Federal Manager's Daily Report

President Trump has issued an executive order restricting the discretion of agencies to make policy decisions that have the effect of increasing spending in “mandatory” programs in which payments are required when certain eligibility conditions are met.

The order closely follows two others restricting agency discretion to issue and enforce guidance documents that set policies outside the formal rule-making process.


The new order notes that under a 2005 OMB policy known as administrative pay as you go, or PAYGO, agencies must include one or more proposals for reducing mandatory spending whenever an agency proposes to undertake a discretionary administrative action that would increase mandatory spending.

“In practice, however, agencies have applied this requirement with varying degrees of stringency, sometimes resulting in higher mandatory spending. Accordingly, institutionalizing and reinvigorating administrative PAYGO through this order is a prudent approach to keeping mandatory spending under control,” it says.

Under the policy, before taking such an administrative action, an agency would have to provide a cost estimate to OMB along with “a proposal to undertake other administrative action(s) that would comparably reduce mandatory spending. Submissions to increase mandatory spending that do not include a proposal to offset such increased spending shall be returned to the agency for reconsideration.”

OMB will have the discretion to determine whether a proposed offset “is comparable to the relevant increase in mandatory spending, taking into account the magnitude of the offset and the increase” and any other factors it deems appropriate.

If an agency determines that a proposed administrative action that would increase mandatory spending is required by statute, it must provide a written opinion to that effect to OMB and consult with OMB before carrying it out.