House Votes to Waive PAYGO to Avoid Relief Bill-Related Cuts

WASHINGTON – The House voted 246-175 Friday to waive mandatory, across-the-board budget cuts under the statutory PAYGO law when it comes implementing the $1.9 trillion COVID relief package signed into law last week.

Budget Hawks have long pointed to PAYGO, which stands for “pay as you go,” as a way to curb profligate spending on Capitol Hill.

It is a budget rule requiring that tax cuts and mandatory spending increases be offset by tax increases or cuts in mandatory spending.

The PAYGO rule in the House was a key provision of the rules package for both the 116^th and 117^th Congress.

H.R. 1868, introduced by Reps. John Yarmuth, D-Ky., Richard Neal, D-Mass., Frank Pallone, D-N.J., and David Scott, D-Ga., extends the temporary Medicare sequester moratorium through the end of 2021 as well as prevent other “budgetary effects” meant to prevent the package from increasing the federal budget deficit.

Signed into law last week, the $1.9 trillion American Rescue Act included several “pay-as-you-go,” or PAYGO, spending cuts per a 2010 federal rule requiring new legislation not increase the federal budget deficit or reduce the surplus.

Had H.R. 1868 not passed Friday, Medicare alone stood to take a $36 billion hit by fiscal year 2022 to offset federal spending increases elsewhere.

“When Democrats worked to pass the statutory PAYGO law and to implement the House PAYGO rule, we made it clear that efforts to address national emergencies are exempt,” said House Majority Leader Steny Hoyer in a written statement. 

“Faced with a crisis, Congress must have the flexibility to respond,” Hoyer continued. “There is no question that the crisis we face now with COVID-19 and the need to build back better from this pandemic is precisely the kind of emergency that PAYGO proponents had in mind then and still do now. 

“Providing relief to struggling Americans, getting our children back into a safe classroom setting, helping businesses reopen safely, and supporting vaccination and testing efforts are the kind of necessary policy responses that PAYGO’s flexible emergency exemption allows,” he added.

Hoyer explained that Friday’s vote was necessary because the Senate’s byzantine rules for reconciliation prevented including the emergency exemption language within the American Rescue Plan itself.

“House Democrats are voting today to remove any question that this once-in-a-century event could be used by Republicans to force cuts to Medicare, farm supports, and other programs through sequestration” Hoyer said. 

Appearing before the House Rules Committee last week, Yarmuth said H.R. 1868 “is largely technical fixes and sequestration adjustments that have historically been bipartisan and noncontroversial.” 

“Over the past year, Congress has delivered multiple critical and necessary COVID relief packages to address the real emergencies facing the American people and our economy,” he continued. “Each time, statutory PAYGO was waived because members on both sides of the aisle understood the dire need for relief as well as the dire impact sequestration would have on our nation’s seniors, students, and farmers.

“Because PAYGO requirements cannot be changed in reconciliation bills, an additional legislative fix is needed to avert these painful and indiscriminate cuts to Medicare, farm supports, and other programs. Today’s bill will ensure the American Rescue Plan is treated the same as previous relief measures, including the Families First Coronavirus Response Act and the CARES Act, and can be considered the final step in this reconciliation process,” Yarmuth said.

Read the legislative text here.

Read the Section-by-Section here.

Read more about Statutory PAYGO here.