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Managing America: Taxes & Budget

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Week Ending July 24, 2009

H.R.2920 To reinstitute and update the Pay-As-You-Go requirement of budget neutrality on new tax and mandatory spending legislation, enforced by the threat of annual, automatic sequestration.

Pay-As-You-Go or ‘PAYGO’ requires an increase in taxes or reduction in spending to offset other spending increases in bills thereby making the bills budget neutral. PAYGO, was initiated in the mid-1980s as a budget tool for a growing federal deficit and was applied over ten years through the 1990 Budget Enforcement Act with the intention of reducing the then $300 billion budget deficit.

Since the 1990 BEA various congresses have suspended PAYGO and then reapplied it. PAYGO is recognized as the mechanism with which Congress reduced the 1990 $300 billion deficit over several years resulting in a surplus in 2000. The 110^th Congress applied the procedure to appropriation bills.

The enforcement mechanism in PAYGO is sequestration, an action that automatically takes place if deficit neutrality is breached. Should that happen spending for a variety of programs are automatically cut to balance the outlays.

Historically off-budget spending that increases the deficit has been allowed in bills designated as emergencies. Those bills include legislation regarding war, unemployment, disasters, and unforeseen circumstances that would not have a lengthy life span. In this bill there is a list of programs that would be exempt from sequestration if a breach occurs. Among them are some veteran programs, various budget accounts including compensation for the President, intra-governmental funds, federal retirement and disability accounts and activities, prior legal obligations of the federal government, non-budgetary accounts such as the Federal Reserve and some government sponsored entities, low income programs, mostly for children, nutrition, and foster care programs, and economic recovery programs. Low income heating help, housing assistance, Pell Grants, Social Security, and Medicaid are also exempt.

Under the bill deficit producing spending or tax cuts must be offset over the course of five to ten years. Three programs will receive immediate exemption. They are Medicare payments to physicians, the Alternative Minimum tax, any extension of child tax credit, marriage penalty relief, and reduction in income tax rates for taxpayers with incomes below $250,000. The current estate tax and tax rate is also exempt.

Upper income tax breaks, popular during most of the Bush Administration but not subject to PAYGO rules would, in future legislation and if the prevailing majority in Congress wants, be subject to PAYGO.

The bill provides for PAYGO scorekeeping and disclosure to the public. As soon as practicable after Congress completes action on any Paygo legislation, CBO shall provide an estimate of the budgetary effects to the president’s Office of Management and Budget (OMB). OMB shall maintain and make publicly available a document containing a PAYGO ledger and, not later than 7 days after the enactment of any PAYGO legislation, OMB shall record on that ledger its estimate of the legislation's budgetary effects in each fiscal year. The document shall also explain any major differences between the OMB and CBO estimates of the budgetary effects of PAYGO legislation. Once it enters budgetary effects on the ledger, OMB shall not change the entries other than to correct errors.

If a provision of PAYGO legislation is enacted that the President designates as an emergency requirement and that the Congress so designates in statute, OMB shall display the budgetary effects of that provision as an addendum in the document containing the PAYGO ledger but shall not record the budgetary effects in the ledger itself.

OMB shall cumulate the budgetary effects of a PAYGO Act over the budget year and the nine subsequent out years and divide that cumulative total by ten to get a ‘look back’ at compliance.

In making estimates of the budgetary effects of a PAYGO act that amends both the AMT and at least one separate provision of the income tax, or amends more than one separate provision of the income tax, OMB shall first estimate the budgetary effects of any amendment to the AMT in that act, and shall then estimate the budgetary effects of each remaining amendment to the income tax as though any AMT amendments contained in that Act and the preceding amendments made by that Act had been enacted but the succeeding amendments had not.

Payments of social insurance, deposit insurance, pension insurance, and any similar statutory financial insurance guarantees are assumed to be made in full regardless of the sufficiency of the funds supporting those programs, and funding for flood insurance and any similar contractual insurance programs is assumed to be sufficient to fulfill existing contracts.

Social Security Benefits and Tier I Railroad Retirement Benefits- Benefits payable under the old-age, survivors, and disability insurance program established under title II of the Social Security Act are exempt from sequestration in the event of a Paygo violation under this act as are numerous veteran and other programs, (Listed below)

No later than 14 days (excluding weekends and holidays) after Congress adjourns to end a session, OMB shall make publicly available an annual PAYGO report and publish it in the Federal Register.

Sponsor: 

Vote: On passage Passed by recorded vote: 265 - 166 (Roll no. 612).

Motion to Recommit with Instructions

The instructions contained in the motion seek to report the bill back to the House with an amendment to insert the following new sections: 1.) to extend the discretionary spending caps; 2.) Disclosure of Interest cost; and 3.) CBO scoring of conference reports.

On motion to recommit with instructions Failed by recorded vote: 196 - 234 (Roll no. 611).

Amendment in the nature of a substitute offered by Mr. Ryan (WI).

An amendment in the nature of a substitute printed in Part C of House Report 111-217 to establish caps on discretionary spending from FY2010 through FY2014 and a cap on total spending as a percentage of gross domestic product. It would also put in place maximum limits on deficits through 2019, again as a percentage of gross domestic product.

On agreeing to the Ryan (WI) amendment Failed by recorded vote 169 to 259: (Roll No. 610).

Cost to the taxpayers:

Earmark Certification:  

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MORE INFORMATION

Protected Veteran Programs

`Canteen Service Revolving Fund (36-4014-0-3-705).

`National Service Life Insurance Fund (36-8132-0-7-701).

`Native American Veteran Housing Loan Program (36-1120-0-1-704).

`Service-Disabled Veterans Insurance Fund (36-4012-0-3-701).

`Veterans Insurance and Indemnities (36-0120-0-1-701).

`Veterans Reopened Insurance Fund (36-4010-0-3-701).

`Veterans Special Life Insurance Fund (36-8455-0-8-701).

`United States Government Life Insurance Fund (36-8150-0-7-701).

`Benefits under chapter 21 of title 38, United States Code, relating to specially adapted housing and mortgage-protection life insurance for certain veterans with service-connected disabilities (36-0120-01-701).

`Compensation and Pensions (36-0102-0-1-701) to include Burial Benefits under chapter 23 of title 38.

`Benefits under chapter 33 of title 38, United States Code, relating to educational assistance provided by the Post-9/11 Educational Assistance Act of 2008 (36-0137-0-1-702).

`Benefits under chapter 39 of title 38, United States Code, relating to automobiles and adaptive equipment for certain disabled veterans and members of the Armed Forces (36-0137-0-1-702).

`Benefits under chapter 35 of title 38, United States Code, related to educational assistance for survivors and dependents of certain veterans with service-connected disabilities (36-0137-0-1-702).

`Assistance and services under chapter 31 of title 38, United States Code, relating to training and rehabilitation for certain veterans with service-connected disabilities (36-0137-0-1-702).

`Benefits under subchapters I, II, and III of chapter 37 of title 38, United States Code, relating to housing loans for certain veterans and for the spouses and surviving spouses of certain veterans Housing Program Account (36-1119-0-1-704).

`Special Benefits for Certain World War II Veterans (28-0401-0-1-701).

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The following budget accounts and activities shall be exempt from reduction under any order issued under this part:

`Activities resulting from private donations, bequests, or voluntary contributions to the Government.

`Activities financed by voluntary payments to the Government for goods or services to be provided for such payments.

`Administration of Territories, Northern Mariana Islands Covenant grants (14-0412-0-1-808).

`Advances to the Unemployment Trust Fund and Other Funds (16-0327-0-1-600).

`Appropriations for the District of Columbia (to the extent they are appropriations of locally raised funds).

`Black Lung Disability Trust Fund Refinancing (16-0329-0-1-601).

`Bonneville Power Administration Fund and borrowing authority established pursuant to section 13 of Public Law 93-454 (1974), as amended (89-4045-0-3-271).

`Claims, Judgments, and Relief Acts (20-1895-0-1-808).

`Colorado River Basins Power Marketing Fund, Western Area Power Administration (89-4452-0-3-271).

`Compact of Free Association (14-0415-0-1-808).

`Compensation of the President (11-0209-0-1-802).

`Construction, Rehabilitation, Operation and Maintenance, Western Area Power Administration (89-5068-0-2-271).

`Comptroller of the Currency, Assessment Funds (20-8413-0-8-373).

`Continuing Fund, Southeastern Power Administration (89-5653-0-2-271).

`Continuing Fund, Southwestern Power Administration (89-5649-0-2-271).

`Dual Benefits Payments Account (60-0111-0-1-601).

`Emergency Fund, Western Area Power Administration (89-5069-0-2-271).

`Exchange Stabilization Fund (20-4444-0-3-155); Federal Deposit Insurance Corporation, Deposit Insurance Fund (51-4596-4-4-373).

`Federal Deposit Insurance Corporation, FSLIC Resolution Fund (51-4065-0-3-373).

`Federal Deposit Insurance Corporation, Noninterest Bearing Transaction Account Guarantee (51-4458-0-3-373).

`Federal Deposit Insurance Corporation, Office of Inspector General (51-4595-0-4-373).

`Federal Deposit Insurance Corporation, Senior Unsecured Debt Guarantee (51-4457-0-3-373).

`Federal Housing Finance Agency, Administrative Expenses (95-5532-0-2-371).

`Federal Payment to the District of Columbia Judicial Retirement and Survivors Annuity Fund (20-1713-0-1-752).

`Federal Payment to the District of Columbia Pension Fund (20-1714-0-1-601).

`Federal Payments to the Railroad Retirement Accounts (60-0113-0-1-601).

`Federal Reserve Bank Reimbursement Fund (20-1884-0-1-803).

`Financial Agent Services (20-1802-0-1-803).

`Foreign Military Sales Trust Fund (11-8242-0-7-155).

`Hazardous Waste Management, Conservation Reserve Program (12-4336-0-3-999).

`Health Education Assistance Loans Program Account (75-0340-0-1-552).

`Host Nation Support Fund for Relocation (97-8337-0-7-051).

`Internal Revenue Collections for Puerto Rico (20-5737-0-2-806).

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`Intragovernmental funds, including those from which the outlays are derived primarily from resources paid in from other government accounts, except to the extent such funds are augmented by direct appropriations for the fiscal year during which an order is in effect.

`Medical Facilities Guarantee and Loan Fund (75-9931-0-3-551).

`National Credit Union Administration, Central Liquidity Facility (25-4470-0-3-373).

`National Credit Union Administration, Corporate Credit Union Share Guarantee Program (25-4476-0-3-376).

`National Credit Union Administration, Credit Union Homeowners Affordability Relief Program (25-4473-0-3-371).

`National Credit Union Administration, Credit Union Share Insurance Fund (25-4468-0-3-373).

`National Credit Union Administration, Credit Union System Investment Program (25-4474-0-3-376).

`National Credit Union Administration, Operating fund (25-4056-0-3-373).

`National Credit Union Administration, Share Insurance Fund Corporate Debt Guarantee Program (25-4469-0-3-376).

`National Credit Union Administration, U.S. Central Federal Credit Union Capital Program (25-4475-0-3-376).

`Office of Thrift Supervision (20-4108-0-3-373).

`Operation and Maintenance, Alaska Power Administration (89-0302-0-1-271).

`Operation and Maintenance, Southeastern Power Administration (89-0302-0-1-271).

`Operation and Maintenance, Southwestern Power Administration (89-0303-0-1-271).

`Panama Canal Commission Compensation Fund (16-5155-0-2-602).

`Payment of Vietnam and USS Pueblo prisoner-of-war claims within the Salaries and Expenses, Foreign Claims Settlement account (15-0100-0-1-153).

`Payment to Civil Service Retirement and Disability Fund (24-0200-0-1-805).

`Payment to Department of Defense Medicare-Eligible Retiree Health Care Fund (97-0850-0-1-054).

`Payment to Judiciary Trust Funds (10-0941-0-1-752).

`Payment to Military Retirement Fund (97-0040-0-1-054).

`Payment to the Foreign Service Retirement and Disability Fund (19-0540-0-1-153).

`Payments to Copyright Owners (03-5175-0-2-376).

`Payments to Health Care Trust Funds (75-0580-0-1-571).

`Payments to Social Security Trust Funds (28-0404-0-1-651).

`Payments to the United States Territories, Fiscal Assistance (14-0418-0-1-806).

`Payments to trust funds from excise taxes or other receipts properly creditable to such trust funds.

`Payments to widows and heirs of deceased Members of Congress (00-0215-0-1-801).

`Postal Service Fund (18-4020-0-3-372).

`Reimbursement to Federal Reserve Banks (20-0562-0-1-803).

`Salaries of article III judges.

`Soldiers and Airmen's Home, payment of claims (84-8930-0-7-705).

`Tennessee Valley Authority Fund, except nonpower programs and activities (64-4110-0-3-999).

`Tribal and Indian trust accounts within the Department of the Interior which fund prior legal obligations of the Government or which are established pursuant to Acts of Congress regarding Federal management of tribal real property or other fiduciary responsibilities, including but not limited to Tribal Special Fund (14-5265-0-2-452), Tribal Trust Fund (14-8030-0-7-452), Indian Land and Water Claims Settlements (14-2303-0-1-452), White Earth Settlement (14-2204-0-1-452), and Indian Water Rights and Habitat Acquisition (14-5505-0-2-303).

`United Mine Workers of America 1992 Benefit Plan (95-8260-0-7-551).

`United Mine Workers of America 1993 Benefit Plan (95-8535-0-7-551).

`United Mine Workers of America Combined Benefit Fund (95-8295-0-7-551).

`United States Enrichment Corporation Fund (95-4054-0-3-271).

`Universal Service Fund (27-5183-0-2-376); Vaccine Injury Compensation (75-0320-0-1-551).

`Vaccine Injury Compensation Program Trust Fund (20-8175-0-7-551).

`Western Area Power Administration, Borrowing Authority, Recovery Act (89-4404-0-3-271).

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The following Federal retirement and disability accounts and activities shall be exempt from reduction under any order issued under this part:

`Black Lung Disability Trust Fund (20-8144-0-7-601).

`Central Intelligence Agency Retirement and Disability System Fund (56-3400-0-1-054).

`Civil Service Retirement and Disability Fund (24-8135-0-7-602).

`Comptrollers general retirement system (05-0107-0-1-801).

`Contributions to U.S. Park Police annuity benefits, Other Permanent Appropriations (14-9924-0-2-303).

`Court of Appeals for Veterans Claims Retirement Fund (95-8290-0-7-705).

`Department of Defense Medicare-Eligible Retiree Health Care Fund (97-5472-0-2-551).

`District of Columbia Federal Pension Fund (20-5511-0-2-601).

`District of Columbia Judicial Retirement and Survivors Annuity Fund (20-8212-0-7-602).

`Energy Employees Occupational Illness Compensation Fund (16-1523-0-1-053).

`Foreign National Employees Separation Pay (97-8165-0-7-051).

`Foreign Service National Defined Contributions Retirement Fund (19-5497-0-2-602).

`Foreign Service National Separation Liability Trust Fund (19-8340-0-7-602).

`Foreign Service Retirement and Disability Fund (19-8186-0-7-602).

`Government Payment for Annuitants, Employees Health Benefits (24-0206-0-1-551); Government Payment for Annuitants, Employee Life Insurance (24-0500-0-1-602).

`Judicial Officers' Retirement Fund (10-8122-0-7-602).

`Judicial Survivors' Annuities Fund (10-8110-0-7-602).

`Military Retirement Fund (97-8097-0-7-602).

`National Railroad Retirement Investment Trust (60-8118-0-7-601).

`National Oceanic and Atmospheric Administration retirement (13-1450-0-1-306).

`Pensions for former Presidents (47-0105-0-1-802).

`Postal Service Retiree Health Benefits Fund (24-5391-0-2-551).

`Rail Industry Pension Fund (60-8011-0-7-601).

`Retired Pay, Coast Guard (70-0602-0-1-403).

`Retirement Pay and Medical Benefits for Commissioned Officers, Public Health Service (75-0379-0-1-551).

`Special Benefits for Disabled Coal Miners (16-0169-0-1-601).

`Special Benefits, Federal Employees' Compensation Act (16-1521-0-1-600).

`Special Workers Compensation Expenses (16-9971-0-7-601).

`Tax Court Judges Survivors Annuity Fund (23-8115-0-7-602).

`United States Court of Federal Claims Judges' Retirement Fund (10-8124-0-7-602).

`United States Secret Service, DC Annuity (70-0400-0-1-751).

`Voluntary Separation Incentive Fund (97-8335-0-7-051).

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Prior legal obligations of the Government in the following budget accounts and activities shall be exempt from any order issued under this part:

`Biomass Energy Development (20-0114-0-1-271).

`Check Forgery Insurance Fund (20-4109-0-3-803).

`Credit liquidating accounts.

`Credit reestimates.

`Employees Life Insurance Fund (24-8424-0-8-602).

`Aviation Insurance Revolving Fund (69-4120-0-3-402).

`Federal Crop Insurance Corporation Fund (12-4085-0-3-351).

`Federal Emergency Management Agency, National Flood Insurance Fund (58-4236-0-3-453).

`Geothermal resources development fund (89-0206-0-1-271).

`Homeowners Assistance Fund (97-4090-0-3-051).

`International Trade Administration, Operations and administration (13-1250-0-1-376).

`Low-Rent Public Housing--Loans and Other Expenses (86-4098-0-3-604).

`Maritime Administration, War Risk Insurance Revolving Fund (69-4302-0-3-403).

`Natural Resource Damage Assessment Fund (14-1618-0-1-302).

`Overseas Private Investment Corporation, Noncredit Account (71-4184-0-3-151).

`Pension Benefit Guaranty Corporation Fund (16-4204-0-3-601).

`Rail service assistance within the Safety and Operations account (69-0700-0-1-401).

`San Joaquin Restoration Fund (14-5537-0-2-301).

`Servicemembers' Group Life Insurance Fund (36-4009-0-3-701).

`Terrorism Insurance Program (20-0123-0-1-376).

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Nonbudgetary accounts and activities, including the following, are exempt from sequestration under this part:

`Credit financing accounts.

`Deposit funds.

`Federal Reserve.

`Government Sponsored Enterprises, including the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.

`Thrift Savings Fund.

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Low-Income Programs- The following programs shall be exempt from reduction under any order issued under this part:

`Academic Competitiveness/Smart Grant Program (91-0205-0-1-502).

`Child Care Entitlement to States (75-1550-0-1-609).

`Child Enrollment Contingency Fund (75-5551-0-2-551).

`Child Nutrition Programs (with the exception of special milk programs) (12-3539-0-1-605).

`Children's Health Insurance Fund (75-0515-0-1-551).

`Commodity Supplemental Food Program (12-3512-0-1-605).

`Contingency Fund (75-1522-0-1-609).

`Family Support Programs (75-1501-0-1-551).

`Federal Pell Grants under section 401 title IV of the Higher Education Act.

`Grants to States for Low-Income House Projects in Lieu of Low-Income Housing Credit Allocations, Recovery Act (20-0139-0-1-604).

`Grants to States for Medicaid (75-0512-0-1-551).

`Payments for Foster Care and Permanency (75-1545-0-1-609).

`Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (12-3510-0-1-605).

`Supplemental Nutrition Assistance Program (12-3505-0-1-605).

`Supplemental Security Income Program (28-0406-0-1-609).

`Temporary Assistance for Needy Families (75-1552-0-1-609).'.

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Economic Recovery Programs- Section 255 of BBEDCA is amended by adding the following after subsection (h):

`(i) Economic Recovery Programs- The following programs shall be exempt from reduction under any order issued under this part:

`All programs enacted in, or increased in programs provided by, the American Recovery and Reinvestment Act of 2009.

`Exchange Stabilization Fund-Money Market Mutual Fund Guaranty Facility (20-4274-0-3-376).

`Office of Financial Stability (20-0128-0-1-376).

`Financial Stabilization Reserve (20-0131-4-1-376).

`GSE Mortgage-Backed Securities Purchase Program Account (20-0126-0-1-371).

`GSE Preferred Stock Purchase Agreements (20-0125-0-1-371).

`Office of Financial Stability (20-0128-0-1-376).

`Special Inspector General for the Troubled Asset Relief Program (20-0133-0-1-376).

`Troubled Asset Relief Program Account (20-0132-0-1-376).

`Troubled Asset Relief Program Equity Purchase Program (20-0134-0-1-376).

`Troubled Asset Relief Program, Home Affordable Modification Program (20-0136-0-1-604).'.

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No reproduction, language translation or distribution without written permission from TheWeekInCongress.com.(TM)