CBO's Estimates of the Statutory Pay-As-You-Go Effects of Public Law 119-21

CBO was asked for information concerning the effects of a potential sequestration (the cancellation of budgetary resources) in accordance with the Statutory Pay‐As‐You‐Go Act of 2010 (S-PAYGO) that could occur as a result of the enactment of the 2025 reconciliation act (Public Law 119-21).

CBO and the staff of the Joint Committee on Taxation estimate that under the act deficits will increase by $2.1 trillion over the 2025–2029 period and by $3.4 trillion over the 2025–2034 period relative to CBO's January 2025 baseline, excluding any macroeconomic or debt-service effects.

Under S-PAYGO, the Office of Management and Budget (OMB) is required to maintain 5- and 10-year scorecards that it updates with the estimated cumulative changes in revenues and outlays generated by newly enacted legislation.

If either scorecard indicates a net increase in the deficit, OMB is required to order a sequestration to eliminate the overage. The balance used to determine the amount of a sequestration is not the projected increase in the deficit for that particular year. Rather, OMB's 5- and 10-year scorecards identify the average annual effects of a piece of legislation over those periods and assign the average to each year in the period. Before an average is calculated, any current-year effects are combined with those for the budget year. The amount of a sequestration would equal the larger of the two averages.