II 

108TH CONGRESS 

1ST SESSION S. 1915

To ensure that the Government fully accounts for both its explicit liabilities 

and implicit commitments and adopts fiscal and economic policies that 

enable it to finance and manage these liabilities and commitments, to 

honor commitments to the Baby Boom and subsequent generations with 

regard to social insurance programs, and to provide for the national 

defense, homeland security, and other critical governmental responsibilities. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 21, 2003

Mr. LIEBERMAN introduced the following bill; which was read twice and referred jointly pursuant to the order of August 4, 1977, to the Committees 

on the Budget and Governmental Affairs, with instructions that if one 

committee reports, the other committee have thirty days to report or be 

discharged 

A BILL

To ensure that the Government fully accounts for both its 

explicit liabilities and implicit commitments and adopts 

fiscal and economic policies that enable it to finance 

and manage these liabilities and commitments, to honor 

commitments to the Baby Boom and subsequent generations with regard to social insurance programs, and to 

provide for the national defense, homeland security, and 

other critical governmental responsibilities.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

2 (a) SHORT TITLE.—This Act may be cited as the 

3 ‘‘Honest Government Accounting Act of 2003’’. 

4 (b) TABLE OF CONTENTS.—The table of contents for 

5 this Act is as follows:

Sec. 1. Short title and table of contents. 

Sec. 2. Findings. 

Sec. 3. Preparation of net present value calculation of major liabilities and commitments. 

Sec. 4. Presidential plan for reducing the net present value of overall liabilities 

and commitments. 

Sec. 5. Commission on Long-Term Government Liabilities and Commitments. 

Sec. 6. Submission of net present value calculation and plan to accompany legislative recommendations included in the President’s budget. 

Sec. 7. Congressional budget resolution. 

Sec. 8. Point of order established against legislation adversely affecting net 

present value of Government’s overall liabilities and commitments. 

Sec. 9. Trustees report of liabilities. 

Sec. 10. Treasury Department analysis of tax provisions present value. 

Sec. 11. Bar use of expedited procedures to enact legislation that aggravates 

the budget deficit or reduces the budget surplus. 

Sec. 12. Reinstatement of pay-as-you-go enforcement.

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) Due to a variety of factors, in the last 2 

9 years the Federal budgetary aggregates for the next 

10 decade have swung from a projected $5.6 trillion 

11 surplus to policies that could generate a $5.5 trillion 

12 deficit (Goldman Sachs September 2003), a decline 

13 of $11.1 trillion. Though this is a substantial dete14 rioration in the country’s financial condition, these 

15 short-term projections substantially understate the 

16 Nation’s long-term fiscal imbalance. 
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1 (2) The United States Government has incurred 

2 different types of long-term liabilities and commit3 ments, including $3.3 trillion debt held by the public 

4 net of holdings of the Federal Reserve System and 

5 also commitments to future beneficiaries of critical 

6 social insurance entitlement programs such as Social 

7 Security and Medicare. 

8 (3) Congress and the public are well-informed 

9 about the long-term liabilities that arise from budget 

10 deficits and debt owed to the public. They are not 

11 well-informed about the commitments that arise 

12 from Government promises to pay social insurance 

13 entitlement benefits, to the Baby Boom and subse14 quent generations. 

15 (4) These different types of liabilities and com16 mitments are similar in many respects. While prom17 ised Social Security and Medicare benefits are not li18 abilities in the sense that government bills, notes, 

19 and bonds are liabilities, and the terms of these ben20 efits have been modified many times in the past, 

21 participants do rely on these promises in planning 

22 for retirement and the programs are funded by a 

23 separate and dedicated payroll tax paid into a Trust 

24 Fund. 
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1 (5) In order to ensure that the Government has 

2 income and net assets sufficient to cover these long3 term liabilities and commitments, as well as its on4 going discretionary spending for the national de5 fense, homeland security, and other critical prior6 ities, it is necessary that Congress and the public be 

7 fully apprised of the types and dimensions of these 

8 long-term liabilities and commitments and take ac9 tions to manage them prudently. 

10 (6) The Government’s liability to holders of 

11 public debt instruments is the outstanding value of 

12 the debt itself, net of holdings of the Federal Re13 serve System, currently $3.3 trillion. 

14 (7) The net present value of the commitment to 

15 pay social insurance entitlement benefits, which rep16 resent obligations in addition to the debt held by the 

17 public net of Federal Reserve holdings, can be cal18 culated. It is the present value of projected future 

19 social insurance entitlement benefits, minus the 

20 present value of future dedicated receipts. This dif21 ference equals the amount that, if put aside today, 

22 would be just sufficient to cover the imbalance be23 tween program benefits and receipts. But calcula24 tions of this imbalance are not widely publicized or 

25 understood. This is due in part to the widely re-
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1 ported surpluses in the Social Security and Medicare 

2 Trust Funds, which convey a misleading picture of 

3 the long-term fiscal health of these social insurance 

4 entitlement programs. Reporting the accumulation 

5 of assets but not comparing them to commitments 

6 on a net basis is inconsistent and misleading. 

7 (8) The Social Security surpluses of the last 

8 several decades thus create the illusion of solvency of 

9 the program and the lending of these surpluses to 

10 the government disguises the accumulation of 

11 mounting deficits in the rest of the Federal budget. 

12 For example, in fiscal year 2003, the reported sur13 pluses in Social Security and Medicare Trust Funds 

14 exceeded $179 billion and these surpluses were used, 

15 in the budget and other budgetary aggregates, to de16 crease the reported total budget deficit for fiscal 

17 year 2002 from $317 billion to $158 billion and for 

18 fiscal year 2003 from $553 billion to $374 billion. 

19 Had the commitments to pay future entitlement ben20 efits been reflected in their annual results, their re21 ported surpluses would have disappeared and the 

22 Trust Funds would have reported annual losses of 

23 $1.5 trillion. In the coming years, the annual Social 

24 Security and Medicare surpluses are projected to 

25 rise to more than $200 billion per year. Unless our 
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1 system of budgetary accounting for Social Security 

2 and Medicare is reformed, these surpluses will con3 tinue to disguise the size of our annual deficit and 

4 distort our budgetary priorities. Presenting Social

5 Security and Medicare’s financial condition in a 

6 more realistic manner would not only clarify the true 

7 extent of the country’s mounting long-term liabilities 

8 and commitments but also encourage responsible 

9 and timely reform of the Social Security and Medi10 care programs. 

11 (9) Comparing the present value of receipts and 

12 expenditures is standard operating procedure in 

13 mortgage lending and investment banking. But it 

14 plays no meaningful role in assessing the Govern15 ment’s overall fiscal position. Instead, the Govern16 ment works on a short-term obligation and cash17 based budgets basis that only looks a few years into 

18 the future. 

19 (10) The most appropriate way to assess Gov20 ernment finances is to calculate its net assets under 

21 current policies: The net present value of all pro22 spective receipts minus the net present value of all 

23 prospective outlays and minus outstanding debt held 

24 by the public. Net present value accounting differs 

25 from accrual accounting. Although appropriate for 
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1 private sector entities whose operations can poten2 tially terminate in the future, accrual accounting is 

3 potentially misleading and incomplete for an entity 

4 such as the Federal Government that is expected to 

5 continue operating indefinitely. For Government so6 cial insurance programs such as Social Security and 

7 Medicare accrual accounting would count only the li8 abilities accrued to date. Moreover, these commit9 ments would be calculated in such a way as to as10 sume that these programs are immediately termi11 nated and that the Government must pay off exist12 ing obligations according to a particular method of 

13 evaluating their size. By way of contrast, a focus on 

14 net present values includes liabilities and income we 

15 know will accrue in the future for future bene16 ficiaries (e.g. the Baby Boomers and all future gen17 erations). These values focus squarely on the extent 

18 to which current programs such as entitlements are 

19 sustainable into the future. They seek to redress the 

20 short sightedness and potentially misleading focus 

21 we find in the current Budget Act and Budget reso22 lutions and public discourse about cash flow meas23 ures of Government finances, deficits, and public 

24 debt. 
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1 (11) Although they are not well-publicized and 

2 play no formal role in budget and planning, calcula3 tions of the Government’s commitment to pay social 

4 insurance entitlement benefits to the Baby Boom 

5 and subsequent generations already are provided 

6 routinely in public Government documents. For sev7 eral decades, calculations under current policies have 

8 been provided for a 75-year period, but recently cal9 culations are being prepared for an indefinite time 

10 period. Examples of such reports are as follows: 

11 (A)(i) The Financial Report of the United 

12 States Government, prepared by the Treasury 

13 Department, presents a calculation of the dif14 ference between the present value of projected 

15 future entitlement payments and projected fu16 ture payroll tax and other dedicated receipts 

17 over a 75-year period. The 2002 report issued 

18 by Treasury Secretary John Snow finds that, 

19 excluding the trust fund balances, the net 

20 present value of benefit payments for Social Se21 curity (OASDI) in excess of contributions and 

22 earmarked taxes is $4.562 trillion. For Medi23 care (Part A, HI) it is $5.126 trillion. Trust 

24 Fund balances are excluded according to the re25 port because to finance Trust Fund redemp-
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1 tions ‘‘the Government must raise taxes, in2 crease borrowings from the public, cut spending 

3 for other programs, retire less debt, or some 

4 combination thereof.’’ For Supplemental Med5 ical Insurance (Medicare Part B) the 2002 re6 port calculated the shortfall to be $8.125 tril7 lion. The total negative cash flow, calculated as 

8 a net present value, is $18 trillion, which is 

9 roughly 5 times as great as the debt held by the 

10 public, $3.1 trillion. Taken together, this meas11 ure of the public debt and long-term social in12 surance entitlement commitments is equal to 

13 more than twice the current year United States 

14 Gross Domestic Product, which is approxi15 mately $10.5 trillion. 

16 (ii) The fiscal year 2004 budget provides 

17 an update of the same imbalance over a 75-year 

18 period. It calculates that the ‘‘combined short19 fall in Social Security and Medicare’’ is $18 

20 trillion. It asserts, ‘‘It would take an additional 

21 $18 trillion in today’s dollars to pay for the ob22 ligations of these systems as they are now con23 stituted.’’ With regard to Medicare, it calculates 

24 ‘‘the (Medicare prescription drug) bills that ad25 vanced furthest in the last Congress would have 
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1 increased the Medicare long-term unfunded 

2 promise liability by an estimated $4.6 trillion 

3 and $5.9 trillion, respectively.’’ Putting the $18 

4 trillion in perspective is the fact that total 

5 household wealth in the United States in 2002 

6 was $42.4 trillion (2001 Survey of Consumer 

7 Finances). ‘‘This means that the Federal Gov8 ernment would have to confiscate almost half of 

9 all household wealth to have the resources nec10 essary to close both of these programs’ future 

11 financial gaps,’’ it concludes. 

12 (B)(i) The net present value of Social Se13 curity and Medicare commitments would be sig14 nificantly larger if calculated over a horizon 

15 longer than 75 years, because of the substantial 

16 imbalance between revenues and expenditures 

17 that is projected for the end of the 75-year pe18 riod and likely to continue well beyond it. As all 

19 future cash flows are relevant, calculations of 

20 the full present value commitment should be 

21 based on the longest time period for which pro22 jections are feasible. A 75-year time period 

23 credits all of the payroll tax revenues from indi24 viduals alive during this period but compares 

25 them only to the benefit payments that will be 
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1 made to them during the 75-year period and 

2 not the full benefit payments that are due. 

3 (ii) The former Deputy Assistant Secretary 

4 for Economic Policy for the Treasury Depart5 ment, and a Senior Economist of the Federal

6 Reserve Bank of Cleveland, have published cal7 culations they prepared for the Government of 

8 the net present value of the negative cash flow 

9 for Social Security and Medicare based on an 

10 infinite-horizon measure. Using policy-inclusive 

11 budget projections and economic growth and 

12 discount rate assumptions of the Office of Man13 agement and Budget, their analysis finds that 

14 the fiscal imbalance for Social Security is $7 

15 trillion and for Medicare (parts A and B) is 

16 $36.6 trillion. Taken together this imbalance is 

17 over 14 times the debt held by the public and 

18 roughly equal to the total family net worth of 

19 the 104 million United States households 

20 ($42.4 trillion). They find that the Federal 

21 Government’s fiscal imbalance equals 16.6 per22 cent of the present discounted value of future 

23 payrolls, and that if the Government fails to set 

24 aside these funds, the fiscal imbalance will grow 

25 by $1.6 trillion each year during the next 4 
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1 years. They calculate that the Medicare pre2 scription drug bills that advanced the furthest 

3 in the last Congress in the House and Senate 

4 would have increased the Medicare long-term 

5 unfunded promise liability by $12 trillion and 

6 $24 trillion, respectively. An option that would 

7 close most but not all of the imbalance is to 

permanently eliminate 1 8 ⁄2 of all that Govern9 ment does, aside from Social Security and 

10 Medicare. 

11 (iii) The 2003 report of the Social Security 

12 Trustees includes a calculation under current 

13 policies of the net present value of the negative 

14 cash flow for Social Security commitments 

15 based on an infinite-horizon measure. Using 

16 their own economic growth and discount rate 

17 assumptions and not counting the Treasury se18 curities held in the OASDI programs’ Trust 

19 Funds, the Social Security Trustees find that 

20 the fiscal imbalance for that program amounts 

21 to $11.9 trillion. The Social Security Trustees’ 

22 measure excludes Trust Funds’ securities be23 cause these assets of the OASDI programs con24 stitute liabilities of the Treasury and, thus, do 

25 not constitute a net asset for the Federal Gov-
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1 ernment as a whole. Its calculation of the net 

2 present value of the shortfall over 75 years is 

3 $4.927 trillion. The report states, ‘‘Over em4 phasis of summary measures . . . for the 75-

5 year period can lead to incorrect perceptions 

6 and policy that fails to address sustainability.’’

7 (12) Another way to view this challenge is to 

8 calculate under current policies how much, as a 

9 share of Gross Domestic Product, our Government 

10 would have to put aside every year in order to fi11 nance a major imbalance between receipts and bene12 fits. Based on the Gross Domestic Product projec13 tions and discount factors in last year’s Social Secu14 rity and Medicare Trustees Report, the amount 

15 needed to meet an imbalance is approximately 3.3 

16 percent of Gross Domestic Product, annually, for the 

17 full 75-year or indefinite period. For 2002, that 

18 would be approximately $362 billion per year with 

19 reference to the calculation under current policies 

20 for the 75-year period and $679 billion per year in 

21 2002 dollars with reference to the calculation for the 

22 indefinite period. 

23 (13) Because, the fiscal imbalance estimate is 

24 similar to a ‘‘stock of debt’’ it is more appropriate 

25 to compare it to another stock measure such as the 
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1 present discounted value of the Gross Domestic 

2 Product or a tax base out of which the overall (or 

3 each particular program’s) fiscal imbalance would be 

4 financed. Although some view it useful to calculate 

5 the share of each year’s Gross Domestic Product 

6 that must be set aside to pay for the imbalance, the 

7 entire Gross Domestic Product does not (and is not 

8 likely to ever) constitute the base on which taxes are 

9 levied. For example, the service flow from the Na10 tion’s housing stock and depreciated capital are not 

11 currently (nor are ever likely to be) included in the 

12 Federal tax base. Hence, it would be better to cal13 culate the share of a tax base that must be set aside 

14 annually to finance the imbalance. For example, it 

15 would be most useful to show the imbalance arising 

16 from Social Security and Medicare programs as a 

17 share of the present discounted value of their respec18 tive revenue bases, and the fiscal imbalance on ac19 count of the rest of Federal operations (non-Social 

20 Security and non-Medicare) as a share of the 

21 present discounted value of the revenue base exclud22 ing the payroll tax base. 

23 (14) The net present value of the debt held by 

24 the public of $3.3 trillion is approximately $11,290 

25 for each American citizen (292,285,000). By way of 
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1 comparison, the value of the entitlement commit2 ments funding imbalance of $43.6 trillion is 

3 $149,175 per United States citizen. Adding this 

4 debt held by the public ($3.3 trillion), the possible 

5 increase in this debt held by the public due to cur6 rent policy measures ($5.5 trillion), and the implicit 

7 entitlement commitments ($43.6 trillion)—a net 

8 present value of $52.5 trillion—the per capita 

9 amount is $178,600. 

10 (15) The staggering size of these alternative 

11 requisite fiscal adjustments reflects the enormous so12 cial insurance entitlement commitments associated 

13 with the imminent retirement of the Baby Boom 

14 generation and the shortfall in payroll tax receipts to 

15 cover them. There are 77 million individuals in the 

16 Baby Boom generation. In addition, America has ab17 sorbed 8 million immigrants in this age group. It is 

18 by far the largest generation in United States his19 tory. On September 2, 2011, the first Baby 

20 Boomers, defined as those born after the end of 

21 World War II through 1964, will turn 66 and begin 

22 to draw full Social Security benefits. This is only 8 

23 years from now. Baby Boomers can begin drawing 

24 full Medicare benefits in 2010 at age 65. 
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1 (16) In focusing on the dimensions of the Gov2 ernment’s promise to pay social insurance entitle3 ment benefits, it is useful and necessary also to 

4 focus on the relationship of other Government 

5 spending programs and other Government revenues.

6 Focusing only on the funding of social insurance en7 titlement benefits and not on the funding available 

8 for other commitments gives policy makers a per9 verse incentive to arbitrage funding for the former 

10 at the expense of the latter. 

11 (17) Policies that substantially increase rather 

12 than retire the debt held by the public, whether 

13 through increases in spending or reduction in reve14 nues, will make it much more difficult to cover the 

15 Government’s long-term social insurance entitlement 

16 commitments. It is well understood that two options 

17 to reduce or eliminate the funding imbalances in So18 cial Security and Medicare are reducing promised 

19 benefits to beneficiaries and bringing more revenues 

20 into the systems, either from payroll tax increases, 

21 transfers of general revenue, or borrowing. Both the 

22 level of debt held by the public and the long-term 

23 fiscal balance of the rest of the Government affect 

24 its ability to fund and absorb these measures. There25 fore, it is necessary to track the long-term fiscal im-
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1 balance in the rest of the budget as well as in Social 

2 Security and Medicare. The options for honoring 

3 these commitments, managing the change in demo4 graphics for these programs, and putting these pro5 grams on a sustainable basis are exponentially more 

6 challenging as the Government’s general revenue 

7 base, annual deficits, and public debt deteriorate. 

8 Every proposal to substantially increase spending or 

9 reduce revenues must be analyzed for its impact on 

10 the ability of the Government to fund and absorb 

11 these measures. It will be very difficult under cur12 rent policies for the Government to cover these com13 mitments, make needed infusions of general revenue, 

14 and maintain any level of financial support for the 

15 national defense, homeland security, education, and 

16 other priorities. It is also true that even if we retire 

17 the debt held by the public, we face a huge shortfall 

18 in dedicated receipts to cover these commitments 

19 and massive pressure on general revenue funded pro20 grams if the Government provides infusions of gen21 eral revenue to cover the shortfall in social insurance 

22 entitlement program payroll tax receipts. 

23 (18) The methodology for preparing net present 

24 value calculations is well understood. The Federal 

25 Government utilizes, and requires private sector en-
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1 tities to utilize, net present value calculations in a 

2 variety of contexts such as the following: 

3 (A) Office of Management and Budget uti4 lizes net present value analysis under OMB Cir5 cular A–94 and every agency of the Govern6 ment is already experienced in utilizing these 

7 analyses as an integral element of their deci8 sionmaking. The Circular applies this type of 

9 analysis broadly to ‘‘any analysis to support 

10 Government decisions to initiate, renew, or ex11 pand programs or projects which would result 

12 in a series of measurable benefits or costs ex13 tending for three or more years into the fu14 ture.’’ This includes any analysis of the ‘‘ben15 efit-cost or cost-effectiveness of Federal pro16 grams or policies,’’ ‘‘regulatory impact anal17 ysis,’’ ‘‘analysis of decisions to lease or pur18 chase,’’ and ‘‘asset valuation and sale analysis.’’ 

19 The use of this methodology is found to ‘‘pro20 mote efficient resource allocation through well21 informed decision-making by the Federal Gov22 ernment.’’ The Circular finds that the ‘‘stand23 ard criterion for deciding whether a government 

24 program can be justified on economic principles 

25 is net present value—the discounted monetized 
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1 value of expected net benefits (i.e., benefits 

2 minus costs).’’ It specifies, ‘‘Net present value 

3 is computed by assigning monetary values to 

4 benefits and costs, discounting future benefits 

5 and costs using an appropriate discount rate, 

6 and subtracting the sum total of discounted 

7 costs from the sum total of discounted benefits. 

8 Discounting benefits and costs transforms gains 

9 and losses occurring in different time periods to 

10 a common unit of measurement. Programs with 

11 positive net present value increase social re12 sources and are generally preferred. Programs 

13 with negative net present value should generally 

14 be avoided. 

15 (B) Under the Internal Revenue Code and 

16 the Employee Retirement Income Security Act 

17 (ERISA), the Federal Government requires pri18 vate companies to calculate the present values 

19 of their accrued pension liabilities to determine 

20 the sustainability and integrity of their private 

21 defined-benefit pension and other benefit plans. 

22 This calculation adds together the current 

23 year’s benefit payout and the increase in the 

24 present value of the firm’s accrued benefits dis25 counted at a prespecified interest rate. The esti-
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1 mate of accrued benefits uses information on 

2 the age profile and expected mortality of the 

3 company’s workforce and the company’s benefit 

4 formulae for determining expected future pay5 outs. The present value of current plus accrued 

6 future benefits is then compared to the balance 

7 in the company’s pension fund dedicated to 

8 paying pension benefits to determine the plan’s 

9 financial adequacy. If the pension fund is un10 derfunded (it’s balance covers less than 90 per11 cent of the firm’s current plus accrued future li12 abilities), the firm is required to make addi13 tional ‘‘deficit reduction contributions’’ intended 

14 to returning the fund to financial adequacy over 

15 time. The Federal Government currently does 

16 not require any similar funding requirement for 

17 its public pension and health-care systems, in18 cluding Social Security and Medicare. 

19 (19) The Government and public need to face 

20 these realities, understanding the scope and mag21 nitude all of the Government’s long-term liabilities 

22 and commitments. The Government and the public 

23 must prepare and adopt realistic long-term financial 

24 plans, not aggravate the challenge by adding to the 

25 debt held by the public, and take decisive steps to 
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1 prepare for the retirements of the Baby Boomers 

2 and subsequent generations. The Government needs 

3 to ensure that its liabilities can be met, its commit4 ments to beneficiaries are realistic, and that the im5 pact of these liabilities and commitments does not

6 undermine the ability of the Government to fund 

7 other critical priorities. 

8 (20) A prudent financial plan would reduce the 

9 Government’s net long-term liabilities and commit10 ments from approximately 16.6 percent of the 

11 present discounted value of future payrolls to less 

12 than 1.25 percent ($5 trillion). It is plausible that 

13 the Government can finance a liability and commit14 ment of this magnitude through higher taxes or less 

15 spending in the future and it becomes increasingly 

16 implausible if the liability and commitment exceeds 

17 1.25 percent of the discounted value of payrolls. 

18 Such a plan would also place constraints on pro19 posals and actions that would adversely affect the 

20 net present value of these long-term liabilities and 

21 commitments and would remove constraints that 

22 prevent the consideration of responsible actions and 

23 reforms. At a minimum, it is not prudent for the 

24 Government to add to the debt held by the public 

25 and net present value of its social insurance entitle-
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1 ment commitments. The longer our Government fails 

2 to face reality and take action to prepare for the 

3 Baby Boom retirements, the greater the pain will be 

4 and the fewer options for reform it will have. 

5 SEC. 3. PREPARATION OF NET PRESENT VALUE CALCULA6 TION OF MAJOR LIABILITIES AND COMMIT7 MENTS. 

8 (a) IN GENERAL.—Section 331(e) of title 31, United 

9 States Code, is amended by adding at the end the fol10 lowing: 

11 ‘‘(3)(A) The financial statement of liabilities re12 quired by paragraph (2) shall include a calculation 

13 under current policies of the net present value of the 

14 overall liabilities and commitments of the United 

15 States Government which shall include—

16 ‘‘(i) calculations of the net present value of 

17 all future government spending other than 

18 spending incident to servicing the current and 

19 future net debt held by the public; the net 

20 present value of all future government tax and 

21 nontax receipts, including tax receipts, net in22 come of public enterprises, fees, and other levies 

23 imposed on United States citizens and resi24 dents; and net annual transfers to the Treasury 

25 from the Federal Reserve System; 
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1 ‘‘(ii) the outstanding debt held by the pub2 lic; 

3 ‘‘(iii) calculations of the net present value 

4 of commitments and receipts of the Federal 

5 Old-Age and Survivors Insurance (OASI) Trust 

6 Fund, the Federal Disability Insurance (DI) 

7 Trust Fund, the Federal Hospital Insurance 

8 (HI) Trust Fund, and the Federal Supple9 mentary Medical Insurance (SMI) Trust Fund 

10 using the most recent available long-term, inter11 mediate projections by the Trustees of such 

12 Trust Funds of revenues, expenditures, and dis13 count factors, as represented in such annual re14 ports; 

15 ‘‘(iv) calculations of the net present value 

16 of commitments and receipts of the Railroad 

17 Retirement and Black Lung (part C) programs; 

18 ‘‘(v) calculations of the net present value 

19 of receipts to the Federal retirement and health 

20 insurance systems, both civil and military; and 

21 ‘‘(vi) the present discounted values of pay22 roll and nonpayroll tax bases separately. The 

23 items to be estimated are the present dis24 counted values of—
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1 ‘‘(I) payroll subject to taxes on ac2 count of OASDI; 

3 ‘‘(II) payroll subject to taxes on ac4 count of HI-Part A; 

5 ‘‘(III) premiums on account of HI6 Part B; 

7 ‘‘(IV) personal income taxes; 

8 ‘‘(V) corporate income taxes; 

9 ‘‘(VI) excise taxes; 

10 ‘‘(VII) customs duties; 

11 ‘‘(VIII) estate and gift taxes; 

12 ‘‘(IX) Federal retirement contribu13 tions; 

14 ‘‘(X) unemployment insurance pre15 miums; and 

16 ‘‘(XI) miscellaneous receipts not in17 cluded in subclauses (I) through (X). 

18 ‘‘(B)(i) For each calculation under subpara19 graph (A), calculations shall be provided for—

20 ‘‘(I) a 75-year horizon; and 

21 ‘‘(II) an indefinite time horizon. 

22 ‘‘(ii) For the 75-year horizon under clause 

23 (i)(I), each calculation shall take each year’s expend24 itures minus revenues, divide this difference by the 

25 projected discount factor for that year, and add the 
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1 resulting 75 annual discounted flows to obtain the 

2 program’s net present value imbalance. The long3 term discount and growth rates utilized in these cal4 culations shall be discussed in the report and con5 sistent with those utilized by the Department of 

6 Treasury and other Government agencies with re7 gard to other long-term financial calculations. For 

8 purposes of the calculations in clauses (iii), (iv), and 

9 (v) of subparagraph (A), revenues will include pay10 roll taxes as allocated by law to the respective Trust 

11 Funds (currently the case for OASI, DI, and HI), 

12 participant premiums (for SMI), general revenue re13 ceipts from the taxation of benefits, as currently al14 located by law to the OASI, DI, and HI Trust 

15 Funds, and funding for the Federal retirement and 

16 health insurance systems, both civil and military. 

17 For purposes of this calculation, revenues will not 

18 include interest income on Trust Fund and transfers 

19 of general revenue to SMI, Social Security, or Medi20 care. 

21 ‘‘(iii) For the indefinite time horizon under 

22 clause (i)(II), the calculations shall follow the proce23 dures provided in clause (iii), but shall be based on 

24 extended projections that go beyond the 75-year pro25 jections currently available. 
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1 ‘‘(4) The financial statement shall include a cal2 culation under current policies of the net present 

3 value of benefits and projected benefits to past and 

4 current participants described in clauses (iii), (iv), 

5 and (v) of paragraph (3)(A), including the present 

6 value of projected benefits to current participants,

7 less the present value of projected taxes paid by cur8 rent participants less the current trust fund balances 

9 (the Closed Group Unfunded Obligation). 

10 ‘‘(5) The financial statement shall include a cal11 culation under current policies of the net present 

12 value of benefits and projected benefits to past, cur13 rent, and future participants described in clauses 

14 (iii), (iv), and (v) of paragraph (3)(A), including the 

15 present value of projected benefits to current and fu16 ture participants, less the present value of projected 

17 taxes paid by current and future participants less 

18 the current trust fund balances (the Open Group 

19 Unfunded Obligation). 

20 ‘‘(6) The financial statement shall include a cal21 culation under current policies of the net present 

22 value of the overall revenues and expenditures of the 

23 United States Government, aside from commitments 

24 to the programs described in clauses (ii), (iii), and 

25 (iv) of paragraph (3)(A), over—
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1 ‘‘(i) a 75-year horizon; and 

2 ‘‘(ii) an indefinite time horizon. 

3 ‘‘(7)(A) The ratio of the fiscal imbalance aris4 ing from OASDI as a share of the present dis5 counted value of clause (vi)(I). 

6 ‘‘(B) The ratio of the fiscal imbalance arising 

7 from the HI program (parts A and B) as a share 

8 of the present discounted value of clause (vi) (II) 

9 and (III). 

10 ‘‘(C) The ratio of the fiscal imbalance arising 

11 from the rest of Federal operations as a share of the 

12 sum of present discounted values in clause (vi) (IV) 

13 through (XI). 

14 ‘‘(8) The financial statement shall include the 

15 assumptions and details of the methods used in 

16 making the calculations in paragraph (3)(A). It shall 

17 separately identify and provide a detailed description 

18 of the methods and assumptions used in making 

19 projections of tax revenues, premiums, other receipts 

20 from all sources including inter-fund transfers and 

21 interest income on securities held in trust funds, 

22 benefit outlays distinguished by the type of benefit, 

23 and administrative expenses. The financial state24 ment shall also provide details regarding demo25 graphic assumptions such as fertility, mortality, im-
28

•S 1915 RIS 

1 migration, and labor-force participation rates, de2 pendency ratios, and economic assumptions such as 

3 trust fund interest rates, discount rates, revenue and 

4 benefit growth rates, health-care expenditure growth 

5 rates, productivity growth rates, and inflation rates. 

6 The information should include a description of all 

7 other intermediate steps and variables used and pro8 jected in making these calculations.’’. 

9 (b) FIRST CALCULATION.—The first calculations re10 quired by section 331(e)(3) of title 31, United States 

11 Code, as added by subsection (a), shall be submitted 180 

12 days following the date of enactment of this Act unless 

13 such date falls within 60 days of March 31. Subsequent 

14 calculations under that section shall be included in the fi15 nance report required by section 331(e)(3)(A)(i) of title 

16 31, United States Code. 

17 (c) GOVERNMENT’S OVERALL LIABILITIES AND COM18 MITMENTS.—In this Act, the term ‘‘Government’s overall 

19 liabilities and commitments’’ shall refer to calculations 

20 prepared under section 331(e)(3)(A)(i) of title 31, United 

21 States Code, enacted herein. 

22 (d) PRESENT DISCOUNTED VALUE OF ALL FUTURE

23 PAYROLLS.—In this Act, the term ‘‘present discounted 

24 value of all future payrolls’’ means the present discounted 
29

•S 1915 RIS 

1 value of gross wages and salaries and all federally taxable 

2 compensation. 

3 SEC. 4. PRESIDENTIAL PLAN FOR REDUCING THE NET 

4 PRESENT VALUE OF OVERALL LIABILITIES 

5 AND COMMITMENTS. 

6 (a) IN GENERAL.—If the total of debt held by the 

7 public added to the calculation under current policies of 

8 the net present value of the overall liabilities and commit9 ments of the United States Government published, as re10 quired by section 331(e)(3)(A)(i) of title 31, United States 

11 Code, exceeds 1.25 percent of the present discounted value 

12 of all future payrolls not later than September 15, 2005, 

13 the President shall submit to Congress and the Commis14 sion on Long-Term Government Liabilities and Commit15 ments established by section 5 a plan or plans that will 

16 reduce the total to a level in net present value calculated 

17 as of September 2, 2011, no greater than 1.25 percent 

18 of such discounted value of all future payrolls as of Sep19 tember 2, 2011. Plans shall be submitted with regard to 

20 calculations based both on a 75-year horizon and an in21 definite horizon. The assumptions and details of the meth22 ods used in making the calculations incorporated in the 

23 plan or plans shall be consistent with those utilized in the 

24 financial statement published under section 331(e) of title 

25 31, United States Code. 
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1 (b) CONTENTS.—The plan or plans required by sub2 section (a) shall include alternative strategies to meet the 

3 goal. 

4 SEC. 5. COMMISSION ON LONG-TERM GOVERNMENT LIABIL5 ITIES AND COMMITMENTS. 

6 (a) IN GENERAL.—There is established a commission 

7 to be known as the ‘‘Commission on Long-Term Govern8 ment Liabilities and Commitments’’ (referred to in this 

9 section as the ‘‘Commission’’). 

10 (b) RECOMMENDATIONS FOR REFORM.—Not later 

11 than December 15, 2005, the Commission shall make rec12 ommendations to the President and Congress of reforms 

13 that will reduce the total of debt held by the public added 

14 to the calculation under current policies of the net present 

15 value of the Government’s overall liabilities and commit16 ments published, as required by section 331(e)(3)(A)(i) of 

17 title 31, United States Code, to a level that is not greater 

18 than 1.25 percent of the percent discounted value of all 

19 future payrolls, as of September 11, 2011. The assump20 tions and details of the methods used in making the cal21 culations incorporated in the recommendations shall be 

22 consistent with those utilized in the financial statement 

23 published under section 331(e) of title 31, United States 

24 Code, unless the Commission elects to make recommenda25 tions based on other assumptions and methods for which 
31

•S 1915 RIS 

1 a detailed explanation and rationale is presented. The rec2 ommendations of the Commission shall be approved by a 

3 two-thirds vote of the members of the Commission.

4 (c) CONTENTS.—The recommendations required by 

5 subsection (a) shall—

6 (1) include several alternative strategies to meet 

7 the goal including strategies that meet this goal sole8 ly by— 

9 (A) reducing Government expenditures; 

10 and 

11 (B) increasing Government revenues; and 

12 (2) include an evaluation of the recommenda13 tions submitted to Congress and the Commission by 

14 the President, as required by section 4. 

15 (d) LEGISLATIVE LANGUAGE.—The recommenda16 tions required under subsection (a) shall include legislative 

17 language necessary for carrying out such recommenda18 tions. The Commission shall develop such legislative lan19 guage after conducting such public hearings and con20 sulting with such public or private entities as the Commis21 sion considers necessary and appropriate to make the rec22 ommendations required under subsection (a). 

23 (e) MEMBERSHIP.—

24 (1) IN GENERAL.—The Commission shall be 

25 composed of 17 members as follows: 
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•S 1915 RIS 

1 (A) One congressional Member shall be ap2 pointed by the Speaker of the House of Rep3 resentatives. 

4 (B) The Chairman of the Committee on 

5 Ways and Means of the House of Representa6 tives. 

7 (C) One congressional Member shall be ap8 pointed by the Minority Leader of the House of 

9 Representatives. 

10 (D) The Ranking Member of the Com11 mittee on Ways and Means of the House of 

12 Representatives. 

13 (E) One congressional Member shall be ap14 pointed by the Majority Leader of the Senate. 

15 (F) The Chairman of the Committee on 

16 Finance of the Senate. 

17 (G) One congressional Member shall be ap18 pointed by the Minority Leader of the Senate. 

19 (H) The Ranking Member of the Com20 mittee on Finance of the Senate. 

21 (I) The Secretary of the Treasury. 

22 (J) The Secretary of Labor. 

23 (K) The Secretary of Health and Human 

24 Services. 
33

•S 1915 RIS 

1 (L) Six members to be appointed by the 

2 President by and with the advise and consent of 

3 the Senate to be individuals from the private 

4 sector with expertise in government fiscal pol5 icy, long-term macroeconomic policy, retirement 

6 and health care plan structure and funding, 

7 intergenerational accounting, and demo8 graphics. 

9 (2) DEADLINE FOR APPOINTMENTS.—The 

10 members of the Commission shall be appointed not 

11 later than February 1, 2005. 

12 (3) CO-CHAIRMEN.—The Commission shall des13 ignate 2 members of the Commission to serve as Co14 chairmen of the Commission, one of whom shall be 

15 the individual appointed under subparagraph (C), 

16 (D), (G), or (H) of paragraph (1). 

17 (4) TERMS.—Each member of the Commission 

18 shall serve on the Commission and, with respect to 

19 the Co-chairmen, in such capacity, until the earlier 

20 of the date the Commission terminates or September 

21 30, 2005. 

22 (5) VACANCIES.—Any vacancy in the member23 ship of the Commission shall be filled in the manner 

24 in which the original appointment was made and 
34

•S 1915 RIS 

1 shall not affect the power of the remaining members 

2 to execute the duties of the Commission. 

3 (f) QUORUM.—A quorum shall consist of 7 voting 

4 members of the Commission. 

5 (g) MEETINGS.—

6 (1) IN GENERAL.—The Commission shall meet 

7 at the call of the Co-chairmen or a majority of its 

8 members. 

9 (2) INITIAL MEETING.—The Commission shall 

10 conduct its first meeting not later than March 1, 

11 2005. 

12 (3) OPEN MEETINGS.—Each meeting of the 

13 Commission, other than meetings in which classified 

14 information is to be discussed, shall be open to the 

15 public. 

16 (h) POLICIES AND PROCEDURES.—The Commission 

17 shall establish policies and procedures for carrying out the 

18 functions of the Commission under this section. 

19 (i) STAFF DIRECTOR AND STAFF.—

20 (1) STAFF DIRECTOR.—The Co-chairmen, with 

21 the advice and consent of the members of the Com22 mission, shall appoint a Staff Director who is not 

23 otherwise, and has not during the 1-year period pre24 ceding the date of such appointment served as, an 

25 officer or employee in the executive branch and who 
35

•S 1915 RIS 

1 is not and has not been a Member of Congress. The 

2 Staff Director shall be paid at a rate not to exceed 

3 the rate of basic pay payable for level IV of the Ex4 ecutive Schedule under section 5315 of title 5, 

5 United States Code. 

6 (2) STAFF.—

7 (A) IN GENERAL.—The Staff Director, 

8 with the approval of the Commission, may ap9 point and fix pay of additional personnel. The 

10 Staff Director may take such appointments 

11 without regard to the provisions of title 5, 

12 United States Code, governing appointment in 

13 the competitive service, and any personnel so 

14 appointed may be paid without regard to the 

15 provisions of chapter 51 and subchapter III of 

16 chapter 53 of such title relating to classification 

17 and General Schedule pay rates, except that an 

18 individual so appointed may not receive pay in 

19 excess of the annual rate of basic pay payable 

20 for level V of the Executive Schedule under sec21 tion 5316 of such title. 

22 (B) DETAILEES.—Upon request of the 

23 Staff Director, the head of any Federal depart24 ment or agency may detail any of the personnel 

25 of that department or agency to the Commis-
36

•S 1915 RIS 

1 sion to assist the Commission in carrying out 

its duties under this Act. Not more than 1 2 ⁄3 of 

3 the personnel employed by or detailed to the 

4 Commission may be on detail from any single 

5 Federal agency.

6 (j) POWERS.—

7 (1) HEARINGS AND OTHER ACTIVITIES.—For 

8 the purpose of carrying out its duties, the Commis9 sion may hold such hearings and undertake such 

10 other activities as the Commission determines to be 

11 necessary to carry out its duties. 

12 (2) STUDIES BY GENERAL ACCOUNTING OF13 FICE.—Upon the request of the Commission, the 

14 Comptroller General shall conduct such studies or 

15 investigations as the Commission determines to be 

16 necessary to carry out its duties. 

17 (3) COST CALCULATIONS BY CONGRESSIONAL

18 BUDGET OFFICE.—Upon the request of the Commis19 sion, the Director of the Congressional Budget Of20 fice shall provide to the Commission such cost esti21 mates as the Commission determines to be necessary 

22 to carry out its duties. 

23 (4) TECHNICAL ASSISTANCE.—Upon the re24 quest of the Commission, the head of a Federal 

25 agency shall provide such technical assistance to the 
37

•S 1915 RIS 

1 Commission as the Commission determines to be 

2 necessary to carry out its duties. 

3 (5) USE OF MAILS.—The Commission may use 

4 the United States mails in the same manner and 

5 under the same conditions as Federal agencies, and 

6 shall, for purposes of the frank, be considered a 

7 commission of Congress as described in section 3215 

8 of title 39, United States Code. 

9 (6) OBTAINING INFORMATION.—The Commis10 sion may secure directly from any Federal agency 

11 information necessary to enable it to carry out its 

12 duties, if the information may be disclosed under 

13 section 552 of title 5, United States Code. Upon re14 quest of the Co-chairmen of the Commission, the 

15 head of such agency shall furnish such information 

16 to the Commission. 

17 (7) ADMINISTRATIVE SUPPORT SERVICES.—

18 Upon the request of the Commission, the Adminis19 trator of General Services shall provide to the Com20 mission on a reimbursable basis such administrative 

21 support services as the Commission may request. 

22 (8) ACCEPTANCE OF DONATIONS.—The Com23 mission may accept, use, and dispose of gifts or do24 nations of services or property. 
38

•S 1915 RIS 

1 (9) PRINTING.—For purposes of costs relating 

2 to printing and binding, including the costs of per3 sonnel detailed from the Government Printing Of4 fice, the Commission shall be deemed to be a com5 mittee of Congress. 

6 (k) TERMINATION.—The Commission shall terminate 

7 15 days after the date of submission of the recommenda8 tions for reform required under subsection (b). 

9 (l) AUTHORIZATION OF APPROPRIATIONS.—There is 

10 authorized to be appropriated to carry out this section, 

11 $5,000,000 for the Commission to carry out its duties 

12 under this section. 

13 SEC. 6. SUBMISSION OF NET PRESENT VALUE CALCULA14 TION AND PLAN TO ACCOMPANY LEGISLA15 TIVE RECOMMENDATIONS INCLUDED IN THE 

16 PRESIDENT’S BUDGET. 

17 (a) NET PRESENT VALUE CALCULATION.—

18 (1) IN GENERAL.—The President shall submit 

19 to Congress for any proposed permanent changes in 

20 law calculations under current policies of the impact 

21 on the net present value of Government’s overall li22 abilities and commitments over 75 years and over an 

23 indefinite time horizon for any legislative rec24 ommendation or recommendations other than annual 

25 appropriations included in the Budget of the United 
39

•S 1915 RIS 

1 States with an adverse impact in the aggregate 

2 greater than 0.25 percent of the present discounted 

3 value of all future payrolls over 75 years or over an 

4 indefinite time horizon. 

5 (2) METHODOLOGY.—In making calculations 

6 under this subsection, the President shall utilize the 

7 same calculation methodology as provided in section 

8 331(e)(3) of title 31, United States Code, as added 

9 by this Act. The assumptions and details of the 

10 methods used in making the calculations incor11 porated in the plan or plans shall be consistent with 

12 those utilized in the financial statement published 

13 under section 331(e) of title 31, United States Code. 

14 (3) ASSUMPTIONS.—The calculation required by 

15 this subsection shall assume that the legislative rec16 ommendation or recommendations other than annual 

17 appropriations will be a permanent change in law 

18 and disregard any changes in the terms of the legis19 lative recommendation beyond the date of enact20 ment, or any formula or mechanism for adjustments 

21 in the recommendations beyond this date to the ex22 tent that such change, formula, or mechanism de23 creases the net present value of the Government’s 

24 overall liabilities and commitments over 75 years or 

25 an indefinite time horizon. 
40

•S 1915 RIS 

1 (b) PLAN.—If the net present value of the Govern2 ment’s overall liabilities and commitments of a legislative 

3 recommendation or recommendations is found to have an 

4 adverse impact greater than 0.25 percent of the present 

5 discounted value of all future payrolls over 75 years or 

6 an indefinite horizon, the President shall submit a plan 

7 to accompany such recommendation or recommendations 

8 that reduces the total of debt held by the public added 

9 to the calculation of the net present value of the Govern10 ment’s overall liabilities and commitments published, as 

11 required by section 331(e)(3)(A)(i) of title 31, United 

12 States Code, to a level that exceeds 1.25 percent of the 

13 present discounted value of all future payrolls as of Sep14 tember 11, 2011. Such plan shall be submitted with re15 gard to calculations based both on a 75-year horizon and 

16 an indefinite horizon. 

17 (c) CONTENTS.—The plan required by subsection (b) 

18 shall include several alternative strategies to meet the 

19 goal. 

20 SEC. 7. CONGRESSIONAL BUDGET RESOLUTION. 

21 Section 301(a) of the Congressional Budget Act of 

22 1974 (2 U.S.C. 631(a)) is amended—

23 (1) in paragraph (6), by—

24 (A) striking ‘‘For’’ and inserting ‘‘for’’; 

25 and 
41

•S 1915 RIS 

1 (B) striking ‘‘and’’ after the semicolon; 

2 (2) in paragraph (7), by—

3 (A) striking ‘‘For’’ and inserting ‘‘for’’; 

4 and

5 (B) striking the period; and 

6 (3) by adding after paragraph (7) the following: 

7 ‘‘(8) calculations for the immediately preceding 

8 fiscal year of the impact of the resolution on the net 

9 present value of the Government’s overall liabilities 

10 and commitments over—

11 ‘‘(A) a 75-year horizon; and 

12 ‘‘(B) an indefinite time horizon; 

13 as determined using the methodology of section 

14 331(e)(3)(A)(i) of title 31, United States Code.’’. 

15 SEC. 8. POINT OF ORDER ESTABLISHED AGAINST LEGISLA16 TION ADVERSELY AFFECTING NET PRESENT 

17 VALUE OF GOVERNMENT’S OVERALL LIABIL18 ITIES AND COMMITMENTS. 

19 (a) REPORT.—Section 308(a)(1) of the Congressional 

20 Budget Act of 1974 (2 U.S.C. 639(a)(1)) is amended—

21 (1) in subparagraph (B), by striking ‘‘and’’ 

22 after the semicolon; 

23 (2) in subparagraph (C), by striking the period 

24 and inserting ‘‘; and’’; and 

25 (3) by adding at the end the following: 
42

•S 1915 RIS 

1 ‘‘(D) calculations under current policies of 

2 the impact on the net present value of the Gov3 ernment’s liabilities and commitments of any 

4 measure with an adverse impact greater than 

5 exceeds 0.25 percent of the present discounted 

6 value of all future payroll taxes over 75 years 

7 or an indefinite period as determined using the 

8 methodology of section 331(e)(3)(A)(i) of title 

9 31, United States Code. The assumptions and 

10 details of the methods used in making this cal11 culation shall be consistent with those utilized 

12 in the financial statement published under sec13 tion 331(e) of title 31, United States Code, un14 less the responsible official or agency elects to 

15 make calculations based on other assumptions 

16 and methods for which a detailed explanation 

17 and rationale is presented.’’. 

18 (b) POINT OF ORDER.—Section 312 of the Congres19 sional Budget Act of 1974 (2 U.S.C. 643) is amended by 

20 adding at the end the following: 

21 ‘‘(g) NEGATIVE IMPACT ON NET PRESENT VALUE OF

22 GOVERNMENT’S OVERALL LIABILITIES AND COMMIT23 MENTS.—It shall not be in order in the House of Rep24 resentatives or the Senate to consider any bill or resolution 

25 (or amendment, motion, or conference report on that bill 
43

•S 1915 RIS 

1 or resolution) that changes direct spending or revenues 

2 that would, when considered together with any other legis3 lation passed by that House or enacted prior to such con4 sideration during that calendar year, cause an adverse im5 pact on the net present value of the Government’s overall 

6 liabilities and commitments incurred by that measure over 

7 75 years or an indefinite time horizon that is greater than 

8 1.25 percent of the present discounted value of all future 

9 payrolls. The calculation required by this subsection shall 

10 assume that the legislative measure subject to the point 

11 of order will be a permanent change in law and disregard 

12 any changes in the terms of the legislative measure and 

13 any formula or mechanism for adjustments in the rec14 ommendations beyond the date of enactment to the extent 

15 that such change, formula, or mechanism increases the net 

16 present value of the Government’s overall liabilities or 

17 commitments over 75 years or an indefinite time hori18 zon.’’. 

19 (c) 60 VOTES.—Section 904 of the Congressional 

20 Budget Act of 1974 (2 U.S.C. 621 note) is amended—

21 (1) in subsection (c)(1), by inserting ‘‘312(g),’’ 

22 before ‘‘313’’; and 

23 (2) in subsection (d)(2), by inserting ‘‘312(g),’’ 

24 before ‘‘313’’. 
44

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1 SEC. 9. TRUSTEES REPORT OF LIABILITIES. 

2 Section 201(c) of the Social Security Act (42 U.S.C. 

3 401(c)) is amended by adding at the end the following: 

4 ‘‘In such report the Trustees shall include a calculation 

5 of the present value of projected benefits to current par6 ticipants, minus the present value of projected revenues 

7 from current participants and current trust fund balances 

8 (the Closed Group Unfunded Obligation), including all 

9 supplemental information required by Federal Financial 

10 Accounting Standard No. 17 Social Insurance. The report 

11 shall also include the net present value calculations related 

12 to the Trust Funds specified in section 3 and such other 

13 supplemental information as the Trustees deem appro14 priate. In the annual report and other public statements 

15 regarding Trust Fund solvency, the Trustees shall give 

16 prominence to the Closed Group Unfunded Obligation and 

17 also the annual change in the Closed Group Unfunded Ob18 ligation. To the extent that the annual performance of the 

19 Social Security system is consolidated into Federal budg20 etary aggregates reported by the Congressional Budget 

21 Office, the General Accounting Office, or the Office of 

22 Management and Budget, annual changes in the Closed 

23 Group Unfunded Obligation shall be included.’’. 
45

•S 1915 RIS 

1 SEC. 10. TREASURY DEPARTMENT ANALYSIS OF TAX PROVI2 SIONS PRESENT VALUE. 

3 (a) PRESENT VALUE.—Not later than 6 months after 

4 the date of enactment of this Act, the Secretary of Treas5 ury shall analyze and report to Congress regarding the 

6 methodology and utility of preparing calculations of the 

7 net present value of specific provisions of the Internal Rev8 enue Code of 1986 that defer tax liability or cause long9 term revenue effects that are not captured in a cash flow 

10 estimate over 5 or 10 years. 

11 (b) LONG-TERM.—Not later than 12 months after 

12 the date of enactment of this Act, the President shall sub13 mit to Congress a calculation under current policies of the 

14 impact on the net present value of the Government’s over15 all liabilities and commitments over 75 years and over an 

16 indefinite time horizon for current tax expenditures and 

17 any tax legislative recommendation included in the Budget 

18 of the United States that have an adverse impact greater 

19 than exceeds 1.25 percent of the present discounted value 

20 of all future payrolls over 75 years and over an indefinite 

21 time horizon. 
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•S 1915 RIS 

1 SEC. 11. BAR USE OF EXPEDITED PROCEDURES TO ENACT 

2 LEGISLATION THAT AGGRAVATES THE BUDG3 ET DEFICIT OR REDUCES THE BUDGET SUR4 PLUS. 

5 Section 310 of the Congressional Budget Act of 1974 

6 (2 U.S.C. 641) is amended by adding at the end the fol7 lowing: 

8 ‘‘(i) LIMITATION TO BUDGET ENFORCEMENT.—It 

9 shall not be in order in the Senate or House of Represent10 atives to consider any reconciliation bill or resolution re11 ported pursuant to a concurrent resolution on the budget

12 that increases the deficit or reduces the surplus for the 

13 budget year, for the total period of years covered by the 

14 concurrent resolution on the budget or that changes direct 

15 spending or revenues causing an adverse impact on the 

16 net present value of United States Government liabilities 

17 and commitments over 75 years or an indefinite time hori18 zon.’’. 

19 SEC. 12. REINSTATEMENT OF PAY-AS-YOU-GO ENFORCE20 MENT. 

21 (a) STATUTORY ENFORCEMENT.—

22 (1) IN GENERAL.—Section 252 of the Balanced 

23 Budget and Emergency Deficit Control Act of 1985 

24 (2 U.S.C. 902) is amended—

25 (A) in subsection (a), by striking ‘‘enacted 

26 before September 30, 2002,’’; 
47

•S 1915 RIS 

1 (B) in subsection (b), by striking ‘‘enacted 

2 before September 30, 2002,’’; and 

3 (C) by adding at the end the following: 

4 ‘‘(f) DECLARATION OF WAR.—Notwithstanding any 

5 other provision of this Act, subsection shall apply in any 

6 fiscal year unless a declaration of war is in effect.’’. 

7 (2) PAY-AS-YOU-GO ADJUSTMENT.—Upon the 

8 enactment of this section, the Director of the Office 

9 of Management and Budget shall change any bal10 ance of direct spending and receipts legislation for 

11 fiscal year 2003 under section 252 of the Balanced 

12 Budget and Emergency Deficit Control Act of 1985 

13 to zero. 

14 (b) PAY-AS-YOU-GO RULE IN CONGRESS.—

15 (1) POINT OF ORDER.— 

16 (A) IN GENERAL.—It shall not be in order 

17 in the Senate or the House of Representatives 

18 to consider any direct spending or revenue leg19 islation that would decrease the on-budget sur20 plus, increase the on-budget deficit, or cause an 

21 on-budget deficit for any one of the three appli22 cable time periods as measured in subpara23 graphs (E) and (F). 

24 (B) APPLICABLE TIME PERIODS.—For 

25 purposes of this paragraph the term ‘‘applicable 
48

•S 1915 RIS 

1 time period’’ means any one of the three fol2 lowing periods: 

3 (i) The first year covered by the most 

4 recently adopted concurrent resolution on 

5 the budget. 

6 (ii) The period of the first five fiscal 

7 years covered by the most recently adopted 

8 concurrent resolution on the budget. 

9 (iii) The period of the five fiscal years 

10 following the first five fiscal years covered 

11 in the most recently adopted concurrent 

12 resolution on the budget. 

13 (C) DIRECT-SPENDING LEGISLATION.—For 

14 purposes of this paragraph and except as pro15 vided in subparagraph (D), the term ‘‘direct16 spending legislation’’ means any bill, joint reso17 lution, amendment, motion, or conference re18 port that affects direct spending as that term is 

19 defined by and interpreted for purposes of the 

20 Balanced Budget and Emergency Deficit Con21 trol Act of 1985. 

22 (D) EXCLUSION.—For purposes of this 

23 paragraph, the terms ‘‘direct-spending legisla24 tion’’ and ‘‘revenue legislation’’ do not in25 clude—
49

•S 1915 RIS 

1 (i) any concurrent resolution on the 

2 budget; or 

3 (ii) any provision of legislation that 

4 affects the full funding of, and continu5 ation of, the deposit insurance guarantee 

6 commitment in effect on the date of the 

7 enactment of the Budget Enforcement Act 

8 of 1990. 

9 (E) BASELINE.—Calculations prepared 

10 pursuant to this paragraph shall—

11 (i) use the baseline used for the most 

12 recently adopted concurrent resolution on 

13 the budget; and 

14 (ii) be calculated under the require15 ments of subsections (b) through (d) of 

16 section 257 of the Balanced Budget and 

17 Emergency Deficit Control Act of 1985 for 

18 fiscal years beyond those covered by that 

19 concurrent resolution on the budget. 

20 (F) PRIOR SURPLUS.—If direct spending 

21 or revenue legislation decreases the on-budget 

22 surplus, increases the on-budget deficit, or 

23 causes an on-budget deficit when taken individ24 ually, then it must also decrease the on-budget 

25 surplus, increase the on-budget deficit, or cause 
50

•S 1915 RIS 

1 an on-budget deficit when taken together with 

2 all direct spending and revenue legislation en3 acted since the beginning of the calendar year 

4 not accounted for in the baseline under sub5 paragraph (E)(i). 

6 (2) WAIVER.—This subsection may be waived 

7 or suspended in the Senate only by the affirmative 

8 vote of three-fifths of the Members, duly chosen and 

9 sworn. 

10 (3) APPEALS.—Appeals in the Senate from the 

11 decisions of the Chair relating to any provision of 

12 this subsection shall be limited to 1 hour, to be 

13 equally divided between, and controlled by, the ap14 pellant and the manager of the bill or joint resolu15 tion, as the case may be. An affirmative vote of 

16 three-fifths of the Members of the Senate, duly cho17 sen and sworn, shall be required in the Senate to 

18 sustain an appeal of the ruling of the Chair on a 

19 point of order raised under this subsection. 

20 (4) DETERMINATION OF BUDGET LEVELS.—

21 For purposes of this subsection, the levels of new 

22 budget authority, outlays, and revenues for a fiscal 

23 year shall be determined on the basis of calculations 

24 made by the Committee on the Budget. 
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1 (5) DECLARATION OF WAR.—This subsection 

2 shall not apply in any fiscal year in which a declara3 tion of war is in effect.

Æ