Trump Signs Order Requiring Agencies to Offset Some New Spending

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Researchers have suggested the Bush-era policy could hurt program management.

President Trump on Thursday signed an executive order aimed at cutting federal agency spending by reinstating a rule that originally went into place during the George W. Bush administration. 

The order will put into effect the “administrative PAYGO” memorandum, which Bush implemented in 2005 to require agencies to offset any actions they took that would increase spending on mandatory programs. While federal deficits have ballooned since President Trump took office, the order is part of an effort to rein in agency spending and give the administration more flexibility for its priorities.      

“Administrative actions” subject to the order will include rules, demonstrations, program notices or guidance not specifically required by law. Agencies will have to submit administrative actions that would increase mandatory spending to the Office of Management and Budget director, along with proposals to offset that spending. OMB will issue further instructions to agencies in the coming months. 

“President Trump continues keeping government spending accountable to the American people,” a senior administration official said. “For too long, careless federal spending has occurred without restraint. While the Obama administration completely ignored administrative PAYGO requirements, this administration is taking steps to stop out-of-control Washington spending and hold government accountable to spending taxpayer money wisely.”

A Congressional Research Service report released in 2010 gave the OMB policy mixed reviews, saying it was difficult to measure its success due to a lack of transparency. 

“After several years of implementation, however, very little is publicly known about the scope and effect of OMB’s process, the rationales for OMB determinations, or whether the process has achieved its stated purpose of constraining mandatory spending,” CRS said. 

The report noted the Obama administration had committed to maintaining the Bush-era policy, but the opacity of the initiative made it difficult to assess whether it had followed through on that promise. As a goal, CRS added, the administrative paygo effort could cut spending, but could have additional consequences for program management. 

“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.” 

CRS cited an example in which the Agriculture Department was unable to make payouts to farmers forced to stop farming because they owned “highly sensitive” or eroding lands due to the paygo requirements. The issue only came to light when a USDA official described it during a congressional hearing. 

OMB also told CRS the policy had not been implemented in a centralized manner, so it was taking effect in a disparate manner at different agencies across government. CRS warned a status quo of carrying out the policy would likely lead to “very limited transparency outside the executive branch” and could “displace statutory authority vested in agencies,” though the researchers noted the initiative could “prevent increases in mandatory spending that are not required by law.”