II

★(Star Print)

104TH CONGRESS

1ST SESSION S. 149

To require a balanced Federal budget by fiscal year 2002 and each year

thereafter, to protect Social Security, to provide for zero-based budgeting

and decennial sunsetting, to impose spending caps on the growth of

entitlements during fiscal years 1996 through 2002, and to enforce

those requirements through a budget process involving the President

and Congress and sequestration.

IN THE SENATE OF THE UNITED STATES

JANUARY 4, 1995

Mr. GRAMM introduced the following bill; which was read twice and referred

jointly pursuant to the order of August 4, 1977, to the Committees on

the Budget and Governmental Affairs, with instructions that if one Committee reports, the other Committee have thirty days to report or be discharged

A BILL

To require a balanced Federal budget by fiscal year 2002

and each year thereafter, to protect Social Security, to

provide for zero-based budgeting and decennial

sunsetting, to impose spending caps on the growth of

entitlements during fiscal years 1996 through 2002, and

to enforce those requirements through a budget process

involving the President and Congress and sequestration.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Balanced Budget Im3 plementation Act’’.

4 SEC. 2. EFFECTIVE DATES.

5 Except as otherwise specified, this Act and the

6 amendments made by it shall take effect on its date of

7 enactment and shall apply to fiscal year 1996 and subse8 quent fiscal years.

9 TITLE I—JOINT BUDGET

10 RESOLUTION

11 SEC. 101. JOINT BUDGET RESOLUTION.

12 (a) DEFINITIONS.—Paragraph (4) of section 3 of the

13 Congressional Budget Act of 1974 is amended to read as

14 follows:

15 ‘‘(4) the term ‘joint resolution on the budget’

16 means—

17 ‘‘(A) a joint resolution setting forth the

18 congressional budget for the United States Gov19 ernment for a fiscal year as provided in section

20 301; and

21 ‘‘(B) any other joint resolution revising the

22 congressional budget for the United States Gov23 ernment for a fiscal year as described in section

24 304.’’.
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1 (b) JOINT RESOLUTION ON THE BUDGET.—(1) Sec2 tion 300 is amended by striking ‘‘concurrent resolution’’

3 each place it appears and inserting ‘‘joint resolution’’.

4 (2) Section 301(a) of the Congressional Budget Act

5 of 1974 is amended by striking ‘‘concurrent resolution’’

6 each place it appears including in the caption and insert7 ing ‘‘joint resolution’’.

8 (3) Section 301(b) is amended by striking ‘‘concur9 rent resolution’’ each place it appears including in the cap10 tion and inserting ‘‘joint resolution’’.

11 (4) Section 301(c) is amended by striking ‘‘concur12 rent resolution’’ each place it appears and inserting ‘‘joint

13 resolution’’.

14 (5) Section 301(e) is amended by striking ‘‘concur15 rent resolution’’ each place it appears and inserting ‘‘joint

16 resolution’’.

17 (6) Section 301(f) is amended by striking ‘‘concur18 rent resolution’’ each place it appears and inserting ‘‘joint

19 resolution’’.

20 (7) Section 301(g) is amended by striking ‘‘concur21 rent resolution’’ each place it appears and inserting ‘‘joint

22 resolution’’.

23 (8) Section 301(h) is amended by striking ‘‘concur24 rent resolution’’ and inserting ‘‘joint resolution’’.
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1 (9) Section 301(i) is amended by striking ‘‘concur2 rent resolution’’ each place it appears and inserting ‘‘joint

3 resolution’’.

4 (10) The section heading of section 301 is amended

5 by striking ‘‘ANNUAL ADOPTION OF CONCURRENT’’

6 and inserting ‘‘ANNUAL ADOPTION OF JOINT’’.

7 (11) The table of contents set forth in section 1(b)

8 of the Congressional Budget and Impoundment Control

9 Act of 1974 is amended by striking ‘‘Annual adoption of

10 the concurrent’’ in the item relating to section 301 and

11 inserting ‘‘Annual adoption of the joint’’.

12 (12) Section 302 is amended by striking ‘‘concurrent

13 resolution’’ each place it appears and inserting ‘‘joint reso14 lution’’.

15 (13) Section 303, including the heading, is amended

16 by striking ‘‘concurrent resolution’’ each place it appears

17 and inserting ‘‘joint resolution’’.

18 (14) The table of contents set forth in section 1(b)

19 of the Congressional Budget and Impoundment Control

20 Act of 1974 is amended by striking ‘‘Concurrent’’ in the

21 item relating to section 303 and inserting ‘‘Joint’’.

22 (15) Section 304 is amended by striking ‘‘concurrent

23 resolution’’, including in the heading, each place it appears

24 and inserting ‘‘joint resolution’’.
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1 (16) The table of contents set forth in section 1(b)

2 of the Congressional Budget and Impoundment Control

3 Act of 1974 is amended by striking ‘‘Concurrent’’ in the

4 item relating to section 304 and inserting ‘‘Joint’’.

5 (17) Section 305 is amended by striking ‘‘concurrent

6 resolution’’, including in the heading, each place it appears

7 and inserting ‘‘joint resolution’’.

8 (18) Section 308 is amended by striking ‘‘concurrent

9 resolution’’ each place it appears and inserting ‘‘joint reso10 lution’’.

11 (19) Section 310 is amended by striking ‘‘concurrent

12 resolution’’ each place it appears and inserting ‘‘joint reso13 lution’’.

14 (20) Section 311 is amended by striking ‘‘concurrent

15 resolution’’ each place it appears and inserting ‘‘joint reso16 lution’’.

17 TITLE II—ZERO BASED BUDGET18 ING AND DECENNIAL

19 SUNSETTING

20 SEC. 201. REAUTHORIZATION OF DISCRETIONARY PRO21 GRAMS AND UNEARNED ENTITLEMENTS.

22 (a) FISCAL YEAR 1996.—Effective October 1, 1995,

23 spending authority for each unearned entitlement and

24 high-cost discretionary spending program is terminated
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1 unless such spending authority is reauthorized after the

2 date of enactment of this Act.

3 (b) FISCAL YEAR 1997.—Effective October 1, 1996,

4 spending authority for each discretionary spending pro5 gram (not including high-cost discretionary spending pro6 grams) is terminated unless such spending authority is re7 authorized after the date of enactment of this Act.

8 (c) DEFINITIONS.—For purposes of this title—

9 (1) the term ‘‘unearned entitlement’’ means an

10 entitlement not earned by service or paid for in total

11 or in part by assessments or contributions such as

12 Social Security, veterans’ benefits, retirement pro13 grams, and medicare; and

14 (2) the term ‘‘high-cost discretionary program’’

15 means the most expensive one-third of discretionary

16 program within each budget function account.

17 SEC. 202. POINT OF ORDER.

18 (a) IN GENERAL.—It shall not be in order in the

19 House of Representatives or the Senate to consider any

20 bill, joint resolution, amendment, or conference report that

21 includes any provision that appropriates funds unless such

22 appropriation has been previously authorized by law.

23 (b) WAIVER OR SUSPENSION.—This section may be

24 waived or suspended in the House of Representatives or
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1 the Senate only by the affirmative vote of three-fifths of

2 the Members, duly chosen and sworn.

3 SEC. 203. DECENNIAL SUNSETTING.

4 (a) FIRST DECENNIAL CENSUS YEAR.—Effective on

5 the first day of the fiscal year beginning in the first decen6 nial census year after the year 2000 and each 10 years

7 thereafter, the spending authority described in section

8 201(a) is terminated unless such spending authority is re9 authorized after the last date the spending authority was

10 required to be reauthorized under this title.

11 (b) FIRST DECENNIAL CENSUS YEAR.—Effective on

12 the first day of the fiscal year beginning in the year after

13 the first decennial census year after the year 2000 and

14 each 10 years thereafter, the spending authority described

15 in section 201(b) is terminated unless such spending au16 thority is reauthorized after the last date the spending au17 thority was required to be reauthorized under this title.

18 TITLE III—SPENDING CAPS ON

19 THE GROWTH OF ENTITLE20 MENTS FOR FISCAL YEARS

21 1996 THROUGH 2002

22 SEC. 301. SPENDING CAPS ON GROWTH OF ENTITLEMENTS

23 AND MANDATORIES.

24 (a) CAP ON GROWTH OF ENTITLEMENTS.—Effective

25 for each of the fiscal years 1996 through 2002, the total
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1 level of entitlement and mandatory spending, excluding

2 Social Security, shall not exceed the total level for the pre3 vious fiscal year increased by the consumer price index,

4 and the growth in eligible population.

5 (b) SEQUESTRATION.—Within 15 days after Con6 gress adjourns to end a session, and on the same day as

7 a sequestration (if any) under title IV (pursuant to the

8 amendments made by such title), there shall be a seques9 tration to reduce the amount of entitlement and manda10 tory spending for the fiscal year beginning in the year the

11 Congress adjourns by any amount necessary to reduce

12 such spending to the level set forth in subsection (a) un13 less that amount is less than $250,000,000.

14 (c) UNIFORM REDUCTIONS; LIMITATIONS.—The

15 amount required to be sequestered for the fiscal year

16 under subsection (a) shall be obtained from nonexempt di17 rect spending accounts by actions taken in the following

18 order:

19 (1) FIRST.—The reductions in the programs

20 specified in section 303(a) (National Wool Act and

21 special milk), section 303(b) (guaranteed student

22 loans), and section 303(c) (foster care and adoption

23 assistance) shall be made.

24 (2) SECOND.—Any additional reductions that

25 may be required shall be achieved by reducing each
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1 remaining nonexempt direct spending account by the

2 uniform percentage necessary to achieve those addi3 tional reductions, except that—

4 (A) the low-income programs specified in

5 section 303(d) shall not be reduced by more

6 than 1 percent;

7 (B) the retirement and veterans benefits

8 specified in section 303(e) shall not be reduced

9 by more than 2 percent in the manner specified

10 in that section; and

11 (C) the medicare programs shall not be re12 duced by more than 4 percent in the manner

13 specified in section 303(f).

14 The limitations set forth in subparagraphs (A), (B),

15 and (C) shall be applied iteratively, and after each

16 iteration the uniform percentage applicable to all

17 other programs under this paragraph shall be in18 creased (if necessary) to a level sufficient to achieve

19 the reductions required by this paragraph.

20 SEC. 302. EXEMPT PROGRAMS AND ACTIVITIES.

21 (a) DESCRIPTIONS AND LISTS.—Except as provided

22 in subsection (b), the following budget accounts or activi23 ties shall be exempt from sequestration—

24 (1) net interest;
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1 (2) all payments to trust funds from excise

2 taxes or other receipts or collections properly cred3 itable to those trust funds;

4 (3) all payments from one Federal direct spend5 ing budget account to another Federal budget ac6 count; and all intragovernmental funds including

7 those from which funding is derived primarily from

8 other Government accounts, except to the extent

9 that such funds are augmented by direct appropria10 tions for the fiscal year for which the order is in ef11 fect;

12 (4) activities resulting from private donations,

13 bequests, or voluntary contributions to the Govern14 ment;

15 (5) payments from any revolving fund or trust16 revolving fund (or similar activity) that provides de17 posit insurance or other Government insurance, Gov18 ernment guarantees, or any other form of contingent

19 liability, to the extent those payments result from

20 contractual or other legally binding commitments of

21 the Government at the time of any sequestration;

22 (6) credit liquidating and financing accounts;

23 (7) the following accounts, which largely fulfill

24 requirements of the Constitution or otherwise make

25 payments to which the Government is committed—
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1 Administration of Territories, Northern

2 Mariana Islands Covenant grants (14–0412–0–

3 1–806);

4 Bureau of Indian Affairs, miscellaneous

5 payments to Indians (14–2303–0–1–452);

6 Bureau of Indian Affairs, miscellaneous

7 trust funds, tribal trust funds (14–9973–0–7–

8 999);

9 Claims, defense;

10 Claims, judgments, and relief act (20–

11 1895–0–1–806);

12 Compact of Free Association, economic as13 sistance pursuant to Public Law 99–658 (14–

14 0415–0–1–806);

15 Compensation of the President (11–0001–

16 0–1–802);

17 Customs Service, miscellaneous permanent

18 appropriations (20–9992–0–2–852);

19 Eastern Indian land claims settlement

20 fund (14–2202–0–1–806);

21 Farm Credit System Financial Assistance

22 Corporation, interest payments (20–1850–0–1–

23 351);

24 Internal Revenue collections of Puerto Rico

25 (20–5737–0–2–852);
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1 Panama Canal Commission, operating ex2 penses and capital outlay (95–5190–0–2–403);

3 Payments of Vietnam and USS Pueblo

4 prisoner-of-war claims (15–0104–0–1–153);

5 Payments to copyright owners (03–5175–

6 0–2–376);

7 Payments to the United States territories,

8 fiscal assistance (14–0418–0–1–801);

9 Payments to widows and heirs of deceased

10 Members of Congress (00–0215–0–1–801);

11 Salaries of Article III judges;

12 Soldier’s and Airmen’s Home, payment of

13 claims (84–8930–0–7–705);

14 Washington Metropolitan Area Transit Au15 thority, interest payments (46–0300–0–1–401);

16 (8) the following noncredit special, revolving, or

17 trust-revolving funds—

18 Coinage profit fund (20–5811–0–2–803);

19 Comptroller of the Currency;

20 Director of the Office of Thrift Super21 vision;

22 Exchange Stabilization Fund (20–4444–0–

23 3–155);

24 Federal Housing Finance Board;
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1 Foreign Military Sales trust fund (11–

2 82232–0–7–155);

3 (9) Thrift Savings Fund;

4 (10) appropriations for the District of Columbia

5 to the extent they are appropriations of locally

6 raised funds;

7 (11)(A) any amount paid as regular unemploy8 ment compensation by a State from its account in

9 the Unemployment Trust Fund (established by sec10 tion 904(a) of the Social Security Act);

11 (B) any advance made to a State from the Fed12 eral unemployment account (established by section

13 904(g) of such Act) under title XII of such Act and

14 any advance appropriated to the Federal unemploy15 ment account pursuant to section 1203 of such Act;

16 and

17 (C) any payment made from the Federal Em18 ployees Compensation Account (as established under

19 section 909 of such Act) for the purpose of carrying

20 out chapter 85 of title 5, United States Code, and

21 funds appropriated or transferred to or otherwise

22 deposited in such Account; and

23 (12) the earned income tax credit (payments to

24 individuals pursuant to section 32 of the Internal

25 Revenue Code of 1986).
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1 (b) FEDERAL ADMINISTRATIVE EXPENSES.—

2 (1) Notwithstanding any provision of law other

3 than paragraph (3), administrative expenses in4 curred by the departments and agencies, including

5 independent agencies, of the Federal Government in

6 connection with any program, project, activity, or ac7 count shall be subject to reduction pursuant to any

8 sequestration order, without regard to any exemp9 tion, exception, limitation, or special rule otherwise

10 applicable with respect to such program, project, ac11 tivity, or account, and regardless of whether the pro12 gram, project, activity, or account is self-supporting

13 and does not receive appropriations.

14 (2) Payments made by the Federal Government

15 to reimburse or match administrative costs incurred

16 by a State or political subdivision under or in con17 nection with any program, project, activity, or ac18 count shall not be considered administrative ex19 penses of the Federal Government for purposes of

20 this section, and shall be subject to sequestration to

21 the extent (and only to the extent) that other pay22 ments made by the Federal Government under or in

23 connection with that program, project, activity, or

24 account are subject to that reduction or sequestra25 tion; except that Federal payments made to a State
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1 as reimbursement of administrative costs incurred

2 by that State under or in connection with the unem3 ployment compensation programs specified in sub4 section (a)(11) shall be subject to reduction or se5 questration under this part notwithstanding the ex6 emption otherwise granted to such programs under

7 that subsection.

8 (3) Notwithstanding any other provision of law,

9 the administrative expenses of the following pro10 grams shall be exempt from sequestration:

11 (A) Comptroller of the Currency.

12 (B) Federal Deposit Insurance Corpora13 tion.

14 (C) Office of Thrift Supervision.

15 (D) National Credit Union Administration.

16 (E) National Credit Union Administration,

17 central liquidity facility.

18 (F) Federal Retirement Thrift Investment

19 Board.

20 (G) Resolution Funding Corporation.

21 (H) Resolution Trust Corporation.

22 (I) Board of Governors of the Federal Re23 serve System.
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1 SEC. 303. EXCEPTIONS, LIMITATIONS, AND SPECIAL RULES.

2 (a) NATIONAL WOOL ACT AND THE SPECIAL MILK

3 PROGRAM.—Automatic spending increases are increases

4 in outlays due to changes in indexes in the following pro5 grams:

6 (1) National Wool Act.

7 (2) Special milk program.

8 In those programs all amounts other than the automatic

9 spending increases shall be exempt from reduction under

10 any sequestration order.

11 (b) THE GUARANTEED STUDENT LOAN PROGRAM.—

12 (1) Any reductions which are required to be achieved from

13 the student loan programs operated pursuant to part B

14 of title IV of the Higher Education Act of 1965 under

15 any sequestration order shall be achieved only from loans

16 described in paragraphs (2) and (3) by the application of

17 the measures described in such paragraphs.

18 (2) For any loan made during the period beginning

19 on the date that a sequestration order takes effect with

20 respect to a fiscal year, the rate used in computing the

21 special allowance payment pursuant to section

22 438(b)(2)(A)(iii) of such Act for each of the first four spe23 cial allowance payments for such loan shall be adjusted

24 by reducing such rate by the lesser of—

25 (A) 0.40 percent, or
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1 (B) the percentage by which the rate specified

2 in such section exceeds 3 percent.

3 (3) For any loan made during the period beginning

4 on the date that a sequestration order takes effect with

5 respect to a fiscal year, the origination fee which is author6 ized to be collected pursuant to section 438(c)(2) of such

7 Act shall be increased by 0.50 percent.

8 (c) FOSTER CARE AND ADOPTION ASSISTANCE PRO9 GRAMS.—Any sequestration order shall make the reduc10 tion otherwise required under the foster care and adoption

11 assistance programs (established by part E of title IV of

12 the Social Security Act) only with respect to payments and

13 expenditures made by States in which increases in foster

14 care maintenance payment rates or adoption assistance

15 payment rates (or both) are to take effect during the fiscal

16 year involved, and only to the extent that the required re17 duction can be accomplished by applying a uniform per18 centage reduction to the Federal matching payments that

19 each such State would otherwise receive under section 474

20 of that Act (for such fiscal year) for that portion of the

21 State’s payments attributable to the increases taking ef22 fect during that year. No State’s matching payments from

23 the Federal Government for foster care maintenance pay24 ments or for adoption assistance maintenance payments

25 may be reduced by a percentage exceeding the applicable
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1 domestic sequestration percentage. No State may, after

2 the date of the enactment of this Act, make any change

3 in the timetable for making payments under a State plan

4 approved under part E of title IV of the Social Security

5 Act which has the effect of changing the fiscal year in

6 which expenditures under such part are made.

7 (d) LOW-INCOME ENTITLEMENTS.—(1) Benefit pay8 ments or payments to States or other entities for the pro9 grams listed in paragraph (2) shall not be reduced by

10 more than 1 percent under any sequestration order. When

11 reduced under an end-of-session sequestration order, those

12 benefit reductions shall occur starting with the payment

13 made at the start of January. When reduced under a with14 in-session sequestration order, those benefit reductions

15 shall occur starting with the next periodic payment.

16 (2) The programs referred to in paragraph (1) are

17 the following:

18 Aid to families with dependent children (75–

19 0412–0–1–609);

20 Child nutrition (12–3539–0–1–605);

21 Food stamp programs (12–3505–0–1–605) and

22 (12–3550–0–1–605);

23 Grants to States for medicaid (75–0512–0–1–

24 551); and
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1 Supplemental security income program (75–

2 0406–0–1–609).

3 (e) FEDERAL RETIREMENT AND VETERANS’ PRO4 GRAMS.—

5 (1) For each of the programs listed in para6 graph (2) and except as provided in paragraph (3),

7 monthly (or other periodic) benefit payments shall

8 be reduced by the uniform percentage applicable to

9 direct spending sequestrations for such programs

10 under section 301(c)(2), which shall in no case ex11 ceed 2 percent under any sequestration order. When

12 reduced under an end-of-session sequestration order,

13 those benefit reductions shall occur starting with the

14 payment made at the start of January or 7 weeks

15 after the order is issued, whichever is later. When

16 reduced under a within-session sequestration order,

17 those benefit reductions shall occur starting with the

18 next periodic payment.

19 (2) The programs subject to paragraph (1) are:

20 Benefits payable under sections 3(a),

21 3(f)(3), 4(a), or 4(f) of the Railroad Retirement

22 Act of 1974;

23 Benefits under chapter 21 of title 38,

24 United States Code, relating to specially adapt25 ed housing and mortgage-protection life insur-
20

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1 ance for certain veterans with service-connected

2 disabilities (36–0137–0–1–702);

3 Benefits under section 907 of title 38,

4 United States Code, relating to burial benefits

5 for veterans who die as a result of service-con6 nected disability (36–0155–0–1–701);

7 Benefits under chapter 39 of title 38,

8 United States Code, relating to automobiles and

9 adaptive equipment for certain disabled veter10 ans and members of the Armed Forces (36–

11 0137–0–1–702);

12 Black lung benefits (20–8144–0–7–601);

13 Central Intelligence Agency retirement and

14 disability system fund (56–3400–0–1–054);

15 Civil service retirement and disability fund

16 (24–8135–0–7–602);

17 Comptrollers general retirement system

18 (05–0107–0–1–801);

19 Foreign service retirement and disability

20 fund (19–8186–0–7–602);

21 Judicial survivors’ annuities fund (10–

22 8110–0–7–602);

23 Longshoremen’s and harborworkers’ com24 pensation benefits (16–9971–0–7–601);
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1 Military retirement fund (97–8097–0–7–

2 602);

3 National Oceanic and Atmospheric Admin4 istration retirement (13–1450–0–1–306);

5 Pensions for former Presidents (47–0105–

6 0–1–802);

7 Railroad retirement tier II (60–8011–0–7–

8 601);

9 Railroad supplemental annuity pension

10 fund (60–8012–0–7–602);

11 Retired pay, Coast Guard (69–0241–0–1–

12 403);

13 Retirement pay and medical benefits for

14 commissioned officers, Public Health Service

15 (75–0379–0–1–551);

16 Special benefits, Federal Employees’ Com17 pensation Act (16–1521–0–1–600);

18 Special benefits for disabled coal miners

19 (75–0409–0–1–601);

20 Tax Court judges survivors annuity fund

21 (23–8115–0–7–602);

22 Veterans’ compensation (36–0153–0–1–

23 701); and

24 Veterans’ pensions (36–0154–0–1–701).

25 (f) MEDICARE PROGRAM.—
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1 (1) CALCULATION OF REDUCTION IN INDIVID2 UAL PAYMENT AMOUNTS.—To achieve the total per3 centage reduction in those programs required by sec4 tion 301, the percentage reduction that shall apply

5 to payments under the health insurance programs

6 under title XVIII of the Social Security Act for serv7 ices furnished after any sequestration order is issued

8 shall be such that the reduction made in payments

9 under that order shall achieve the required total per10 centage reduction in those payments for that fiscal

11 year as determined on a 12-month basis.

12 (2) TIMING OF APPLICATION OF REDUC13 TIONS.—

14 (A) IN GENERAL.—Except as provided in

15 subparagraph (B), if a reduction is made under

16 paragraph (1) in payment amounts pursuant to

17 a sequestration order, the reduction shall be ap18 plied to payment for services furnished after the

19 effective date of the order. For purposes of the

20 previous sentence, in the case of inpatient serv21 ices furnished for an individual, the services

22 shall be considered to be furnished on the date

23 of the individual’s discharge from the inpatient

24 facility.
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1 (B) PAYMENT ON THE BASIS OF COST RE2 PORTING PERIODS.—In the case in which pay3 ment for services of a provider of services is

4 made under title XVIII of the Social Security

5 Act on a basis relating to the reasonable cost

6 incurred for the services during a cost reporting

7 period of the provider, if a reduction is made

8 under paragraph (1) in payment amounts pur9 suant to a sequestration order, the reduction

10 shall be applied to payment for costs for such

11 services incurred at any time during each cost

12 reporting period of the provider any part of

13 which occurs after the effective date of the

14 order, but only (for each such cost reporting pe15 riod) in the same proportion as the fraction of

16 the cost reporting period that occurs after the

17 effective date of the order.

18 (3) NO INCREASE IN BENEFICIARY CHARGES IN

19 ASSIGNMENT-RELATED CASES.—If a reduction in

20 payment amounts is made under paragraph (1) for

21 services for which payment under part B of title

22 XVIII of the Social Security Act is made on the

23 basis of an assignment described in section

24 1842(b)(3)(B)(ii), in accordance with section

25 1842(b)(6)(B), or under the procedure described in
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1 section 1870(f)(1) of such Act, the person furnishing

2 the services shall be considered to have accepted

3 payment of the reasonable charge for the services,

4 less any reduction in payment amount made pursu5 ant to a sequestration order, as payment in full.

6 (4) NO EFFECT ON COMPUTATION OF AAPCC.—

7 In computing the adjusted average per capita cost

8 for purposes of section 1876(a)(4) of the Social Se9 curity Act, the Secretary of Health and Human

10 Services shall not take into account any reductions

11 in payment amounts which have been or may be ef12 fected under this subtitle.

13 (g) FEDERAL PAY.—

14 (1) IN GENERAL.—Except as provided in sec15 tion 302(b)(3), new budget authority to pay Federal

16 personnel shall be reduced by the uniform percent17 age calculated under section 301(c), but no seques18 tration order may reduce or have the effect of reduc19 ing the rate of pay to which any individual is enti20 tled under any statutory pay system (as increased by

21 any amount payable under section 5304 of title 5,

22 United States Code, or section 302 of the Federal

23 Employees Pay Comparability Act of 1990) or the

24 rate of any element of military pay to which any in25 dividual is entitled under title 37, United States
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1 Code, or any increase in rates of pay which is sched2 uled to take effect under section 5303 of title 5,

3 United States Code, section 1009 of title 37, United

4 States Code, or any other provision of law.

5 (2) DEFINITIONS.—For purposes of this sub6 section:

7 (A) The term ‘‘statutory pay system’’ shall

8 have the meaning given that term in section

9 5302(1) of title 5, United States Code.

10 (B) The term ‘‘elements of military pay’’

11 means—

12 (i) the elements of compensation of

13 members of the uniformed services speci14 fied in section 1009 of title 37, United

15 States Code,

16 (ii) allowances provided members of

17 the uniformed services under sections 403a

18 and 405 of such title, and

19 (iii) cadet pay and midshipman pay

20 under section 203(c) of such title.

21 (C) The term ‘‘uniformed services’’ shall

22 have the meaning given that term in section

23 101(3) of title 37, United States Code.

24 (h) CHILD SUPPORT ENFORCEMENT PROGRAM.—

25 Any sequestration order shall accomplish the full amount
26

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1 of any required reduction in expenditures under sections

2 455 and 458 of the Social Security Act by reducing the

3 Federal matching rate for State administrative costs

4 under such program, as specified (for the fiscal year in5 volved) in section 455(a) of such Act, to the extent nec6 essary to reduce such expenditures by that amount.

7 (i) EXTENDED UNEMPLOYMENT COMPENSATION.—

8 (1) A State may reduce each weekly benefit payment made

9 under the Federal-State Extended Unemployment Com10 pensation Act of 1970 for any week of unemployment oc11 curring during any period with respect to which payments

12 are reduced under an order issued under this title by a

13 percentage not to exceed the percentage by which the Fed14 eral payment to the State under section 204 of such Act

15 is to be reduced for such week as a result of such order.

16 (2) A reduction by a State in accordance with sub17 paragraph (A) shall not be considered as a failure to fulfill

18 the requirements of section 3304(a)(11) of the Internal

19 Revenue Code of 1954.

20 (j) COMMODITY CREDIT CORPORATION.—

21 (1) POWERS AND AUTHORITIES OF THE COM22 MODITY CREDIT CORPORATION.—This title shall not

23 restrict the Commodity Credit Corporation in the

24 discharge of its authority and responsibility as a cor25 poration to buy and sell commodities in world trade,
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1 to use the proceeds as a revolving fund to meet

2 other obligations and otherwise operate as a corpora3 tion, the purpose for which it was created.

4 (2) REDUCTION IN PAYMENTS MADE UNDER

5 CONTRACTS.—(A) Payments and loan eligibility

6 under any contract entered into with a person by the

7 Commodity Credit Corporation prior to the time any

8 sequestration order has been issued shall not be re9 duced by an order subsequently issued. Subject to

10 subparagraph (B), after any sequestration order is

11 issued for a fiscal year, any cash payments made by

12 the Commodity Credit Corporation—

13 (i) under the terms of any one-year con14 tract entered into in or after such fiscal year

15 and after the issuance of the order; and

16 (ii) out of an entitlement account,

17 to any person (including any producer, lender, or

18 guarantee entity) shall be subject to reduction under

19 the order.

20 (B) Each contract entered into with producers

21 or producer cooperatives with respect to a particular

22 crop of a commodity and subject to reduction under

23 subparagraph (A) shall be reduced in accordance

24 with the same terms and conditions. If some, but

25 not all, contracts applicable to a crop of a commod-
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1 ity have been entered into prior to the issuance of

2 any sequestration order, the order shall provide that

3 the necessary reduction in payments under contracts

4 applicable to the commodity be uniformly applied to

5 all contracts for succeeding crops of the commodity,

6 under the authority provided in paragraph (3).

7 (3) DELAYED REDUCTION IN OUTLAYS PERMIS8 SIBLE.—Notwithstanding any other provision of this

9 title, if any sequestration order is issued with re10 spect to a fiscal year, any reduction under the order

11 applicable to contracts described in paragraph (2)

12 may provide for reductions in outlays for the ac13 count involved to occur in the fiscal years following

14 the fiscal year to which the order applies.

15 (4) UNIFORM PERCENTAGE RATE OF REDUC16 TION AND OTHER LIMITATIONS.—All reductions de17 scribed in paragraph (2) that are required to be

18 made in connection with any sequestration order

19 with respect to a fiscal year—

20 (A) shall be made so as to ensure that out21 lays for each program, project, activity, or ac22 count involved are reduced by a percentage rate

23 that is uniform for all such programs, projects,

24 activities, and accounts, and may not be made

25 so as to achieve a percentage rate of reduction
29

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1 in any such item exceeding the rate specified in

2 the order; and

3 (B) with respect to commodity price sup4 port and income protection programs, shall be

5 made in such manner and under such proce6 dures as will attempt to ensure that—

7 (i) uncertainty as to the scope of ben8 efits under any such program is mini9 mized;

10 (ii) any instability in market prices

11 for agricultural commodities resulting from

12 the reduction is minimized; and

13 (iii) normal production and marketing

14 relationships among agricultural commod15 ities (including both contract and non-con16 tract commodities) are not distorted.

17 In meeting the criterion set out in clause (iii)

18 of subparagraph (B) of the preceding sentence,

19 the President shall take into consideration that

20 reductions under an order may apply to pro21 grams for two or more agricultural commodities

22 that use the same type of production or market23 ing resources or that are alternative commod24 ities among which a producer could choose in

25 making annual production decisions.
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1 (5) CERTAIN AUTHORITY NOT TO BE LIM2 ITED.—Nothing in this title shall limit or reduce in

3 any way any appropriation that provides the Com4 modity Credit Corporation with funds to cover the

5 Corporation’s net realized losses.

6 (k) THE JOBS PORTION OF AFDC.—

7 (1) FULL AMOUNT OF SEQUESTRATION RE8 QUIRED.—Any sequestration order shall accomplish

9 the full amount of any required reduction of the job

10 opportunities and basic skills training program

11 under section 402(a)(19), and part F of title VI, of

12 the Social Security Act, in the manner specified in

13 this subsection. Such an order may not reduce any

14 Federal matching rate pursuant to section 403(l) of

15 the Social Security Act.

16 (2) NEW ALLOTMENT FORMULA.—

17 (A) GENERAL RULE.—Notwithstanding

18 section 403(k) of the Social Security Act, each

19 State’s percentage share of the amount avail20 able after sequestration for direct spending pur21 suant to section 403(l) of such Act shall be

22 equal to that percentage of the total amount

23 paid to the States pursuant to such section

24 403(l) for the prior fiscal year that is rep25 resented by the amount paid to such State pur-
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1 suant to such section 403(l) for the prior fiscal

2 year, except that a State may not be allotted an

3 amount under this subparagraph that exceeds

4 the amount that would have been allotted to

5 such State pursuant to such section 403(k) had

6 the sequestration not been in effect.

7 (B) REALLOTMENT OF AMOUNTS REMAIN8 ING UNALLOTTED AFTER APPLICATION OF GEN9 ERAL RULE.—Any amount made available after

10 sequestration for direct spending pursuant to

11 section 403(l) of the Social Security Act that

12 remains unallotted as a result of subparagraph

13 (A) of this paragraph shall be allotted among

14 the States in proportion to the absolute dif15 ference between the amount allotted, respec16 tively, to each State as a result of such sub17 paragraph and the amount that would have

18 been allotted to such State pursuant to section

19 403(k) of such Act had the sequestration not

20 been in effect, except that a State may not be

21 allotted an amount under this subparagraph

22 that results in a total allotment to the State

23 under this paragraph of more than the amount

24 that would have been allotted to such State
32

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1 pursuant to such section 403(k) had the seques2 tration not been in effect.

3 (l) POSTAL SERVICE FUND.—Notwithstanding any

4 other provision of law, any sequestration of the Postal

5 Service Fund shall be accomplished by a payment from

6 that Fund to the General Fund of the Treasury, and the

7 Postmaster General of the United States shall make the

8 full amount of that payment during the fiscal year to

9 which the presidential sequestration order applies.

10 (m) EFFECTS OF SEQUESTRATION.—The effects of

11 sequestration shall be as follows:

12 (1) Budgetary resources sequestered from any

13 account other than an entitlement trust, special, or

14 revolving fund account shall revert to the Treasury

15 and be permanently canceled.

16 (2) Except as otherwise provided, the same per17 centage sequestration shall apply to all programs,

18 projects, and activities within a budget account (with

19 programs, projects, and activities as delineated in

20 the appropriation Act or accompanying report for

21 the relevant fiscal year covering that account, or for

22 accounts not included in appropriation Acts, as de23 lineated in the most recently submitted President’s

24 budget).
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1 (3) Administrative regulations or similar ac2 tions implementing a sequestration shall be made

3 within 120 days of the sequestration order. To the

4 extent that formula allocations differ at different

5 levels of budgetary resources within an account, pro6 gram, project, or activity, the sequestration shall be

7 interpreted as producing a lower total appropriation,

8 with that lower appropriation being obligated as

9 though it had been the pre-sequestration appropria10 tion and no sequestration had occurred.

11 (4) Except as otherwise provided, obligations in

12 sequestered direct spending accounts shall be re13 duced in the fiscal year in which a sequestration oc14 curs and in all succeeding fiscal years.

15 (5) If an automatic spending increase is seques16 tered, the increase (in the applicable index) that was

17 disregarded as a result of that sequestration shall

18 not be taken into account in any subsequent fiscal

19 year.

20 (6) Except as otherwise provided, sequestration

21 in accounts for which obligations are indefinite shall

22 be taken in a manner to ensure that obligations in

23 the fiscal year of a sequestration and succeeding fis24 cal years are reduced, from the level that would ac-
34

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1 tually have occurred, by the applicable sequestration

2 percentage.

3 SEC. 304. POINT OF ORDER.

4 (a) IN GENERAL.—It shall not be in order in the

5 House of Representatives or the Senate to consider any

6 bill, joint resolution, amendment, or conference report that

7 includes any provision that has the effect of modifying the

8 application of this title to any entitlement program subject

9 to sequestration or exempt from sequestration under this

10 title.

11 (b) WAIVER OR SUSPENSION.—This section may be

12 waived or suspended in the House of Representatives or

13 the Senate only by the affirmative vote of three-fifths of

14 the Members, duly chosen and sworn.

15 TITLE IV—BALANCED BUDGET

16 BY FISCAL YEAR 2002

17 SEC. 401. REDUCTION OF MAXIMUM DEFICIT AMOUNT TO

18 ZERO.

19 (a) IN GENERAL.—Section 601(a)(1) of the Congres20 sional Budget Act of 1974 is amended to read as follows:

21 ‘‘(1) MAXIMUM DEFICIT AMOUNT.—The term

22 ‘maximum deficit amount’ means—

23 ‘‘(A) with respect to fiscal year 1996,

24 $145,000,000,000;
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1 ‘‘(B) with respect to fiscal year 1997,

2 $120,000,000,000;

3 ‘‘(C) with respect to fiscal year 1998,

4 $97,000,000,000;

5 ‘‘(D) with respect to fiscal year 1999,

6 $72,000,000,000;

7 ‘‘(E) with respect to fiscal year 2000,

8 $48,000,000,000;

9 ‘‘(F) with respect to fiscal year 2001,

10 $24,000,000,000; and

11 ‘‘(G) with respect to fiscal year 2002 and

12 fiscal years thereafter, zero.’’.

13 (b) RESTORATION OF FIXED MAXIMUM DEFICIT

14 AMOUNTS.—Section 253(g) of the Balanced Budget and

15 Emergency Deficit Control Act is amended by striking

16 paragraph (1)(B).

17 SEC. 402. MAXIMUM DEFICIT AMOUNT POINT OF ORDER.

18 (a) MDA POINT OF ORDER.—Section 605(b) of the

19 Congressional Budget Act of 1974 is amended to read as

20 follows:

21 ‘‘(b) MAXIMUM DEFICIT POINT OF ORDER.—

22 ‘‘(1) IN GENERAL.—It shall not be in order in

23 the House of Representatives or the Senate to con24 sider any bill, joint resolution, amendment, or con25 ference report that includes any provision that would
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1 result in a deficit for a fiscal year that exceeds the

2 maximum deficit amount for such fiscal year.

3 ‘‘(2) WAIVER OR SUSPENSION.—This subsection

4 may be waived or suspended in the House of Rep5 resentatives or the Senate only by the affirmative

6 vote of three-fifths of the Members, duly chosen and

7 sworn.’’.

8 (b) LIMIT ON PUBLIC DEBT.—Section 605 of the

9 Congressional Budget Act of 1974 is amended by adding

10 at the end thereof the following:

11 ‘‘(c) LIMIT ON PUBLIC DEBT.—

12 ‘‘(1) IN GENERAL.—It shall not be in order in

13 the House of Representatives or the Senate to con14 sider any bill, joint resolution, amendment, or con15 ference report that includes any provision that in16 creases the national debt held by the public estab17 lished in the joint resolution on the budget for a fis18 cal year in excess of the limit on public debt estab19 lished by the joint resolution for such fiscal year.

20 ‘‘(2) WAIVER OR SUSPENSION.—This subsection

21 may be waived or suspended in the House of Rep22 resentatives or the Senate only by the affirmative

23 vote of three-fifths of the Members, duly chosen and

24 sworn.’’.

25 (c) SOCIAL SECURITY.—
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1 (1) EXCLUSION FROM BUDGET.—Section

2 13301(a) of the Budget Enforcement Act of 1990 is

3 amended by adding at the end thereof the following:

4 ‘‘This subsection shall apply to fiscal years begin5 ning with fiscal year 2003.’’.

6 (2) EXCLUSION FROM CONGRESSIONAL BUDG7 ET.—The last sentence of section 301(a) of the Con8 gressional Budget Act of 1974 is amended by strik9 ing ‘‘The’’ and inserting ‘‘Effective with respect to

10 fiscal years beginning with fiscal year 2003, the’’.

11 (3) SOCIAL SECURITY ACT.—Section 710(a) of

12 the Social Security Act is amended by adding at the

13 end thereof the following: ‘‘This subsection shall

14 apply to fiscal years beginning with fiscal year

15 2003.’’.

16 SEC. 403. SOCIAL SECURITY FIREWALL.

17 (a) POINT OF ORDER.—Section 301(i) of the Con18 gressional Budget Act of 1974 is amended to read as fol19 lows:

20 ‘‘(i) SOCIAL SECURITY POINT OF ORDER.—It shall

21 not be in order in the Senate or the House of Representa22 tives to consider any joint resolution on the budget that

23 would decrease the excess of social security revenues over

24 social security outlays in any of the fiscal years covered

25 by the joint resolution. No change in chapter 1 of the In-
38

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1 ternal Revenue Code of 1986 shall be treated as affecting

2 the amount of social security revenues unless such provi3 sion changes the income tax treatment of social security

4 benefits.’’.

5 (b) BALANCING THE UNIFIED BUDGET.—Section

6 601(a)(1) of the Congressional Budget Act of 1974, as

7 amended by section 401(a) of this Act, is amended by add8 ing at the end thereof the following:

9 ‘‘For fiscal years after fiscal year 2002, the maxi10 mum deficit amount shall be set at zero for each fis11 cal year in the joint resolution on the budget.’’.

12 (c) ELIMINATION OF SOCIAL SECURITY DEFICIT.—

13 Not later than October 1, 2002, Congress may adopt

14 budget procedures for the elimination of the non-Social

15 Security deficit by not later than September 30, 2007. The

16 non-Social Security deficit shall be defined as the Federal

17 budget deficit excluding the receipts and outlays of the

18 Social Security Trust Fund.

19 SEC. 404. DISCRETIONARY SPENDING CAPS.

20 Section 601(a)(2) of the Congressional Budget Act

21 of 1974 is amended—

22 (1) in subparagraph (E) by striking ‘‘and’’

23 after the semicolon; and

24 (2) by striking subparagraph (F) and inserting

25 the following:
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1 ‘‘(F) with respect to fiscal year 1996, for

2 the discretionary category, $514,344,000,000 in

3 new budget authority and $547,279,000,000 in

4 outlays;

5 ‘‘(G) with respect to fiscal year 1997, for

6 the discretionary category, $522,555,000,000 in

7 new budget authority and $544,147,000,000 in

8 outlays; and

9 ‘‘(H) for each of the fiscal years 1998,

10 1999, 2000, 2001, and 2002 $524,592,000,000

11 in new budget authority and $542,379,000,000

12 in outlays.’’.

13 SEC. 405. LOOK-BACK SEQUESTER.

14 Section 253 of the Balanced Budget and Emergency

15 Deficit Control Act of 1985 is amended by adding at the

16 end thereof the following new subsection:

17 ‘‘(i) LOOK-BACK SEQUESTER.—

18 ‘‘(1) IN GENERAL.—On July 1 of each fiscal

19 year, the Director of OMB shall determine if laws

20 effective during the current fiscal year will cause the

21 deficit to exceed the maximum deficit amount for

22 such fiscal year. If the limit is exceeded, there shall

23 be a preliminary sequester on July 1 to eliminate the

24 excess.
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1 ‘‘(2) PERMANENT SEQUESTER.—Budget au2 thority sequestered on July 1 pursuant to paragraph

3 (1) shall be permanently canceled on July 15.

4 ‘‘(3) NO MARGIN.—The margin for determining

5 a sequester under this subsection shall be zero.

6 ‘‘(4) SEQUESTRATION PROCEDURES.—The pro7 vision of subsections (c), (d), and (e) of this section

8 shall apply to a sequester under this subsection.’’.

9 SEC. 406. SAVINGS PROVISION.

10 The amendments made by this title, the limits estab11 lished by this title, and the procedures provided in Acts

12 amended by this title necessary to enforce such limits shall

13 apply with respect to fiscal years beginning with fiscal

14 year 1996 and shall continue notwithstanding the termi15 nation of any Act setting forth such procedures.

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