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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1915 Referral Instructions Senate (RIS)]

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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Honest Government 
Accounting Act of 2003''.
    (b) Table of Contents.--The table of contents for 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.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Due to a variety of factors, in the last 2 years the 
        Federal budgetary aggregates for the next decade have swung 
        from a projected $5.6 trillion surplus to policies that could 
        generate a $5.5 trillion deficit (Goldman Sachs September 
        2003), a decline of $11.1 trillion. Though this is a 
        substantial deterioration in the country's financial condition, 
        these short-term projections substantially understate the 
        Nation's long-term fiscal imbalance.
            (2) The United States Government has incurred different 
        types of long-term liabilities and commitments, including $3.3 
        trillion debt held by the public net of holdings of the Federal 
        Reserve System and also commitments to future beneficiaries of 
        critical social insurance entitlement programs such as Social 
        Security and Medicare.
            (3) Congress and the public are well-informed about the 
        long-term liabilities that arise from budget deficits and debt 
        owed to the public. They are not well-informed about the 
        commitments that arise from Government promises to pay social 
        insurance entitlement benefits, to the Baby Boom and subsequent 
        generations.
            (4) These different types of liabilities and commitments 
        are similar in many respects. While promised Social Security 
        and Medicare benefits are not liabilities in the sense that 
        government bills, notes, and bonds are liabilities, and the 
        terms of these benefits have been modified many times in the 
        past, participants do rely on these promises in planning for 
        retirement and the programs are funded by a separate and 
        dedicated payroll tax paid into a Trust Fund.
            (5) In order to ensure that the Government has income and 
        net assets sufficient to cover these long-term liabilities and 
        commitments, as well as its ongoing discretionary spending for 
        the national defense, homeland security, and other critical 
        priorities, it is necessary that Congress and the public be 
        fully apprised of the types and dimensions of these long-term 
        liabilities and commitments and take actions to manage them 
        prudently.
            (6) The Government's liability to holders of public debt 
        instruments is the outstanding value of the debt itself, net of 
        holdings of the Federal Reserve System, currently $3.3 
        trillion.
            (7) The net present value of the commitment to pay social 
        insurance entitlement benefits, which represent obligations in 
        addition to the debt held by the public net of Federal Reserve 
        holdings, can be calculated. It is the present value of 
        projected future social insurance entitlement benefits, minus 
        the present value of future dedicated receipts. This difference 
        equals the amount that, if put aside today, would be just 
        sufficient to cover the imbalance between program benefits and 
        receipts. But calculations of this imbalance are not widely 
        publicized or understood. This is due in part to the widely 
        reported surpluses in the Social Security and Medicare Trust 
        Funds, which convey a misleading picture of the long-term 
        fiscal health of these social insurance entitlement programs. 
        Reporting the accumulation of assets but not comparing them to 
        commitments on a net basis is inconsistent and misleading.
            (8) The Social Security surpluses of the last several 
        decades thus create the illusion of solvency of the program and 
        the lending of these surpluses to the government disguises the 
        accumulation of mounting deficits in the rest of the Federal 
        budget. For example, in fiscal year 2003, the reported 
        surpluses in Social Security and Medicare Trust Funds exceeded 
        $179 billion and these surpluses were used, in the budget and 
        other budgetary aggregates, to decrease the reported total 
        budget deficit for fiscal year 2002 from $317 billion to $158 
        billion and for fiscal year 2003 from $553 billion to $374 
        billion. Had the commitments to pay future entitlement benefits 
        been reflected in their annual results, their reported 
        surpluses would have disappeared and the Trust Funds would have 
        reported annual losses of $1.5 trillion. In the coming years, 
        the annual Social Security and Medicare surpluses are projected 
        to rise to more than $200 billion per year. Unless our system 
        of budgetary accounting for Social Security and Medicare is 
        reformed, these surpluses will continue to disguise the size of 
        our annual deficit and distort our budgetary priorities. 
        Presenting Social Security and Medicare's financial condition 
in a more realistic manner would not only clarify the true extent of 
the country's mounting long-term liabilities and commitments but also 
encourage responsible and timely reform of the Social Security and 
Medicare programs.
            (9) Comparing the present value of receipts and 
        expenditures is standard operating procedure in mortgage 
        lending and investment banking. But it plays no meaningful role 
        in assessing the Government's overall fiscal position. Instead, 
        the Government works on a short-term obligation and cash-based 
        budgets basis that only looks a few years into the future.
            (10) The most appropriate way to assess Government finances 
        is to calculate its net assets under current policies: The net 
        present value of all prospective receipts minus the net present 
        value of all prospective outlays and minus outstanding debt 
        held by the public. Net present value accounting differs from 
        accrual accounting. Although appropriate for private sector 
        entities whose operations can potentially terminate in the 
        future, accrual accounting is potentially misleading and 
        incomplete for an entity such as the Federal Government that is 
        expected to continue operating indefinitely. For Government 
        social insurance programs such as Social Security and Medicare 
        accrual accounting would count only the liabilities accrued to 
        date. Moreover, these commitments would be calculated in such a 
        way as to assume that these programs are immediately terminated 
        and that the Government must pay off existing obligations 
        according to a particular method of evaluating their size. By 
        way of contrast, a focus on net present values includes 
        liabilities and income we know will accrue in the future for 
        future beneficiaries (e.g. the Baby Boomers and all future 
        generations). These values focus squarely on the extent to 
        which current programs such as entitlements are sustainable 
        into the future. They seek to redress the short sightedness and 
        potentially misleading focus we find in the current Budget Act 
        and Budget resolutions and public discourse about cash flow 
        measures of Government finances, deficits, and public debt.
            (11) Although they are not well-publicized and play no 
        formal role in budget and planning, calculations of the 
        Government's commitment to pay social insurance entitlement 
        benefits to the Baby Boom and subsequent generations already 
        are provided routinely in public Government documents. For 
        several decades, calculations under current policies have been 
        provided for a 75-year period, but recently calculations are 
        being prepared for an indefinite time period. Examples of such 
        reports are as follows:
                    (A)(i) The Financial Report of the United States 
                Government, prepared by the Treasury Department, 
                presents a calculation of the difference between the 
                present value of projected future entitlement payments 
                and projected future payroll tax and other dedicated 
                receipts over a 75-year period. The 2002 report issued 
                by Treasury Secretary John Snow finds that, excluding 
                the trust fund balances, the net present value of 
                benefit payments for Social Security (OASDI) in excess 
                of contributions and earmarked taxes is $4.562 
                trillion. For Medicare (Part A, HI) it is $5.126 
                trillion. Trust Fund balances are excluded according to 
                the report because to finance Trust Fund redemptions 
                ``the Government must raise taxes, increase borrowings 
                from the public, cut spending for other programs, 
                retire less debt, or some combination thereof.'' For 
                Supplemental Medical Insurance (Medicare Part B) the 
                2002 report calculated the shortfall to be $8.125 
                trillion. The total negative cash flow, calculated as a 
                net present value, is $18 trillion, which is roughly 5 
                times as great as the debt held by the public, $3.1 
                trillion. Taken together, this measure of the public 
                debt and long-term social insurance entitlement 
                commitments is equal to more than twice the current 
                year United States Gross Domestic Product, which is 
                approximately $10.5 trillion.
                    (ii) The fiscal year 2004 budget provides an update 
                of the same imbalance over a 75-year period. It 
                calculates that the ``combined shortfall in Social 
                Security and Medicare'' is $18 trillion. It asserts, 
                ``It would take an additional $18 trillion in today's 
                dollars to pay for the obligations of these systems as 
                they are now constituted.'' With regard to Medicare, it 
                calculates ``the (Medicare prescription drug) bills 
                that advanced furthest in the last Congress would have 
                increased the Medicare long-term unfunded promise 
                liability by an estimated $4.6 trillion and $5.9 
                trillion, respectively.'' Putting the $18 trillion in 
                perspective is the fact that total household wealth in 
                the United States in 2002 was $42.4 trillion (2001 
                Survey of Consumer Finances). ``This means that the 
                Federal Government would have to confiscate almost half 
                of all household wealth to have the resources necessary 
                to close both of these programs' future financial 
                gaps,'' it concludes.
                    (B)(i) The net present value of Social Security and 
                Medicare commitments would be significantly larger if 
                calculated over a horizon longer than 75 years, because 
                of the substantial imbalance between revenues and 
                expenditures that is projected for the end of the 75-
                year period and likely to continue well beyond it. As 
                all future cash flows are relevant, calculations of the 
                full present value commitment should be based on the 
                longest time period for which projections are feasible. 
                A 75-year time period credits all of the payroll tax 
                revenues from individuals alive during this period but 
                compares them only to the benefit payments that will be 
                made to them during the 75-year period and not the full 
                benefit payments that are due.
                    (ii) The former Deputy Assistant Secretary for 
                Economic Policy for the Treasury Department, and a 
                Senior Economist of the Federal Reserve Bank of 
Cleveland, have published calculations they prepared for the Government 
of the net present value of the negative cash flow for Social Security 
and Medicare based on an infinite-horizon measure. Using policy-
inclusive budget projections and economic growth and discount rate 
assumptions of the Office of Management and Budget, their analysis 
finds that the fiscal imbalance for Social Security is $7 trillion and 
for Medicare (parts A and B) is $36.6 trillion. Taken together this 
imbalance is over 14 times the debt held by the public and roughly 
equal to the total family net worth of the 104 million United States 
households ($42.4 trillion). They find that the Federal Government's 
fiscal imbalance equals 16.6 percent of the present discounted value of 
future payrolls, and that if the Government fails to set aside these 
funds, the fiscal imbalance will grow by $1.6 trillion each year during 
the next 4 years. They calculate that the Medicare prescription drug 
bills that advanced the furthest in the last Congress in the House and 
Senate would have increased the Medicare long-term unfunded promise 
liability by $12 trillion and $24 trillion, respectively. An option 
that would close most but not all of the imbalance is to permanently 
eliminate \1/2\ of all that Government does, aside from Social Security 
and Medicare.
                    (iii) The 2003 report of the Social Security 
                Trustees includes a calculation under current policies 
                of the net present value of the negative cash flow for 
                Social Security commitments based on an infinite-
                horizon measure. Using their own economic growth and 
                discount rate assumptions and not counting the Treasury 
                securities held in the OASDI programs' Trust Funds, the 
                Social Security Trustees find that the fiscal imbalance 
                for that program amounts to $11.9 trillion. The Social 
                Security Trustees' measure excludes Trust Funds' 
                securities because these assets of the OASDI programs 
                constitute liabilities of the Treasury and, thus, do 
                not constitute a net asset for the Federal Government 
                as a whole. Its calculation of the net present value of 
                the shortfall over 75 years is $4.927 trillion. The 
                report states, ``Over emphasis of summary measures . . 
                . for the 75-year period can lead to incorrect 
                perceptions and policy that fails to address 
                sustainability.''
            (12) Another way to view this challenge is to calculate 
        under current policies how much, as a share of Gross Domestic 
        Product, our Government would have to put aside every year in 
        order to finance a major imbalance between receipts and 
        benefits. Based on the Gross Domestic Product projections and 
        discount factors in last year's Social Security and Medicare 
        Trustees Report, the amount needed to meet an imbalance is 
        approximately 3.3 percent of Gross Domestic Product, annually, 
        for the full 75-year or indefinite period. For 2002, that would 
        be approximately $362 billion per year with reference to the 
        calculation under current policies for the 75-year period and 
        $679 billion per year in 2002 dollars with reference to the 
        calculation for the indefinite period.
            (13) Because, the fiscal imbalance estimate is similar to a 
        ``stock of debt'' it is more appropriate to compare it to 
        another stock measure such as the present discounted value of 
        the Gross Domestic Product or a tax base out of which the 
        overall (or each particular program's) fiscal imbalance would 
        be financed. Although some view it useful to calculate the 
        share of each year's Gross Domestic Product that must be set 
        aside to pay for the imbalance, the entire Gross Domestic 
        Product does not (and is not likely to ever) constitute the 
        base on which taxes are levied. For example, the service flow 
        from the Nation's housing stock and depreciated capital are not 
        currently (nor are ever likely to be) included in the Federal 
        tax base. Hence, it would be better to calculate the share of a 
        tax base that must be set aside annually to finance the 
        imbalance. For example, it would be most useful to show the 
        imbalance arising from Social Security and Medicare programs as 
        a share of the present discounted value of their respective 
        revenue bases, and the fiscal imbalance on account of the rest 
        of Federal operations (non-Social Security and non-Medicare) as 
        a share of the present discounted value of the revenue base 
        excluding the payroll tax base.
            (14) The net present value of the debt held by the public 
        of $3.3 trillion is approximately $11,290 for each American 
        citizen (292,285,000). By way of comparison, the value of the 
        entitlement commitments funding imbalance of $43.6 trillion is 
        $149,175 per United States citizen. Adding this debt held by 
        the public ($3.3 trillion), the possible increase in this debt 
        held by the public due to current policy measures ($5.5 
        trillion), and the implicit entitlement commitments ($43.6 
        trillion)--a net present value of $52.5 trillion--the per 
        capita amount is $178,600.
            (15) The staggering size of these alternative requisite 
        fiscal adjustments reflects the enormous social insurance 
        entitlement commitments associated with the imminent retirement 
        of the Baby Boom generation and the shortfall in payroll tax 
        receipts to cover them. There are 77 million individuals in the 
        Baby Boom generation. In addition, America has absorbed 8 
        million immigrants in this age group. It is by far the largest 
        generation in United States history. On September 2, 2011, the 
        first Baby Boomers, defined as those born after the end of 
        World War II through 1964, will turn 66 and begin to draw full 
        Social Security benefits. This is only 8 years from now. Baby 
        Boomers can begin drawing full Medicare benefits in 2010 at age 
        65.
            (16) In focusing on the dimensions of the Government's 
        promise to pay social insurance entitlement benefits, it is 
        useful and necessary also to focus on the relationship of other 
        Government spending programs and other Government 
revenues. Focusing only on the funding of social insurance entitlement 
benefits and not on the funding available for other commitments gives 
policy makers a perverse incentive to arbitrage funding for the former 
at the expense of the latter.
            (17) Policies that substantially increase rather than 
        retire the debt held by the public, whether through increases 
        in spending or reduction in revenues, will make it much more 
        difficult to cover the Government's long-term social insurance 
        entitlement commitments. It is well understood that two options 
        to reduce or eliminate the funding imbalances in Social 
        Security and Medicare are reducing promised benefits to 
        beneficiaries and bringing more revenues into the systems, 
        either from payroll tax increases, transfers of general 
        revenue, or borrowing. Both the level of debt held by the 
        public and the long-term fiscal balance of the rest of the 
        Government affect its ability to fund and absorb these 
        measures. Therefore, it is necessary to track the long-term 
        fiscal imbalance in the rest of the budget as well as in Social 
        Security and Medicare. The options for honoring these 
        commitments, managing the change in demographics for these 
        programs, and putting these programs on a sustainable basis are 
        exponentially more challenging as the Government's general 
        revenue base, annual deficits, and public debt deteriorate. 
        Every proposal to substantially increase spending or reduce 
        revenues must be analyzed for its impact on the ability of the 
        Government to fund and absorb these measures. It will be very 
        difficult under current policies for the Government to cover 
        these commitments, make needed infusions of general revenue, 
        and maintain any level of financial support for the national 
        defense, homeland security, education, and other priorities. It 
        is also true that even if we retire the debt held by the 
        public, we face a huge shortfall in dedicated receipts to cover 
        these commitments and massive pressure on general revenue 
        funded programs if the Government provides infusions of general 
        revenue to cover the shortfall in social insurance entitlement 
        program payroll tax receipts.
            (18) The methodology for preparing net present value 
        calculations is well understood. The Federal Government 
        utilizes, and requires private sector entities to utilize, net 
        present value calculations in a variety of contexts such as the 
        following:
                    (A) Office of Management and Budget utilizes net 
                present value analysis under OMB Circular A-94 and 
                every agency of the Government is already experienced 
                in utilizing these analyses as an integral element of 
                their decisionmaking. The Circular applies this type of 
                analysis broadly to ``any analysis to support 
                Government decisions to initiate, renew, or expand 
                programs or projects which would result in a series of 
                measurable benefits or costs extending for three or 
                more years into the future.'' This includes any 
                analysis of the ``benefit-cost or cost-effectiveness of 
                Federal programs or policies,'' ``regulatory impact 
                analysis,'' ``analysis of decisions to lease or 
                purchase,'' and ``asset valuation and sale analysis.'' 
                The use of this methodology is found to ``promote 
                efficient resource allocation through well-informed 
                decision-making by the Federal Government.'' The 
                Circular finds that the ``standard criterion for 
                deciding whether a government program can be justified 
                on economic principles is net present value--the 
                discounted monetized value of expected net benefits 
                (i.e., benefits minus costs).'' It specifies, ``Net 
                present value is computed by assigning monetary values 
                to benefits and costs, discounting future benefits and 
                costs using an appropriate discount rate, and 
                subtracting the sum total of discounted costs from the 
                sum total of discounted benefits. Discounting benefits 
                and costs transforms gains and losses occurring in 
                different time periods to a common unit of measurement. 
                Programs with positive net present value increase 
                social resources and are generally preferred. Programs 
                with negative net present value should generally be 
                avoided.
                    (B) Under the Internal Revenue Code and the 
                Employee Retirement Income Security Act (ERISA), the 
                Federal Government requires private companies to 
                calculate the present values of their accrued pension 
                liabilities to determine the sustainability and 
                integrity of their private defined-benefit pension and 
                other benefit plans. This calculation adds together the 
                current year's benefit payout and the increase in the 
                present value of the firm's accrued benefits discounted 
                at a prespecified interest rate. The estimate of 
                accrued benefits uses information on the age profile 
                and expected mortality of the company's workforce and 
                the company's benefit formulae for determining expected 
                future payouts. The present value of current plus 
                accrued future benefits is then compared to the balance 
                in the company's pension fund dedicated to paying 
                pension benefits to determine the plan's financial 
                adequacy. If the pension fund is underfunded (it's 
                balance covers less than 90 percent of the firm's 
                current plus accrued future liabilities), the firm is 
                required to make additional ``deficit reduction 
                contributions'' intended to returning the fund to 
                financial adequacy over time. The Federal Government 
                currently does not require any similar funding 
                requirement for its public pension and health-care 
                systems, including Social Security and Medicare.
            (19) The Government and public need to face these 
        realities, understanding the scope and magnitude all of the 
        Government's long-term liabilities and commitments. The 
        Government and the public must prepare and adopt realistic 
        long-term financial plans, not aggravate the challenge by 
        adding to the debt held by the public, and take decisive steps 
        to prepare for the retirements of the Baby Boomers and 
        subsequent generations. The Government needs to ensure that its 
        liabilities can be met, its commitments to beneficiaries are 
        realistic, and that the impact of these liabilities and 
        commitments does not undermine the ability of the Government to 
fund other critical priorities.
            (20) A prudent financial plan would reduce the Government's 
        net long-term liabilities and commitments from approximately 
        16.6 percent of the present discounted value of future payrolls 
        to less than 1.25 percent ($5 trillion). It is plausible that 
        the Government can finance a liability and commitment of this 
        magnitude through higher taxes or less spending in the future 
        and it becomes increasingly implausible if the liability and 
        commitment exceeds 1.25 percent of the discounted value of 
        payrolls. Such a plan would also place constraints on proposals 
        and actions that would adversely affect the net present value 
        of these long-term liabilities and commitments and would remove 
        constraints that prevent the consideration of responsible 
        actions and reforms. At a minimum, it is not prudent for the 
        Government to add to the debt held by the public and net 
        present value of its social insurance entitlement commitments. 
        The longer our Government fails to face reality and take action 
        to prepare for the Baby Boom retirements, the greater the pain 
        will be and the fewer options for reform it will have.

SEC. 3. PREPARATION OF NET PRESENT VALUE CALCULATION OF MAJOR 
              LIABILITIES AND COMMITMENTS.

    (a) In General.--Section 331(e) of title 31, United States Code, is 
amended by adding at the end the following:
            ``(3)(A) The financial statement of liabilities required by 
        paragraph (2) shall include a calculation under current 
        policies of the net present value of the overall liabilities 
        and commitments of the United States Government which shall 
        include--
                    ``(i) calculations of the net present value of all 
                future government spending other than spending incident 
                to servicing the current and future net debt held by 
                the public; the net present value of all future 
                government tax and nontax receipts, including tax 
                receipts, net income of public enterprises, fees, and 
                other levies imposed on United States citizens and 
                residents; and net annual transfers to the Treasury 
                from the Federal Reserve System;
                    ``(ii) the outstanding debt held by the public;
                    ``(iii) calculations of the net present value of 
                commitments and receipts of the Federal Old-Age and 
                Survivors Insurance (OASI) Trust Fund, the Federal 
                Disability Insurance (DI) Trust Fund, the Federal 
                Hospital Insurance (HI) Trust Fund, and the Federal 
                Supplementary Medical Insurance (SMI) Trust Fund using 
                the most recent available long-term, intermediate 
                projections by the Trustees of such Trust Funds of 
                revenues, expenditures, and discount factors, as 
                represented in such annual reports;
                    ``(iv) calculations of the net present value of 
                commitments and receipts of the Railroad Retirement and 
                Black Lung (part C) programs;
                    ``(v) calculations of the net present value of 
                receipts to the Federal retirement and health insurance 
                systems, both civil and military; and
                    ``(vi) the present discounted values of payroll and 
                nonpayroll tax bases separately. The items to be 
                estimated are the present discounted values of--
                            ``(I) payroll subject to taxes on account 
                        of OASDI;
                            ``(II) payroll subject to taxes on account 
                        of HI-Part A;
                            ``(III) premiums on account of HI-Part B;
                            ``(IV) personal income taxes;
                            ``(V) corporate income taxes;
                            ``(VI) excise taxes;
                            ``(VII) customs duties;
                            ``(VIII) estate and gift taxes;
                            ``(IX) Federal retirement contributions;
                            ``(X) unemployment insurance premiums; and
                            ``(XI) miscellaneous receipts not included 
                        in subclauses (I) through (X).
            ``(B)(i) For each calculation under subparagraph (A), 
        calculations shall be provided for--
                    ``(I) a 75-year horizon; and
                    ``(II) an indefinite time horizon.
            ``(ii) For the 75-year horizon under clause (i)(I), each 
        calculation shall take each year's expenditures minus revenues, 
        divide this difference by the projected discount factor for 
        that year, and add the resulting 75 annual discounted flows to 
        obtain the program's net present value imbalance. The long-term 
        discount and growth rates utilized in these calculations shall 
        be discussed in the report and consistent with those utilized 
        by the Department of Treasury and other Government agencies 
        with regard to other long-term financial calculations. For 
        purposes of the calculations in clauses (iii), (iv), and (v) of 
        subparagraph (A), revenues will include payroll taxes as 
        allocated by law to the respective Trust Funds (currently the 
        case for OASI, DI, and HI), participant premiums (for SMI), 
        general revenue receipts from the taxation of benefits, as 
        currently allocated by law to the OASI, DI, and HI Trust Funds, 
        and funding for the Federal retirement and health insurance 
        systems, both civil and military. For purposes of this 
        calculation, revenues will not include interest income on Trust 
        Fund and transfers of general revenue to SMI, Social Security, 
        or Medicare.
            ``(iii) For the indefinite time horizon under clause 
        (i)(II), the calculations shall follow the procedures provided 
        in clause (iii), but shall be based on extended projections 
        that go beyond the 75-year projections currently available.
            ``(4) The financial statement shall include a calculation 
        under current policies of the net present value of benefits and 
        projected benefits to past and current participants described 
        in clauses (iii), (iv), and (v) of paragraph (3)(A), including 
        the present value of projected benefits to current 
        participants, less the present value of projected taxes paid by 
current participants less the current trust fund balances (the Closed 
Group Unfunded Obligation).
            ``(5) The financial statement shall include a calculation 
        under current policies of the net present value of benefits and 
        projected benefits to past, current, and future participants 
        described in clauses (iii), (iv), and (v) of paragraph (3)(A), 
        including the present value of projected benefits to current 
        and future participants, less the present value of projected 
        taxes paid by current and future participants less the current 
        trust fund balances (the Open Group Unfunded Obligation).
            ``(6) The financial statement shall include a calculation 
        under current policies of the net present value of the overall 
        revenues and expenditures of the United States Government, 
        aside from commitments to the programs described in clauses 
        (ii), (iii), and (iv) of paragraph (3)(A), over--
                    ``(i) a 75-year horizon; and
                    ``(ii) an indefinite time horizon.
            ``(7)(A) The ratio of the fiscal imbalance arising from 
        OASDI as a share of the present discounted value of clause 
        (vi)(I).
            ``(B) The ratio of the fiscal imbalance arising from the HI 
        program (parts A and B) as a share of the present discounted 
        value of clause (vi) (II) and (III).
            ``(C) The ratio of the fiscal imbalance arising from the 
        rest of Federal operations as a share of the sum of present 
        discounted values in clause (vi) (IV) through (XI).
            ``(8) The financial statement shall include the assumptions 
        and details of the methods used in making the calculations in 
        paragraph (3)(A). It shall separately identify and provide a 
        detailed description of the methods and assumptions used in 
        making projections of tax revenues, premiums, other receipts 
        from all sources including inter-fund transfers and interest 
        income on securities held in trust funds, benefit outlays 
        distinguished by the type of benefit, and administrative 
        expenses. The financial statement shall also provide details 
        regarding demographic assumptions such as fertility, mortality, 
        immigration, and labor-force participation rates, dependency 
        ratios, and economic assumptions such as trust fund interest 
        rates, discount rates, revenue and benefit growth rates, 
        health-care expenditure growth rates, productivity growth 
        rates, and inflation rates. The information should include a 
        description of all other intermediate steps and variables used 
        and projected in making these calculations.''.
    (b) First Calculation.--The first calculations required by section 
331(e)(3) of title 31, United States Code, as added by subsection (a), 
shall be submitted 180 days following the date of enactment of this Act 
unless such date falls within 60 days of March 31. Subsequent 
calculations under that section shall be included in the finance report 
required by section 331(e)(3)(A)(i) of title 31, United States Code.
    (c) Government's Overall Liabilities and Commitments.--In this Act, 
the term ``Government's overall liabilities and commitments'' shall 
refer to calculations prepared under section 331(e)(3)(A)(i) of title 
31, United States Code, enacted herein.
    (d) Present Discounted Value of All Future Payrolls.--In this Act, 
the term ``present discounted value of all future payrolls'' means the 
present discounted value of gross wages and salaries and all federally 
taxable compensation.

SEC. 4. PRESIDENTIAL PLAN FOR REDUCING THE NET PRESENT VALUE OF OVERALL 
              LIABILITIES AND COMMITMENTS.

    (a) In General.--If the total of debt held by the public added to 
the calculation under current policies of the net present value of the 
overall liabilities and commitments of the United States Government 
published, as required by section 331(e)(3)(A)(i) of title 31, United 
States Code, exceeds 1.25 percent of the present discounted value of 
all future payrolls not later than September 15, 2005, the President 
shall submit to Congress and the Commission on Long-Term Government 
Liabilities and Commitments established by section 5 a plan or plans 
that will reduce the total to a level in net present value calculated 
as of September 2, 2011, no greater than 1.25 percent of such 
discounted value of all future payrolls as of September 2, 2011. Plans 
shall be submitted with regard to calculations based both on a 75-year 
horizon and an indefinite horizon. The assumptions and details of the 
methods used in making the calculations incorporated in the plan or 
plans shall be consistent with those utilized in the financial 
statement published under section 331(e) of title 31, United States 
Code.
    (b) Contents.--The plan or plans required by subsection (a) shall 
include alternative strategies to meet the goal.

SEC. 5. COMMISSION ON LONG-TERM GOVERNMENT LIABILITIES AND COMMITMENTS.

    (a) In General.--There is established a commission to be known as 
the ``Commission on Long-Term Government Liabilities and Commitments'' 
(referred to in this section as the ``Commission'').
    (b) Recommendations for Reform.--Not later than December 15, 2005, 
the Commission shall make recommendations to the President and Congress 
of reforms that will reduce the total of debt held by the public added 
to the calculation under current policies of the net present value of 
the Government's overall liabilities and commitments published, as 
required by section 331(e)(3)(A)(i) of title 31, United States Code, to 
a level that is not greater than 1.25 percent of the percent discounted 
value of all future payrolls, as of September 11, 2011. The assumptions 
and details of the methods used in making the calculations incorporated 
in the recommendations shall be consistent with those utilized in the 
financial statement published under section 331(e) of title 31, United 
States Code, unless the Commission elects to make recommendations based 
on other assumptions and methods for which a detailed explanation and 
rationale is presented. The recommendations of the Commission shall be 
approved by a two-thirds vote of the members of the Commission.
    (c) Contents.--The recommendations required by subsection (a) 
shall--
            (1) include several alternative strategies to meet the goal 
        including strategies that meet this goal solely by--
                    (A) reducing Government expenditures; and
                    (B) increasing Government revenues; and
            (2) include an evaluation of the recommendations submitted 
        to Congress and the Commission by the President, as required by 
        section 4.
    (d) Legislative Language.--The recommendations required under 
subsection (a) shall include legislative language necessary for 
carrying out such recommendations. The Commission shall develop such 
legislative language after conducting such public hearings and 
consulting with such public or private entities as the Commission 
considers necessary and appropriate to make the recommendations 
required under subsection (a).
    (e) Membership.--
            (1) In general.--The Commission shall be composed of 17 
        members as follows:
                    (A) One congressional Member shall be appointed by 
                the Speaker of the House of Representatives.
                    (B) The Chairman of the Committee on Ways and Means 
                of the House of Representatives.
                    (C) One congressional Member shall be appointed by 
                the Minority Leader of the House of Representatives.
                    (D) The Ranking Member of the Committee on Ways and 
                Means of the House of Representatives.
                    (E) One congressional Member shall be appointed by 
                the Majority Leader of the Senate.
                    (F) The Chairman of the Committee on Finance of the 
                Senate.
                    (G) One congressional Member shall be appointed by 
                the Minority Leader of the Senate.
                    (H) The Ranking Member of the Committee on Finance 
                of the Senate.
                    (I) The Secretary of the Treasury.
                    (J) The Secretary of Labor.
                    (K) The Secretary of Health and Human Services.
                    (L) Six members to be appointed by the President by 
                and with the advise and consent of the Senate to be 
                individuals from the private sector with expertise in 
                government fiscal policy, long-term macroeconomic 
                policy, retirement and health care plan structure and 
                funding, intergenerational accounting, and 
                demographics.
            (2) Deadline for appointments.--The members of the 
        Commission shall be appointed not later than February 1, 2005.
            (3) Co-chairmen.--The Commission shall designate 2 members 
        of the Commission to serve as Co-chairmen of the Commission, 
        one of whom shall be the individual appointed under 
        subparagraph (C), (D), (G), or (H) of paragraph (1).
            (4) Terms.--Each member of the Commission shall serve on 
        the Commission and, with respect to the Co-chairmen, in such 
        capacity, until the earlier of the date the Commission 
        terminates or September 30, 2005.
            (5) Vacancies.--Any vacancy in the membership of the 
        Commission shall be filled in the manner in which the original 
        appointment was made and shall not affect the power of the 
        remaining members to execute the duties of the Commission.
    (f) Quorum.--A quorum shall consist of 7 voting members of the 
Commission.
    (g) Meetings.--
            (1) In general.--The Commission shall meet at the call of 
        the Co-chairmen or a majority of its members.
            (2) Initial meeting.--The Commission shall conduct its 
        first meeting not later than March 1, 2005.
            (3) Open meetings.--Each meeting of the Commission, other 
        than meetings in which classified information is to be 
        discussed, shall be open to the public.
    (h) Policies and Procedures.--The Commission shall establish 
policies and procedures for carrying out the functions of the 
Commission under this section.
    (i) Staff Director and Staff.--
            (1) Staff director.--The Co-chairmen, with the advice and 
        consent of the members of the Commission, shall appoint a Staff 
        Director who is not otherwise, and has not during the 1-year 
        period preceding the date of such appointment served as, an 
        officer or employee in the executive branch and who is not and 
        has not been a Member of Congress. The Staff Director shall be 
        paid at a rate not to exceed the rate of basic pay payable for 
        level IV of the Executive Schedule under section 5315 of title 
        5, United States Code.
            (2) Staff.--
                    (A) In general.--The Staff Director, with the 
                approval of the Commission, may appoint and fix pay of 
                additional personnel. The Staff Director may take such 
                appointments without regard to the provisions of title 
                5, United States Code, governing appointment in the 
                competitive service, and any personnel so appointed may 
                be paid without regard to the provisions of chapter 51 
                and subchapter III of chapter 53 of such title relating 
                to classification and General Schedule pay rates, 
                except that an individual so appointed may not receive 
                pay in excess of the annual rate of basic pay payable 
                for level V of the Executive Schedule under section 
                5316 of such title.
                    (B) Detailees.--Upon request of the Staff Director, 
                the head of any Federal department or agency may detail 
                any of the personnel of that department or agency to 
                the Commission to assist the Commission in carrying out 
                its duties under this Act. Not more than \1/3\ of the 
                personnel employed by or detailed to the Commission may 
                be on detail from any single Federal agency.
    (j) Powers.--
            (1) Hearings and other activities.--For the purpose of 
        carrying out its duties, the Commission may hold such hearings 
        and undertake such other activities as the Commission 
        determines to be necessary to carry out its duties.
            (2) Studies by general accounting office.--Upon the request 
        of the Commission, the Comptroller General shall conduct such 
        studies or investigations as the Commission determines to be 
        necessary to carry out its duties.
            (3) Cost calculations by congressional budget office.--Upon 
        the request of the Commission, the Director of the 
        Congressional Budget Office shall provide to the Commission 
        such cost estimates as the Commission determines to be 
        necessary to carry out its duties.
            (4) Technical assistance.--Upon the request of the 
        Commission, the head of a Federal agency shall provide such 
        technical assistance to the Commission as the Commission 
        determines to be necessary to carry out its duties.
            (5) Use of mails.--The Commission may use the United States 
        mails in the same manner and under the same conditions as 
        Federal agencies, and shall, for purposes of the frank, be 
        considered a commission of Congress as described in section 
        3215 of title 39, United States Code.
            (6) Obtaining information.--The Commission may secure 
        directly from any Federal agency information necessary to 
        enable it to carry out its duties, if the information may be 
        disclosed under section 552 of title 5, United States Code. 
        Upon request of the Co-chairmen of the Commission, the head of 
        such agency shall furnish such information to the Commission.
            (7) Administrative support services.--Upon the request of 
        the Commission, the Administrator of General Services shall 
        provide to the Commission on a reimbursable basis such 
        administrative support services as the Commission may request.
            (8) Acceptance of donations.--The Commission may accept, 
        use, and dispose of gifts or donations of services or property.
            (9) Printing.--For purposes of costs relating to printing 
        and binding, including the costs of personnel detailed from the 
        Government Printing Office, the Commission shall be deemed to 
        be a committee of Congress.
    (k) Termination.--The Commission shall terminate 15 days after the 
date of submission of the recommendations for reform required under 
subsection (b).
    (l) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section, $5,000,000 for the Commission 
to carry out its duties under this section.

SEC. 6. SUBMISSION OF NET PRESENT VALUE CALCULATION AND PLAN TO 
              ACCOMPANY LEGISLATIVE RECOMMENDATIONS INCLUDED IN THE 
              PRESIDENT'S BUDGET.

    (a) Net Present Value Calculation.--
            (1) In general.--The President shall submit to Congress for 
        any proposed permanent changes in law calculations under 
        current policies of the impact on the net present value of 
        Government's overall liabilities and commitments over 75 years 
        and over an indefinite time horizon for any legislative 
        recommendation or recommendations other than annual 
        appropriations included in the Budget of the United States with 
        an adverse impact in the aggregate greater than 0.25 percent of 
        the present discounted value of all future payrolls over 75 
        years or over an indefinite time horizon.
            (2) Methodology.--In making calculations under this 
        subsection, the President shall utilize the same calculation 
        methodology as provided in section 331(e)(3) of title 31, 
        United States Code, as added by this Act. The assumptions and 
        details of the methods used in making the calculations 
        incorporated in the plan or plans shall be consistent with 
        those utilized in the financial statement published under 
        section 331(e) of title 31, United States Code.
            (3) Assumptions.--The calculation required by this 
        subsection shall assume that the legislative recommendation or 
        recommendations other than annual appropriations will be a 
        permanent change in law and disregard any changes in the terms 
        of the legislative recommendation beyond the date of enactment, 
        or any formula or mechanism for adjustments in the 
        recommendations beyond this date to the extent that such 
        change, formula, or mechanism decreases the net present value 
        of the Government's overall liabilities and commitments over 75 
        years or an indefinite time horizon.
    (b) Plan.--If the net present value of the Government's overall 
liabilities and commitments of a legislative recommendation or 
recommendations is found to have an adverse impact greater than 0.25 
percent of the present discounted value of all future payrolls over 75 
years or an indefinite horizon, the President shall submit a plan to 
accompany such recommendation or recommendations that reduces the total 
of debt held by the public added to the calculation of the net present 
value of the Government's overall liabilities and commitments 
published, as required by section 331(e)(3)(A)(i) of title 31, United 
States Code, to a level that exceeds 1.25 percent of the present 
discounted value of all future payrolls as of September 11, 2011. Such 
plan shall be submitted with regard to calculations based both on a 75-
year horizon and an indefinite horizon.
    (c) Contents.--The plan required by subsection (b) shall include 
several alternative strategies to meet the goal.

SEC. 7. CONGRESSIONAL BUDGET RESOLUTION.

    Section 301(a) of the Congressional Budget Act of 1974 (2 U.S.C. 
631(a)) is amended--
            (1) in paragraph (6), by--
                    (A) striking ``For'' and inserting ``for''; and
                    (B) striking ``and'' after the semicolon;
            (2) in paragraph (7), by--
                    (A) striking ``For'' and inserting ``for''; and
                    (B) striking the period; and
            (3) by adding after paragraph (7) the following:
            ``(8) calculations for the immediately preceding fiscal 
        year of the impact of the resolution on the net present value 
        of the Government's overall liabilities and commitments over--
                    ``(A) a 75-year horizon; and
                    ``(B) an indefinite time horizon;
        as determined using the methodology of section 331(e)(3)(A)(i) 
        of title 31, United States Code.''.

SEC. 8. POINT OF ORDER ESTABLISHED AGAINST LEGISLATION ADVERSELY 
              AFFECTING NET PRESENT VALUE OF GOVERNMENT'S OVERALL 
              LIABILITIES AND COMMITMENTS.

    (a) Report.--Section 308(a)(1) of the Congressional Budget Act of 
1974 (2 U.S.C. 639(a)(1)) is amended--
            (1) in subparagraph (B), by striking ``and'' after the 
        semicolon;
            (2) in subparagraph (C), by striking the period and 
        inserting ``; and''; and
            (3) by adding at the end the following:
                    ``(D) calculations under current policies of the 
                impact on the net present value of the Government's 
                liabilities and commitments of any measure with an 
                adverse impact greater than exceeds 0.25 percent of the 
                present discounted value of all future payroll taxes 
                over 75 years or an indefinite period as determined 
                using the methodology of section 331(e)(3)(A)(i) of 
                title 31, United States Code. The assumptions and 
                details of the methods used in making this calculation 
                shall be consistent with those utilized in the 
                financial statement published under section 331(e) of 
                title 31, United States Code, unless the responsible 
                official or agency elects to make calculations based on 
                other assumptions and methods for which a detailed 
                explanation and rationale is presented.''.
    (b) Point of Order.--Section 312 of the Congressional Budget Act of 
1974 (2 U.S.C. 643) is amended by adding at the end the following:
    ``(g) Negative Impact on Net Present Value of Government's Overall 
Liabilities and Commitments.--It shall not be in order in the House of 
Representatives or the Senate to consider any bill or resolution (or 
amendment, motion, or conference report on that bill or resolution) 
that changes direct spending or revenues that would, when considered 
together with any other legislation passed by that House or enacted 
prior to such consideration during that calendar year, cause an adverse 
impact on the net present value of the Government's overall liabilities 
and commitments incurred by that measure over 75 years or an indefinite 
time horizon that is greater than 1.25 percent of the present 
discounted value of all future payrolls. The calculation required by 
this subsection shall assume that the legislative measure subject to 
the point of order will be a permanent change in law and disregard any 
changes in the terms of the legislative measure and any formula or 
mechanism for adjustments in the recommendations beyond the date of 
enactment to the extent that such change, formula, or mechanism 
increases the net present value of the Government's overall liabilities 
or commitments over 75 years or an indefinite time horizon.''.
    (c) 60 Votes.--Section 904 of the Congressional Budget Act of 1974 
(2 U.S.C. 621 note) is amended--
            (1) in subsection (c)(1), by inserting ``312(g),'' before 
        ``313''; and
            (2) in subsection (d)(2), by inserting ``312(g),'' before 
        ``313''.

SEC. 9. TRUSTEES REPORT OF LIABILITIES.

    Section 201(c) of the Social Security Act (42 U.S.C. 401(c)) is 
amended by adding at the end the following: ``In such report the 
Trustees shall include a calculation of the present value of projected 
benefits to current participants, minus the present value of projected 
revenues from current participants and current trust fund balances (the 
Closed Group Unfunded Obligation), including all supplemental 
information required by Federal Financial Accounting Standard No. 17 
Social Insurance. The report shall also include the net present value 
calculations related to the Trust Funds specified in section 3 and such 
other supplemental information as the Trustees deem appropriate. In the 
annual report and other public statements regarding Trust Fund 
solvency, the Trustees shall give prominence to the Closed Group 
Unfunded Obligation and also the annual change in the Closed Group 
Unfunded Obligation. To the extent that the annual performance of the 
Social Security system is consolidated into Federal budgetary 
aggregates reported by the Congressional Budget Office, the General 
Accounting Office, or the Office of Management and Budget, annual 
changes in the Closed Group Unfunded Obligation shall be included.''.

SEC. 10. TREASURY DEPARTMENT ANALYSIS OF TAX PROVISIONS PRESENT VALUE.

    (a) Present Value.--Not later than 6 months after the date of 
enactment of this Act, the Secretary of Treasury shall analyze and 
report to Congress regarding the methodology and utility of preparing 
calculations of the net present value of specific provisions of the 
Internal Revenue Code of 1986 that defer tax liability or cause long-
term revenue effects that are not captured in a cash flow estimate over 
5 or 10 years.
    (b) Long-Term.--Not later than 12 months after the date of 
enactment of this Act, the President shall submit to Congress a 
calculation under current policies of the impact on the net present 
value of the Government's overall liabilities and commitments over 75 
years and over an indefinite time horizon for current tax expenditures 
and any tax legislative recommendation included in the Budget of the 
United States that have an adverse impact greater than exceeds 1.25 
percent of the present discounted value of all future payrolls over 75 
years and over an indefinite time horizon.

SEC. 11. BAR USE OF EXPEDITED PROCEDURES TO ENACT LEGISLATION THAT 
              AGGRAVATES THE BUDGET DEFICIT OR REDUCES THE BUDGET 
              SURPLUS.

    Section 310 of the Congressional Budget Act of 1974 (2 U.S.C. 641) 
is amended by adding at the end the following:
    ``(i) Limitation to Budget Enforcement.--It shall not be in order 
in the Senate or House of Representatives to consider any 
reconciliation bill or resolution reported pursuant to a concurrent 
resolution on the budget that increases the deficit or reduces the 
surplus for the budget year, for the total period of years covered by 
the concurrent resolution on the budget or that changes direct spending 
or revenues causing an adverse impact on the net present value of 
United States Government liabilities and commitments over 75 years or 
an indefinite time horizon.''.

SEC. 12. REINSTATEMENT OF PAY-AS-YOU-GO ENFORCEMENT.

    (a) Statutory Enforcement.--
            (1) In general.--Section 252 of the Balanced Budget and 
        Emergency Deficit Control Act of 1985 (2 U.S.C. 902) is 
        amended--
                    (A) in subsection (a), by striking ``enacted before 
                September 30, 2002,'';
                    (B) in subsection (b), by striking ``enacted before 
                September 30, 2002,''; and
                    (C) by adding at the end the following:
    ``(f) Declaration of War.--Notwithstanding any other provision of 
this Act, subsection shall apply in any fiscal year unless a 
declaration of war is in effect.''.
            (2) Pay-as-you-go adjustment.--Upon the enactment of this 
        section, the Director of the Office of Management and Budget 
        shall change any balance of direct spending and receipts 
        legislation for fiscal year 2003 under section 252 of the 
        Balanced Budget and Emergency Deficit Control Act of 1985 to 
        zero.
    (b) Pay-As-You-Go Rule in Congress.--
            (1) Point of order.--
                    (A) In general.--It shall not be in order in the 
                Senate or the House of Representatives to consider any 
                direct spending or revenue legislation that would 
                decrease the on-budget surplus, increase the on-budget 
                deficit, or cause an on-budget deficit for any one of 
                the three applicable time periods as measured in 
                subparagraphs (E) and (F).
                    (B) Applicable time periods.--For purposes of this 
                paragraph the term ``applicable time period'' means any 
                one of the three following periods:
                            (i) The first year covered by the most 
                        recently adopted concurrent resolution on the 
                        budget.
                            (ii) The period of the first five fiscal 
                        years covered by the most recently adopted 
                        concurrent resolution on the budget.
                            (iii) The period of the five fiscal years 
                        following the first five fiscal years covered 
                        in the most recently adopted concurrent 
                        resolution on the budget.
                    (C) Direct-spending legislation.--For purposes of 
                this paragraph and except as provided in subparagraph 
                (D), the term ``direct-spending legislation'' means any 
                bill, joint resolution, amendment, motion, or 
                conference report that affects direct spending as that 
                term is defined by and interpreted for purposes of the 
                Balanced Budget and Emergency Deficit Control Act of 
                1985.
                    (D) Exclusion.--For purposes of this paragraph, the 
                terms ``direct-spending legislation'' and ``revenue 
                legislation'' do not include--
                            (i) any concurrent resolution on the 
                        budget; or
                            (ii) any provision of legislation that 
                        affects the full funding of, and continuation 
                        of, the deposit insurance guarantee commitment 
                        in effect on the date of the enactment of the 
                        Budget Enforcement Act of 1990.
                    (E) Baseline.--Calculations prepared pursuant to 
                this paragraph shall--
                            (i) use the baseline used for the most 
                        recently adopted concurrent resolution on the 
                        budget; and
                            (ii) be calculated under the requirements 
                        of subsections (b) through (d) of section 257 
                        of the Balanced Budget and Emergency Deficit 
                        Control Act of 1985 for fiscal years beyond 
                        those covered by that concurrent resolution on 
                        the budget.
                    (F) Prior surplus.--If direct spending or revenue 
                legislation decreases the on-budget surplus, increases 
                the on-budget deficit, or causes an on-budget deficit 
                when taken individually, then it must also decrease the 
                on-budget surplus, increase the on-budget deficit, or 
                cause an on-budget deficit when taken together with all 
                direct spending and revenue legislation enacted since 
                the beginning of the calendar year not accounted for in 
                the baseline under subparagraph (E)(i).
            (2) Waiver.--This subsection may be waived or suspended in 
        the Senate only by the affirmative vote of three-fifths of the 
        Members, duly chosen and sworn.
            (3) Appeals.--Appeals in the Senate from the decisions of 
        the Chair relating to any provision of this subsection shall be 
        limited to 1 hour, to be equally divided between, and 
        controlled by, the appellant and the manager of the bill or 
        joint resolution, as the case may be. An affirmative vote of 
        three-fifths of the Members of the Senate, duly chosen and 
        sworn, shall be required in the Senate to sustain an appeal of 
        the ruling of the Chair on a point of order raised under this 
        subsection.
            (4) Determination of budget levels.--For purposes of this 
        subsection, the levels of new budget authority, outlays, and 
        revenues for a fiscal year shall be determined on the basis of 
        calculations made by the Committee on the Budget.
            (5) Declaration of war.--This subsection shall not apply in 
        any fiscal year in which a declaration of war is in effect.
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