This bill would impose spending limits on the federal budget for all expenditures except Social Security, Medicare, military pay, veterans’ benefits, and interest paid on the debt. For fiscal year 2016, this bills aims to rack up $207 billion in spending reductions.
Beginning in fiscal year 2021, federal spending would be capped at 18 percent of the Gross Domestic Product (GDP) of the U.S. economy. It would gradually decrease to that level from a cap of 19.9 percent in fiscal year 2016 at a rate of about 0.4 percent per year.
Each year the Office of Management and Budget (OMB) would determine spending limits for each fiscal year. After fiscal year 2021, federal spending would remained capped at 18 percent going forward.
All future debt limit increases would be prevented until a balanced budget amendment has been passed by Congress and sent to the states for ratification.