SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Debt Reduction Priority Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) On October 7, 2008, Congress established the Troubled 
        Assets Relief Program (TARP) as part of the Emergency Economic 
        Stabilization Act (Public Law 110-343; 122 Stat. 3765) and 
        allocated $700,000,000,000 for the purchase of toxic assets 
        from banks with the goal of restoring liquidity to the 
        financial sector and restarting the flow of credit in our 
        markets.
            (2) The Department of Treasury, without consultation with 
        Congress, changed the purpose of TARP and began injecting 
        capital into financial institutions through a program called 
        the Capital Purchase Program (CPP) rather than purchasing toxic 
        assets.
            (3) Lending by financial institutions was not noticeably 
        increased with the implementation of the CPP and the 
        expenditure of $250,000,000,000 of TARP funds, despite the goal 
        of the program.
            (4) The recipients of amounts under the CPP are now faced 
        with additional restrictions related to accepting those funds.
            (5) A number of community banks and large financial 
        institutions have expressed their desire to return their CPP 
        funds to the Department of Treasury and the Department has 
        begun the process of accepting receipt of such funds.
            (6) The Department of the Treasury should not unilaterally 
        determine how these returned funds are spent in the future and 
        the Congress should play a role in any determination of future 
        spending of funds returned through the TARP.

SEC. 3. DEBT REDUCTION.

    (a) In General.--Title I of the Emergency Economic Stabilization 
Act of 2008 (12 U.S.C. 5211 et seq.) is amended by adding at the end 
the following:

``SEC. 137. DEBT REDUCTION.

    ``Not later than 30 days after the date of enactment of this 
section, the Secretary of the Treasury shall deposit any amounts 
received by the Secretary for repayment of financial assistance or for 
payment of any interest on the receipt of such financial assistance by 
an entity that has received financial assistance under the TARP or any 
program enacted by the Secretary under the authorities granted to the 
Secretary under this Act, including the Capital Purchase Program, in 
the Public Debt Reduction Payment Account established under section 
3114 of title 31, United States Code.''.

SEC. 4. ESTABLISHMENT OF PUBLIC DEBT REDUCTION PAYMENT ACCOUNT.

    (a) In General.--Subchapter I of chapter 31 of title 31, United 
States Code, is amended by adding at the end the following new section:
``Sec. 3114. Public Debt Reduction Payment Account
    ``(a) There is established in the Treasury of the United States an 
account to be known as the Public Debt Reduction Payment Account 
(hereinafter in this section referred to as the `account').
    ``(b) The Secretary of the Treasury shall use amounts in the 
account to pay at maturity, or to redeem or buy before maturity, any 
obligation of the Government held by the public and included in the 
public debt. Any obligation which is paid, redeemed, or bought with 
amounts from the account shall be canceled and retired and may not be 
reissued. Amounts deposited in the account are appropriated and may 
only be expended to carry out this section.
    ``(c) There shall be deposited in the account any amounts which are 
received by the Secretary of the Treasury pursuant to section 137 of 
the Emergency Economic Stabilization Act of 2008. The funds deposited 
to this account shall remain available until expended.
    ``(d) The Secretary of the Treasury and the Director of the Office 
of Management and Budget shall each take such actions as may be 
necessary to promptly carry out this section in accordance with sound 
debt management policies.
    ``(e) Reducing the debt pursuant to this section shall not 
interfere with the debt management policies or goals of the Secretary 
of the Treasury.''.
    (b) Conforming Amendment.--The chapter analysis for chapter 31 of 
title 31, United States Code, is amended by inserting after the item 
relating to section 3113 the following:

``3114. Public debt reduction payment account.''.

SEC. 5. REDUCTION OF STATUTORY LIMIT ON THE PUBLIC DEBT.

    Section 3101(b) of title 31, United States Code, is amended by 
inserting ``minus the aggregate amounts deposited into the Public Debt 
Reduction Payment Account pursuant to section 3114(c)'' before ``, 
outstanding at one time''.

SEC. 6. OFF-BUDGET STATUS OF PUBLIC DEBT REDUCTION PAYMENT ACCOUNT.

    Notwithstanding any other provision of law, the receipts and 
disbursements of the Public Debt Reduction Payment Account established 
by section 3114 of title 31, United States Code, shall not be counted 
as new budget authority, outlays, receipts, or deficit or surplus for 
purposes of--
            (1) the budget of the United States Government as submitted 
        by the President,
            (2) the congressional budget, or
            (3) the Balanced Budget and Emergency Deficit Control Act 
        of 1985.

SEC. 7. REMOVING PUBLIC DEBT REDUCTION PAYMENT ACCOUNT FROM BUDGET 
              PRONOUNCEMENTS.

    (a) In General.--Any official statement issued by the Office of 
Management and Budget, the Congressional Budget Office, or any other 
agency or instrumentality of the Federal Government of surplus or 
deficit totals of the budget of the United States Government as 
submitted by the President or of the surplus or deficit totals of the 
congressional budget, and any description of, or reference to, such 
totals in any official publication or material issued by either of such 
Offices or any other such agency or instrumentality, shall exclude the 
outlays and receipts of the Public Debt Reduction Payment Account 
established by section 3114 of title 31, United States Code.
    (b) Separate Public Debt Reduction Payment Account Budget 
Documents.--The excluded outlays and receipts of the Public Debt 
Reduction Payment Account established by section 3114 of title 31, 
United States Code, shall be submitted in separate budget documents.
Debt Reduction Priority Act - Amends the Emergency Economic Stabilization Act of 2008 (EESA) to require the Secretary of the Treasury to deposit in the Public Debt Reduction Payment Account (established by this Act) amounts received for repayment of financial assistance or payment of interest on the receipt of such assistance by an entity under the Troubled Asset Relief Program (TARP) or any program enacted by the Secretary under the authorities granted under such Act, including the Capital Purchase Program.

Requires the Secretary to use amounts in the Account to pay at maturity, or to redeem or buy before maturity, any obligation of the government held by the public and included in the public debt.

Reduces the public debt limit by the aggregate of amounts deposited into the Account.

 Excludes receipts and disbursements of the Account from consideration as new budget authority, outlays, receipts, or deficit or surplus for purposes of the President's budget, the congressional budget, or the Balanced Budget and Emergency Deficit Control Act of 1985. Requires outlays and receipts of the Account to be excluded from any official statement of budget surplus or deficit totals issued by the Office of Management and Budget (OMB), the Congressional Budget Office (CBO), or any other federal agency or instrumentality.
A bill to require the Secretary of the Treasury to use any amounts repaid by a financial institution that is a recipient of assistance under the Troubled Assets Relief Program for debt reduction.