PAYGO was initially put in place by a divided government in 1990. It remained on the books until 2002, and is often associated with the elimination of deficits in the late 1990s. In 2010, PAYGO was reintroduced as part of a deal to increase the nation's debt limit. Unfortunately, the new PAYGO rule is riddled with exceptions. For instance, it doesn't apply to the U.S. Postal Service or Medicare provider reimbursements, and Congress can exempt any deficit-increasing bill from the restrictions by designating the legislation as a response to an emergency. Further, PAYGO is enforced by the Congressional Budget Office and the White House Office of Management and Budget, which in turn are responsible to the two branches of government that spend taxpayer money.
A PAYGO constitutional amendment, however, couldn't be altered or abolished on a political whim, would never sunset, and couldn't be evaded through statutory exemptions. Moreover, any violations of a PAYGO amendment would be addressable by the judicial branch, providing a check on the free-spending branches. A PAYGO amendment could thus serve as a powerful break on political tendencies to shift costs onto future generations.
The language of such an amendment would be the subject of negotiation, and this opens a can of worms. Given the ways Congress manipulates legislative wording, the amendment could be rendered ineffective. With this in mind, we propose the language be simple, straightforward and free of political exceptions.
The amendment should establish a special court with budget experts to handle cases of potential PAYGO violations. Leaving enforcement only with the CBO could expose its analysts to political pressure, because their estimates would have the potential to kill legislation. We imagine the special court might be petitioned to score legislation in advance of a bill's passage to keep the system from getting clogged up. And we imagine that the amendment would enable nonprofit good- governance groups to serve as watchdogs, filing complaints to the court as necessary.