Spending caps would limit funding for some new federal programs

The Office of Management and Budget director would set a spending cap for each covered program. The rule covers direct-spending programs enacted or renewed after this Act takes effect that lack a specific dollar amount of authorized appropriations. Medicare and Social Security are excluded. The cap would equal 120% of estimated six-year cost for defense, health, income security, and veterans programs, or 110% for other covered programs. The director would set each cap within 90 days after the program is enacted or renewed.

The Treasury secretary would report monthly spending to the budget office, which would publish scorecards and report to Congress. These reporting duties apply to covered programs listed on the spending scorecard. The President’s annual budget and mid-session materials would also include spending levels and caps for covered programs. Monthly reports would be sent within seven days after each month, starting after a program’s first full month of operation. The budget office would report to Congress after each six-month period.

The budget office director would warn Congress when a covered program is likely to reach its cap within six months; after it reaches the cap, new funding obligations would stop after 30 days. The warning and funding limit apply to scorecard programs during any of the six years used to estimate their costs. The director would use monthly spending reports to determine whether a program is nearing or has reached its cap. The warning would be sent within 15 days after the director determines the program is likely to reach its cap within six months. The funding limit would take effect 30 days after the director determines the program has reached its cap.

Federal agencies would tell program participants that a spending cap may affect future funds for benefits. Agencies would include the notice in contracts, benefit offers, and other materials provided to participants in scorecard programs.