SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Ronald Reagan Peace Dividend 
Investment Act''.

SEC. 2. AMENDMENTS TO THE CONGRESSIONAL BUDGET ACT OF 1974.

    (a) In general.--Title VI of the Congressional Budget Act of 1974 
(as amended by the Budget Enforcement Act of 1990) is amended by adding 
after section 606 the following new section:

``SEC. 606A. DETERMINATION OF PEACE DIVIDEND.

    ``(a) Fiscal Year 1993.--
            ``(1) In general.--If pursuant to section 251(a)(7) of the 
        Balanced Budget and Emergency Deficit Control Act of 1985 
        outlays in the defense category for fiscal year 1993 are 
        estimated to be below the discretionary spending limit for such 
        outlays, the difference shall be used to reduce the deficit and 
        to increase the personal income tax exemption as provided in 
        subsection (c).
            ``(2) Adjustment to discretionary spending limits.--If 
        outlays for the defense category in fiscal year 1993 are 
        estimated to be below the discretionary spending limit for such 
        outlays, the discretionary spending limits calculated pursuant 
        to section 251(b) of the Balanced Budget and Emergency Deficit 
        Control Act of 1985 shall be adjusted for the difference.
    ``(b) Fiscal Years 1994 and Thereafter.--
            ``(1) In general.--If outlays in the defense category as 
        defined in section 250(c)(4) of the Balanced Budget and 
        Emergency Deficit Control Act of 1985 for each fiscal year 
        beginning with fiscal year 1994 are below the defense baseline 
        for such fiscal year as determined under paragraph (3), the 
        difference shall be used to reduce the deficit and increase the 
        personal exemption as provided in subsection (c).
            ``(2) Adjustment to discretionary spending limits.--For 
        fiscal year 1994 or 1995 if the defense category outlays for 
        such fiscal year are estimated to be below the defense baseline 
        for such fiscal year, the discretionary spending limits shall 
        be adjusted by the difference.
            ``(3) Baseline.--(A) For fiscal year 1994 or 1995, the 
        applicable baseline for defense outlays shall be the total 
        estimated discretionary outlays for the fiscal year multiplied 
        by the ratio of the final defense outlay cap for fiscal year 
        1993 divided by the final total discretionary cap for fiscal 
        year 1993.
            ``(4) Fiscal year 1996 and thereafter.--Beginning with 
        fiscal year 1996 and each fiscal year thereafter, the 
        applicable defense outlay baseline shall be the Congressional 
        Budget Office baseline inflator multiplied by the defense 
        outlay level for the previous fiscal year.
    ``(c) Allocation of Adjustments.--The adjustments in the 
discretionary spending limits for outlays described in subsections (a) 
and (b) shall be allocated in the following manner:
            ``(1) Deficit reduction.--The maximum deficit amount 
        calculated pursuant to section 253 of the Balanced Budget and 
        Emergency Deficit Control Act of 1985 for any of fiscal years 
        1993 through 1995 shall be reduced by an amount equal to the 
        change in the estimated deficit resulting from such reduced 
        outlays and the reduction in revenue described in paragraph 
        (2).
            ``(2) Personal exemption.--The Secretary of the Treasury 
        shall increase the personal exemption amount for individuals as 
        determined under section 151 of the Internal Revenue Code of 
        1986 by an amount estimated to reduce receipts in the calendar 
        year beginning during such fiscal year by an amount equal to 
        one-half of the difference (peace dividend) described in 
        subsections (a) or (b) with respect to defense outlays for that 
        fiscal year.
    ``(d) Permitting of Peace Dividend Investment.--Legislation 
affecting receipts as a result of the requirements of section (c)(2) 
shall not be considered legislation that increases the deficit for 
purposes of section 252 of the Balanced Budget and Emergency Deficit 
Control Act of 1985.
    ``(e) Point of Order.--
            ``(1) It shall not be in order in the Senate to consider 
        any bill, resolution, amendment, or conference report that 
        would reduce defense spending below the spending limit for the 
        defense category as defined in section 250(c)(4) of the 
        Balanced Budget and Emergency Deficit Control Act of 1985 if 
        such bill, resolution, amendment, or conference report does not 
        allocate the total amount of reduced new budget authority or 
        outlays between deficit reduction and increases in the personal 
        income tax exemption as provided in this section.
            ``(2) For purposes of this subsection, the levels of 
        defense spending for a fiscal year shall be determined on the 
        basis of estimates made by the Committee on the Budget.''.
    (b) Point of Order.--The last sentence of section 904(d) of the 
Congressional Budget Act of 1974 (as amended by the Budget Enforcement 
Act of 1990) is amended by striking ``and 606(c)'' and inserting 
``606(c), and 606A''.
Ronald Reagan Peace Dividend Investment Act - Amends the Congressional Budget Act of 1974 to provide for a reduction in the deficit and an increase in the personal income tax exemption when outlays in the defense category for FY 1993 or 1994 are estimated to be below the discretionary spending limit for such outlays.  Requires an adjustment in such spending limits under such circumstances. 
Prohibits Senate consideration of legislation that would reduce defense spending below the spending limit for the defense category if such legislation does not allocate the total amount of reduced new budget authority or outlays between deficit reduction and increases in the personal income tax exemption.
Ronald Reagan Peace Dividend Investment Act