Pay-As-You-Go (PAYGO)

Pay-as-you-go, commonly referred to as PAYGO, is a Congressional budget rule enforced by a point of order that is designed to make it more difficult for Congress to enact legislation that would worsen the deficit over the upcoming six- and 11-year periods. In order for legislation to pass the PAYGO deficit test, any increase in mandatory spending or revenue decreases (e.g. tax cuts) must be offset by spending decreases or revenue increases. In the House, PAYGO applies to each bill, so that the bill itself must be deficit neutral. In the Senate, a PAYGO scorecard is used so that a bill that reduces spending or raises revenue can be used to offset a bill considered later that increases spending or reduces revenue, thereby avoiding a PAYGO violation. PAYGO does not apply to appropriations bills. A majority can vote to waive PAYGO in the House and a supermajority of 60 votes are needed in the Senate.