Pathologies at the Intersection of the Budget and Tax Legislative Processes

101 Pages Posted: 15 Feb 2005

See all articles by Cheryl D. Block

Cheryl D. Block

Washington University in St. Louis - School of Law


In 1999, Congress utilized a new gimmick in its budget legislative process. Under pay as you go (PAYGO) budget rules, Congress used the repeal of installment sale reporting for certain taxpayers to pay for revenue-losing provisions in its budget deal with the administration. Early in 2000, Congress simply repealed the repeal of the installment sale provision retroactively as if it had never existed. This gave Congress room to by-pass existing budget rules, permitting it to include new spending and tax cuts not included in the earlier budget deal and that would not have been permitted under existing budget rules. Although such gimmicks are not uncommon, the installment sale episode reflected pathologies ingrained at the intersection of the current federal budget and tax legislation processes. This Article examines those pathologies, their origins, and their effects on federal tax and budget policy. The Article then reviews the installment sale episode as a breach of Congress's contract with itself, emblematic of the pathologies and the harm that they cause to genuine policy considerations. The PAYGO rules expired as of 2003. As Congress now considers whether, and in what form, PAYGO rules should be re-enacted, this Article suggests reforms that would re-emphasize the democracy-oriented goals of the budget legislative process.

Keywords: PAYGO, budget, tax policy

JEL Classification: H61, H62, K23, K34

Suggested Citation

Block, Cheryl D., Pathologies at the Intersection of the Budget and Tax Legislative Processes. GWU Law School Public Law Research Paper No. 129, Available at SSRN:

Cheryl D. Block (Contact Author)

Washington University in St. Louis - School of Law ( email )

Campus Box 1120
St. Louis, MO 63130
United States

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