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House GOP wants answers from OMB about rulemaking costs

Debt limit law provision requiring White House to offset regulatory spending increases has loopholes

House Budget Chairman Jodey C. Arrington, R-Texas, and Office of Management and Budget Director Shalanda Young, talk before a March 21 House Budget Committee hearing on the president's budget request. (Tom Williams/CQ Roll Call)

By Paul M. Krawzak
April 29, 2024

House Budget Committee Republicans ratcheted up pressure on the White House on Monday to provide details on implementation of a law intended to offset the budgetary costs of administrative rules and regulations, which they claim have run into the trillions of dollars during President Joe Biden’s first term.

In a letter to White House budget director Shalanda Young, House Budget Chairman Jodey C. Arrington, R-Texas, and Jack Bergman, R-Mich., the panel’s oversight task force chairman, said they have “serious concerns” about the Office of Management and Budget’s treatment of the 2023 requirement.

The “administrative pay-as-you-go” provision in the 2023 debt limit law requires federal agencies to propose spending cuts or other pay-fors to offset “economically significant” or “major” rules or regulations that would cost $1 billion or more over a decade and $100 million or more annually. But waivers baked into the law have thus far rendered the provision basically toothless.

Arrington and Bergman wrote to Young that the Biden administration has either proposed or already implemented executive actions that could cost more than $2 trillion over a decade, according to an informal running tally Budget panel Republicans updated on Friday.

Among the most expensive is a 2021 overhaul of the Agriculture Department formula that determines Supplemental Nutrition Assistance Program benefits. That overhaul led to a 23 percent increase and added around $300 billion to food stamp costs over a decade. 

Pandemic-era pauses in student loan repayments and other initiatives to forgive student debt cost hundreds of billions of dollars, according to the committee. Another costly regulation tightens vehicle emission standards.

The GOP letter seeks details on how many rules since Biden took office would qualify for the administrative pay-as-you-go requirement, how many have been given waivers by OMB, and the estimated cost of each rule where pay-as-you-go was waived.

“As our nation faces an unprecedented and continuously growing debt crisis, offsetting costs of administrative rules is imperative,” the letter says. The letter expresses concern that “OMB is effectively ignoring” the requirement.

As described in a November 2023 report from the Government Accountability Office, OMB said that of 28 major rules that were finalized between June 3, 2023 and Nov. 3, 2023, only two were costly enough to qualify for administrative pay-as-you-go.

OMB waived the offset requirement for those two rules — Biden’s July 2023 income-driven student loan repayment plan and a November Health and Human Services rule updating Medicare home health care reimbursements — citing the law’s waiver authority if a rule is necessary for “effective program delivery” or “delivery of essential services.” No further explanation of such waivers is required under the law.

The changes to income-based student loan repayments alone cost more than $260 billion over a decade, the Congressional Budget Office estimated.

In January, House Budget Committee Republicans wrote to the GAO that the agency’s report on administrative pay-as-you-go “raises concerns about whether the provision is being implemented effectively and as intended.”

Arrington and Bergman requested that the GAO prepare a supplemental report, which they said they would use in “fiscal oversight duties.” A committee spokesman said GAO has not “formally responded” to the request for a supplemental report.

While the pay-as-you-go provision requires agencies to propose offsets under certain circumstances, OMB says in its formal guidance that even if agencies propose offsets, they are not required to implement them.

That does not sit well with House Budget Committee Republicans, who argue that’s contrary to the intent of the law and similar provisions in previous laws. Arrington and Bergman wrote that past administrations defined the pay-as-you-go rule as a “budget neutrality requirement” on agency actions that increase mandatory or automatic spending.

They said OMB’s interpretation “exhibits a complete and total disregard of the provision and is markedly different from previous iterations … which promulgated the measure’s intention of promoting budget-neutral policy.”

The policy of offsetting the cost of administrative actions goes back to former President George W. Bush’s administration, and continued in various forms under his next two successors. Biden revoked former President Donald Trump’s pay-as-you-go rule and other initiatives from the prior administration as one of his first acts.

The pay-as-you-go policy always had loopholes, and records are spotty about how it was used. But according to a 2011 GAO report, USDA administrative actions during the Bush administration resulted in net savings of $244 million between fiscal 2006 and fiscal 2015.

The pay-as-you-go requirement lapses after Dec. 31, 2024. But a future president could reinstate it unilaterally.