Waiving the Statutory PAYGO Act for the Tax Cuts and Jobs Act

The Capitol Dome is seen silhouetted by the rising sun on Capitol Hill, November 2017.

Senate Republicans are using reconciliation to pass their tax cuts and jobs bill because doing so means they do not need Democratic votes. However, the Tax Cuts and Jobs Act reconciliation bill that the Senate is considering at this time would trigger a sequester of many mandatory programs under the Statutory Pay-As-You-Go Act (PAYGO) of 2010. The sequester could be waived or prevented in whole or in part through enactment of separate legislation after the reconciliation bill has been approved. This would not be an easy legislative task—in part because such legislation would be subject to filibuster in the Senate, and the filibuster could only be stopped with 60 votes. Has such difficult legislative action been taken since enactment of the Statutory PAYGO Act? The answer is no.

It may seem that there have been many cases since the adoption of the Statutory PAYGO Act where it has been waived. But these cases are vastly different than the case of the waiver that is being contemplated for the Tax Cuts and Jobs Act. According to a memo by Bill Heniff Jr. of the nonpartisan Congressional Research Service, there have been 16 occasions since enactment of the Statutory PAYGO Act when the sequester has been prevented through the inclusion of waiver language in the underlying bill itself.* But it is much easier to put waiver language into the underlying bill than to enact new legislation with a waiver. This is especially true because new legislation—like most legislation in the Senate—would be subject to a filibuster that would take 60 votes to stop, even though the underlying reconciliation bill could be adopted by a majority vote.

If enacting new legislation is so difficult, why not put the waiver language directly into the reconciliation bill? The answer is that a point of order would lie against such language in a reconciliation bill, and the point of order could only be waived with 60 votes. The waiver language would trigger the point of order by running afoul of section 313 of the Congressional Budget Act—the Byrd rule.

Conclusion

The difficult situation facing the reconciliation bill now being considered in the Senate is that waiver language would have to be enacted in legislation that is separate from the reconciliation bill—and at a later time. Moreover, this legislation would be subject to a filibuster that would take 60 votes to stop. There have not been any occasions since enactment of the Statutory PAYGO Act when such difficult-to-pass legislation has been adopted.

Alan Cohen is a senior fellow at the Center for American Progress.

*Author’s note: Bill Heniff Jr.,“Memorandum: Budgetary Effects Excluded From the Statutory Pay-As-You-Go (Stat-PAYGO) Scorecards” (Washington: Congressional Research Service, 2017), Table 1. Document on file with author. Table 1 also includes exclusions resulting from current policy adjustments specified in the Statutory PAYGO Act, emergency designations, the CLASS Act, and the repurposing of prior emergency spending.