Got your attention?
It’s time to talk about PAYGO (if you’ve been following this part of the GOP tax train wreck already, please ignore this journal. Only a few print publications have been giving it the serious attention it warrants, but it’s been a major factor in back-room dealings by GOP senators.) PAYGO is a long-standing rule in congress that any cuts to revenue (i.e. tax cuts) or increases in mandatory spending (i.e. “entitlements”) must balance out each year. It is a budgetary rule that congress has waved and eliminated in the past, but in 2010, it was made law by the Statutory Pay-As-You-Go Act.
How does PAYGO work? Basically, at the end of each year the changes in revenue and mandatory spending (not discretionary spending) are tallied up over the next 10 years. If all the relevant tallies for a given year result in an increase in the deficit, mandatory sequestration cuts are automatically made to certain government programs.
What programs? Well, here’s a partial list:
- Medicare
- Customs and Border Protection
- Farm price-support programs
- Farm security programs
- The Agricultural Marketing Service
- The Military Retirement Fund
- The National Flood Insurance Program
- The Crime Victims Fund
- The Assets Forfeiture Fund
- US Immigration Services
- Vocational Rehabilitation Services
- Social Services
- Medicare and Medicaid Risk Adjustment Program
- Medicare and Medicaid Program Management
If the Republican tax bill passed last night increased the deficit by 1.4 trillion (as projected by the CBO), then a cut of $140 billion is required by PAYGO. Medicare, however, is limited to about $26 billion in cuts in a given year (4%), which means the remaining cuts must come from the other programs. The problem is all the other programs combined are only about $100 billion so if PAYGO sequestration goes into effect, the other programs will be completely defunded.
This would be particularly bad for agriculture, the agricultural programs on the list would be completely eliminated if sequestration goes into effect.
Because Republicans used reconciliation to pass their tax bill without any debate, there is no waiver included to keep these programs funded. If they had held debates and passed a tax bill under the general order, congress could have included a PAYGO waiver in the package (like they did for various changes to Medicare and CHIP in 2015), but they did not so there is not.