President Trump on Thursday signed an executive order aimed at cutting spending at federal agencies by requiring them to offset any increased outlays on mandatory programs with other cuts.
The “administrative PAYGO” rule put into effect by Trump’s order was originally put in place under the administration of President George W. Bush in 2005, according to Government Executive. The mandatory spending it covers includes spending on Social Security, Medicare and Medicaid.
“It is the policy of the executive branch to control Federal spending and restore the Nation’s fiscal security,” the order says. “This policy includes ensuring that agencies consider the costs of their administrative actions, take steps to offset those costs, and curtail costly administrative actions.”
Congress faces a similar legal requirement and Trump signed a similar order in 2017, but that order only applied to that fiscal year, The Wall Street Journal’s Kate Davidson and Andrew Restuccia note.
A 2010 Congressional Research Service (CRS) report highlighted by Government Executive noted that, while the Obama administration has said it would continue the administrative PAYGO policy, it was difficult to gauge the measure’s success, even after several years of implementation, due to a lack of transparency about the processes involved. The CRS report also noted that even if the rule does reduce spending it could raise other concerns.
“While potentially limiting spending, the OMB process may have measurable effects on program outcomes for entitlement programs, for example, and may impose administrative burdens on federal agencies,” CRS said. “Moreover, if agencies experience difficulty in identifying plausible offsets, it is conceivable that agencies may choose to not consider, pursue, or submit to OMB an administrative action that would cost money, regardless of the agency’s perception of a policy’s merits or whether it would be consistent with congressional intent.”
The bottom line: “It is not clear by how much the directive will reduce federal outlays and it is unlikely to change the trajectory of trillion-dollar annual budget deficits over the next decade after Mr. Trump and congressional leaders agreed to boost federal spending, and Republicans advanced a $1.5 trillion tax cut,” the Journal’s Davidson and Restuccia say.