The Fiscal Responsibility Act of 2023 requires federal agencies to identify increases in mandatory or "direct spending" that may result from some new federal rules.
In these cases, agencies must:
notify the Office of Management and Budget of estimated increases to direct spending
identify actions that could offset this spending or request a waiver
In this Q&A report, we identified 28 economically significant rules finalized between June 3 and November 1, 2023. OMB officials said they granted two waivers and the requirements didn't seem to apply to the other 26 rules.
What GAO Found
The Office of Management and Budget (OMB) issued M-23-21, providing guidance for implementing Administrative Pay-As-You-Go (PAYGO) on September 1, 2023. Administrative PAYGO requires federal agencies to report information to OMB for final rules that increase direct spending above certain thresholds. For these rules, federal agencies must identify the potential increases in direct spending associated with the rule—as well as one or more additional agency actions that would potentially offset that increase—or request and receive a waiver. OMB's guidance addressed potential exemptions for individual rules and the process for waiving Administrative PAYGO requirements, among other elements. It also described the process for submitting information to OMB for administrative actions subject to Administrative PAYGO requirements.
The Administrative PAYGO requirements apply to final rules that increase direct spending above certain thresholds and were published after June 3, 2023—the date when the requirements were enacted. In addition, OMB's guidance applies to proposed rules submitted for OMB review after September 1, 2023. As of November 1, 2023, OMB has not received a written notice or written opinion and estimate for any significant rule finalized after June 3, 2023, according to OMB staff.
Why GAO Did This Study
From fiscal years 2001 through 2021, more than 60 percent of federal spending in any given year came from direct spending, which includes spending for certain entitlement programs such as Social Security, Medicare, and Medicaid. The Fiscal Responsibility Act of 2023 established Administrative PAYGO, a provision that requires federal agencies to report increases in direct spending that result from certain final rules. The act also includes a provision for GAO to report on the progress in implementing Administrative PAYGO.
GAO reviewed the Fiscal Responsibility Act of 2023 and OMB's guidance related to Administrative PAYGO to determine how federal agencies are to comply with Administrative PAYGO requirements. GAO also spoke with and reviewed written responses from officials at OMB and its Office of Information and Regulatory Affairs about their process for working with federal agencies, and the extent to which administrative actions that agencies submitted since enactment of the Fiscal Responsibility Act of 2023 had complied with Administrative PAYGO requirements.
For more information, contact Jeff Arkin at (202) 512-6806 or ArkinJ@gao.gov.