by the House shall be included in the evaluation under paragraph (a) of the bill, joint resolution, or amendment.
(c)(1) Except as provided in subparagraph (2), the evaluation under paragraph (a) shall exclude a provision expressly designated as an emergency for purposes of pay as-you-go principles in the case of a point of order under this clause against consideration of—
(A) a bill or joint resolution;
(B) an amendment made in order as original text by a special order of business;
(C) a conference report; or
(D) an amendment between the Houses.
(2) In the case of an amendment (other than one specified in subparagraph (1)) to a bill or joint resolution, the evaluation under paragraph (a) shall give no cognizance to any designation of emergency.
(3) If a bill, a joint resolution, an amendment made in order as original text by a special order of business, a conference report, or an amendment between the Houses includes a provision expressly designated as an emergency for purposes of pay-as-you-go principles, the Chair shall put the question of consideration with respect thereto.
(d) For the purpose of this clause, the terms ‘budget year’ and ‘current year’ have the meanings specified in section 250 of the Balanced Budget and Emergency Deficit Control Act of 1985, and the term ‘direct spending’ has the meaning specified in such section 250 except that such term shall also include provisions in appropriations Acts that make outyear modifications to substantive law as described in section 3(4)(C) of the Statutory Pay-As-You-Go Act of 2010.
Counsel Notes
Summary
The “Paygo Point of Order” is the reestablishment of the provision prohibiting the consideration of measures causing an increase in the deficit over a six or eleven year period. It is entirely separate from the budget procedures found in the Congressional Budget Act of 1974, though both are based on advisories provided by the Chairman of the House Budget Committee, under the terms of both section 312 (CBA) and clause 4 of rule XXIX of the House Rules. This particular provision replaced the “Cutgo Point of Order”, which acted in a similar fashion, though that point of order only applied to measures causing a net increase in direct spending rather than the deficit. The latter includes the effects of changes in revenue. That point of order had replaced the original House Paygo Point of Order, first established in the 110th Congress.
A section-by-section was placed in the Congressional Record by the Democratic Leadership on January 3, 2019, and it summarized this section as follows:
Pay-As-You-Go Point of Order. [Section 102(ee) of H. Res. 6 (116th Congress)] reinstates the PAYGO rule from the 111th Congress, with changes to conform with the recent practice of tying the measurement timeline to the calendar year, rather than the last completed budget resolution. As in the 111th Congress, this provision establishes a point of order against any measure that has a net effect of increasing the deficit or reducing the surplus for the current fiscal year, the budget year, and up to nine fiscal years following that budget year. The subsection stipulates that the net budgetary effects of a measure will be determined by the non-partisan Congressional Budget Office (CBO) but provides that if a measure is considered pursuant to a special order that instructs the Clerk of the House to add the measure to another measure passed by the House, then the net budgetary effects of the entire package will be considered. Finally, the subsection provides for exemptions, given an emergency designation.
Clause 10 of Rule XXI, as adopted by the 110th Congress
The original House Paygo as adopted in the 110th Congress read as below. It was amended in the 111th Congress, and that text follows. The original version reads:
§ 1068e. Pay-as-you-go point of order.
10. It shall not be in order to consider any bill, joint resolution, amendment, or conference report if the provisions of such measure affecting direct spending and revenues have the net effect of increasing the deficit or reducing the surplus for either the period comprising the current fiscal year and the five fiscal years beginning with the fiscal year that ends in the following calendar year or the period comprising the current fiscal year and the ten fiscal years beginning with the fiscal year that ends in the following calendar year. The effect of such measure on the deficit or surplus shall be determined on the basis of estimates made by the Committee on the Budget relative to—
(a) the most recent baseline estimates supplied by the Congressional Budget Office consistent with section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985 used in considering a concurrent resolution on the budget; or
(b) after the beginning of a new calendar year and before consideration of a concurrent resolution on the budget, the most recent baseline estimates supplied by the Congressional Budget Office consistent with section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985.”.
Amendment to the House Paygo Point of Order in the 111th Congress
At the beginning of the 111th Congress, the House amended clause 10, rule XXI, known as the House Paygo Point of Order, to allow for emergencies, to provide for other measures to be attached to a bill or joint resolution under consideration later to offset the deficit increase, and for other technical changes. The section-by-section description included in the Congressional Record summarized the amendment as follows:
Section-by-Section for H. Res. 5 (111th Congress)
Summary for Changes made to the Pay-As-You-Go Point of Order (Clause 10, Rule XXI):
(j) PAYGO.—
This provision amends clause 10 of rule XXI to make the following changes:
(1) A technical amendment to align the PAYGO rules of the House with those of the Senate so that both houses use the same CBO baselines;
(2) The changes would also allow one House-passed measure to pay for spending in a separate House-passed measure if the two are linked at the engrossment stage; and
(3) The changes would also allow for emergency exceptions to PAYGO for provisions designated as emergency spending in a bill, joint resolution, amendment made in order as original text, conference report, or amendment between the Houses (but not other amendments).
The new clause 10(c)(3) of rule XXI provides that the Chair will put the question of consideration on a bill, joint resolution, an amendment made in order as original text by a special order of business, a conference report, or an amendment between the Houses that includes an emergency PAYGO designation. The Chair will put the question of consideration on such a measure without regard to a waiver of points of order under clause 10 of rule XXI or language providing for immediate consideration of such a measure.
The intent of this exception to pay-as-you-go principles is to allow for consideration of measures that respond to emergency situations. Provisions of legislation may receive an emergency designation if such provisions are necessary to respond to an act of war, an [Page H12] act of terrorism, a natural disaster, or a period of sustained low economic growth. A measure that includes any provision designated as emergency shall be accompanied by a report or a joint statement of managers, as the case may be, or include an applicable “Findings” section in the legislation, stating the reasons why such provision meets the emergency requirement according to the following criteria.
In general, the criteria to be considered in determining whether a proposed expenditure or tax change meets an emergency designation include: (1) necessary, essential, or vital (not merely useful or beneficial); (2) sudden, quickly coming into being, and not building up over time; (3) an urgent, pressing, and compelling need requiring immediate action; (4) unforeseen, unpredictable, and unanticipated; and (5) not permanent, but rather temporary in nature. With respect to the fourth criterion above, an emergency that is part of an aggregate level of anticipated emergencies, particularly when normally estimated in advance, is not “unforeseen.”
Precedents
Precedent: House Rules and Manual (111th Congress): “The Chair is authoritatively guided by estimates from the Committee on the Budget as to the net effect of a provision on the relevant surplus or deficit (Dec. 12, 2007, p. [H15380- H15381]).”
Point of Order
Mr. Neal of Massachusetts. Mr. Speaker, I make a point of order that the motion to recommit violates clause 10 of rule XXI because the provisions of the measure have the net effect of in-creasing the deficit over the requisite time period. The cost of 1 year of AMT relief is $50 billion, and the motion contains no provisions to pay for that relief.
The Speaker pro tempore. Does any Member wish to be heard on the point of order?
Mr. McCrery. Mr. Speaker, I do not believe it is the intent of clause 10 of rule XXI to require tax increases to pay for preventing scheduled tax increases. That is precisely what we are debating on this point of order.
If the Chair determines that this motion violates rule XXI and the House sustains this ruling, then the House is endorsing more than $3 trillion of tax increases over the next 10 years. PAYGO, as a budget enforcement law between 1990 and 2002, as the majority leader referred to, required automatic spending reductions across the government when budget targets were not met. Rule XXI, should it apply to this motion, is a very, very different PAYGO. It would prevent any Member from offering an amendment that prevents a tax increase without another tax increase. I would understand, and even strongly support, an interpretation of rule XXI that had the effect of requiring spending reductions to offset increases in spending.
Further, while I would not necessarily endorse it, I could understand a PAYGO interpretation that requires a spending cut or tax increase to offset any reduction in current tax rates, or an increase in any current tax deductions or credits; but that is not what we’re dealing with here today, Mr. Speaker. Today, with my motion, we are simply maintaining the Federal Government’s current take, so to speak, from the people.
Current individual tax rates and policies have largely been in place as they are since 2003 and have led to sustained increases in revenue to the Federal Government. In fact, the annualized increases over the last 3 years have been 14.6 percent, 11.7 percent and 6.7 percent.
Even if my motion passes and is eventually enacted, we will again see increased revenue, it is projected, to the Federal Government next year. Those who wish to apply PAYGO to my motion, those who wish to object to my motion, are advocating very clearly that they want to lock in not only the largest revenue take in history, but also the largest tax increase in history. These tax increases will lead the government to collect more than 20 percent of GDP from its citizens by the end of the decade, and far higher in the years that follow. These tax increases will be of such a dramatic magnitude that they threaten to bring our economy to its knees and render it uncompetitive in the global marketplace.
The motion I have offered contains no new spending, no new tax cuts. Instead, it simply prevents a tax increase. That, I submit, is not what rule XXI was designed to prevent. And I urge the speaker to reject the point of order.
The Speaker pro tempore. Does any other Member wish to be heard on the point of order?
Mr. Neal of Massachusetts. Mr. Speaker, I insist on my point of order.
The Speaker pro tempore. The gentleman from Massachusetts makes a point of order that the amendment proposed in the motion violates clause 10 of rule XXI by increasing the deficit.
Pursuant to clause 10 of rule XXI, the Chair is authoritatively guided by estimates from the Committee on the Budget that the net effect of the provisions in the amendment affecting revenues would increase the deficit for a relevant period. Accordingly, the point of order is sustained and the motion is not in order.
[The ruling was appealed and the appeal tabled agreed to yeas 225, nays 191, not voting 15.]
Precedent: House Rules and Manual (111th Congress): Spending provided by appropriation acts does not constitute ‘‘direct spending’’ for purposes of paragraph (a) (May 15, 2008, p.[H3934-3935).
Point of Order
Mr. Ryan of Wisconsin. Mr. Speaker, I make a point of order against consideration of the measure.
The Speaker pro tempore. The gentleman will state his point of order.
Mr. Ryan of Wisconsin. Mr. Speaker, I make a point of order that the measure causes an increase in the deficit over a 6- and 11-year period and therefore violates clause 10 of House rule XXI, the PAYGO point of order.
Mr. Speaker, there is undeniably net direct spending included in this bill. Hence it increases the deficit. Simply by putting new entitlement spending on an appropriation bill in order to evade PAYGO would constitute a blatant loophole in the PAYGO point of order. If PAYGO is designed to prevent increases in the deficit, this measure should not be considered here today.
I therefore urge that my point of order be sustained.
The Speaker pro tempore. Does any other Member wish to be heard?
Mr. Obey. Mr. Speaker, the gentleman may be reciting the PAYGO rule as he wishes it were, but that’s not the way it is.
The legislation before the House fully complies with the PAYGO rule. That rule deals with direct spending and revenues.
As to revenues, the revenue effects of this package reduce the deficit, rather than increasing it. As to spending, none of the spending in this package falls into the direct spending category, which is basically defined as spending outside the appropriations process.
Even though not technically required to do so, the Medicaid provisions and the expansion of veterans’ education benefits fully meet the PAYGO standard. Both sets of provisions contain offsets to ensure that they do not increase the deficit over the 5- and 10-year periods used by the PAYGO rule.
The rest of the bill consists mostly of emergency appropriations for defense and other security-related needs, largely for things requested by the President. And the other major spending item, relating to extended unemployment compensation benefits, is temporary in nature and responds to current hardships created by the economic downturn.
So I believe that we ought to abide by the House rules as they are, not as some Members wish they were.
The Speaker pro tempore. The gentleman from Wisconsin makes a point of order that the motion violates clause 10 of rule XXI by increasing a deficit.
Clause 10 of rule XXI provides a point of order against a measure if the provisions of such measure affecting direct spending or revenues have the net effect of increasing a deficit or reducing a surplus. Clause 10 of rule XXI further provides that the effect of the measure on the deficit or surplus is determined by the Committee on the Budget relative to certain estimates supplied by the Congressional Budget Office.
The gentleman from Wisconsin has asserted that the motion contains direct spending that causes an increase in a deficit. As a threshold matter, the Chair must determine if provisions in the measure affect ‘‘direct spending.’’
In reviewing the text of clause 10 of rule XXI, the Chair finds no definition of the term ‘‘direct spending.’’
Because clause 10 of rule XXI is a budget enforcement mechanism, the Chair finds it prudent to look to other budget enforcement schemes for guidance in defining this term. In a review of relevant budget enforcement statutes, the Chair finds a definition of the term ‘‘direct spending’’ in section 250 of the Balanced Budget and Emergency Deficit Control Act of 1985, hereafter section 250. The definition in section 250 provides, in pertinent part, that ‘‘direct spending’’ means budget authority provided by law other than appropriation Acts.
The underlying bill, H.R. 2642, is a general appropriation bill. This measure constitutes an ‘‘appropriation Act’’ within the meaning of section 250. The motion proposes amendments that would make emergency supplemental appropriations for the fiscal year 2008.
Accordingly, the budget authority portended by the motion does not constitute ‘‘direct spending’’ for purposes of section 250, and by extension, the Chair finds that the motion does not affect direct spending for purposes of clause 10 of rule XXI.
Pursuant to clause 10 of rule XXI, the Committee on the Budget is required to provide estimates to the Chair on the effect of the measure on the deficit.
In consonance with the Chair’s findings, the Chair is authoritatively guided by estimates from the Committee on the Budget that the net effect of the provisions of the pending motion affecting revenues and direct spending would not increase a deficit. Accordingly, the point of order is overruled.
Parliamentary Inquiry
Mr. Ryan of Wisconsin. One quick parliamentary inquiry for the purposes of clarification, Mr. Speaker.
The Speaker pro tempore. The gentleman may state his inquiry.
Mr. Ryan of Wisconsin. Condensing all of that, is it my understanding, then, that this is not sustained because PAYGO does not apply to direct spending so long as it’s in an appropriations bill? Is that correct?
The Speaker pro tempore. The Chair’s ruling will have to speak for itself in that regard.
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