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‘‘(I) on which a binding contract
to acquire the principal residence to
which subparagraph (A) applies is en-
tered into, or
‘‘(II) on which construction or re-
construction of such a principal resi-
dence is commenced.
‘‘(D) SPECIAL RULE WHERE DELAY IN AC-
QUISITION.—If any distribution from any indi-
vidual retirement plan fails to meet the require-
ments of subparagraph (A) solely by reason of
a delay or cancellation of the purchase or con-
struction of the residence, the amount of the
distribution may be contributed to an individual
retirement 
plan 
as 
provided 
in 
section
408(d)(3)(A)(i) (determined by substituting
‘120 days’ for ‘60 days’ in such section), except
that—
‘‘(i) section 408(d)(3)(B) shall not be
applied to such contribution, and
‘‘(ii) such amount shall not be taken
into account in determining whether sec-
tion 408(d)(3)(A)(i) applies to any other
amount.
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‘‘(8) QUALIFIED
HIGHER
EDUCATION
EX-
PENSES.—For purposes of paragraph (2)(D)(ii)—
‘‘(A) IN
GENERAL.—The term ‘qualified
higher education expenses’ means tuition and
fees required for the enrollment or attendance
of—
‘‘(i) the taxpayer,
‘‘(ii) the taxpayer’s spouse,
‘‘(iii) a dependent of the taxpayer
with respect to whom the taxpayer is al-
lowed a deduction under section 151, or
‘‘(iv) the taxpayer’s child (as defined
in section 151(c)(3)) or grandchild,
as an eligible student at an institution of higher
education (as defined in paragraphs (1)(D) and
(2) of section 220(c)).
‘‘(B) EXCEPTIONS.—The term ‘qualified
higher education expenses’ does not include ex-
penses described in subparagraphs (B) and (C)
of section 220(c)(1).
‘‘(C) COORDINATION WITH SAVINGS BOND
PROVISIONS.—The amount of qualified higher
education expenses for any taxable year shall be
reduced by any amount excludable from gross
income under section 135.
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‘‘(9) QUALIFIED LONG-TERM CARE SERVICES.—
For purposes of paragraph (2)(B)—
‘‘(A) IN
GENERAL.—The term ‘qualified
long-term care services’ means necessary diag-
nostic, curing, mitigating, treating, preventive,
therapeutic, and rehabilitative services, and
maintenance and personal care services (wheth-
er performed in a residential or nonresidential
setting) which—
‘‘(i) are required by an individual dur-
ing any period the individual is an inca-
pacitated individual (as defined in subpara-
graph (B)),
‘‘(ii) have as their primary purpose—
‘‘(I) the provision of needed as-
sistance with 1 or more activities of
daily living (as defined in subpara-
graph (C)), or
‘‘(II) protection from threats to
health and safety due to severe cog-
nitive impairment, and
‘‘(iii) are provided pursuant to a con-
tinuing plan of care prescribed by a li-
censed professional (as defined in subpara-
graph (D)).
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‘‘(B) INCAPACITATED
INDIVIDUAL.—The
term ‘incapacitated individual’ means any indi-
vidual who—
‘‘(i) is unable to perform, without sub-
stantial assistance from another individual
(including assistance involving cueing or
substantial supervision), at least 2 activi-
ties of daily living as defined in subpara-
graph (C), or
‘‘(ii) has severe cognitive impairment
as defined by the Secretary in consultation
with the Secretary of Health and Human
Services.
Such term shall not include any individual oth-
erwise meeting the requirements of the preced-
ing sentence unless a licensed professional with-
in the preceding 12-month period has certified
that such individual meets such requirements.
‘‘(C) ACTIVITIES OF DAILY LIVING.—Each
of the following is an activity of daily living:
‘‘(i) Eating.
‘‘(ii) Toileting.
‘‘(iii) Transferring.
‘‘(iv) Bathing.
‘‘(v) Dressing.
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‘‘(D) 
LICENSED
PROFESSIONAL.—The
term ‘licensed professional’ means—
‘‘(i) a physician or registered profes-
sional nurse, or
‘‘(ii) any other individual who meets
such requirements as may be prescribed by
the Secretary after consultation with the
Secretary of Health and Human Services.
‘‘(E) 
CERTAIN
SERVICES
NOT
IN-
CLUDED.—The term ‘qualified long-term care
services’ shall not include any services provided
to an individual—
‘‘(i) by a relative (directly or through
a partnership, corporation, or other entity)
unless the relative is a licensed professional
with respect to such services, or
‘‘(ii) by a corporation or partnership
which is related (within the meaning of
section 267(b) or 707(b)) to the individual.
For purposes of this subparagraph, the term
‘relative’ means an individual bearing a rela-
tionship to the individual which is described in
paragraphs (1) through (8) of section 152(a).’’
(d) PENALTY-FREE DISTRIBUTIONS FOR CERTAIN
UNEMPLOYED INDIVIDUALS.—Paragraph (2) of section
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72(t) is amended by adding at the end the following new
subparagraph:
‘‘(E) DISTRIBUTIONS TO UNEMPLOYED IN-
DIVIDUALS.—A distribution from an individual
retirement plan to an individual after separa-
tion from employment, if—
‘‘(i) such individual has received un-
employment compensation for 12 consecu-
tive weeks under any Federal or State un-
employment compensation law by reason of
such separation, and
‘‘(ii) such distributions are made dur-
ing any taxable year during which such un-
employment compensation is paid or the
succeeding taxable year.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to payments and distributions after
December 31, 1995, and before January 1, 2001.
SEC. ll22. CONTRIBUTIONS MUST BE HELD AT LEAST 5
YEARS IN CERTAIN CASES.
(a) IN GENERAL.—Section 72(t), as amended by this
Act, is amended by adding at the end the following new
paragraph:
‘‘(10) CERTAIN CONTRIBUTIONS MUST BE HELD
5 YEARS.—
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‘‘(A) IN
GENERAL.—Paragraph (2)(A)(i)
shall not apply to any amount distributed out
of an individual retirement plan (other than a
special individual retirement account) which is
allocable to contributions made to the plan dur-
ing the 5-year period ending on the date of
such distribution (and earnings on such con-
tributions).
‘‘(B) ORDERING RULE.—For purposes of
this paragraph, distributions shall be treated as
having been made—
‘‘(i) first from the earliest contribu-
tion (and earnings allocable thereto) re-
maining in the account at the time of the
distribution, and
‘‘(ii) then from other contributions
(and earnings allocable thereto) in the
order in which made.
Earnings shall be allocated to contributions in
such manner as the Secretary may prescribe.
‘‘(C) SPECIAL RULE FOR ROLLOVERS.—
‘‘(i) PENSION PLANS.—Subparagraph
(A) shall not apply to distributions out of
an individual retirement plan which are al-
locable to rollover contributions to which
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section 402(c), 403(a)(4), or 403(b)(8) ap-
plied.
‘‘(ii) CONTRIBUTION
PERIOD.—For
purposes of subparagraph (A), amounts
shall be treated as having been held by a
plan during any period such contributions
were held (or are treated as held under
this clause) by any individual retirement
plan from which transferred.
‘‘(D) SPECIAL ACCOUNTS.—For rules ap-
plicable to special individual retirement ac-
counts under section 408A, see paragraph (8).’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to contributions (and earnings allo-
cable thereto) which are made after December 31, 1995,
and before January 1, 2001.
Subtitle C—Increase in Deduction
for Health Care Costs of Self-
Employed Individuals
SEC. ll31. INCREASE IN SELF-EMPLOYED INDIVIDUALS’
DEDUCTION FOR HEALTH INSURANCE COSTS.
(a) IN GENERAL.—Section 162(l) (relating to special
rules for health insurance costs of self-employed individ-
uals) is amended—
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(1) by striking ‘‘30 percent’’ in paragraph (1)
and inserting ‘‘the applicable percentage’’, and
(2) by adding at the end the following new
paragraph:
‘‘(6) APPLICABLE PERCENTAGE.—For purposes
of this subsection, the term ‘applicable percentage’
means the percentage determined in accordance with
the following table:
‘‘In the case of taxable years
The applicable
beginning in:
percentage is:
1996 .........................................................................................
1997 .........................................................................................
1998 .........................................................................................
1999 .........................................................................................
2000 .........................................................................................
2001 and thereafter .................................................................
30.’’
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
TITLE X—BUDGET ENFORCEMENT
SEC. 10001. PURPOSE.
The Congress declares that it is essential to—
(1) preserve the deficit reduction achieved by
this Act;
(2) extend the system of discretionary spending
limits for the single discretionary category set forth
in section 601 of the Congressional Budget Act of
1974;
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(3) extend the pay-as-you-go enforcement sys-
tem;
(4) prohibit the consideration of direct spending
or receipts legislation that would decrease the pay-
as-you-go surplus achieved by this Act and created
under section 252 of the Balanced Budget and
Emergency Deficit Contract of 1985; and
(5) provide for additional deficit reduction, in-
vestment, and tax relief in the event that actual defi-
cit reduction exceeds that currently projected by the
Congressional Budget Office to result from enact-
ment of this Act.
SEC. 10002. DISCRETIONARY SPENDING LIMITS.
(a) DEFINITION
OF ‘‘DISCRETIONARY SPENDING
LIMIT’’.—Section 601(a)(2) of the Congressional Budget
Act of 1974 is amended—
(1) in subparagraph (E) by striking the word
‘‘and’’; and
(2) by striking subparagraph (F) and inserting
the following:
‘‘(F) with respect to fiscal year 1996, for the
discretionary category: $502,000,000,000 in new
budget authority and $539,535,000,000 in outlays;
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‘‘(G) with respect to fiscal year 1997, for the
discretionary category: $508,000,000,000 in new
budget authority and $546,851,000,000 in outlays;
‘‘(H) with respect to fiscal year 1998, for the
discretionary category: $514,000,000,000 in new
budget authority and $540,041,000,000 in outlays;
‘‘(I) with respect to fiscal year 1999, for the
discretionary category: $508,000,000,000 in new
budget authority and $542,166,000,000 in outlays;
‘‘(J) with respect to fiscal year 2000, for the
discretionary category: $504,000,000,000 in new
budget authority and $541,759,000,000 in outlays;
‘‘(K) with respect to fiscal year 2001, for the
discretionary category: $500,000,000,000 in new
budget authority and $530,833,000,000 in outlays;
and
‘‘(L) with respect to fiscal year 2002, for the
discretionary category: $482,000,000,000 in new
budget authority and $514,088,000,000 in outlays;’’.
(b) POINT
OF ORDER
IN
THE SENATE.—Section
601(b)(1) of the Congressional Budget Act of 1974 is
amended to read as follows:
‘‘(1) Except as otherwise provided in this Act, it shall
not be in order in the Senate to consider any concurrent
resolution on the budget for fiscal year 1996, 1997, 1998,
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1999, 2000, 2001, or 2002 (or amendment, motion, or
conference report on such a resolution) that would exceed
any of the deficit targets or discretionary spending limits
in this title.’’.
(c) CONFORMING AMENDMENTS.—(1) Section 251 of
the Balanced Budget and Emergency Deficit Control Act
of 1985 is amended—
(A) in subsection (a) by striking ‘‘FISCAL
YEARS 1991–1998 ENFORCEMENT.—’’ and inserting
‘‘FISCAL YEARS 1991–2002 ENFORCEMENT.—’’;
(B) in subsection (b)(1)—
(i) in the matter before subparagraph (A),
by—
(I) striking ‘‘When the President sub-
mits the budget under section 1105(a) of
title 31, United States Code, for budget
year 1992, 1993, 1994, 1995, 1996, 1997,
or 1998’’ and inserting ‘‘When the Presi-
dent submits the budget under section
1105(a) of title 31, United States Code,
for budget year 1992, 1993, 1994, 1995,
1996, 1997, 1998, 1999, 2000, 2001, or
2002’’; and
(II) striking ‘‘the budget shall include,
adjustments to discretionary spending lim-
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its (and those limits as cumulatively ad-
justed) for the budget year and each out-
year through 1998’’ and inserting ‘‘the
budget shall include, adjustments to discre-
tionary spending limits (and those limits as
cumulatively adjusted) for the budget year
and each outyear through 2002’’;
(ii) in paragraph (1)(B), by striking
‘‘budget year 1996, 1997, or 1998,’’ and insert-
ing ‘‘budget year 1996, 1997, 1998, 2000,
2001, or 2002,’’;
(iii) in the matter before subparagraph (A)
in paragraph (2) by—
(I) striking ‘‘When OMB submits a
sequestration report under section 254 (g)
or (h) for fiscal year 1991, 1992, 1993,
1994, 1995, 1996, 1997, or 1998,’’ and in-
serting ‘‘When OMB submits a sequestra-
tion report under section 254(g) or (h) for
fiscal year 1991, 1992, 1993, 1994, 1995,
1996, 1997, 1998, 1999, 2000, 2001, or
2002,’’; and
(II) striking ‘‘for the fiscal year and
each succeeding year through 1998,’’ and
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inserting ‘‘for the fiscal year and each suc-
ceeding year through 2002,’’;
‘‘(iv) by amending paragraph (2)(A) to
read as follows:
‘‘(A) IRS FUNDING.—(i) To the extent
that appropriations are enacted that provide ad-
ditional new budget authority or result in addi-
tional outlays for the Internal Revenue Service
compliance initiative in any fiscal year, the ad-
justments for that year shall be those amounts
of additional new budget authority or additional
outlays (as defined in clause (ii)), but not to ex-
ceed in any fiscal year $405,000,000 in new
budget authority and $405,000,000 in outlays.
‘‘(ii) ADDITIONAL AMOUNTS.—As used in
this subparagraph, the terms ‘additional new
budget authority’ or ‘additional outlays’ shall
mean, for any fiscal year, budget authority or
outlays (as the case may be) in excess of the
amounts requested for that fiscal year for the
Internal Revenue Service in the President’s
Budget for fiscal year 1996.’’;
(v) in paragraph (2)(E)(iv), by striking
‘‘fiscal years 1994, 1995, 1996, 1997, and
1998,’’ and inserting ‘‘fiscal years 1994, 1995,
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1996, 1997, 1998, 1999, 2000, 2001, and
2002’’; and
(vi) in paragraph (2)(F), by striking ‘‘fis-
cal year 1996, 1997, or 1998’’ and inserting
‘‘fiscal year 1996, 1997, 1998, 1999, 2000,
2001, or 2002’’.
(2) REPORTS.—Sections 254(d)(2) and 254(g)(2)(A)
of the Balanced Budget and Emergency Deficit Control
Act of 1985 are each amended by striking ‘‘1998’’ and
inserting ‘‘2002’’.
(3) CONGRESSIONAL ENFORCEMENT.—
(A) Title VI of the Congressional Budget Act of
1974 is amended—
(i) in section 602(c) and (d), by striking
‘‘1995’’ each time it appears and inserting
‘‘2002’’;
(ii) in section 606(a), by striking ‘‘fiscal
year 1992, 1993, 1994, or 1995,’’ and inserting
‘‘any fiscal year’’; and
(iii) in section 606(d)(1), by striking ‘‘fis-
cal years 1992, 1993, 1994, and 1995,’’ and in-
serting any fiscal year’’.
(B) Section 210 of House Concurrent Resolu-
tion 67 (104th Congress) is repealed.
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(4) 
EXPIRATION.—(A) 
Notwithstanding 
section
275(b) of the Balanced Budget and Emergency Deficit
Control Act of 1985, sections 250, 251, 252, and 254
through 258C of that Act, the second sentence of section
904(c) of the Congressional Budget Act, and the second
sentence of section 904(d) of the Congressional Budget
Act shall expire on September 30, 2002.
(B) Section 607 of the Congressional Budget Act of
1974 is amended by striking ‘‘shall apply to fiscal years
1991 to 1998’’ and inserting ‘‘shall apply to fiscal years
1991 to 2002’’
SEC. 10003. ENFORCING PAY-AS-YOU-GO.
(a) Section 252 of the Balanced Budget and Emer-
gency Deficit Control Act of 1985 is amended—
(1) in subsection (a), by striking ‘‘FISCAL YEAR
1992–1998 ENFORCEMENT.’’ and inserting ‘‘FISCAL
YEAR 1992–2002 ENFORCEMENT.’’;
(2) in subsection (d), by striking ‘‘estimate of
the amount of change in outlays or receipts, as the
case may be, in each fiscal year through fiscal year
1998’’ both places that it appears and inserting ‘‘es-
timate of the amount of change in outlays or re-
ceipts, as the case may be, in each fiscal year
through fiscal year 2002’’ both places; and
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(3) in subsection (e), by striking ‘‘for any fiscal
year from 1991 through 1998,’’ and inserting ‘‘for
any fiscal year from 1991 through 2002,’’.
(b) Section 254(g)(3) of the Balanced Budget and
Emergency Deficit Control Act of 1985 is amended by
striking ‘‘1998’’ and inserting ‘‘2002’’.
(c) Upon enactment of this Act, the director of the
Office of Management and Budget shall reduce the bal-
ances of direct spending and receipts legislation applicable
to each fiscal year under section 252 of the Balanced
Budget and Emergency Deficit Control Act of 1985 by
an amount equal to the net deficit reduction achieved
through the enactment in this Act of direct spending and
receipts legislation for that year.
SEC. 10004. FISCAL DIVIDEND FOR DEFICIT REDUCTION, IN-
VESTMENT, AND TAX REDUCTION.
Title VI of the Congressional Budget Act is amended
by inserting at the end thereof the following new section:
‘‘SEC. 608. FISCAL DIVIDEND FOR DEFICIT REDUCTION, IN-
VESTMENT, AND TAX REDUCTION.
‘‘(a) DEFINITIONS.—
‘‘(1) DEFICIT TARGETS.—The term ‘deficit tar-
get’ means—
‘‘(A) with respect to fiscal year 1999,
$131,000,000,000;
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‘‘(B) with respect to fiscal year 2000,
$114,000,000,000;
‘‘(C) with respect to fiscal year 2001,
$54,000,000,000; and
‘‘(D) with respect to fiscal year 2002,
$0.’’.
‘‘(2) FISCAL DIVIDEND.—The term ‘fiscal divi-
dend’ means, for any fisal year, the amount by
which the deficit target exceeds the actual deficit.
‘‘(b) USE OF THE FISCAL DIVIDEND IN THE CON-
GRESSIONAL BUDGET PROCESS—
‘‘(1) FILINGS—As soon as practicable after the
actual deficit for th prior fiscal year is known, the
Chairs of the Committees on the Budget of the Sen-
ate and House shall file with their respective
Houses—
‘‘(A) revised allocations under sections
302(a) and 602(a) of the Congressional Budget
Act of 1974 to the Committees on Appropria-
tions for the current fiscal year and correspond-
ing aggregates, increased by one third of the
fiscal dividend for the prior fiscal year; and
‘‘(B) revised revenue aggregates for the
current fiscal year, decreased by one third of
the fiscal dividend for the prior fiscal year.
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‘‘(2) EFFECT OF REVISED ALLOCATIONS AND
AGGREGATES.—Revised allocations and aggregates
submitted under this subsection shall be considered
for the purposes of the Congressional Budget Act of
1974 as allocations and aggregates contained in the
most recently adopted concurrent resolution on the
budget.
‘‘(B) USE OF THE FISCAL DIVIDEND IN
THE
ENFORCEMENT
OF
DISCRETTIONARY
SPENDING
LIMITS.—As soon as practicable
after the actual deficit for the prior fiscal year
is known, the Director of the Office of Manage-
ment and Budget shall increase the discre-
tionary spending limits for the current fiscal
year by one third of the fiscal dividend for the
prior fiscal year.
‘‘(C) USE OF THE FISCAL DIVIDEND IN
THE
ENFORCEMENT
OF
PAY-AS-YOU-GO.—As
soon as practicable after the actual deficit for
the prior fiscal year is known, the Director of
the Office of Management and Budget shall
credit the balances of direct spending and re-
ceipts legislation applicable to the current fiscal
year under section 252 of the Balanced Budget
and Emergency Deficit Control Act of 1985 by
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one third of the fiscal dividend for the prior fis-
cal year.’’
SEC. 10005. EXERCISE OF RULE-MAKING POWERS
The Congress enacts the provisions of this part—
(1) as an exercise of the rule-making power of
the Senate and the House of Representatives, re-
spectively, and as such these provisions shall be con-
sidered as part of the rules of each House, respec-
tively, or of that House to which they specifically
apply, and such rules shall supersede other rules
only to the extent that they are inconsistent there-
with; and
(2) with full recognition of the constitutional
right of either House to change such rules (so far
as relating to such House) at any time, in the same
manner, and to the same extent as in the case of
any other rule of such House.
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