Intergenerational Financial Obligations Reform Act
Bill: H.R.5340 | Sponsor: Rep. Murphy, Gregory (R-NC)
Policy area: Economics and Public Finance

Summary:
Intergenerational Financial Obligations Reform Act
This bill requires the Congressional Budget Office, the Office of Management and Budget, and the Government Accountability Office to provide various reports that include a fiscal gap analysis and a generational accounting analysis.
Under the bill, the fiscal gap generally refers to the sum of (1) the total amount of Treasury liabilities outstanding on the last day of the budget year, and (2) the discounted present value of the projected difference between federal spending and revenues during the period of the budget year and at least the next 75 fiscal years (excluding spending for net interest and principal payments on Treasury liabilities).
A generational accounting analysis addresses the fiscal impact that projected federal spending and tax burdens will have on various generations of individuals.

To provide for fiscal gap and generational accounting analysis in the 
   legislative process, the President's budget, and annual long-term 
                        fiscal outlook reports.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Intergenerational Financial 
Obligations Reform Act''.

SEC. 2. THE CONGRESSIONAL BUDGET OFFICE REPORT.

    Section 202 of the Congressional Budget Act of 1974 (2 U.S.C. 602) 
is amended--
            (1) in subsection (e), by adding at the end the following:
            ``(4) For any legislation or resolution considered in the 
        Senate or the House of Representatives that would impact 
        revenues or mandatory spending by greater than 0.5 percent of 
        the gross domestic product over the following 10-fiscal-year 
        period and upon request relating to any other legislation or 
        resolution by the Chairman or Ranking Member of the Committee 
        on the Budget of the House of Representatives or of the 
        Committee on the Budget of the Senate, the Congressional Budget 
        Office shall provide with respect to such legislation or 
        resolution a report that includes--
                    ``(A) a fiscal gap report and a generational 
                account report, including changes in the fiscal gap and 
                generational accounts relative to the baseline 
                estimates for purposes of each such report;
                    ``(B) Federal deficits as of the end of the fiscal 
                year that is 75 years after the budget year with 
                respect to the legislation, under a baseline estimate 
                and an alternative scenario estimate; and
                    ``(C) outstanding Treasury liabilities as of the 
                end of the fiscal year that is 75 years after the 
                budget year with respect to the legislation, under a 
                baseline estimate and an alternative scenario 
                estimate.''; and
            (2) by adding at the end the following:
    ``(h) Definitions.--In this section:
            ``(1) Alternative scenario estimate.--The term `alternative 
        scenario estimate' means an estimate assuming laws, as in 
        effect during the budget year, continue to be in effect for 
        each subsequent fiscal year.
            ``(2) Baseline estimate.--The term `baseline estimate' 
        means an estimate based on laws enacted through the date of the 
        estimate.
            ``(3) Budget year.--The term `budget year' has the meaning 
        given that term in section 250(c) of the Balanced Budget and 
        Emergency Deficit Control Act of 1985 (2 U.S.C. 900(c)).
            ``(4) Direct spending.--The term `direct spending' has the 
        meaning given that term in section 250(c) of the Balanced 
        Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 
        900(c)).
            ``(5) Explicit debt.--The term `explicit debt' means the 
        total amount of Treasury liabilities outstanding on the last 
        day of the budget year.
            ``(6) Fiscal gap.--The term `fiscal gap' means the sum of 
        the explicit debt and the implicit debt.
            ``(7) Fiscal gap policy option.--
                    ``(A) In general.--The term `fiscal gap policy 
                option' means the permanent across-the-board change in 
                particular (combinations of) Federal revenues or the 
                permanent across-the-board change in particular 
                (combinations of) Federal expenditures required to make 
                the fiscal gap equal to zero.
                    ``(B) Timing.--The change in revenues or 
                expenditures for purposes of subparagraph (A)--
                            ``(i) may be calculated under alternative 
                        timings of when the policy change begins; and
                            ``(ii) shall, at a minimum, include policy 
                        change options starting 1, 5, 10, 15, and 25 
                        fiscal years after the budget year.
                    ``(C) Policy options.--The potential combinations 
                of changes in Federal revenues and Federal expenditures 
                that are a part of a fiscal gap policy option may 
                include--
                            ``(i) income taxes imposed under chapter 1 
                        of the Internal Revenue Code of 1986;
                            ``(ii) taxes described in clause (i), taxes 
                        on self-employment income under chapter 2 of 
                        the Internal Revenue Code of 1986, employment 
                        taxes imposed under chapters 21 and 22 of such 
                        Code, and offsetting receipts;
                            ``(iii) taxes and receipts described in 
                        clause (ii), excise taxes imposed under 
                        subtitles D and E of the Internal Revenue Code 
                        of 1986, estate and gift taxes imposed under 
                        subtitle B of such Code, customs duties, and 
                        other receipts;
                            ``(iv) discretionary appropriations (with 
                        no changes to offsetting receipts);
                            ``(v) direct spending and expenditures 
                        under the Federal old-age, survivors, and 
                        disability insurance benefits program under 
                        title II of the Social Security Act, the 
                        Medicare program under parts A and B of title 
                        XVIII of the Social Security Act, and Medicare 
                        Prescription Drug Coverage under part D of 
                        title XVIII of the Social Security Act;
                            ``(vi) direct spending and expenditures 
                        described in clause (v) and all other direct 
                        spending including the supplemental nutrition 
                        assistance program, supplemental security 
                        income benefits, child, earned income, and 
                        other tax credits, child nutrition programs, 
                        the temporary assistance for needy families 
                        program, housing assistance programs, and 
                        civilian and military retirement programs; and
                            ``(vii) discretionary appropriations and 
                        direct spending, except interest payments on 
                        outstanding Treasury liabilities.
                    ``(D) Dynamic effects.--Calculations of fiscal gap 
                policy options shall incorporate dynamic effects from 
                induced changes in labor supply, national saving, and 
                capital formation, as relevant to each particular 
                policy option among those described in subparagraphs 
                (C).
            ``(8) Fiscal gap report.--
                    ``(A) In general.--The term `fiscal gap report' 
                means a report that, in accordance with this 
                paragraph--
                            ``(i) specifies the amount of explicit 
                        debt, the implicit debt, and the fiscal gap;
                            ``(ii) provides fiscal gap policy options; 
                        and
                            ``(iii) incorporates a fiscal gap 
                        sensitivity analysis.
                    ``(B) Separate reporting for trust funds.--
                            ``(i) In general.--A fiscal gap report 
                        shall address each item specified in clauses 
                        (i), (ii), and (iii) of subparagraph (A) 
                        separately for each social insurance program.
                            ``(ii) Fiscal gap policy options.--The 
                        fiscal gap policy options provided for each 
                        Federal social insurance program shall be 
                        limited to changes in receipts and expenditures 
                        from the applicable trust fund.
                            ``(iii) Calculation.--
                                    ``(I) In general.--For purposes of 
                                calculations relating to the fiscal gap 
                                in connection with a social insurance 
                                program, the calculations shall be 
                                determined as the sum of--
                                            ``(aa) the projected 
                                        budget-year-end value of 
                                        Treasury securities and other 
                                        assets held in the applicable 
                                        trust fund; and
                                            ``(bb) the present 
                                        discounted value of annual 
                                        expenditures from the 
                                        applicable trust fund over 
                                        future fiscal years minus the 
                                        present discounted value of 
                                        receipts paid into the 
                                        applicable trust fund excluding 
                                        transfers from other Federal 
                                        funds over future fiscal years.
                                    ``(II) Expenditures and receipts.--
                                For purposes of subclause (I), 
                                expenditures and receipts shall include 
                                expenditures and receipts projected 
                                through the future fiscal year 
                                described in paragraph (15)(B).
                            ``(iv) Limiting.--For each social insurance 
                        program, a fiscal gap report shall separately 
                        address each item specified in clauses (i), 
                        (ii), and (iii) of subparagraph (A) as 
                        specified and after limiting the calculation 
                        under clause (iii)(I)(bb) to the closed group 
                        of past and current adult program participants 
                        (as described in paragraph 11(B)(i)), both 
                        taxpayers and beneficiaries.
                    ``(C) Scenarios.--A fiscal gap report shall address 
                each item specified in clauses (i), (ii), and (iii) of 
                subparagraph (A) under--
                            ``(i) a baseline estimate; and
                            ``(ii) an alternative scenario estimate.
                    ``(D) Amounts.--A fiscal gap report shall provide 
                information with respect to each item specified in 
                clauses (i), (ii), and (iii) of subparagraph (A)--
                            ``(i) in present-discounted dollars;
                            ``(ii) as percentages of present-discounted 
                        value of future gross domestic product 
                        projected through the future fiscal year 
                        described in paragraph (15)(B); and
                            ``(iii) as a percentage of the amount of 
                        taxes projected to be collected under sections 
                        1401(b), 3101(b), and 3111(b) of the Internal 
                        Revenue Code of 1986 through the future fiscal 
                        year described in paragraph (15)(B).
            ``(9) Fiscal gap sensitivity analysis.--
                    ``(A) In general.--The term `fiscal gap sensitivity 
                analysis' means estimates of changes to the fiscal gap 
                amounts specified in paragraph (8)(D) calculated under 
                alternative economic and demographic assumptions for a 
                given scenario described in paragraph (8)(C).
                    ``(B) Required alternatives.--The alternative 
                economic assumptions for any fiscal gap sensitivity 
                analysis shall include the following:
                            ``(i) Projected annual rate of population 
                        growth that is 25 basis points larger and 25 
                        basis points smaller than the baseline 
                        population growth-rate projection specified 
                        under paragraph (15)(C). In making the 
                        estimates, the applicable agency may use 
                        reasonable alternative symmetric basis point 
                        variations around baseline population-growth 
                        projections consistent with uncertainty 
                        associated with underlying growth components of 
                        fertility, mortality, and immigration rates.
                            ``(ii) Projected annual rates of labor 
                        productivity growth that is 50 basis points 
                        larger and 50 basis points smaller than the 
                        baseline labor productivity growth-rate 
                        projection specified under paragraph (15)(C). 
                        In making the estimates, the applicable agency 
                        may use reasonable alternative, symmetric 
                        basis-point variations around baseline labor-
                        productivity growth rates consistent with 
                        uncertainty associated with underlying 
                        components of inflation rates, technological 
                        change, capital intensity, and labor 
                        efficiency.
                            ``(iii) Projected discount rates that are 
                        75 basis points larger and 75 basis points 
                        smaller than the baseline long-term discount 
                        rate projection specified under paragraph 
                        (15)(D). In making the estimates, the 
                        applicable agency may use reasonable 
                        alternative, symmetric basis-point variations 
                        as appropriate around baseline interest rate 
                        projections consistent with uncertainty 
                        associated with long-term government borrowing 
                        rates. All interest rate variations reported 
                        shall be consistent with maintaining a net 
                        positive average long-term interest rate after 
                        subtracting the long-term average labor 
                        productivity growth rate of the economy of the 
                        United States.
            ``(10) Generation.--The term `generation' means a 1-year 
        birth cohort of individuals of a given gender born during a 
        given fiscal year.
            ``(11) Generational account.--
                    ``(A) In general.--The term `generational account' 
                means the actuarially present-valued amount per capita 
                for a given generation of annual net Federal tax 
                burdens during that generation's remaining lifetime 
                under a particular Federal fiscal policy.
                    ``(B) Ages.--A report regarding generational 
                accounts shall include generational accounts for--
                            ``(i) selected individual generations born 
                        not less than 18 years before the report; and
                            ``(ii) selected individual generations born 
                        or who will be born after the date that is 18 
                        years before the report, including those born 
                        after the budget year.
                    ``(C) Calculation.--Generational accounts of 
                children and future generations described in 
                subparagraph (B)(ii) shall be calculated such that--
                            ``(i) their total over all members equals 
                        the sum of--
                                    ``(I) Treasury liabilities 
                                projected to be outstanding at the end 
                                of the budget year; and
                                    ``(II) the present value of 
                                projected discretionary (non-transfer) 
                                Federal spending minus the sum of the 
                                generational accounts of adult 
                                generations described in subparagraph 
                                (B)(i);
                            ``(ii) the ratio of the generational 
                        account of males of each generation among 
                        children and future generations described in 
                        subparagraph (B)(ii) to the generational 
                        account of females born in the same year is set 
                        equal to the ratio of the generational accounts 
                        of males and females born 18 years before the 
                        calculation; and
                            ``(iii) the generational accounts of 
                        members of children and future generations 
                        described in subparagraph (B)(ii) increases 
                        with the year of their births at the projected 
                        growth rate of labor productivity.
            ``(12) Generational account policy effects.--
                    ``(A) In general.--The term `generational account 
                policy effects' means the changes to the generational 
                accounts of adults described in paragraph (11)(B)(i) 
                and children and future generations described in 
                paragraph (10)(B)(ii) and to the generational net-tax-
                burden gap from changes to particular (combinations of) 
                Federal taxes and to particular (combinations of) 
                Federal expenditures.
                    ``(B) Dynamic effects.--Calculations of 
                generational accounts policy options shall incorporate 
                dynamic effects from induced changes in employment, 
                national saving, and capital formation, as relevant to 
                each particular policy option described in paragraph 
                (7)(C).
            ``(13) Generational account report.--
                    ``(A) In general.--The term `generational account 
                report' means a report that, in accordance with this 
                paragraph, includes generational accounts and a 
                discussion of generational account policy effects.
                    ``(B) Scenarios.--A generational account report 
                shall address generational accounts, including net 
                Federal tax burdens, under--
                            ``(i) a baseline estimate; and
                            ``(ii) an alternative scenario estimate.
            ``(14) Generational net-tax-burden gap.--The term 
        `generational net-tax-burden gap' means the ratios of the 
        generational account of males and females born 17 years before 
        the budget year to the generational accounts of males and 
        females, respectively, born 18 years before the budget year 
        minus 1 times 100.
            ``(15) Implicit debt.--
                    ``(A) In general.--The term `implicit debt' means 
                the difference between--
                            ``(i) the discounted present value of 
                        projected annual Federal spending during the 
                        period of the budget year and not less than the 
                        ensuing 75 fiscal years, excluding spending for 
                        net interest and principal payments on Treasury 
                        liabilities; and
                            ``(ii) the discounted present value of 
                        Federal tax and non-tax receipts during the 
                        period of the budget year and not less than the 
                        ensuing 75 fiscal years.
                    ``(B) Projection period.--Annual Federal 
                noninterest spending and receipts used to calculate 
                implicit debt shall be projected through a future 
                fiscal year, at least 75 years beyond the budget year, 
                and such that the accrual to the fiscal gap by 
                extending the calculation by 1 additional fiscal year 
                is within 0.1 percent of the fiscal gap without 
                extending the calculation by 1 fiscal year.
                    ``(C) Federal budget projections.--The growth of 
                Federal noninterest spending and receipts over future 
                fiscal years shall be consistent with the baseline 
                projections of population growth, general price 
                inflation (Personal Consumption Expenditures index), 
                and labor-productivity-growth factors including 
                technological change, capital intensity, and labor 
                efficiency, as determined by the applicable agency.
                    ``(D) Discount rates.--For purposes of calculating 
                the implicit debt, the discount rates shall be the 
                interest rate projections of the Congressional Budget 
                Office over the projection horizon on Treasury bonds 
                with prospective maturity of at least 20 years and 
                longer.
            ``(16) Net federal tax burden.--The term `net Federal tax 
        burden' means the difference between Federal taxes paid and 
        transfer payments received.
            ``(17) Social insurance program.--The term `social 
        insurance program'--
                    ``(A) means a social insurance program that is 
                funded out of a Federal trust fund; and
                    ``(B) includes the Federal old-age, survivors, and 
                disability insurance benefits program under title II of 
                the Social Security Act, the Medicare program under 
                parts A and B of title XVIII of the Social Security 
                Act, and the Medicare Prescription Drug Coverage under 
                part D of title XVIII of the Social Security Act.
            ``(18) Treasury liabilities.--The term `Treasury 
        liabilities' means the face amount of obligations issued under 
        chapter 31 of title 31, United States Code, and the face amount 
        of obligations whose principal and interest are guaranteed by 
        the United States Government (except guaranteed obligations 
        held by the Secretary of the Treasury)--as in section 3101(b) 
        of title 31.''.

SEC. 3. CBO ANNUAL REPORT.

    (a) Requirement.--
            (1) In general.--The Congressional Budget Office shall 
        produce a fiscal gap and generational accounting analysis, 
        which shall be reported as a separate section within its annual 
        ``Long-Term Budget Outlook''.
            (2) Definitions.--In this subsection, the terms ``fiscal 
        gap'' and ``generational account'' have the meanings given such 
        terms in subsection (h) of section 202 of the Congressional 
        Budget Act of 1974 (2 U.S.C. 602), as added by section 2.
    (b) Public Report.--The Director of the Congressional Budget Office 
shall post the report described in subsection (a) on the Congressional 
Budget Office public website.

SEC. 4. GAO ANNUAL REPORT.

    (a) Requirement.--
            (1) In general.--The Comptroller General shall produce 
        annually a report on fiscal gap and generational accounting 
        analysis consistent with the assumptions of the Government 
        Accountability Office with respect to baseline projections of 
        population growth, general price inflation (Personal 
        Consumption Expenditures index), and labor-productivity-growth 
        factors including technological change, capital intensity, and 
        labor efficiency.
            (2) Definitions.--In this subsection, the terms ``fiscal 
        gap'' and ``generational account'' have the meanings given such 
        terms in subsection (h) of section 202 of the Congressional 
        Budget Act of 1974 (2 U.S.C. 602), as added by section 2.
    (b) Public Report.--The Comptroller General shall post the report 
described in subsection (a) on the General Accountability Office public 
website.

SEC. 5. THE PRESIDENT'S BUDGET.

    Section 1105 of title 31, United States Code, is amended--
            (1) in subsection (a), by adding at the end the following:
            ``(40) an analysis including--
                    ``(A) a fiscal gap report and a generational 
                account report, including changes in the fiscal gap and 
                generational accounts relative to the baseline 
                estimates for purposes of each report;
                    ``(B) Federal deficits as of the end of the fiscal 
                year that is 75 years after the budget year, under a 
                baseline estimate and an alternative scenario estimate; 
                and
                    ``(C) outstanding Treasury liabilities as of the 
                end of the fiscal year that is 75 years after the 
                budget year, under a baseline estimate and an 
                alternative scenario estimate.''; and
            (2) by adding at the end the following:
    ``(i)(1) For purposes of subsection (a)(40), the terms `alternative 
scenario estimate', `baseline estimate', `fiscal gap', `fiscal gap 
report', `generational account', `generational account report', and 
`Treasury liabilities' have the meanings given such terms in section 
202(h) of the Congressional Budget Act of 1974 (2 U.S.C. 602(h)).
    ``(2) For purposes of subsection (a)(40), the terms defined in 
paragraph (1) shall be calculated using the assumptions of the 
President of baseline projections of population growth, general price 
inflation (Personal Consumption Expenditures index), and labor-
productivity-growth factors including technological change, capital 
intensity, and labor efficiency.''.
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