TeachMeFinance.com - explain pay-as-you-go (PAYGO)
pay-as-you-go (PAYGO) -- A procedure set forth in the Deficit
Control Act that ensures that all legislation affecting direct spending or receipts is budget neutral
in each fiscal year. The Office of Management and Budget and CBO estimate the five-year budgetary effects
of all such legislation enacted before September 31, 2002. If the estimated effects in the budget year
would increase the deficit or reduce the surplus for that year, a PAYGO sequestration--a cancellation of
budgetary resources available for direct spending programs--is triggered.
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