Cyclopedia

Budgetary Effects

Summary

The  term budgetary effects has somewhat different definitions, but they are variations on explaining the effect a legislative provision will have on spending, receipts, and other budget concepts should it be enacted.

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Statutory Pay-As-You-Go Act of 2010

The basic procedural component to S-Paygo is to assess the budgetary effects of revenue and direct spending provisions enacted into law. These include costs and savings, which are placed on scorecards to determine whether automatic spending reductions are required (a “sequestration”). The Act defines budgetary effects as follows:

(4)(A) The term “budgetary effects” means the amount by which PAYGO legislation changes outlays flowing from direct spending or revenues relative to the baseline and shall be determined on the basis of estimates prepared under section 4. Budgetary effects that increase outlays flowing from direct spending or decrease revenues are termed “costs” and budgetary effects that increase revenues or decrease outlays flowing from direct spending are termed “savings”. Budgetary effects shall not include any costs associated with debt service.

(B) For purposes of these definitions, off-budget effects shall not be counted as budgetary effects.

(C) Solely for purposes of recording entries on a PAYGO scorecard, provisions in appropriation Acts are also considered to be budgetary effects for purposes of this title if such provisions make outyear modifications to substantive law, except that provisions for which the outlay effects net to zero over a period consisting of the current year, the budget year, and the 4 subsequent years shall not be considered budgetary effects. For purposes of this paragraph, the term, “modifications to substantive law” refers to changes to or restrictions on entitlement law or other mandatory spending contained in appropriations Acts, notwithstanding section 250(c)(8) of BBEDCA. Provisions in appropriations Acts that are neither outyear modifications to substantive law nor changes in revenues have no budgetary effects for purposes of this title.

From CRS Report by Bob Keith:

The Congressional Research Service issued a report on S-Paygo that included this explanation of “budgetary effects”:

CRS – The Statutory Pay-As-You-Go Act of 2010: Summary and Legislative History (R41157) April 2, 2010

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House Rules: Macroeconomic Policy Requirement under House Rule XIII

Under clause 8 of rule XIII of the House Rules,

Estimates of major legislation

8. (a) An estimate provided by the Congressional Budget Office under section 402 of the Congressional Budget Act of 1974 for any major legislation shall, to the extent practicable, incorporate the budgetary effects of changes in economic output, employment, capital stock, and other macroeconomic variables resulting from such legislation.

(b) An estimate provided by the Joint Committee on Taxation to the Director of the Congressional Budget Office under section 201(f) of the Congressional Budget Act of 1974 for any major legislation shall, to the extent practicable, incorporate the budgetary effects of changes in economic output, employment, capital stock, and other macroeconomic variables resulting from such legislation.

(c) An estimate referred to in this clause shall, to the extent practicable, include—

(1) a qualitative assessment of the budgetary effects (including macroeconomic variables described in paragraphs (a) and (b)) of such legislation in the 20-fiscal year period beginning after the last fiscal year of the most recently agreed to concurrent resolution on the budget that set forth appropriate levels required by section 301 of the Congressional Budget Act of 1974; and

(2) an identification of the critical assumptions and the source of data underlying that estimate.

(d) As used in this clause—

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(2) the term ‘‘budgetary effects’’ means changes in revenues, outlays, and deficits.

[Emphasis added]

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