The pay-as-you-go rule was originally designed during the last period of chronically high deficits to prevent policy changes that would make the situation worse. It did not guarantee deficit reduction or freeze in place all tax and entitlement laws. It did, however, require anyone proposing new tax cuts or entitlement expansions to come up either with a way of paying for them without enlarging the deficit or with 60 votes in the Senate to bypass the rule. Requiring this simple trade-off had a powerful effect. As the Congressional Budget Office has noted, “Between 1991 and 1997, most new revenue and mandatory spending laws that were enacted were consistent with the PAYGO requirement to be deficit neutral.”

[Center on Budget and Policy Priorities - http://www.cbpp.org/3-14-05bud.htm]

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