SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Economic Growth and Price Stability 
Act of 1995''.

SEC. 2. FINDINGS; STATEMENT OF POLICY.

    (a) Findings.--The Congress finds that--
            (1) during the 25 years preceding the date of enactment of 
        this Act, the United States experienced a deterioration of 
        potential economic growth;
            (2) there is sufficient evidence to suggest that increased 
        Government spending, deficits, high taxes, and regulation have 
        significantly contributed to slower economic growth, higher 
        inflation, and diminished expectations;
            (3) micromanagement of the economy and fine tuning have not 
        alleviated economic hardship;
            (4) the conditions and goals established by the Full 
        Employment and Balanced Growth Act of 1978, have not been and 
        could not be met, and continue to cause confusion and ambiguity 
        about the appropriate role of monetary policy;
            (5) the multiple policy goals of the Board of Governors of 
        the Federal Reserve System, stipulated in the Full Employment 
        and Balanced Growth Act of 1978, have created uncertainty about 
        the aims of monetary policy, which can add to volatility in 
        economic activity and financial markets, costing workers jobs 
        and harming economic growth;
            (6) there is a need for the Congress to clarify the proper 
        role of the Board of Governors of the Federal Reserve System in 
        economic policymaking, in order to achieve the best environment 
        for long-term economic growth and the lowest possible interest 
        rates;
            (7) recognizing the dangers of inflation and the 
        appropriate role of monetary policy, political leaders in 
        countries throughout the world are directing the central banks 
        of those countries to institute reforms that focus monetary 
        policy on the single objective of price stability, rather than 
        on multiple policy goals; and
            (8) because price stability leads to the lowest possible 
        interest rates and is a key condition to maintaining the 
        highest possible levels of productivity, real incomes, living 
        standards, employment, and global competitiveness, price 
        stability should be the primary long-term goal of the Board of 
        Governors of the Federal Reserve System.
    (b) Statement of Policy.--It is the policy of the United States 
that--
            (1) the principal economic responsibilities of the 
        Government are to establish and ensure an environment that is 
        conducive to both long-term economic growth and increases in 
        living standards, by establishing and maintaining free markets, 
        low taxes, respect for private property, and the stable, long-
        term purchasing power of the United States currency; and
            (2) the primary long-term goal of the Board of Governors of 
        the Federal Reserve System should be to promote price 
        stability.

SEC. 3. MONETARY POLICY.

    (a) Amendment to the Federal Reserve Act.--Section 2A of the 
Federal Reserve Act (12 U.S.C. 225a) is amended to read as follows:

``SEC. 2A. MONETARY POLICY.

    ``(a) Price Stability.--The Board of Governors of the Federal 
Reserve System (hereafter in this section referred to as the `Board') 
and the Federal Open Market Committee (hereafter in this section 
referred to as the `Committee') shall--
            ``(1) establish an explicit numerical definition of the 
        term `price stability'; and
            ``(2) maintain a monetary policy that effectively promotes 
        long-term price stability.
    ``(b) Congressional Consultation.--Not later than February 20 and 
July 20 of each year, the Board shall consult with the Congress at 
semiannual hearings before the Committee on Banking, Housing, and Urban 
Affairs of the Senate and the Committee on Banking and Financial 
Services of the House of Representatives, about the objectives and 
plans of the Board and the Committee with respect to achieving and 
maintaining price stability.
    ``(c) Congressional Oversight.--The Board shall, concurrent with 
each semiannual hearing required by subsection (b), submit a written 
report to the Congress containing--
            ``(1) numerical measures to help assess the extent to which 
        the Board and the Committee are achieving and maintaining price 
        stability in accordance with subsection (a);
            ``(2) a description of the intermediate variables used by 
        the Board to gauge the prospects for achieving the objective of 
        price stability; and
            ``(3) the definition, or any modifications thereto, of 
        `price stability' established in accordance with subsection 
        (a)(1)(A).''.
    (b) Compliance Estimate.--Concurrent with the first semiannual 
hearing required by section 2A(b) of the Federal Reserve Act (as 
amended by subsection (a) of this section) following the date of 
enactment of this Act, the Board of Governors of the Federal Reserve 
System shall submit to the Congress a written estimate of the length of 
time it will take for the Board and the Committee to fully achieve 
price stability. The Board and the Committee shall take into account 
any potential short-term effects on employment and output in complying 
with the goal of price stability.

SEC. 4. REPEAL OF OBSOLETE PROVISIONS.

    (a) Full Employment and Balanced Growth Act of 1978.--The Full 
Employment and Balanced Growth Act of 1978 (15 U.S.C. 3101 et seq.) is 
repealed.
    (b) Employment Act of 1946.--The Employment Act of 1946 (15 U.S.C. 
1021 et seq.) is amended--
            (1) in section 3--
                    (A) in the section heading, by striking ``and 
                short-term economic goals and policies'';
                    (B) by striking ``(a)''; and
                    (C) by striking ``in accord with section 11(c) of 
                this Act'' and all that follows through the end of the 
                section and inserting ``in accordance with section 
                5(c).'';
            (2) in section 9(b), by striking ``, the Full Employment 
        and Balanced Growth Act of 1978,'';
            (3) in section 10--
                    (A) in subsection (a), by striking ``in the light 
                of the policy declared in section 2'';
                    (B) in subsection (e)(1), by striking ``section 9'' 
                and inserting ``section 3''; and
                    (C) in the matter immediately following paragraph 
                (2) of subsection (e), by striking ``and the Full 
                Employment and Balanced Growth Act of 1978'';
            (4) by striking section 2;
            (5) by striking sections 4 through 8; and
            (6) by redesignating sections 3, 9, 10, and 11 as sections 
        2 through 5, respectively.
    (c) Congressional Budget Act of 1974.--Title III of the 
Congressional Budget Act of 1974 (2 U.S.C. 631 et seq.) is amended--
            (1) in section 301--
                    (A) in subsection (b), by striking paragraph (1) 
                and redesignating paragraphs (2) through (8) as 
                paragraphs (1) through (7), respectively;
                    (B) in subsection (d), in the second sentence, by 
                striking ``the fiscal policy'' and all that follows 
                through the end of the sentence and inserting ``fiscal 
                policy.'';
                    (C) in subsection (e), in the second sentence, by 
                striking ``as to short-term and medium-term goals''; 
                and
                    (D) by striking subsection (f) and inserting the 
                following:
    ``(f) [Reserved.]''; and
            (2) in section 305--
                    (A) in subsection (a)(3), by inserting before the 
                period at the end ``, as described in section 2 of the 
                Economic Growth and Price Stability Act of 1995'';
                    (B) in subsection (a)(4)--
                            (i) by striking ``House sets forth the 
                        economic goals'' and all that follows through 
                        ``designed to achieve,'' and inserting ``House 
                        of Representatives sets forth the economic 
                        goals and policies, as described in section 2 
                        of the Economic Growth and Price Stability Act 
                        of 1995,''; and
                            (ii) by striking ``such goals,'' and all 
                        that follows through the end of the paragraph 
                        and inserting ``such goals and policies.'';
                    (C) in subsection (b)(3), by inserting before the 
                period at the end ``, as described in section 2 of the 
                Economic Growth and Price Stability Act of 1995''; and
                    (D) in subsection (b)(4)--
                            (i) by striking ``goals (as'' and all that 
                        follows through ``designed to achieve,'' and 
                        inserting ``goals and policies, as described in 
                        section 2 of the Economic Growth and Price 
                        Stability Act of 1995,''; and
                            (ii) by striking ``such goals,'' and all 
                        that follows through the end of the paragraph 
                        and inserting ``such goals and policies.''.
Economic Growth and Price Stability Act of 1995 - Amends the Federal Reserve Act to repeal the mandate of the Board of Governors of the Federal Reserve System and the Federal Open Market Committee to maintain long run growth of monetary and credit aggregates in order to promote maximum employment, stable prices, and moderate long-term interest rates. Replaces such mandate with a mandate to:  (1) establish an explicit numerical definition of "price stability"; and (2) maintain a monetary policy that effectively promotes long-term price stability. 
Repeals the mandate of the Board and the Committee to report biannually to the Congress on national economic trends, taking into account unemployment, investment and productivity.  Replaces such mandate with a mandate to consult semiannually with the Congress and report on their plans and the time required to achieve price stability. 
Repeals the Full Employment and Balanced Growth Act of 1978 (Humphrey-Hawkins Act).  Amends the Employment Act of 1946 and the Congressional Budget Act of 1974 to reflect the provisions of this Act.
Economic Growth and Price Stability Act of 1995