Under the bill, discretionary budget authority would be capped at about $1 trillion for FY 2012, and discretionary outlays would be capped at $1.22 trillion. There is an exception for operations related to the global war on terrorism of $126 billion.

Also, Social Security, Medicare, Veterans Affairs, and interest payments on the debt would be excluded from direct spending limits.

To trim spending in the medium term, the bill would cap spending to a percentage of U.S. gross domestic product over the next ten years. Federal spending would be capped at 21.7 percent of GDP for 2013, 20.8 for 2014, 20.2 for 2015, 20.1 for 2016, 19.9 for 2017, 19.7 for 2018, and 19.9 percent for 2019 through 2021.

The third component of the bill would require congressional approval of a balanced budget amendment to the Constitution before the Treasury Department is allowed to borrow money above these caps. The bill cites already introduced language as acceptable, but also said any amendment to the Constitution is acceptable if it requires outlays not to exceed receipts, contains spending limits based on a percentage of GDP, and requires tax increases to be approved by a two-thirds vote in both the House and Senate.