The term Cutgo is a colloquial reference to the “Cut-As-You-Go” point of order, more formerly known as clause 10 of rule XXI of the Rules of the House of Representatives. It takes the form of a point of order against bills, joint resolutions and amendments that cause an increase in direct spending in two multi-year periods. Because of the way those periods are defined in the text of the point of order, as it refers back to the statutory definition of “budget year” might be a five-year and ten-year period, or a six-year and eleven-year period, depending on the day of the year the measure is considered.
Application Relative to Budgeting
Unlike other forms of budgetary enforcement, in particular the budget resolution, this point of order is generally independent of any decisions made by Congress prior to a measure’s consideration: If it increases direct spending, on net, in either of the two time periods, then the point of order is violated. This is different from a budget resolution where an increase in direct spending may be provided for in the text.
Successor to “Pay-As-You-Go” and application to taxes
The Cutgo point of order was the successor to the “Pay-As-You-Go” point of order, which is largely the same in application, but is based on a deficit test rather than a spending test. This simply means that an increase in direct spending may be offset by an increase in taxes (revenue), or conversely an decrease in taxes may be offset by a decrease in direct spending. In Cutgo, revenue effects are ignored and thus does not apply to changes in taxes, unless they change budget authority such as refundable tax credits in some instances.
Clause 10(c) of the Cutgo point of order sets out an emergency exemption for measures. Notably, the exemption does not include amendments offered from the Floor. Thus, the exemption applies to bills, joint resolutions, amendments between the Houses, and conference reports. The exemption also applies to “amendments made in order as original text” which means a measure may be brought up and replaced by the Leadership of the House with alternate text using the the rule (“special order of business”) which delineates the terms of the debate for any bill coming to the floor.
The following is an excerpt from the CRS Report detailing House Rules changes from the 110th Congress onward and dated June 4, 2014:
Replaced the pay-as-you-go rule with a cut-as-you-go rule. While the House had prohibited consideration of 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,” the House in the 112th Congress prohibited consideration of these legislative vehicles “if the provisions of such measure have the net effect of increasing mandatory spending” over 6-year and 11-year periods. Other provisions of the rule change allowed direct spending measures to be joined upon engrossment to accommodate the required budget neutrality and, under certain procedures, exempted direct spending provisions designated as emergency from the budget neutrality requirement.183 (Emphasis added) (Amended clause 10 of Rule XXI.)
Retrospective of House Rules Changes Since the 110th Congress (R42395) June 4, 2014, (Congressional Research Service, June 4, 2014), p. 78.
Description from the Section-by-Section (House Republican Leadership)
“Initiatives to Reduce Spending and Improve Accountability. Subparagraph (d)(i) replaces the current ‘‘pay-as-you-go’’ requirements with a ‘‘cut-as-you-go’’ requirement. The provision prohibits consideration of a bill, joint resolution, conference report, or amendment that has the net effect of increasing mandatory spending within a five- year or ten-year budget window. This provision continues the current practice of counting multiple measures considered pursuant to a special order of business which directs the Clerk to engross the measures together after passage for purposes of compliance with the rule and provides a mechanism for addressing ‘‘emergency’’ designations.”
H.Res. 5, 112th Cong., 1st Sess., Vol. 157 Cong. Rec. H13 (daily ed. January 5, 2011).
From Deschler’s Precedents, Volume 18, Chapter 41
House CUTGO Rule
In the 112th Congress, the House replaced its pay-as-you-go rule with a cut-as-you-go rule (CUTGO). The rule provides that it shall not be in order to consider a bill or joint resolution, or amendment thereto, or conference report if its provisions have the net effect of increasing direct spending over 6- and 11-year periods. Like the former PAYGO rule, an amendment under CUTGO is evaluated on the basis of its marginal effect on the bill (and not against a ‘‘baseline’’ of existing law). Unlike the former PAYGO rule, CUTGO does not take revenues into consideration. Thus, an increase in spending may not be offset by an increase in revenues. The rule applies to direct spending only, not discretionary spending, and direct spending is specifically defined by reference to section 250 of Gramm-Rudman-Hollings. The CUTGO rule maintains the same measure-by-measure approach of budget neutrality as the former House PAYGO rule. The Chair is authoritatively guided by estimates from the Committee on the Budget with respect to the net effect of a measure on direct spending. [iv] Rule XXI clause 7 also provides a point of order against concurrent resolutions on the budget containing reconciliation directives that are not CUTGO compliant. Specifically, it shall not be in order to consider a concurrent resolution on the budget, or an amendment thereto, or a conference report thereon that contains reconciliation directives under section 310 of the Congressional Budget Act that specify changes in law that would cause an increase in net direct spending for the period of the concurrent resolution on the budget.
 House Rules and Manual § 1068f (2011). In addition, the 112th Congress established a separate point of order (in the opening-day resolution adopting the standing rules of the House) against consideration of a measure increasing mandatory spending above a certain threshold over certain periods. See 157 Cong. Rec. H9 [Daily Ed.], Jan. 5, 2011 (H. Res. 5, sec. 3(g)). House Rules and Manual § 1068h (2011). (FN#1)
 An amendment is evaluated on the basis of its marginal effect on the measure proposed to be amended. For an example of a CUTGO point of order raised against an amendment contained in a motion to recommit, see § 25.3, infra. (FN#2)
 2 USC § 900. (FN#3)
 Pursuant to Rule XXIX clause 4, such estimates may be provided by the chairman of such committee. House Rules and Manual § 1105d (2011). (FN#4)
 House Rules and Manual § 1068b (2011). (FN#5)
 2 USC § 641. (FN#6)
 Prior to the 112th Congress, this clause merely required budget neutrality for reconciliation directives, rather than prohibiting reconciliation directives that would cause an increase in net direct spending. (FN#7)
See also Deschler’s Volume 18,§ 25, page 328.
From House Practice
§ 3. — The Paygo/Cutgo Rule (clause 10 of rule XXI) Generally
In the 112th Congress, the House created a procedure known as ‘‘Cut-As-You-Go’’ (CUTGO) which permitted a point of order to be raised against certain matters providing a net increase in mandatory spending. The current rule was based on earlier procedures known as ‘‘Pay-As-You-Go’’ or PAYGO. At different times over the past three decades, different procedures in the House have fallen under this label. The term PAYGO was first used in law in section 252 of Gramm-Rudman as part of a process that required that direct spending and revenue legislation enacted into law be deficit neutral. The original statutory PAYGO process, as noted above, was first insti tuted in 1990 and, while textually still in law, only applies to legislation enacted prior to the end of the fiscal year 2002. Today the House operates under another statutory PAYGO process (Stat-Paygo), enacted in 2010 (Pub. L. No. 111-139). See §4, infra. The House first adopted a separate PAYGO rule providing a point of order against measures in the 110th Congress (clause 10 of rule XXI). That rule was converted in the 112th Congress to the current CUTGO rule. For a more detailed description of Stat-Paygo, see The Statutory Pay-As-You-Go Act of 2010: Summary and Legislative History, CRS, Sept. 13, 2010. For more on the former House PAYGO rule, see Manual § 1068e for the 111th Congress (H. Doc. 110-162).
The Cutgo Rule (clause 10 of rule XXI)
The House CUTGO rule establishes a point of order against measures that cause an increase in mandatory spending over a six- or eleven-year time period. The effect of the measure is determined on the basis of estimates made by the Committee on the Budget. 112-1, Jan. 26, 2011, pp 919, 920. The rule also provides special procedures when evaluating measures that (1) are considered under a rule that directs the Clerk to add the text of one measure to another after passage, or (2) contain provisions designated as an emergency.
Definitions and Time Periods
The CUTGO rule only addresses measures that affect mandatory spending. The rule equates ‘‘mandatory spending’’ with ‘‘direct spending’’ and uses the definition of direct spending found in section 250 of Gramm-Rudman with an exception for certain provisions in appropriation Acts. The rule also uses the definitions of ‘‘budget year’’ and ‘‘current year’’ found in section 250 of Gramm-Rudman (the ‘‘budget year’’ is the fiscal year that begins on October 1 of the calendar year in which that session of Congress begins; the ‘‘current year’’ is the fiscal year immediately preceding the budget year).
The rule provides both a six- and eleven-year time period in which a measure may not increase mandatory spending. Specifically, the measure may not increase mandatory spending for the period comprising either: (1) the current year, the budget year, and the four years following that budget year; or (2) the current year, the budget year, and the nine years following that budget year.
The effect of the measure on mandatory spending is based on estimates provided by the Committee on the Budget. This is similar to the authority vested in the Committee on the Budget by section 312 of the Budget Act over estimates of levels of new budget authority, outlays, direct spending, new entitlement authority, and revenues for purposes of titles III and IV of the Budget Act. The Chair is authoritatively guided by estimates from the Committee on the Budget as to the net effect of a measure as compared to the proposition to which it was offered. 112-1, Jan. 26, 2011, pp. 919, 920. Pursuant to clause 4 of rule XXIX, the Chair may obtain authoritative guidance with respect to budgetary levels from the chair of the Committee on the Budget.
The rule provides for a special evaluation when a measure is being considered under a special order of business that directs the Clerk to add the text of one measure to another measure following passage. Specifically, the rule provides that 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 entire text of a separate measure or measures as passed by the House, the new matter shall be included in the evaluation of the bill, joint resolution, or amendment. Clause 10(b) of rule XXI. See SPECIAL ORDERS OF BUSINESS.
The rule excludes provisions designated as emergencies in certain measures from the CUTGO evaluation. The rule specifically excludes a provision designated as an emergency under Stat-Paygo in the case of a point of order against: (1) a bill or joint resolution; (2) an amendment made in order as original text by a special order of business; (3) a conference report; or (4) an amendment between the Houses. Clause 10(c)(1) of rule XXI. The rule also provides that in the case of an amendment (other than an amendment made in order as original text or an amendment between the Houses) the evaluation of the Committee on the Budget shall give no cognizance to any designation of emergency. Clause 10(c)(2) of rule XXI. This provision creates a level playing field for amendments by requiring the Committee on the Budget to evaluate amendments offered from the floor (including those proposed in a motion to recommit) to the underlying text as if both the amendment and the underlying text did not include such emergency designations. For a discussion of the treatment of emergency designations under the Budget Control Act of 2011, see § 24, infra.
Clause 7 of rule XXI provides that it is not in order to consider a concurrent resolution on the budget, or an amendment thereto, or a conference report thereon, that contains reconciliation directives under section 310 of the Congressional Budget Act of 1974 that specify changes in law that would cause an increase in net direct spending for the period of the concurrent resolution on the budget.
U.S. Congress, House, House Practice: A Guide to the Rules, Precedents and Procedures of the House, 115th Cong., 1st sess. (Washington: GPO, 2017), pp.190-193.