Tax Cuts Could Trigger PAYGO Sequester

Congress has adopted a fiscal year (FY) 2018 budget resolution allowing $1.5 trillion in tax cuts with a simple majority in the Senate, using a budget process known as reconciliation.

However, according to a report from the Committee for a Responsible Federal Budget (CRFB), a tax reform package of this magnitude could run afoul of a different budget process, known as statutory pay-as-you-go, or PAYGO. Under statutory PAYGO, a major tax cut could trigger sequestration of non-exempt mandatory programs by an amount so large that it would effectively eliminate most of these programs altogether. Waiving this sequestration would require a three-fifths vote in the Senate.

This Budget Brief summarizes CRFB’s report, and lists mandatory programs that could potentially be affected.