199 
(A) by striking ‘‘OFFICERS’’ at the begin-
ning of the table and inserting ‘‘SUBCHAPTER 
I—OFFICERS’’; 
(B) by striking ‘‘ENLISTED
MEMBERS’’ 
after the item relating to section 336 and in-
serting 
‘‘SUBCHAPTER
II—ENLISTED
MEM-
BERS’’; 
(C) by striking ‘‘GENERAL
PROVISIONS’’ 
after the item relating to section 373 and in-
serting ‘‘SUBCHAPTER
III—GENERAL
PROVI-
SIONS’’; 
(D) by striking ‘‘SPECIAL
PROVISIONS’’ 
after the item relating to section 425 and in-
serting 
‘‘SUBCHAPTER
IV—SPECIAL
PROVI-
SIONS’’; and 
(E) by adding at the end the following: 
‘‘SUBCHAPTER V—COAST GUARD MILITARY RETIREMENT FUND 
‘‘441. Establishment and purpose of Fund; definitions. 
‘‘442. Assets of the Fund. 
‘‘443. Payments from the Fund. 
‘‘444. Determination of contributions to the Fund. 
‘‘445. Payments into the Fund. 
‘‘446. Investment of assets of the Fund.’’. 
(b) IMPLEMENTATION YEAR EXCEPTIONS.—To avoid 
funding shortfalls in the first year of implementation of 
subchapter V of chapter 11 of title 14, United States 
Code, as added by subsection (a), if formal actuarial deter-
minations are not available in time for budget preparation, 
the amounts used in the first year under sections
200 
445(a)(1)(A) and 445(a)(2)(A) of such title shall be set 
equal to those estimates in sections 444(b)(1)(A)(i) and 
444(b)(1)(B)(i), respectively, of such title if final deter-
minations are not available. The original unfunded liabil-
ity, as defined in section 444(a) of such title, shall include 
an adjustment to correct for this difference between the 
formal actuarial determinations and the estimates in sec-
tions 444(b)(1)(A)(i) and 444(b)(1)(B)(i) of such title. 
(c) CONFORMING AMENDMENT.—Section 256(f) of 
the Balanced Budget and Emergency Deficit Control Act 
of 1985 (2 U.S.C. 906(f)) is amended by striking ‘‘Retired 
Pay, Coast Guard (69–0241–0–1–403)’’ and inserting 
‘‘Coast Guard Military Retirement Fund (69–0241–01– 
403)’’. 
(d) TRANSFER OF EXISTING BALANCES.— 
(1) TRANSFER.—There shall be transferred into 
the Fund on October 1, 2006, any obligated and un-
obligated balances of appropriations made to the De-
partment of Homeland Security that are currently 
available for retired pay, and amounts so transferred 
shall be part of the assets of the Fund. 
(2) FUND
DEFINED.—For purposes of para-
graph (1), the term ‘‘Fund’’ means the Coast Guard 
Military Retirement Fund established under section
201 
441 of title 14, United States Code, as added by 
subsection (a). 
(e) EFFECTIVE DATE.—Sections 443 (relating to 
payments from the Fund) and 445 (relating to payments 
into the Fund) of title 14, United States Code, as added 
by subsection (a), shall take effect on October 1, 2006. 
Subtitle 
B—Accrual 
Funding 
of 
Post-Retirement Health Benefits 
Costs for Federal Employees 
SEC. 411. FEDERAL EMPLOYEES HEALTH BENEFITS FUND. 
(a) Section 8906 of title 5, United States Code, is 
amended— 
(1) by redesignating subsection (c) as sub-
section (c)(1) and by adding at the end the following 
new paragraphs: 
‘‘(2) In addition to Government contributions re-
quired by subsection (b) and paragraph (1), each employ-
ing agency shall contribute amounts as determined by the 
Office to be necessary to prefund the accruing actuarial 
cost of post-retirement health benefits for each of the 
agency’s current employees who are eligible for Govern-
ment contributions under this section. Amounts under this 
paragraph shall be paid by the employing agency separate 
from other contributions under this section, from the ap-
202 
propriations or fund used for payment of the salary of the 
employee, on a schedule to be determined by the Office. 
‘‘(3) Paragraph (2) shall not apply to the United 
States Postal Service or the government of the District 
of Columbia.’’; and 
(2) by amending subsection (g)(1) to read as 
follows: 
‘‘(g)(1) Except as provided in paragraphs (2) and 
(3), all Government contributions authorized by this sec-
tion for health benefits for an annuitant shall be paid from 
the Employees Health Benefits Fund to the extent that 
funds are available in accordance with section 8909(h)(6) 
and, if necessary, from annual appropriations which are 
authorized to be made for that purpose and which may 
be made available until expended.’’. 
(b) Section 8909 of title 5, United States Code, is 
amended by adding at the end the following new sub-
section: 
‘‘(h)(1) Not later than June 30, 2007, the Office 
shall determine the existing liability of the Fund for post- 
retirement health benefits, excluding the liability of the 
United States Postal Service for service under section 
8906(g)(2), under this chapter as of September 30, 2007. 
The Office shall establish an amortization schedule, in-
cluding a series of annual installments commencing Sep-
203 
tember 30, 2007, which provides for the liquidation of 
such liability by September 30, 2043. 
‘‘(2) At the close of each fiscal year, for fiscal years 
beginning after September 30, 2006, the Office shall de-
termine the supplemental liability of the Fund for post- 
retirement health benefits, excluding the liability attrib-
utable to the United States Postal Service for service sub-
ject to section 8906(g)(2), and shall establish an amortiza-
tion schedule, including a series of annual installments 
commencing on September 30 of the subsequent fiscal 
year, which provides for liquidation of such supplemental 
liability over 30 years. 
‘‘(3) Amortization schedules established under this 
paragraph shall be set in accordance with generally accept-
ed actuarial practices and principles. 
‘‘(4) At the end of each fiscal year on and after Sep-
tember 30, 2007, the Office shall notify the Secretary of 
the Treasury of the amounts of the next installments 
under the most recent amortization schedules established 
under paragraphs (1) and (2). Before closing the accounts 
for the fiscal year, the Secretary shall credit the sum of 
these amounts (including in that sum any negative 
amount for the amortization of the supplemental liability) 
to the Fund, as a Government contribution, out of any
204 
money in the Treasury of the United States not otherwise 
appropriated. 
‘‘(5) For the purpose of carrying out paragraphs (1) 
and (2), the Office shall perform or arrange for actuarial 
determinations and valuations and shall prescribe reten-
tion of such records as it considers necessary for making 
periodic actuarial valuations of the Fund. 
‘‘(6) Notwithstanding subsection (b), the amounts de-
posited into the Fund pursuant to this subsection and sec-
tion 8906(c)(2) to prefund post-retirement health benefits 
costs shall be segregated within the Fund so that such 
amounts, as well as earnings and proceeds under sub-
section (c) attributable to them, may be used exclusively 
for the purpose of paying Government contributions for 
post-retirement health benefits costs. When such amounts 
are used in combination with amounts withheld from an-
nuitants to pay for health benefits, a portion of the con-
tributions shall then be set aside in the Fund as described 
in subsection (b). 
‘‘(7) Under this subsection, ‘supplemental liability’ 
means— 
‘‘(A) the actuarial present value for future post- 
retirement health benefits that are the liability of 
the Fund, less 
‘‘(B) the sum of—
205 
‘‘(i) the actuarial present value of all fu-
ture contributions by agencies and annuitants 
to the Fund toward those benefits pursuant to 
section 8906; 
‘‘(ii) the present value of all scheduled am-
ortization payments to the Fund pursuant to 
paragraphs (1) and (2); 
‘‘(iii) the Fund balance as of the date the 
supplemental liability is determined, to the ex-
tent that such balance is attributable to post-re-
tirement benefits; and 
‘‘(iv) any other appropriate amount, as de-
termined by the Office in accordance with gen-
erally accepted actuarial practices and prin-
ciples.’’. 
SEC. 412. FUNDING UNIFORMED SERVICES HEALTH BENE-
FITS FOR ALL RETIREES. 
Title 10, United States Code, is amended— 
(1) in the title of chapter 56, by striking ‘‘DE-
PARTMENT OF DEFENSE MEDICARE- 
ELIGIBLE’’ 
and 
inserting 
‘‘UNIFORMED 
SERVICES’’; 
(2) in section 1111— 
(A) in subsection (a)—
206 
(i) by striking ‘‘Department of De-
fense Medicare-Eligible’’ and inserting 
‘‘Uniformed Services’’; 
(ii) by striking ‘‘Department of De-
fense under’’; and 
(iii) by striking ‘‘for medicare-eligible 
beneficiaries’’; 
(B) in subsection (c)— 
(i) by striking ‘‘The Secretary of De-
fense may’’ and inserting ‘‘The Secretary 
of Defense shall’’; 
(ii) by striking ‘‘with any other’’ and 
inserting ‘‘with each’’; 
(iii) by striking ‘‘Any such agree-
ment’’ and inserting ‘‘Such agreements’’; 
and 
(iv) by striking ‘‘administering Sec-
retary may’’ and inserting ‘‘administrative 
Secretary shall’’; 
(3) in section 1113— 
(A) in subsection (a)— 
(i) by striking ‘‘and are medicare eli-
gible’’; 
(ii) by striking ‘‘who are medicare eli-
gible’’; and
207 
(iii) by adding at the end the fol-
lowing new sentence: ‘‘For the fiscal year 
starting October 1, 2005, only, the pay-
ments will be solely for the costs of mem-
bers or former members of a uniformed 
service who are entitled to retired or re-
tainer pay and are medicare-eligible, and 
eligible dependents or survivors who are 
medicare-eligible.’’; 
(B) in subsection (c)(1), by striking ‘‘who 
are medicare-eligible’’; 
(C) in subsection (d), by striking ‘‘who are 
medicare-eligible’’; and 
(D) in subsection (f), by striking ‘‘If’’ and 
inserting ‘‘When’’; 
(4) in section 1114, in subsection (a)(1), by 
striking ‘‘Department of Defense Medicare-Eligible’’ 
and inserting ‘‘Uniformed Services’’; 
(5) in section 1115— 
(A) in subsection (b)(2), by striking ‘‘The 
amount determined under paragraph (1) for 
any fiscal year is the amount needed to be ap-
propriated to the Department of Defense (or to 
the other executive department having jurisdic-
tion over the participating uniformed service)’’
208 
and inserting ‘‘The amount determined under 
paragraph (1), or the amount determined under 
section 1111(c) for a participating uniformed 
service, for any fiscal year, is the amount need-
ed to be appropriated to the Department of De-
fense (or to any other executive department 
having jurisdiction over a participating uni-
formed service)’’; 
(B) in subsection (c)(2), by striking ‘‘for 
medicare eligible beneficiaries’’; and 
(C) by adding at the end the following new 
subsection: 
‘‘(f) For the fiscal year starting October 1, 2005, 
only, the amounts in this section shall be based solely on 
the costs of medicare-eligible benefits of beneficiaries and 
the costs for their eligible dependents or survivors who are 
medicare-eligible, and shall be recalculated thereafter to 
reflect the cost of beneficiaries defined in section 1111.’’; 
and 
(6) in section 1116— 
(A) in subsection (a)(1)(A), by striking 
‘‘for medicare-eligible beneficiaries’’; 
(B) in subsection (a)(2)(A), by striking 
‘‘for medicare-eligible beneficiaries’’; and
209 
(C) in subsection (c), by striking ‘‘sub-
section (a) shall be paid from funds available 
for the health care programs’’ and inserting 
‘‘subsection (a) and section 1111(c) shall be 
paid from funds available for the pay of mem-
bers of the participating uniformed services 
under the jurisdiction of the respective admin-
istering secretaries’’. 
SEC. 413. EFFECTIVE DATE. 
Except as otherwise provided, this title shall take ef-
fect upon enactment with respect to fiscal years beginning 
after 2006. 
Subtitle C—Public Debt Limit 
Reform 
SEC. 421. FINDINGS. 
The Congress finds the following: 
(1) Since 1997, Congress has paid down and 
retired approximately $450,000,000,000 of the Gov-
ernment’s debt which was previously held by the 
public. 
(2) This reduction in the Government’s debt to 
the public should permit a lowering of the statutory 
debt ceiling. However, the statutory definition min-
gles both the public debt and intragovernment liabil-
210 
ities, the latter of which do not represent resource 
withdrawals for the economy. 
(3) Intragovernment accounts such as the social 
security trust funds, the Civil Service Retirement 
and Disability Fund, the Department of Defense 
Military Retirement Fund, and the Unemployment 
Trust Fund constitute accrued liabilities of the Gov-
ernment which will be paid from future receipts, 
taxes, or borrowing. If the Government issues debt 
to the public to fund such liabilities in the future, 
that debt will properly be subject to the debt ceiling. 
(4) Properly defining the debt of the Govern-
ment would permit lowering the debt ceiling to take 
account of, and lock in, the fiscal progress that has 
been made. 
SEC. 422. PURPOSE. 
It is the purpose of this subtitle to properly define 
the public debt to exclude intragovernment obligations. 
SEC. 423. LIMIT ON PUBLIC DEBT. 
Section 3101 of title 31, United States Code, is 
amended to read as follows: 
‘‘§ 3101. Public debt limit 
‘‘(a) In this section, the current redemption value of 
an obligation issued on a discount basis and redeemable
211 
before maturity at the option of its holder is deemed to 
be the face amount of the obligation. 
‘‘(b) The face amount of obligations issued under this 
chapter and the face amount of obligations whose prin-
cipal and interest are guaranteed by the United States 
Government (except guaranteed obligations held by the 
Secretary of the Treasury and intragovernmental hold-
ings) may not be more than $4,393,000,000,000 out-
standing at one time, subject to changes periodically made 
in that amount as provided by law. 
‘‘(c) For purposes of this section, the face amount, 
for any month, of any obligation issued on a discount basis 
that is not redeemable before maturity at the option of 
the holder of the obligation is an amount equal to the sum 
of— 
‘‘(1) the original issue price of the obligation, 
plus 
‘‘(2) the portion of the discount on the obliga-
tion attributable to periods before the beginning of 
such month (as determined under the principles of 
section 1272(a) of the Internal Revenue Code of 
1986 without regard to any exceptions contained in 
paragraph (2) of such section). 
‘‘(d) For purposes of this section, the term 
‘intragovernment holding’ is any obligation issued by the
212 
Secretary of the Treasury to any Federal trust fund or 
Government account, whether in respect of public money, 
money otherwise required to be deposited in the Treasury, 
or amounts appropriated.’’. 
SEC. 424. REPEAL OF THE GEPHARDT RULE. 
The Rules of the House of Representatives are 
amended by repealing rule XXVII (relating to the statu-
tory limit on public debt) and by redesignating rule 
XXVIII as rule XXVII. 
Subtitle D—Risk-assumed 
Budgeting 
SEC. 431. FEDERAL INSURANCE PROGRAMS. 
(a) IN GENERAL.—The Congressional Budget Act of 
1974 is amended by adding after title V the following new 
title: 
‘‘TITLE VI—BUDGETARY TREAT-
MENT OF FEDERAL INSUR-
ANCE PROGRAMS 
‘‘SEC. 602. BUDGETARY TREATMENT. 
‘‘(a) PRESIDENT’S BUDGET.—Beginning with fiscal 
year 2011, the budget of the Government pursuant to sec-
tion 1105(a) of title 31, United States Code, shall be 
based on the risk-assumed cost of Federal insurance pro-
grams.
213 
‘‘(b) BUDGET ACCOUNTING.—For any Federal insur-
ance program— 
‘‘(1) the program account shall— 
‘‘(A) pay the risk-assumed cost borne by 
the taxpayer to the financing account, and 
‘‘(B) pay actual insurance program admin-
istrative costs; 
‘‘(2) the financing account shall— 
‘‘(A) receive premiums and other income, 
‘‘(B) pay all claims for insurance and re-
ceive all recoveries, 
‘‘(C) transfer to the program account on 
not less than an annual basis amounts nec-
essary to pay insurance program administrative 
costs; 
‘‘(3) a negative risk-assumed cost shall be 
transferred from the financing account to the pro-
gram account, and shall be transferred from the pro-
gram account to the general fund; and 
‘‘(4) all payments by or receipts of the financ-
ing accounts shall be treated in the budget as a 
means of financing. 
‘‘(c) APPROPRIATIONS
REQUIRED.—(1) Notwith-
standing any other provision of law, insurance commit-
ments may be made for fiscal year 2011 and thereafter
214 
only to the extent that new budget authority to cover their 
risk-assumed cost is provided in advance in an appropria-
tion Act. 
‘‘(2) An outstanding insurance commitment shall not 
be modified in a manner that increases its risk-assumed 
cost unless budget authority for the additional cost has 
been provided in advance. 
‘‘(3) Paragraph (1) shall not apply to Federal insur-
ance programs that constitute entitlements. 
‘‘(d) REESTIMATES.—The risk-assumed cost for a 
fiscal year shall be reestimated in each subsequent year. 
Such reestimate can equal zero. In the case of a positive 
reestimate, the amount of the reestimate shall be paid 
from the program account to the financing account. In 
the case of a negative reestimate, the amount of the reesti-
mate shall be paid from the financing account to the pro-
gram account, and shall be transferred from the program 
account to the general fund. Reestimates shall be dis-
played as a distinct and separately identified subaccount 
in the program account. 
‘‘(e) ADMINISTRATIVE EXPENSES.—All funding for 
an agency’s administration of a Federal insurance pro-
gram shall be displayed as a distinct and separately identi-
fied subaccount in the program account.
215 
‘‘SEC. 603. TIMETABLE FOR IMPLEMENTATION OF ACCRUAL 
BUDGETING FOR FEDERAL INSURANCE PRO-
GRAMS. 
‘‘(a) AGENCY REQUIREMENTS.—Agencies with re-
sponsibility for Federal insurance programs shall develop 
models to estimate their risk-assumed cost by year 
through the budget horizon and shall submit those models, 
all relevant data, a justification for critical assumptions, 
and the annual projected risk-assumed costs to OMB with 
their budget requests each year starting with the request 
for fiscal year 2008. Agencies will likewise provide OMB 
with annual estimates of modifications, if any, and reesti-
mates of program costs. 
‘‘(b) DISCLOSURE.—When the President submits a 
budget of the Government pursuant to section 1105(a) of 
title 31, United States Code, for fiscal year 2008, OMB 
shall publish a notice in the Federal Register advising in-
terested persons of the availability of information describ-
ing the models, data (including sources), and critical as-
sumptions (including explicit or implicit discount rate as-
sumptions) that it or other executive branch entities would 
use to estimate the risk-assumed cost of Federal insurance 
programs and giving such persons an opportunity to sub-
mit comments. At the same time, the chairman of the 
Committee on the Budget shall publish a notice for CBO 
in the Federal Register advising interested persons of the
216 
availability of information describing the models, data (in-
cluding sources), and critical assumptions (including ex-
plicit or implicit discount rate assumptions) that it would 
use to estimate the risk-assumed cost of Federal insurance 
programs and giving such interested persons an oppor-
tunity to submit comments. 
‘‘(c) REVISION.—(1) After consideration of comments 
pursuant to subsection (b), and in consultation with the 
Committees on the Budget of the House of Representa-
tives and the Senate, OMB and CBO shall revise the mod-
els, data, and major assumptions they would use to esti-
mate the risk-assumed cost of Federal insurance pro-
grams. 
‘‘(2) When the President submits a budget of the 
Government pursuant to section 1105(a) of title 31, 
United States Code, for fiscal year 2009, OMB shall pub-
lish a notice in the Federal Register advising interested 
persons of the availability of information describing the 
models, data (including sources), and critical assumptions 
(including explicit or implicit discount rate assumptions) 
that it or other executive branch entities used to estimate 
the risk-assumed cost of Federal insurance programs. 
‘‘(d) DISPLAY.— 
‘‘(1) IN
GENERAL.—For fiscal years 2009, 
2010, and 2011 the budget submissions of the Presi-