To amend the Balanced Budget and Emergency Deficit Control Act of 1985 to extend the discretionary spending limits through fiscal year 2008, to extend paygo for direct spending, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Common Sense Spending Act''.

SEC. 2. EXTENSION OF DISCRETIONARY SPENDING LIMITS.

    (a) Adjustments to Discretionary Spending Limits.--In the matter 
that precedes subparagraph (A) of section 251(b)(2) of the Balanced 
Budget and Emergency Deficit Control Act of 1985, strike ``through 
2002''.
    (b) Discretionary Spending Limit.--Section 251(c) of the Balanced 
Budget and Emergency Deficit Control Act of 1985 is amended as follows:
            (1) Strike paragraphs (1) through (6) and redesignate 
        paragraph (7) (which relates to fiscal year 2003) as paragraph 
        (1).
            (2) Strike paragraphs (8) through (16) and insert after 
        paragraph (1) the following new paragraphs:
            ``(2) with respect to fiscal year 2004, for the 
        discretionary category: $765,510,000,000 in new budget 
        authority of which not less than $399,181,000,000 shall be for 
        the defense category and of which not less than $28,239,000,000 
        shall be for homeland security activities outside of the 
        defense category and $815,516,000,000 in outlays of which not 
        less than $389,746,000,000 shall be for the defense category;
            ``(3) with respect to fiscal year 2005, for the 
        discretionary category: $780,820,000,000 in new budget 
        authority of which not less than $419,623,000,000 shall be for 
        the defense category and of which not less than $29,367,000,000 
        shall be for homeland security activities outside of the 
        defense category and $825,851,000,000 in outlays of which not 
        less than $409,737,000,000 shall be for the defense category;
            ``(4) with respect to fiscal year 2006, for the 
        discretionary category: $796,437,000,000 in new budget 
        authority of which not less than $439,740,000,000 shall be for 
        the defense category and of which not less than $30,407,000,000 
        shall be for homeland security activities outside of the 
        defense category and $834,246,000,000 in outlays of which not 
        less than $422,808,000,000 shall be for the defense category;
            ``(5) with respect to fiscal year 2007, for the 
        discretionary category: $812,365,000,000 in new budget 
        authority of which not less than $459,999,000,000 shall be for 
        the defense category and of which not less than $31,494,000,000 
        shall be for homeland security activities outside of the 
        defense category and $846,485,000,000 in outlays of which not 
        less than $436,164,000,000 shall be for the defense category; 
        and
            ``(6) with respect to fiscal year 2008, for the 
        discretionary category: $828,613,000,000 in new budget 
        authority of which not less than $480,433,000,000 shall be for 
        the defense category and of which not less than $32,621,000,000 
        shall be for homeland security activities outside of the 
        defense category and $864,832,000,000 in outlays of which not 
        less than $460,190,000,000 shall be for the defense 
        category;''.
    (c) Adjustments to Discretionary Spending Limits.--
            (1) Section 251(b)(2) of the Balanced Budget and Emergency 
        Deficit Control Act of 1985 is amended by striking 
        subparagraphs (C) through (H) and by inserting after 
        subparagraph (B) the following new subparagraph:
                    ``(C) Accrual accounting.--If a bill or joint 
                resolution is enacted that charges Federal agencies for 
                the full cost of accrued Federal retirement and health 
                benefits and a bill or joint resolution making 
                appropriations is enacted that provides new budget 
                authority to carry out the legislation charging Federal 
                agencies for such accrued costs, the adjustment shall 
                be equal to the reduction in mandatory budget authority 
                and the outlays flowing therefrom estimated to result 
                from the legislation charging Federal agencies for such 
                accrued costs.''.
            (2) Section 251(b)(2)(A) of the Balanced Budget and 
        Emergency Deficit Control Act of 1985 is amended by striking 
        the last sentence.

SEC. 3. EXTENSION OF PAY-AS-YOU-GO.

    Section 252 of the Balanced Budget and Emergency Deficit Control 
Act of 1985 is amended to read as follows:

``SEC. 252. ENFORCING PAY-AS-YOU-GO.

    ``(a) Purpose.--The purpose of this section is to assure that any 
legislation enacted before October 1, 2008, affecting direct spending 
that increases the deficit will trigger an offsetting sequestration.
    ``(b) Sequestration.--
            ``(1) Timing.--Not later than 15 calendar days after the 
        date Congress adjourns to end a session and on the same day as 
        a sequestration (if any) under section 251, there shall be a 
        sequestration to offset the amount of any net deficit increase 
        caused by all direct spending legislation enacted before 
        October 1, 2008, as calculated under paragraph (2).
            ``(2) Calculation of deficit increase.--OMB shall calculate 
        the amount of deficit increase or decrease by adding--
                    ``(A) all OMB estimates for the budget year of 
                direct spending legislation transmitted under 
                subsection (d);
                    ``(B) the estimated amount of savings in direct 
                spending programs applicable to budget year resulting 
                from the prior year's sequestration under this section 
                or, if any, as published in OMB's final sequestration 
                report for that prior year; and
                    ``(C) any net deficit increase or decrease in the 
                current year resulting from all OMB estimates for the 
                current year of direct spending legislation transmitted 
                under subsection (d) of this section that were not 
                reflected in the final OMB sequestration report for the 
                current year.
    ``(c) Eliminating a Deficit Increase.--(1) The amount required to 
be sequestered in a fiscal year under subsection (b) of this section 
shall be obtained from non-exempt direct spending accounts from actions 
taken in the following order:
            ``(A) First.--All reductions in automatic spending 
        increases specified in section 256(a) shall be made.
            ``(B) Second.--If additional reductions in direct spending 
        accounts are required to be made, the maximum reductions 
        permissible under sections 256(b) (guaranteed and direct 
        student loans) and 256(c) (foster care and adoption assistance) 
        shall be made.
            ``(C) Third.--(i) If additional reductions in direct 
        spending accounts are required to be made, each remaining non-
        exempt direct spending account shall be reduced by the uniform 
        percentage necessary to make the reductions in direct spending 
        required by paragraph (1); except that the medicare programs 
        specified in section 256(d) shall not be reduced by more than 4 
        percent and the uniform percentage applicable to all other 
        direct spending programs under this paragraph shall be 
        increased (if necessary) to a level sufficient to achieve the 
        required reduction in direct spending.
            ``(ii) For purposes of determining reductions under clause 
        (i), outlay reductions (as a result of sequestration of 
        Commodity Credit Corporation commodity price support contracts 
        in the fiscal year of a sequestration) that would occur in the 
        following fiscal year shall be credited as outlay reductions in 
        the fiscal year of the sequestration.
    ``(2) For purposes of this subsection, accounts shall be assumed to 
be at the level in the baseline.
    ``(d) Estimates.--
            ``(1) CBO estimates.--As soon as practicable after Congress 
        completes action on any direct spending, CBO shall provide an 
        estimate to OMB of that legislation.
            ``(2) OMB estimates.--Not later than 7 calendar days 
        (excluding Saturdays, Sundays, and legal holidays) after the 
        date of enactment of any direct spending, OMB shall transmit a 
        report to the House of Representatives and to the Senate 
        containing--
                    ``(A) the CBO estimate of that legislation;
                    ``(B) an OMB estimate of that legislation using 
                current economic and technical assumptions; and
                    ``(C) an explanation of any difference between the 
                2 estimates.
            ``(3) Significant differences.--If during the preparation 
        of the report under paragraph (2) OMB determines that there is 
        a significant difference between the OMB and CBO estimates, OMB 
        shall consult with the Committees on the Budget of the House of 
        Representatives and the Senate regarding that difference and 
        that consultation, to the extent practicable, shall include 
        written communication to such committees that affords such 
        committees the opportunity to comment before the issuance of 
        that report.
            ``(4) Scope of estimates.--The estimates under this section 
        shall include the amount of change in outlays for the current 
        year (if applicable), the budget year, and each outyear 
        excluding any amounts resulting from--
                    ``(A) full funding of, and continuation of, the 
                deposit insurance guarantee commitment in effect under 
                current estimates; and
                    ``(B) emergency provisions as designated under 
                subsection (e) of this section.
            ``(5) Scorekeeping guidelines.--OMB and CBO, after 
        consultation with each other and the Committees on the Budget 
        of the House of Representatives and the Senate, shall--
                    ``(A) determine common scorekeeping guidelines; and
                    ``(B) in conformance with such guidelines, prepare 
                estimates under this section.
    ``(e) Emergency Legislation.--If a provision of direct spending 
legislation is enacted that the President designates as an emergency 
requirement and that the Congress so designates in statute, the amounts 
of new budget authority, outlays, and receipts in all fiscal years 
resulting from that provision shall be designated as an emergency 
requirement in the reports required under subsection (d) of this 
section.''.

SEC. 4. CONFORMING AMENDMENTS.

    (a) Expiration.--(1) Section 254(c)(2) of the Balanced Budget and 
Emergency Deficit Control Act of 1985 is amended by striking ``2002'' 
and inserting ``2008''.
    (2) Section 254(f)(2)(A) of the Balanced Budget and Emergency 
Deficit Control Act of 1985 is amended by striking ``2002'' and 
inserting ``2008''.
    (b) Expiration.--Section 275(b) of the Balanced Budget and 
Emergency Deficit Control Act of 1985 is amended by striking ``2002'' 
and inserting ``2008''.

SEC. 5. EMERGENCY SPENDING LEGISLATION AND THE BASELINE.

    (a) In General.--Section 257(a) of the Balanced Budget and 
Emergency Deficit Control Act of 1985 is amended by inserting ``, 
except for emergency appropriations covered by section 251(b)(2)(A) and 
emergency legislation covered by section 252(e)'' before the period.
    (b) Direct Spending and Receipts.--Section 257(b)(2) of the 
Balanced Budget and Emergency Deficit Control Act of 1985 (as amended 
by section 2) is further amended by adding at the end the following new 
subparagraph:
            ``(D) Emergency legislation covered by section 252(e) shall 
        not be extended in the baseline.''.
    (c) Discretionary Appropriations.--Section 257(c) of the Balanced 
Budget and Emergency Deficit Control Act of 1985 is amended by adding 
at the end the following new paragraph:
            ``(7) Emergency appropriations covered by section 
        251(b)(2)(A) shall not be extended in the baseline.''.

SEC. 6. OMB EMERGENCY CRITERIA.

    (a) Definition of Emergency.--Section 3 of the Congressional Budget 
and Impoundment Control Act of 1974 is amended by adding at the end the 
following new paragraph:
            ``(11)(A) The term `emergency' means a situation that--
                    ``(i) requires new budget authority and outlays (or 
                new budget authority and the outlays flowing therefrom) 
                for the prevention or mitigation of, or response to, 
                loss of life or property, or a threat to national 
                security; and
                    ``(ii) is unanticipated.
            ``(B) As used in subparagraph (A), the term `unanticipated' 
        means that the underlying situation is--
                    ``(i) sudden, which means quickly coming into being 
                or not building up over time;
                    ``(ii) urgent, which means a pressing and 
                compelling need requiring immediate action;
                    ``(iii) unforeseen, which means not predicted or 
                anticipated as an emerging need; and
                    ``(iv) temporary, which means not of a permanent 
                duration.''.
    (b) Conforming Amendment.--Section 250(c) of the Balanced Budget 
and Emergency Deficit Control Act of 1985 is amended by adding at the 
end the following new paragraph:
            ``(20) The term `emergency' has the meaning given to such 
        term in section 3 of the Congressional Budget and Impoundment 
        Control Act of 1974.''.

SEC. 7. RULE RESPECTING DESIGNATION OF LEGISLATIVE PROVISION AS AN 
              EMERGENCY.

    (a) In General.--Title III of the Congressional Budget Act of 1974 
is amended by adding at the end the following new section:

 ``rule respecting designation of legislative provision as an emergency

    ``Sec. 316. (a) Guidance.--In making a designation of a provision 
of legislation as an emergency requirement under section 251(b)(2)(A) 
or 252(e) of the Balanced Budget and Emergency Deficit Control Act of 
1985, the committee report and any statement of managers accompanying 
that legislation shall analyze whether a proposed emergency requirement 
meets the definition of an `emergency' set out in section 3 of the 
Congressional Budget and Impoundment Control Act of 1974.
    ``(b) In General.--It shall not be in order in the Senate or the 
House of Representatives to consider any bill, joint resolution, or 
conference report that contains an emergency designation under section 
251(b)(2)(A) or 252(e) of the Balanced Budget and Emergency Deficit 
Control Act of 1985 unless the proposed emergency requirement meets the 
definition of an `emergency' set out in section 3 of the Congressional 
Budget and Impoundment Control Act of 1974.
    ``(c) Waiver and Appeal in the Senate.--This section may be waived 
or suspended in the Senate only by an affirmative vote of three-fifths 
of the Members, duly chosen and sworn. 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 section.
    ``(d) Enforcement in the House of Representatives.--It shall not be 
in order in the House of Representatives to consider a rule or order 
that waives the application of subsection (b) of this section.
    ``(e) Disposition of Points of Order in the House.--As disposition 
of a point of order under subsection (b) or subsection (d) of this 
section, the Chair shall put the question of consideration with respect 
to the proposition that is the subject of the point of order. A 
question of consideration under this section shall be debatable for 10 
minutes by the Member initiating the point of order and for 10 minutes 
by an opponent of the point of order, but shall otherwise be decided 
without intervening motion except one that the House adjourn or that 
the Committee of the Whole rise, as the case may be.
    ``(f) Effect on Amendment in Order as Original Text in the House.--
The disposition of the question of consideration under this section 
with respect to a bill or joint resolution shall be considered also to 
determine the question of consideration under this subsection with 
respect to an amendment made in order as original text.''.
    (b) Conforming Amendment.--The table of contents set forth in 
section 1(b) of the Congressional Budget and Impoundment Control Act of 
1974 is amended by inserting after the item relating to section 315 the 
following new item:

``Sec. 316. Rule respecting designation of legislative provision as an 
                            emergency.''.

Summary: Common Sense Spending Act - Amends the Balanced Budget and Emergency Deficit Control Act of 1985 (Gramm-Rudman-Hollings Act) to extend discretionary spending limits through FY 2008.

Repeals requirements for adjustments to discretionary limits for: (1) continuing disability reviews by the Social Security Administration; (2) specified allowances for the International Monetary Fund and international arrearages; (3) any earned income tax credit compliance initiative; (4) adoption incentive payments; and (5) conservation spending. Requires an adjustment to discretionary spending limits equal to the estimated resulting reduction in mandatory budget authority and outlays utilizing accrual methods, if enacted legislation charges Federal agencies for the full cost of accrued Federal retirement and health benefits, and an appropriations Act provides new budget authority to carry out such legislation. Repeals the exemption of appropriations to cover agricultural crop disaster assistance from the application of mandatory adjustments in discretionary spending limits in a sequestration report and subsequent budgets for emergency appropriations for discretionary accounts. (Thus applies such mandatory adjustments in the total amount of emergency appropriations to appropriations covering agricultural crop disaster assistance.) Revises PAYGO requirements to remove receipts from the requirement that any legislation enacted before FY 2009 affecting direct spending (currently, direct spending and receipts) that increases the deficit will trigger an offsetting sequestration. Revises the formula for calculating the amount of deficit increase or decrease by the Office of Management and Budget (OMB). States that, with respect to eliminating a deficit increase, accounts shall be assumed to be at the level in the baseline.

Revises the definition of baseline to exclude emergency appropriations and legislation.

Prohibits such emergency appropriations from being extended in the baseline.

Amends the Congressional Budget and Impoundment Control Act of 1974 to define: (1) "emergency" as an unanticipated situation that requires new budget authority and outlays (or new budget authority and the outlays flowing therefrom) for the prevention or mitigation of, or response to, loss of life or property, or a threat to national security; and (2) "unanticipated" as an underlying situation that is sudden, which means quickly coming into being or not building up over time, urgent, which means a pressing and compelling need requiring immediate action, unforeseen, which means not predicted or anticipated as an emerging need, and temporary, which means not of a permanent duration.

Amends the Congressional Budget Act of 1974 to require that the committee report and any statement of managers accompanying proposed legislation analyze whether a proposed emergency requirement meets such definition of "emergency." Prohibits the consideration of any such legislation that does not meet this "emergency" definition.