Budget Process:

Use of PAYGO and Discretionary Offsets

AIMD-98-213R: Published: Jul 14, 1998. Publicly Released: Jul 14, 1998.

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Pursuant to a congressional request, GAO reviewed the past use of discretionary spending as an offset for mandatory spending increases or tax decreases under the pay-as-you-go (PAYGO) provisions of the Budget Enforcement Act (BEA), focusing on: (1) instances where mandatory spending reductions have offset discretionary increases; (2) instances where discretionary spending reductions have offset mandatory spending increases or tax reductions; (3) changes in the budget scoring guidelines resulting from the Balanced Budget Act of 1997 to determine if they increased the flexibility to use mandatory reductions to offset discretionary spending increases; and (4) BEA scoring with regard to the use of offsets.

GAO noted that: (1) mandatory spending changes have been used at least 100 times since 1992 to offset discretionary spending increases; (2) the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO) scored these provisions in accordance with budget scorekeeping rules; (3) in contrast, GAO could find only one example in which reductions in discretionary spending could have been used to offset mandatory spending increases or tax reductions, although both OMB and CBO agree this is allowable under limited circumstances; and (4) the changes in the scorekeeping guidelines following the 1997 Balanced Budget Act did not make it easier to use PAYGO savings to offset increased discretionary spending.

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