08/21/2025

CBO Says PAYGO Cuts Likely Triggered

The Congressional Budget Office (CBO) has warned that the One Big Beautiful Bill will likely trigger automatic spending cuts under the Statutory Pay-As-You-Go Act (PAYGO). Unless Congress intervenes, sequestration would take effect in January 2026, with Medicare facing an estimated $45 billion reduction in that year alone, according to the CBO PAYGO letter.

Senior GOP leaders have signaled that Congress will likely waive PAYGO requirements before the end of the year, as it has done several times since the law’s enactment in 2010.

A separate CBO distributional analysis found that households in the lowest 10 percent of earners would see about a $1,200 annual loss in resources, largely from Medicaid and SNAP cuts. Middle-income households would see annual gains of $800 to $1,200, while the top 10 percent of earners would see increases averaging $13,600 per year, driven by tax cuts.

Meanwhile, House Energy and Commerce Committee Chairman Brett Guthrie (R-KY) highlighted a CBO coverage update showing that about 10 million people will lose Medicaid coverage, not the 17 million previously reported, with most either ineligible or voluntarily leaving the program.