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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2293 Introduced in House (IH)]

106th CONGRESS
  1st Session
                                H. R. 2293

                     To reform the budget process.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             June 22, 1999

   Mr. Barton of Texas (for himself and Mr. Stenholm) introduced the 
following bill; which was referred to the Committee on the Budget, and 
   in addition to the Committees on Rules, and Appropriations, for a 
 period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL

 
                     To reform the budget process.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Budget Enforcement 
Act of 1999''.
    (b) Table of Contents.--

Sec. 1. Short title and table of contents.
Sec. 2. Definitions.
       TITLE I--A SINGLE BUDGET FOR THE UNITED STATES GOVERNMENT

Sec. 101. Statement of purpose.
Sec. 102. Safeguards against delay.
Sec. 103. Binding budget law.
Sec. 104. Budget required before spending bills may be considered.
Sec. 105. Lock box amendment.
Sec. 106. Technical amendments.
Sec. 107. Timetable.
Sec. 108. Procedures to avoid sequestration.
Sec. 109. Effect on Presidents' budget submissions; point of order.
Sec. 110. Direct Spending Caps.
Sec. 111. Economic assumptions.
Sec. 112. Revisions to the caps for entitlements and other mandatory 
                            spending.
                    TITLE II--ENFORCEMENT PROVISIONS

Sec. 201. Reporting excess spending.
Sec. 202. Enforcing direct spending caps.
Sec. 203. Sequestration rules.
Sec. 204. Exempt programs and activities.
Sec. 205. Special rules.
Sec. 206. The current law baseline.
Sec. 207. Limitations on emergency spending.
Sec. 208. Ten-year congressional review requirement of permanent budget 
                            authority.

SEC. 2. DEFINITIONS.

    For purposes of this Act:
            (1) Eligible population.--The term ``eligible population'' 
        shall mean those individuals to whom the United States is 
        obligated to make a payment under the provisions of a law 
        creating entitlement authority. Such term shall not include 
        States, localities, corporations or other nonliving entities.
            (2) Sequester and sequestration.--The terms ``sequester'' 
        and ``sequestration'' refer to or mean the cancellation of 
        budgetary resources provided by discretionary appropriations or 
        direct spending law.
            (3) Breach.--The term ``breach'' means, for any fiscal 
        year, the amount (if any) by which outlays for that year 
        (within a category of direct spending) is above that category's 
        direct spending cap for that year.
            (4) Baseline.--The term ``baseline'' means the projection 
        (described in section 206) of current levels of new budget 
        authority, outlays, receipts, and the surplus or deficit into 
        the budget year and the outyears.
            (5) Budgetary resources.--The term ``budgetary resources'' 
        means new budget authority, unobligated balances, direct 
        spending authority, and obligation limitations.
            (6) Discretionary appropriations.--The term ``discretionary 
        appropriations'' means budgetary resources (except to fund 
        direct spending programs) provided in appropriation Acts. If an 
        appropriation Act alters the level of direct spending or 
        offsetting collections, that effect shall be treated as direct 
        spending. Classifications of new accounts or activities and 
        changes in classifications shall be made in consultation with 
        the Committees on Appropriations and the Budget of the House of 
        Representatives and the Senate and with CBO and OMB.
            (7) Direct spending.--The term ``direct spending'' means--
                    (A) budget authority provided by law other than 
                appropriation Acts, including entitlement authority;
                    (B) entitlement authority; and
                    (C) the food stamp program.
        If a law other than an appropriation Act alters the level of 
        discretionary appropriations or offsetting collections, that 
        effect shall be treated as direct spending.
            (8) Entitlement authority.--The term ``entitlement 
        authority'' means authority (whether temporary or permanent) to 
        make payments (including loans and grants), the budget 
        authority for which is not provided for in advance by 
        appropriation Acts, to any person or government if, under the 
        provisions of the law containing such authority, the United 
        States is obligated to make such payments to persons or 
        governments who meet the requirements established by such law.
            (9) Current.--The term ``current'' means, with respect to 
        OMB estimates included with a budget submission under section 
        1105(a) of title 31, United States Code, the estimates 
        consistent with the economic and technical assumptions 
underlying that budget.
            (10) Account.--The term ``account'' means an item for which 
        there is a designated budget account designation number in the 
        President's budget.
            (11) Budget year.--The term ``budget year'' means the 
        fiscal year of the Government that starts on the next October 
        1.
            (12) Current year.--The term ``current year'' means, with 
        respect to a budget year, the fiscal year that immediately 
        precedes that budget year.
            (13) Outyear.--The term ``outyear'' means, with respect to 
        a budget year, any of the fiscal years that follow the budget 
        year.
            (14) OMB.--The term ``OMB'' means the Director of the 
        Office of Management and Budget.
            (15) CBO.--The term ``CBO'' means the Director of the 
        Congressional Budget Office.
            (16) Budget outlays and outlays.--The terms ``budget 
        outlays'' and ``outlays'' mean, with respect to any fiscal 
        year, expenditures of funds under budget authority during such 
        year.
            (17) Budget authority and new budget authority.--The terms 
        ``budget authority'' and ``new budget authority'' have the 
        meanings given to them in section 3 of the Congressional Budget 
        and Impoundment Control Act of 1974.
            (18) Appropriation act.--The term ``appropriation Act'' 
        means an Act referred to in section 105 of title 1, United 
        States Code.
            (19) Deficit.--The term ``deficit'' means, with respect to 
        a fiscal year, the amount by which total outlays exceed total 
        receipts during that year.
            (20) Surplus.--The term ``surplus'' means, with respect to 
        a fiscal year, the amount by which total receipts exceed total 
        outlays during that year.
            (21) Direct spending caps.--The term ``direct spending 
        caps'' means the nominal dollar limits for entitlements and 
        other mandatory spending pursuant to section 110, as adjusted 
        pursuant to section 112.

       TITLE I--A SINGLE BUDGET FOR THE UNITED STATES GOVERNMENT

SEC. 101. STATEMENT OF PURPOSE.

    (a) The Federal budget process is the principal vehicle by which 
many of the most fundamental policy choices in Government are made. The 
purpose of this Act is to facilitate rational, informed, and timely 
decisions and to enforce the expenditure levels contained in the 
budget.
    (b) The Federal budget process should focus attention on the 
aggregate impact of Federal fiscal policy on the economy, on public 
priorities, and on the tradeoffs that must be made among priorities to 
control overall levels of spending. To this end the Act is intended to 
establish a budget process that, in each fiscal period--
            (1) requires adoption of a budget before Congress considers 
        expenditures for individual programs, activities and functions 
        of government;
            (2) encourages agreement between Congress and the 
        President, with regard to broad fiscal policy objectives and 
        the allocation of public resources among broad categories of 
        expenditure;
            (3) ties subsequent spending decisions to binding budget 
        limits;
            (4) holds Congress and the President accountable for 
        expenditure limits contained in the budget until and unless 
        they change the law to change the limits; and
            (5) produces a bias in favor of fiscal responsibility that 
        can be overcome only if Congress and the President act 
        constructively to do so.

SEC. 102. SAFEGUARDS AGAINST DELAY.

    (a) To avoid temporary shutdowns of the Federal Government, chapter 
13 of title 31, United States Code, is amended by inserting after 
section 1310 the following new section:
``Sec. 1311. Automatic continuing resolution
    ``(a) If any appropriation Act as defined in section 105 of title 1 
has not become law by the beginning of a fiscal period, the automatic 
continuing resolution provided for in this section shall take effect 
immediately. The automatic continuing resolution shall remain in effect 
for the entirety of the fiscal period, unless amended in whole or in 
part, by enactment of an appropriation Act or Acts. If the automatic 
continuing resolution shall take effect, then there is hereby 
appropriated out of any moneys in the Treasury not otherwise 
appropriated, an amount equal to 95 percent of budget authority for 
each program, project or activity regularly provided for under that 
appropriation bill in the most recent fiscal period. In no case shall 
the total dollar amount of appropriations for any program, project or 
activity pursuant to an automatic continuing resolution exceed 95 
percent of the fixed dollar appropriation for such program, project or 
activity in the most recent appropriation Act, determined on a fiscal 
year basis. Budget authority and outlays provided subject to any 
automatic continuing resolution shall be subject to all expenditure 
limits and enforcement provisions contained in all laws in effect for 
the fiscal period.
    ``(b) Any automatic continuing resolution enacted pursuant to this 
section shall be subject to the same apportionment and other rules as 
apply to any other continuing resolution making appropriations.''.

SEC. 103. BINDING BUDGET LAW.

    (a) To encourage early consultation and cooperation between 
Congress and the President on decisions concerning overall spending 
levels for all Federal programs, projects, and activities and to 
provide for one budget for the Government of the United States, 
Congress shall enact, and the President shall sign, a binding budget 
law, in the form of a joint resolution, by May 15 of the calendar year 
in which the beginning of a new fiscal period commences. The budget law 
shall fit on one page. It shall set--
            (1) budget authority and outlays for the major functional 
        categories for the budget year and 5 subsequent years, except 
        for disbursements of the old age, survivors, and disability 
        insurance program established under title II of the Social 
        Security Act;
            (2) annual limits for budget authority an outlays for 
        discretionary and mandatory programs, activities, and accounts, 
        with the exception of social security program disbursements and 
        interest, for the budget year and 5 subsequent years;
            (3) appropriate levels for receipts and surpluses or 
        deficits for the budget year and 5 subsequent years, not 
        including receipts and disbursements of the old age, survivors, 
        and disability insurance program established under title II of 
        the Social Security Act and related provisions of the Internal 
        Revenue Code of 1986;
            (4) nonsocial security budget totals for the budget year 
        and for 5 subsequent years, including--
                    (A) budget authority and outlays;
                    (B) receipts; and
                    (C) surpluses, deficits, debt held by the public; 
                debt subject to limitation, and changes in debt subject 
                to limitation;
            (5) for Social Security, which is by law ``off-budget'', 
        the budget shall identify separately annual estimates for 
        disbursements, receipts, and surpluses or deficits for the 
        budget year, and for 5 subsequent years; and
            (6) unified budget totals for the budget year and for 5 
        subsequent years for budget authority and outlays; receipts; 
        and surpluses or deficits.
    (b) The expenditure limits contained in the one-page budget 
pursuant to this section shall include direct spending caps pursuant to 
section 110 of this Act and discretionary spending limits pursuant to 
the most recently enacted legislation containing statutory spending 
limits. If the one-page budget changes any expenditure limit for any 
year, contained in any law in force for the fiscal period covered by 
that budget, any Member of the House or Senate may, as a matter of the 
highest privilege, demand a separate vote on the question of whether to 
change the limit.

SEC. 104. BUDGET REQUIRED BEFORE SPENDING BILLS MAY BE CONSIDERED.

    (a) Section 303 of the Congressional Budget Act of 1974 is amended 
by striking ``concurrent resolution on the budget'' and inserting 
``joint budget resolution enacted pursuant to section 103 of the Budget 
Enforcement Act of 1999'' wherever it appears.
    (b) Section 303 of the Congressional Budget Act of 1974 is amended 
by striking subsections (b) and (c) and inserting the following new 
subsection:
    ``(b) Exception.--Consideration in the House or the Senate of any 
bill, resolution, amendment or conference report making available 
budget authority, entitlement authority, direct spending authority, 
contract authority, direct or guaranteed lending authority effective in 
that fiscal period in the absence of an enacted joint budget resolution 
shall only be in order upon a two-thirds vote of the Members voting, a 
quorum being present, to waive subsection (a).

SEC. 105. LOCK BOX AMENDMENT.

    Notwithstanding any other law or any rule of the House of 
Representatives or the Senate, it shall always be in order to offer an 
amendment to a bill providing discretionary budget authority or budget 
outlays that would--
            (1) only reduce such budget authority or budget outlays; 
        and
            (2) reduce the appropriate caps in the most recently 
        enacted joint budget resolution for such budget authority or 
        budget outlays by an amount less than or equal to the amount of 
        the reduction in the amendment.

SEC. 106. TECHNICAL AMENDMENTS.

    The Congressional Budget Act of 1974, the Rules of the House of 
Representatives, the Standing Rules of the United States, and the 
Balanced Budget and Emergency Deficit Control Act of 1985 are amended 
by striking ``concurrent resolution on the budget'' and inserting 
``joint resolution on the budget'', by striking ``concurrent 
resolutions on the budget'' and inserting ``joint resolutions on the 
budget'', by striking ``concurrent resolution'' or ``concurrent 
resolutions'' (if the reference is to a budget resolution) and 
inserting ``joint resolution'' or ``joint resolutions'', as the case 
may be.

SEC. 107. TIMETABLE.

On or before:                       Action to be completed:
    January 15.....................
                                        CBO economic and budget update.
    First Monday in February.......
                                        President's budget update based 
                                                on new assumptions.
    April l5.......................
                                        House and Senate complete 
                                                action on the Budget.
    May l0.........................
                                        House and Senate complete 
                                                action on the 
                                                Conference Agreement on 
                                                the Budget.
    May l5.........................
                                        President signs or vetos the 
                                                Conference Agreement on 
                                                the Budget.
    August l.......................
                                        CBO and OMB updates.
    August l5......................
                                        Preview report.
    Not later than November 1 (and 
        as soon as practical after 
        the end of the fiscal 
        year).
                                        OMB and CBO Analyses of 
                                                Deficits, Revenues and 
                                                Spending Levels and 
                                                Projections for the 
                                                Upcoming Year.
    November 1-December l5.........
                                        Congressional action to avoid 
                                                sequestration.
    December 15....................
                                        OMB issues final (look back) 
                                                report for prior year 
                                                and preview for current 
                                                year.
    December 15....................
                                        Presidential sequester order or 
                                                order.

SEC. 108. PROCEDURES TO AVOID SEQUESTRATION.

    (a) Special Message.--If the OMB Analysis of Actual Spending Levels 
and Projections for the Upcoming Year, issued pursuant to section 201, 
indicates that outlays in the most recently completed fiscal year 
exceeded, or outlays in the current year are projected to exceed, the 
caps in section 110, as adjusted pursuant to section 112, the President 
shall submit to Congress with the OMB Analysis of Actual Spending 
Levels and Projections for the Upcoming Year a special message that 
includes proposed legislative changes to--
            (1) offset all or part of outlay excess; or
            (2) revise the outlay caps contained in this Act.
    (b) Introduction of the President's Package.--Not later than 
November 15, the message from the President required pursuant to 
subsection (a) shall be introduced as a joint resolution in the House 
of Representatives or the Senate by the chairman of its Committee on 
the Budget. If the chairman fails to do so, after November 15, the 
joint resolution may be introduced by any Member of that House of 
Congress and shall be referred to the Committee on the Budget of that 
House.
    (c) House Committee Action.--The Committee on the Budget, in 
consultation with the committees of jurisdiction, shall, by November 
15, report a joint resolution containing--
            (1) the recommendations in the President's message, or 
        different policies and proposed legislative changes than those 
        contained in the message of the President, to ameliorate or 
        eliminate any excess expenditures, or
            (2) any changes to expenditure caps contained in this Act, 
        except that any changes to the expenditure caps cannot be 
        greater than the changes recommended in the message submitted 
        by the President.
    (d) Procedure if the Appropriate Committee of the House of 
Representatives Fails To Report Required Resolution.--
            (1) Automatic discharge of committees on the budget of the 
        house.--If the Committee on the Budget of the House of 
        Representatives fails, by November 20, to report a resolution 
        meeting the requirements of subsection (c), the committee shall 
        be automatically discharged from further consideration of the 
        joint resolution reflecting the President's recommendations 
        introduced pursuant to subsection (a), and the joint resolution 
        shall be placed on the appropriate calendar.
            (2) Consideration of discharge resolution in the house.--If 
        the Committee has been discharged under paragraph (1) above, 
        any Member may move that the House of Representatives consider 
        the resolution. Such motion shall be highly privileged and not 
        debatable. It shall not be in order to consider any amendment 
        to the resolution except amendments which are germane and which 
        do not change the net outlay impact of the resolution.
    (e) Consideration of Joint Resolutions in the House.--Consideration 
of resolutions reported pursuant to subsection (c) or (d) shall be 
pursuant to the procedures set forth in section 305 of the 
Congressional Budget Act of 1974 and subsection (d). Notwithstanding 
subsection (d) and any other rule or order of the House of 
Representatives or the Senate, it shall be in order to consider 
amendments to ameliorate any excess spending through different policies 
and proposed legislation and which do not change the net outlay impact 
of the resolution.
    (f) Transmittal to Senate.--If a joint resolution passes the House 
of Representatives pursuant to subsection (e), the Clerk of the House 
of Representatives shall cause the resolution to be engrossed, 
certified, and transmitted to the Senate within 1 calendar day of the 
day on which the resolution is passed. The resolution shall be referred 
to the Senate Committee on the Budget.
    (g) Requirements for Special Joint Resolution in the Senate.--The 
Committee on the Budget, in consultation with the committees of 
jurisdiction shall report not later than December 1--
            (1) a joint resolution reflecting the message of the 
        President; or
            (2) the joint resolution passed by the House of 
        Representatives, with or without amendment; or
            (3) a joint resolution containing different policies and 
        proposed legislative changes than those contained in either the 
        message of the President or the resolution passed by the House 
        of Representatives, to eliminate all or part of any excess 
        expenditures, or
            (4) any changes to the expenditure caps contained in this 
        Act, except that any changes to the expenditure caps cannot be 
        greater than the changes recommended in the message submitted 
        by the President.
    (h) Procedure if the Appropriate Committee of the Senate Fails To 
Report Required Resolution.--(1) In the event that the Committee on the 
Budget of the Senate fails, by December 1, to report a resolution 
meeting the requirements of subsection (g), the committee shall be 
automatically discharged from further consideration of the joint 
resolution reflecting the President's recommendations introduced 
pursuant to subsection (a) and of the resolution passed by the House of 
Representatives, and both joint resolutions shall be placed on the 
appropriate calendar.
    (2) Any member may move that the Senate consider the resolution 
passed by the House of Representatives or the resolution introduced 
pursuant to subsection (b).
    (i) Consideration of Joint Resolution in the Senate.--Consideration 
of resolutions reported pursuant to subsections (c) or (d) shall be 
pursuant to the procedures set forth in section 305 of the 
Congressional Budget Act of 1974 and subsection (d).
    (j) Procedure if Joint Resolution Does Not Eliminate Excess.--If 
the joint resolution reported by the Committee on the Budget pursuant 
to subsection (c) or (g) or a joint resolution discharged in the House 
of Representatives or the Senate pursuant to subsection (d)(1) or (h) 
would eliminate less than the entire amount by which actual or 
projected outlays exceed the caps contained in this Act;
then the Committee on the Budget of the Senate shall report a joint 
resolution, raising the outlay caps, for any year in which actual or 
projected spending would not conform to the expenditure caps in section 
110.
    (k)  Conference Reports Shall Fully Address Excess.--It shall not 
be in order in the House of Representatives or the Senate to consider a 
conference report on a joint resolution to eliminate all or part of any 
excess outlays compared to the expenditure caps contained in section 
110, unless--
            (1) the joint resolution offsets the entire amount of any 
        overage; or
            (2) the House of Representatives and Senate both pass the 
        joint resolution reported pursuant to subsection (j).
The vote on any resolution reported pursuant to subsection (j) shall be 
solely on the subject of changing the expenditure limits in section 
110.

SEC. 109. EFFECT ON PRESIDENTS' BUDGET SUBMISSIONS; POINT OF ORDER.

    (a) Budget Submission.--Any budget submitted by the President 
pursuant to section 1105(a) of title 31, United States Code, for each 
of fiscal years 1999 through 2003 shall be consistent with the spending 
levels established in section 110, as adjusted pursuant to section 112, 
or it shall recommend changes to those levels.
    (b) Point of Order.--It shall not be in order in the House of 
Representatives or the Senate to consider any concurrent resolution on 
the budget unless it is consistent with the spending levels established 
in section 110, as adjusted pursuant to section 112.

SEC. 110. DIRECT SPENDING CAPS.

    (a) In General.--Effective upon submission of the report by OMB 
pursuant to subsection (c), direct spending caps shall apply to all 
entitlement authority except for undistributed offsetting receipts and 
net interest outlays, subject to adjustments for changes in eligible 
populations and inflation pursuant to section 112. For purposes of 
enforcing direct spending caps under this Act, each separate program 
shown in the table set forth in subsection (d) shall be deemed to be a 
category.
    (b) Budget Committee Reports.--Within 30 days after enactment of 
this Act, the Budget Committees of the House of Representatives and the 
Senate shall file with their respective Houses identical reports 
containing account numbers and spending levels for each specific 
category.
    (c) Report by OMB.--Within 30 days after enactment of this Act, OMB 
shall submit to the President and each House of Congress a report 
identical to the reports in subsection (b) containing account numbers 
and spending limits for each specific category.
    (d) Contents of Reports.--All direct spending accounts not included 
in these reports under separate categories shall be included under the 
heading ``Other Entitlements and Mandatory Spending''. These reports 
may include adjustments among the caps set forth in this Act as 
required below, however the aggregate amount available under the 
``Total Entitlements and Other Mandatory Spending'' cap shall be 
identical in each such report and in this Act and shall be deemed to 
have been adopted as part of this Act. Each such report shall include 
the actual amounts of the caps for each year of fiscal years 2001 
through 2006 consistent with the concurrent resolution on the budget 
for fiscal year 1999 for each of the following categories:
            Earned Income Tax Credit,
            Family Support,
            Civilian and other Federal retirement:
                    Military retirement,
            Food stamps,
            Medicaid,
            Medicare,
            Social Security,
            Supplemental security income,
            Unemployment compensation,
            Veterans' benefits,
            Other entitlements and mandatory spending, and
            Aggregate entitlements and other mandatory spending.
    (e) Additional Spending Limits.--Legislation enacted subsequent to 
this Act may include additional caps to limit spending for specific 
programs, activities, or accounts with these categories. Those 
additional caps (if any) shall be enforced in the same manner as the 
limits set forth in such joint explanatory statement.

SEC. 111. ECONOMIC ASSUMPTIONS.

    Subject to periodic reestimation based on changed economic 
conditions or changes in eligible population, determinations of the 
direct spending caps under section 110, any breaches of such caps, and 
actions necessary to remedy such breaches shall be based upon the 
economic assumptions set forth in the joint explanatory statement of 
managers accompanying the most recently enacted joint resolution on the 
budget. At the same time as the submission of the report by OMB 
pursuant to section 110(c), OMB shall submit to the President and 
Congress a report setting forth the economic assumptions in the joint 
explanatory statement of managers accompanying the joint resolution on 
the budget for fiscal year 2001 and the assumptions regarding eligible 
populations used in preparing the report submitted pursuant to section 
110(c).

SEC. 112. REVISIONS TO THE CAPS FOR ENTITLEMENTS AND OTHER MANDATORY 
              SPENDING.

    (a) Automatic Adjustments to Caps for Entitlements and Other 
Mandatory Spending.--When the President submits the budget under 
section 1105(a) of title 31, United States Code, and upon submission of 
the OMB report pursuant to section 201(a) for any year, OMB shall 
calculate (in the order set forth below), and the budget and reports 
shall include, adjustments to the direct spending caps (and those 
limits as cumulatively adjusted) for the current year, the budget year, 
and each outyear, to reflect the following:
            (1) Adjustments to direct spending caps.--
                    (A) Changes in concepts and definitions.--The 
                adjustments produced by changes in concepts and 
                definitions shall equal the baseline levels of new 
                budget authority and outlays using up-to-date concepts 
                and definitions minus those levels using the concepts 
                and definitions in effect before such changes. Such 
                changes in concepts and definitions may only be made in 
                consultation with the Committees on Appropriations, the 
                Budget, and Government Reform and Oversight and 
                Governmental Affairs of the House of Representatives 
                and the Senate.
                    (B) Changes in net outlays.--Changes in net outlays 
                for all programs and activities exempt from 
                sequestration under section 204.
                    (C) Changes in inflation.--For direct spending 
                under laws and policies enacted or effective on or 
                before July 1, 2000, inflation adjustment factors shall 
                equal the ratio between the level of year-over-year 
                change in the Consumer Price Index measured for the 
                fiscal year most recently completed and the applicable 
                estimated level for that year as described in section 
                111 (relating to economic assumptions). For direct 
                spending under laws and policies enacted or effective 
                after July 1, 2000, there shall be no adjustment to the 
                direct spending caps (for changes in economic 
                conditions including inflation, nor for changes in 
                numbers of eligible beneficiaries) unless--
                            (i) the Act or the joint explanatory 
                        statement of managers accompanying such Act 
                        providing new direct spending includes economic 
                        projections and projections of numbers of 
                        beneficiaries; and
                            (ii) such Act specifically provides for 
                        automatic adjustments to the direct spending 
                        caps in section 110 based on those projections.
                    (D) Changes in eligible populations.--For direct 
                spending under laws and policies enacted or effective 
                on or before July 1, 2000, the direct spending caps 
                shall be adjusted to reflect changes in eligible 
                populations, based on the assumptions set forth in the 
                OMB report submitted pursuant to section 111. In 
making such adjustments, OMB shall estimate the changes in spending 
resulting from the change in eligible populations. For direct spending 
under laws and policies enacted or effective after July 1, 1998, there 
shall be no adjustment to the direct spending caps for changes in 
numbers of eligible beneficiaries unless--
                            (i) the Act or the joint explanatory 
                        statement of managers accompanying such Act 
                        providing new direct spending includes economic 
                        projections and projections of numbers of 
                        beneficiaries; and
                            (ii) such Act specifically provides for 
                        automatic adjustments to the direct spending 
                        caps in section 110 based on those projections.
                    (E) Intra-budgetary payments.--From discretionary 
                accounts to mandatory accounts. The baseline and the 
                discretionary spending caps shall be adjusted to 
                reflect those changes.
    (b) Permissible Revisions to Direct Spending Caps.--Direct spending 
caps as enacted pursuant to section 110 may be revised as follows: 
Except as required pursuant to subsection (a), direct spending caps may 
only be adjusted by recorded vote. It shall be a matter of highest 
privilege in the House of Representatives and the Senate for a Member 
of the House of Representatives or the Senate to insist on a recorded 
vote solely on the question of amending such caps. It shall not be in 
order for the Committee on Rules of the House of Representatives to 
report a resolution waiving the provisions of this subsection. This 
subsection may be waived in the Senate only by an affirmative vote of 
three-fifths of the Members duly chosen and sworn.

                    TITLE II--ENFORCEMENT PROVISIONS

SEC. 201. REPORTING EXCESS SPENDING.

    (a) Analysis of Actual Deficit, Revenue, and Spending Levels.--As 
soon as practicable after any fiscal year, OMB shall compile a 
statement of actual and projected deficits, revenues, and direct 
spending for that year and the current fiscal year. The statement shall 
identify such spending by categories contained in section 110.
    (b) Estimate of Necessary Spending Reduction.--Based on the 
statement provided under subsection (a), the OMB shall issue a report 
to the President and the Congress on December 15 of any year in which 
such statement identifies actual or projected deficits, revenues, or 
spending in the current or immediately preceding fiscal years in 
violation of the direct spending caps in section 110, as adjusted 
pursuant to section 112, by more than one-tenth of one percent of the 
applicable direct spending for such year. The report shall include:
            (1) The amount, if any, that total direct spending 
        exceeded, or is projected to exceed, the aggregate direct 
        spending cap in section 110, as adjusted pursuant to section 
        112.
            (2) All instances in which actual direct spending has 
        exceeded the applicable direct spending cap.
            (3) The difference between the amount of spending available 
        under the direct spending caps for the current year and 
        estimated actual spending for the categories associated with 
        such caps.
            (4) The amounts by which direct spending shall be reduced 
        in the current fiscal year to offset the net amount that actual 
        direct spending in the preceding fiscal year and projected 
        direct spending in the current fiscal year exceeds the amounts 
        available for each cap category.

SEC. 202. ENFORCING DIRECT SPENDING CAPS.

    (a) Purpose.--This subtitle provides enforcement of the direct 
spending caps on categories of spending established pursuant to section 
110. This section shall apply for any fiscal year in which the 
statement provided under section 201 identifies actual direct spending 
in the preceding fiscal year or projected direct spending in the 
current year in excess of the aggregate direct spending cap, as 
adjusted pursuant to section 112.
    (b) General Rules.--
            (1) Eliminating a breach.--Each non-exempt account within a 
        category shall be reduced by a dollar amount calculated by 
        multiplying the baseline level of sequestrable budgetary 
        resources in that account at that time by the uniform 
        percentage necessary to eliminate a breach within that 
        category.
            (2) Programs, projects, or activities.--Except as otherwise 
        provided, the same percentage sequestration shall apply to all 
        programs, projects and activities within a budget account.
            (3) Indefinite authority.--Except as otherwise provided, 
        sequestration in accounts for which obligations are indefinite 
        shall be taken in a manner to ensure that obligations in the 
        fiscal year of a sequestration and succeeding fiscal years are 
        reduced, from the level that would actually have occurred, by 
        the applicable sequestration percentage or percentages.
            (4) Cancellation of budgetary resources.--Budgetary 
        resources sequestered from any account other than a trust, 
        special or revolving fund shall revert to the Treasury and be 
permanently canceled.
            (5) Implementing regulations.--Notwithstanding any other 
        provision of law, administrative rules or similar actions 
        implementing any sequestration shall take effect within 30 days 
        after that sequestration.

SEC. 203. SEQUESTRATION RULES.

    (a) General Rules.--For programs subject to direct spending caps:
            (1) Triggering of Sequestration.--Sequestration is 
        triggered if total direct spending subject to the caps in the 
        preceding fiscal year and projected direct spending subject to 
        the caps in the current fiscal year exceeds the total of 
        aggregate caps for direct spending for the current and 
        immediately preceding fiscal year.
            (2) Calculation of reductions.--The amount to be 
        sequestered from direct spending programs under each separate 
        cap shall be determined by multiplying the total amount that 
        direct spending in that category exceeded or is projected to 
        exceed the direct spending cap for that category by--
                    (A) the net amount that total direct spending 
                exceeded, or is projected to exceed, the aggregate 
                spending caps, as identified pursuant to paragraph 
                201(b)(1); multiplied by
                    (B) the net amount that direct spending by which 
                the category exceeded and is projected to exceed the 
                direct spending cap for that category, divided by the 
                net amount that total spending exceeded and is 
                projected to exceed the applicable direct spending cap 
                for all categories in which spending exceeds the 
                applicable direct spending caps.
            (3) Uniform percentages.--In calculating the uniform 
        percentage applicable to the sequestration of all spending 
        programs or activities within each category, or the uniform 
        percentage applicable to the sequestration of nonexempt direct 
        spending programs or activities, the sequestrable base for 
        direct spending programs and activities is the total level of 
        outlays for the fiscal year for those programs or activities in 
        the current law baseline.
            (4) Permanent sequestration of direct spending.--
        Obligations in sequestered direct spending accounts shall be 
        reduced in the fiscal year in which a sequestration occurs and 
        in all succeeding fiscal years. Notwithstanding any other 
        provision of this section, after the first direct spending 
        sequestration, any later sequestration shall reduce direct 
        spending by an amount in addition to, rather than in lieu of, 
        the reduction in direct spending in place under the existing 
        sequestration or sequestrations.
            (5) Special rule.--For any direct spending program in 
        which--
                    (A) outlays pay for entitlement benefits;
                    (B) a current-year sequestration takes effect after 
                the 1st day of the budget year;
                    (C) that delay reduces the amount of entitlement 
                authority that is subject to sequestration in the 
                budget; and
                    (D) the uniform percentage otherwise applicable to 
                the budget-year sequestration of a program or activity 
                is increased due to the delay;
        then the uniform percentage shall revert to the uniform 
        percentage calculated under paragraph (3) when the budget year 
        is completed.
            (6) Indexed benefit payments.--If, under any entitlement 
        program--
                    (A) benefit payments are made to persons or 
                governments more frequently than once a year; and
                    (B) the amount of entitlement authority is 
                periodically adjusted under existing law to reflect 
                changes in a price index (commonly called ``cost of 
                living adjustments'');
        sequestration shall first be applied to the cost of living 
        adjustment before reductions are made to the base benefit. For 
        the first fiscal year to which a sequestration applies, the 
        benefit payment reductions in such programs accomplished by the 
        order shall take effect starting with the payment made at the 
        beginning of January following a final sequester. For the 
        purposes of this subsection, veterans' compensation shall be 
        considered a program that meets the conditions of the preceding 
        sentence.
            (7) Loan programs.--For all loans made, extended, or 
        otherwise modified on or after any sequestration under loan 
        programs subject to direct spending caps--
                    (A) the sequestrable base shall be total fees 
                associated with all loans made, extended or otherwise 
                modified on or after the date of sequestration; and
                    (B) the fees paid by borrowers shall be increased 
                by a uniform percentage sufficient to produce the 
                dollar savings in such loan programs for the fiscal 
                year or years of the sequestrations required by this 
                section.
        Notwithstanding any other provision of law, in any year in 
        which a sequestration is in effect, all subsequent fees shall 
        be increased by the uniform percentage and all proceeds from 
        such fees shall be paid into the general fund of the Treasury.
            (8) Insurance programs.--Any sequestration of a Federal 
        program that sells insurance contracts to the public (including 
        the Federal Crop Insurance Fund, the National Insurance 
        Development Fund, the National Flood Insurance fund, insurance 
        activities of the Overseas Private Insurance Corporation, and 
        Veterans' Life insurance programs) shall be accomplished by 
        increasing premiums on contracts entered into, extended or 
        otherwise modified, after the date a sequestration order takes 
        effect by the uniform sequestration percentage. Notwithstanding 
        any other provision of law, for any year in which a 
        sequestration affecting such programs is in effect, subsequent 
        premiums shall be increased by the uniform percentage and all 
        proceeds from the premium increase shall be paid from the 
        insurance fund or account to the general fund of the Treasury.
            (9) State grant formulas.--For all State grant programs 
        subject to direct spending caps--
                    (A) the total amount of funds available for all 
                States shall be reduced by the amount required to be 
                sequestered; and
                    (B) if States are projected to receive increased 
                funding in the budget year compared to the immediately 
                preceding fiscal year, sequestration shall first be 
                applied to the estimated increases before reductions 
                are made compared to actual payments to States in the 
                previous year--
                            (i) the reductions shall be applied first 
                        to the total estimated increases for all 
                        States; then
                            (ii) the uniform reduction shall be made 
                        from each State's grant; and
                            (iii) the uniform reduction shall apply to 
                        the base funding levels available to states in 
                        the immediately preceding fiscal year only to 
                        the extent necessary to eliminate any remaining 
                        excess over the applicable direct spending cap.
                    (10) Special rule for certain programs.--Except 
                matters exempted under section 205 and programs subject 
                to special rules set forth under section 206 and 
                notwithstanding any other provisions of law, any 
                sequestration required under this Act shall reduce 
                benefit levels by an amount sufficient to eliminate all 
                excess spending identified in the report issued 
                pursuant to section 201, while maintaining the same 
                uniform percentage reduction in the monetary value of 
                benefits subject to reduction under this subsection.
    (b) Within-Session Sequester.--If a bill or resolution providing 
direct spending for the current year is enacted before July 1 of that 
fiscal year and causes a breach within any direct spending cap for that 
fiscal year, 15 days later there shall be a sequestration to eliminate 
that breach within that cap.

SEC. 204. EXEMPT PROGRAMS AND ACTIVITIES.

    The following budget accounts, activities within accounts, or 
income shall be exempt from sequestration--
            (1) net interest;
            (2) all payments to trust funds from excise taxes or other 
        receipts or collections properly creditable to those trust 
        funds;
            (3) offsetting receipts and collections;
            (4) all payments from one Federal direct spending budget 
        account to another Federal budget account;
            (5) all intragovernmental funds including those from which 
        funding is derived primarily from other Government accounts;
            (6) expenses to the extent they result from private 
        donations, bequests, or voluntary contributions to the 
        Government;
            (7) nonbudgetary activities, including but not limited to--
                    (A) credit liquidating and financing accounts;
                    (B) the Pension Benefit Guarantee Corporation Trust 
                Funds;
                    (C) the Thrift Savings Fund;
                    (D) the Federal Reserve System; and
                    (E) appropriations for the District of Columbia to 
                the extent they are appropriations of locally raised 
                funds;
            (8) payments resulting from Government insurance, 
        Government guarantees, or any other form of contingent 
        liability, to the extent those payments result from contractual 
        or other legally binding commitments of the Government at the 
        time of any sequestration;
            (9) the following accounts, which largely fulfill 
        requirements of the Constitution or otherwise make payments to 
        which the Government is committed--
                    Bureau of Indian Affairs, miscellaneous trust 
                funds, tribal trust funds (14-9973-0-7-999);
                    Claims, defense;
                    Claims, judgments and relief act (20-1895-0-1-806);
                    Compact of Free Association, economic assistance 
                pursuant to Public Law 99-658 (14-0415-0-1-806);
                    Compensation of the President (11-0001-0-1-802);
                    Customs Service, miscellaneous permanent 
                appropriations (20-9992-0-2-852);
                    Eastern Indian land claims settlement fund (14-
                2202-0-1-806);
                    Farm Credit System Financial Assistance 
                Corporation, interest payments (20-1850-0-1-351);
                    Internal Revenue collections of Puerto Rico (20-
                5737-0-2-852);
                    Payments of Vietnam and USS Pueblo prisoner-of-war 
                claims (15-0104-0-1-153):
                    Payments to copyright owners (03-5175-0-2-376);
                    Salaries of Article III judges (not including cost 
                of living adjustments);
                    Soldier's and Airman's Home, payment of claims (84-
                8930-0-7-705);
                    Washington Metropolitan Area Transit Authority, 
                interest payments (46-0300-0-1-401);
            (10) the following noncredit special, revolving, or trust-
        revolving funds--
                    Exchange Stabilization Fund (20-4444-0-3-155); and
                    Foreign Military Sales trust fund (11-82232-0-7-
                155).

SEC. 205. SPECIAL RULES.

    (a) Child Support Enforcement Program.--Any sequestration order 
shall accomplish the full amount of any required reduction in payments 
under sections 455 and 458 of the Social Security Act by reducing the 
Federal matching rate for State administrative costs under the program, 
as specified (for the fiscal year involved) in section 455(a) of such 
Act, to the extent necessary to reduce such expenditures by that 
amount.
    (b) Commodity Credit Corporation.--
            (1) Effective date.--For the Commodity Credit Corporation, 
        the date on which a sequestration order takes effect in a 
        fiscal year shall vary for each crop of a commodity. In 
        general, the sequestration order shall take effect when issued, 
        but for each crop of a commodity for which 1-year contracts are 
        issued as an entitlement, the sequestration order shall take 
        effect with the start of the sign-up period for that crop that 
        begins after the sequestration order is issued. Payments for 
        each contract in such a crop shall be reduced under the same 
        terms and conditions.
            (2) Dairy program.--
                    (A) As the sole means of achieving any reduction in 
                outlays under the milk price-support program, the 
                Secretary of Agriculture shall provide for a reduction 
                to be made in the price received by producers for all 
                milk in the United States and marketed by producers for 
                commercial use.
                    (B) That price reduction (measured in cents per 
                hundred-weight of milk marketed) shall occur under 
                subparagraph (A) of section 201(d)(2) of the 
                Agricultural Act of 1949 (7 U.S.C. 1446(d)(2)(A)), 
                shall begin on the day any sequestration order is 
                issued, and shall not exceed the aggregate amount of 
                the reduction in outlays under the milk price-support 
                program, that otherwise would have been achieved by 
                reducing payments made for the purchase of milk or the 
                products of milk under this subsection during that 
                fiscal year.
            (3) Certain authority not to be limited.--Nothing in this 
        Act shall restrict the Corporation in the discharge of its 
        authority and responsibility as a corporation to buy and sell 
        commodities in international trade, or limit or reduce in any 
        way any appropriation that provides the Corporation with funds 
        to cover its realized losses.
    (c) Earned Income Tax Credit.--
            (1) The sequestrable base for earned income tax credit 
        program is the dollar value of all current year benefits to the 
        entire eligible population.
            (2) In the event sequestration is triggered to reduce 
        earned income tax credits, all earned income tax credits shall 
        be reduced, whether or not such credits otherwise would result 
        in cash payments to beneficiaries, by a uniform percentage 
        sufficient to produce the dollar savings required by the 
        sequestration.
    (d) Regular and Extended Unemployment Compensation.--
            (1) A State may reduce each weekly benefit payment made 
        under the regular and extended unemployment benefit programs 
        for any week of unemployment occurring during any period with 
        respect to which payments are reduced under any sequestration 
        order by a percentage not to exceed the percentage by which the 
        Federal payment to the State is to be reduced for such week as 
        a result of such order.
            (2) A reduction by a State in accordance with paragraph (1) 
        shall not be considered as a failure to fulfill the 
        requirements of section 3304(a)(11) of the Internal Revenue 
        Code of 1986.
    (e) Federal Employees Health Benefits Fund.-- For the Federal 
Employees Health Benefits Fund, a sequestration order shall take effect 
with the next open season. The sequestration shall be accomplished by 
annual payments from that Fund to the General Fund of the Treasury. 
Those annual payments shall be financed solely by charging higher 
premiums. The sequestrable base for the Fund is the current-year level 
of gross outlays resulting from claims paid after the sequestration 
order takes effect.
    (f) Federal Housing Finance Board.-- Any sequestration of the 
Federal Housing Board shall be accomplished by annual payments (by the 
end of each fiscal year) from that Board to the general fund of the 
Treasury, in amounts equal to the uniform sequestration percentage for 
that year times the gross obligations of the Board in that year.
    (g) Federal Pay.--
            (1) In general.-- New budget authority to pay Federal 
        personnel from direct spending accounts shall be reduced by the 
        uniform percentage calculated under section 203(c)(3), as 
        applicable, but no sequestration order may reduce or have the 
        effect of reducing the rate of pay to which any individual is 
        entitled under any statutory pay system as increased by any 
        amount payable under section 5304 of title 5, United States 
        Code, or any increase in rates of pay which is scheduled to 
        take effect under section 5303 of title 5, United States Code, 
        section 1109 of title 37, United States Code, or any other 
        provision of law.
            (2) Definitions.--For purposes of this subsection--
                    (A) the term ``statutory pay system'' shall have 
                the meaning given that term in section 5302(1) of title 
                5, United States Code;
                 term ``elements of military pay'' means--
                            (i) the elements of compensation of members 
                        of the uniformed services specified in section 
                        1009 of title 37, United States Code;
                            (ii) allowances provided members of the 
                        uniformed services under sections 403(a) and 
                        405 of such title; and
                            (iii) cadet pay and midshipman pay under 
                        section 203(c) of such title; and
                    (C) the term ``uniformed services'' shall have the 
                same meaning given that term in section 101(3) of title 
                37, United States Code.
    (h) Medicare.--
            (1) In general.--Any sequestration shall accomplish 90 
        percent of the required reduction by reductions in payments for 
        services under title XVIII of the Social Security Act and 10 
        percent of the required reduction through increases in 
        beneficiary premiums under part B of title XVIII of the Social 
        Security Act.
            (2) Timing of application of reductions.--
                    (A) In general.--Except as provided in subparagraph 
                (B), if a reduction is made in payment amounts pursuant 
                to sequestration order, the reduction shall be applied 
                to payment for services furnished after the effective 
                date of the order. For purposes of the previous 
                sentence, in the case of inpatient services furnished 
                for an individual, the services shall be considered to 
                be furnished on the date of the individual's discharge 
                from the inpatient facility.
                    (B) Payment on the basis of cost reporting 
                periods.--In the case in which payment for services of 
                a provider of services is made under title XVIII of the 
                Social Security Act on a basis relating to the 
                reasonable cost incurred for the services during a cost 
                reporting period of the provider, if a reduction is 
                made in payment amounts pursuant to a sequestration 
                order, the reduction shall be applied to payment for 
                costs for such services incurred at any time during 
                each cost reporting period of the provider any part of 
                which occurs after the effective date of order, but 
                only (for each such cost reporting period) in the same 
                proportion as the fraction of the cost reporting period 
                that occurs after the effective date of the order.
            (3) No increase in beneficiary charges in assignment-
        related cases.--If a reduction in payment amounts is made 
        pursuant to a sequestration order for services for which 
        payment under part B of title XVIII of the Social Security Act 
        is made on the basis of an assignment described in section 
        1842(b)(3)(B)(ii), in accordance with section 1842(b)(6)(B), or 
        under the procedure described in section 1870(f)(1) of such 
        Act, the person furnishing the services shall be considered to 
        have accepted payment of the reasonable charge for the 
        services, less any reduction in payment amount made pursuant to 
        a sequestration order, as payment in full.
            (4) Part b premiums.--In computing the amount and method, 
        part B premiums shall be increased by a percentage to be 
        determined by dividing 10 percent of the amount that medicare 
        spending exceeds the applicable cap by the total amount of all 
        premium collections. All beneficiary premiums shall be 
        increased by the percentage calculated pursuant to the 
        preceding sentence, except that no increase in the premium 
        shall result in a reduction in social security benefit payments 
        to any beneficiary.
            (5) No effect on computation of aapcc.--In computing the 
        adjusted average per capita cost for purposes of section 
        1876(a)(4) of the Social Security Act, the Secretary of Health 
        and Human Services shall not take into account any reductions 
        in payment amounts which have been or may be effected under 
        this part.
    (i) Postal Service Fund.--Any sequestration of the Postal Service 
Fund shall be accomplished by annual payments from that Fund to the 
General Fund of the Treasury, and the Postmaster General of the United 
States and shall have the duty to make those payments during the first 
fiscal year to which the sequestration order applies and each 
succeeding fiscal year. The amount of each annual payment shall be--
            (1) the uniform sequestration percentage, times
            (2) the estimated gross obligations of the Postal Service 
        Fund in that year other than those obligations financed with an 
        appropriation for revenue forgone that year.
Any such payment for a fiscal year shall be made as soon as possible 
during the fiscal year, except that it may be made in installments 
within that year if the payment schedule is approved by the Secretary 
of the Treasury. Within 30 days after the sequestration order is 
issued, the Postmaster General shall submit to the Postal Rate 
Commission a plan for financing the annual payment for that fiscal year 
and publish that plan in the Federal Register. The plan may assume 
efficiencies in the operation of the Postal Service, reductions in 
capital expenditures, increases in the prices of services, or any 
combination, but may not assume a lower Fund surplus or higher Fund 
deficit and shall follow the requirements of existing law governing the 
Postal Service in all other respects. Within 30 days of the receipt of 
that plan, the Postal Rate Commission shall approve the plan or modify 
it in the manner that modifications are allowed under current law. If 
the Postal Rate Commission does not respond to the plan within 30 days, 
the plan submitted by the Postmaster General shall go into effect. Any 
plan may be later revised by the submission of a new plan to the Postal 
Rate Commission, which may approve or modify it.
    (j) Power Marketing Administrations and T.V.A.--Any sequestration 
of the Department of Energy power marketing administration funds or the 
Tennessee Valley Authority fund shall be accomplished by annual 
payments from those funds to the General Fund of the Treasury, and the 
administrators of those funds shall have the duty to make those 
payments during the fiscal year to which the sequestration order 
applies and each succeeding fiscal year. The amount of each payment by 
a fund shall be--
            (1) the direct spending uniform sequestration percentage, 
        times
            (2) the estimated gross obligations of the fund in that 
        year other than those obligations financed from discretionary 
        appropriations for that year.
Any such payment for a fiscal year shall be made as soon as possible 
during the fiscal year, except that it may be made in installments 
within that year if the payment schedule is approved by the Secretary 
of the Treasury. Annual payments by a fund may be financed by 
reductions in costs required to produce the pre-sequester amount of 
power (but those reductions shall not include reductions in the amount 
of power supplied by the fund), by reductions in capital expenditures, 
by increases in tax rates, or by any combination, but may not be 
financed by a lower fund surplus, a higher fund deficit, additional 
borrowing, delay in repayment of principal on outstanding debt and 
shall follow the requirements of existing law governing the fund in all 
other respects. The administrator of a fund or the TVA Board is 
authorized to take the actions specified in this subsection in order to 
make the annual payments to the Treasury.
    (k) Business-like Transactions.--Notwithstanding any other 
provision of law, for programs which provide a business-like service in 
exchange for a fee, sequestration shall be accomplished through a 
uniform increase in fees (sufficient to produce the dollar savings in 
such programs for the fiscal year of the sequestration required by 
section 201(a)(2), all subsequent fees shall be increased by the same 
percentage, and all proceeds from such fees shall be paid into the 
general fund of the Treasury, in any year for which a sequester 
affecting such programs are in effect.

SEC. 206. THE CURRENT LAW BASELINE.

    (a) Submission of Reports.--CBO and OMB shall submit to the 
President and the Congress reports setting forth the budget baselines 
for the budget year and the next nine fiscal years. The CBO report 
shall be submitted on or before January 15. The OMB report shall 
accompany the President's budget.
    (b) Determination of the Budget Baseline.--(1) The budget baseline 
shall be based on the common economic assumptions set forth in section 
111, adjusted to reflect revisions pursuant to subsection (c).
    (2) The budget baseline shall consist of a projection of current 
year levels of budget authority, outlays, revenues and the surplus or 
deficit into the budget year and the relevant outyears based on current 
enacted laws as of the date of the projection.
    (3) For discretionary spending items, the baseline shall be the 
spending caps in effect pursuant to section 251(c) of the Balanced 
Budget and Emergency Deficit Control Act of 1985. For years for which 
there are no caps, the baseline for discretionary spending shall be the 
same as the last year for which there were statutory caps.
    (4) For all other expenditures and for revenues, the baseline shall 
be adjusted by comparing unemployment, inflation, interest rates, 
growth and eligible population for the most recent period for which 
actual data are available, compared to the assumptions contained in 
section 113.
    (c) Revisions to the Baseline.--The baseline shall be adjusted for 
up-to-date economic assumptions for all reports issued pursuant to 
section 112 of this Act and section 254 of the Balanced Budget and 
Emergency Deficit Control Act of 1985.

SEC. 207. LIMITATIONS ON EMERGENCY SPENDING.

    (a) In General.--(1) Within the discretionary caps for each fiscal 
year contained in this Act, an amount shall be withheld from allocation 
to the appropriate committees of the House of Representatives and of 
the Senate and reserved for natural disasters and other emergency 
purposes.
    (2) Such amount for each such fiscal year shall not be less than 1 
percent of total budget authority and outlays available within those 
caps for that fiscal year.
    (3) No adjustments shall be made to the discretionary spending 
limits under section 251(b)(2)(A) of the Balanced Budget and Emergency 
Deficit Control Act of 1985 unless the amount appropriated for 
discretionary accounts that have been designated as emergency 
requirements exceed the amount reserved pursuant to paragraph (1). Any 
adjustment shall be limited to the amount that total appropriations 
designated as emergency requirements for the fiscal year exceeds the 
amount reserved pursuant to paragraph (1).
    (4) The amounts reserved pursuant to this subsection shall be made 
available for allocation to such committees only if--
            (A) the President has made a request for such disaster 
        funds;
            (B) the programs to be funded are included in such request; 
        and
            (C) the projected obligations for unforeseen emergency 
        needs exceed the 10-year rolling average annual expenditures 
        for existing programs included in the Presidential request for 
        the applicable fiscal year.
    (5) Notwithstanding any other provision of law--
            (A) States and localities shall be required to maintain 
        effort and ensure that Federal assistance payments do not 
        replace, subvert or otherwise have the effect of reducing 
        regularly budgeted State and local expenditures for law 
        enforcement, firefighting, road construction and maintenance, 
        building construction and maintenance or any other category of 
        regular government expenditure (to ensure that Federal disaster 
        payments are made only for incremental costs directly 
        attributable to unforeseen disasters, and do not replace or 
        reduce regular State and local expenditures for the same 
        purposes);
            (B) the President may not take administrative action to 
        waive any requirement for States or localities to make minimum 
        matching payments as a condition or receiving Federal disaster 
        assistance or take administrative action to waive all or part 
        of any repayment of Federal loans for the State or local 
        matching share required as a condition of receiving Federal 
        disaster assistance. This clause shall apply to all matching 
        share requirements and loans to meet matching share 
requirements under the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (42 U.S.C. 5121 et seq.) and any other Acts pursuant to 
which the President may declare a disaster or disasters and States and 
localities otherwise qualify for Federal disaster assistance; and
            (C) a two-thirds vote in each House of Congress shall be 
        required for each emergency to reduce or waive the State 
        matching requirement or to forgive all or part of loans for the 
        State matching share as required under the Robert T. Stafford 
        Disaster Relief and Emergency Assistance Act.
    (b) Effect on Budget Resolutions.--(1) All concurrent resolutions 
on the budget (including revisions) shall specify the amount of new 
budget authority and outlays within the discretionary spending cap that 
shall be withheld from allocation to the committees and reserved for 
natural disasters, and a procedure for releasing such funds for 
allocation to the appropriate committee. The amount withheld shall be 
equal to 1 percent of the total discretionary spending cap for fiscal 
year covered by the resolution, unless additional amounts are 
specified.
    (2) The procedure for allocation of the amounts pursuant to 
paragraph (1) shall ensure that the funds are released for allocation 
only pursuant to the conditions contained in subsection (a)(3)(A) 
through (C).
    (c) Restriction on Use of Funds.--Notwithstanding any other 
provision of law, the amount reserved pursuant to subsection (a) shall 
not be available for other than emergency funding requirements for 
particular natural disasters or national security emergencies so 
designated by Acts of Congress.
    (d) New Point of Order.--(1) Title IV of the Congressional Budget 
Act of 1974 is amended by adding at the end the following new section:

                 ``point of order regarding emergencies

    ``Sec. 408. It shall not be in order in the House of 
Representatives or the Senate to consider any bill or joint resolution, 
or amendment thereto or conference report thereon, containing an 
emergency designation for purposes of section 251(b)(2)(A) or 252(e) of 
the Balanced Budget and Emergency Deficit Control Act of 1985 or of 
section 207 of the Budget Enforcement Act of 1999 if it also provides 
an appropriation or direct spending for any other item or contains any 
other matter, but that bill or joint resolution, amendment, or 
conference report may contain rescissions of budget authority or 
reductions of direct spending, or that amendment may reduce amounts for 
that emergency.''.
    (2) The table of contents set forth in section 1(b) of the 
Congressional Budget and Impoundment Control Act of 1974 is amended by 
inserting after the item relating to section 407 the following new 
item:

``Sec. 408. Point of order regarding emergencies.''.

SEC. 208. TEN-YEAR CONGRESSIONAL REVIEW REQUIREMENT OF PERMANENT BUDGET 
              AUTHORITY.

    (a) Timetable for Review.--Clause 2(d)(1) of rule X of the Rules of 
the House of Representatives is amended by striking subdivisions (B) 
and (C) and inserting the following new subdivision:
            ``(B) provide in its plans a specific timetable for its 
        review of those laws, programs, or agencies within its 
        jurisdiction, including those that operate under permanent 
        budget authority or permanent statutory authority.''.
    (b) Review of Permanent Budget Authority by the Committee on 
Appropriations.--Clause 4(a) of rule X of the Rules of the House of 
Representatives is amended--
            (1) by striking subparagraph (2); and
            (2) by redesignating subparagraph (3) as subparagraph (2) 
        and by striking ``from time to time'' and inserting ``at least 
        once each Congress'' in subparagraph (2) (as redesignated).
    (c) Conforming Amendment.--Clause 4(e)(2) of rule X of the Rules of 
the House of Representatives is amended by striking ``from time to 
time'' and inserting ``at least once every ten years''.
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