II 

111TH CONGRESS 

2D SESSION S. 3496 

To amend the Internal Revenue Code of 1986 to allow individuals to designate 

that up to 10 percent of their income tax liability be used to reduce 

the national debt, and to require spending reductions equal to the 

amounts so designated. 

IN THE SENATE OF THE UNITED STATES 

JUNE 16, 2010 

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

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to allow individuals to designate that up to 10 percent of their income 

tax liability be used to reduce the national debt, and 

to require spending reductions equal to the amounts 

so designated. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Debt Buy-Down Act’’. 


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1 SEC. 2. DESIGNATION OF AMOUNTS FOR REDUCTION OF 

2 PUBLIC DEBT. 

3 (a) IN GENERAL.—Subchapter A of chapter 61 of the 

4 Internal Revenue Code of 1986 (relating to returns and 

5 records) is amended by adding at the end the following 

6 new part: 

7 ‘‘PART IX—DESIGNATION FOR REDUCTION OF 

8 PUBLIC DEBT 

‘‘Sec. 6097. Designation. 

9 ‘‘SEC. 6097. DESIGNATION. 

10 ‘‘(a) IN GENERAL.—Every individual with adjusted 

11 income tax liability for any taxable year may designate 

12 that a portion of such liability (not to exceed 10 percent 

13 thereof) shall be used to reduce the public debt. 

14 ‘‘(b) MANNER AND TIME OF DESIGNATION.—A des15 ignation under subsection (a) may be made with respect 

16 to any taxable year only at the time of filing the return 

17 of tax imposed by chapter 1 for the taxable year. The des18 ignation shall be made on the first page of the return or 

19 on the page bearing the taxpayer’s signature. 

20 ‘‘(c) ADJUSTED INCOME TAX LIABILITY.—For pur21 poses of this section, the adjusted income tax liability of 

22 an individual for any taxable year is the income tax liabil23 ity of the individual for the taxable year determined under 

24 section 6096(b), reduced by any amount designated under 

25 section 6096(a).’’. 


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1 (b) CLERICAL AMENDMENT.—The table of parts for 

2 such subchapter A is amended by adding at the end the 

3 following new item: 

‘‘PART IX. DESIGNATION FOR REDUCTION OF PUBLIC DEBT.’’. 

4 (c) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply to taxable years ending after the 

6 date of the enactment of this Act. 

7 SEC. 3. PUBLIC DEBT REDUCTION TRUST FUND. 

8 (a) IN GENERAL.—Subchapter A of chapter 98 of the 

9 Internal Revenue Code of 1986 (relating to trust fund 

10 code) is amended by adding at the end the following sec11 tion: 

12 ‘‘SEC. 9511. PUBLIC DEBT REDUCTION TRUST FUND. 

13 ‘‘(a) CREATION OF TRUST FUND.—There is estab14 lished in the Treasury of the United States a trust fund 

15 to be known as the ‘Public Debt Reduction Trust Fund’, 

16 consisting of any amount appropriated or credited to the 

17 Trust Fund as provided in this section or section 9602(b). 

18 ‘‘(b) TRANSFERS TO TRUST FUND.—There are here19 by appropriated to the Public Debt Reduction Trust Fund 

20 amounts equivalent to the amounts designated under sec21 tion 6097 (relating to designation for public debt reduc22 tion). 

23 ‘‘(c) EXPENDITURES.—Amounts in the Public Debt 

24 Reduction Trust Fund shall be used by the Secretary for 

25 purposes of paying at maturity, or to redeem or buy before 


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1 maturity, any obligation of the Federal Government in2 cluded in the public debt (other than an obligation held 

3 by the Federal Old-Age and Survivors Insurance Trust 

4 Fund or the Department of Defense Military Retirement 

5 Fund). Any obligation which is paid, redeemed, or bought 

6 with amounts from the Public Debt Reduction Trust Fund 

7 shall be canceled and retired and may not be reissued.’’. 

8 (b) CLERICAL AMENDMENT.—The table of sections 

9 for such subchapter is amended by adding at the end the 

10 following new item: 

‘‘Sec. 9511. Public Debt Reduction Trust Fund.’’. 

11 (c) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to amounts received after the date 

13 of the enactment of this Act. 

14 SEC. 4. TAXPAYER-GENERATED SEQUESTRATION OF FED15 ERAL SPENDING TO REDUCE THE PUBLIC 

16 DEBT. 

17 (a) SEQUESTRATION TO REDUCE THE PUBLIC

18 DEBT.—Part C of the Balanced Budget and Emergency 

19 Deficit Control Act of 1985 is amended by inserting after 

20 section 253 the following new section: 

21 ‘‘SEC. 253A. SEQUESTRATION TO REDUCE THE PUBLIC 

22 DEBT. 

23 ‘‘(a) SEQUESTRATION.—Notwithstanding sections 

24 255 and 256, within 15 days after Congress adjourns to 

25 end a session, and on the same day as sequestration (if 


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1 any) under sections 251, 252, and 253, and under section 

2 5(b) of the Statutory Pay-As-You-Go Act of 2010, but 

3 after any sequestration required by those sections, there 

4 shall be a sequestration equivalent to the estimated aggre5 gate amount designated under section 6097 of the Inter6 nal Revenue Code of 1986 for the last taxable year ending 

7 one year before the beginning of that session of Congress, 

8 as estimated by the Department of the Treasury on Octo9 ber 1 and as modified by the total of— 

10 ‘‘(1) any amounts by which net discretionary 

11 spending is reduced by legislation below the discre12 tionary spending limits enacted after the enactment 

13 of this section related to the fiscal year subject to 

14 the sequestration (or, in the absence of such limits, 

15 any net deficit change from the baseline amount cal16 culated under section 257; and 

17 ‘‘(2) the net deficit change that has resulted 

18 from all direct spending legislation enacted after the 

19 enactment of this section related to the fiscal year 

20 subject to the sequestration, as estimated by OMB. 

21 If the reduction in spending under paragraphs (1) and (2) 

22 for a fiscal year is greater than the estimated aggregate 

23 amount designated under section 6097 of the Internal 

24 Revenue Code of 1986 respecting that fiscal year, then 

25 there shall be no sequestration under this section. 


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1 ‘‘(b) APPLICABILITY.— 

2 ‘‘(1) IN GENERAL.—Except as provided by 

3 paragraph (2), each account of the United States 

4 shall be reduced by a dollar amount calculated by 

5 multiplying the level of budgetary resources in that 

6 account at that time by the uniform percentage nec7 essary to carry out subsection (a). All obligational 

8 authority reduced under this section shall be done in 

9 a manner that makes such reductions permanent. 

10 ‘‘(2) EXEMPT ACCOUNTS.—No order issued 

11 under this part may— 

12 ‘‘(A) reduce benefits payable to the old-age 

13 and survivors insurance program established 

14 under title II of the Social Security Act; 

15 ‘‘(B) reduce retired or retainer pay payable 

16 to a member or former member of the uni17 formed services; or 

18 ‘‘(C) reduce payments for net interest (all 

19 of major functional category 900).’’. 

20 (b) REPORTS.—Section 254 of the Balanced Budget 

21 and Emergency Deficit Control Act of 1985 is amended— 

22 (1) in subsection (a), by adding at the end of 

23 the table the following new item: 

‘‘October 1 ..................................... Department of Treasury report to 

Congress estimating amount of income tax designated pursuant to 

section 6097 of the Internal Revenue Code of 1986.’’. 


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1 (2) in subsection (c)(1), by inserting ‘‘, and se2 questration to reduce the public debt,’’ after ‘‘se3 questration’’; 

4 (3) in subsection (c), by redesignating para5 graph (5) as paragraph (6) and by inserting after 

6 paragraph (4) the following new paragraph: 

7 ‘‘(5) REPORTS ON SEQUESTRATION TO REDUCE

8 THE PUBLIC DEBT.—The preview reports shall set 

9 forth for the budget year estimates for each of the 

10 following: 

11 ‘‘(A) The aggregate amount designated 

12 under section 6097 of the Internal Revenue 

13 Code of 1986 for the last taxable year ending 

14 before the budget year. 

15 ‘‘(B) The amount of reductions required 

16 under section 253A and the deficit remaining 

17 after those reductions have been made. 

18 ‘‘(C) The sequestration percentage nec19 essary to achieve the required reduction in ac20 counts under section 253A(b).’’; and 

21 (4) in subsection (f), by redesignating para22 graphs (4) and (5) as paragraphs (5) and (6), re23 spectively, and by inserting after paragraph (3) the 

24 following new paragraph: 


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1 ‘‘(4) REPORTS ON SEQUESTRATION TO REDUCE

2 THE PUBLIC DEBT.—The final reports shall contain 

3 all of the information contained in the public debt 

4 taxation designation report required on October 1.’’. 

5 (c) CONFORMING AMENDMENT.—The table of con6 tents in section 250(a) of the Balanced Budget and Emer7 gency Deficit Control Act of 1985 is amended by inserting 

8 after the item relating to section 253 the following new 

9 item: 

‘‘Sec. 253A. Sequestration to reduce the public debt.’’. 

10 (d) EFFECTIVE DATE.—Notwithstanding section 

11 275(b) of the Balanced Budget and Emergency Deficit 

12 Control Act of 1985, the expiration date set forth in that 

13 section shall not apply to the amendments made by this 

14 section. The amendments made by this section shall cease 

15 to have any effect after the first fiscal year during which 

16 there is no public debt. 

Æ 


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