I 
108TH CONGRESS 
2D SESSION 
H. R. 3925
To amend the Congressional Budget Act of 1974 and the Balanced Budget 
and Emergency Deficit Control Act of 1985 to reform Federal budget 
procedures, provide for budget discipline, accurately account for Govern-
ment spending, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 10, 2004
Mr. KIRK (for himself, Mr. BASS, Mr. CASTLE, Mr. EHLERS, Mr. FEENEY, 
Mr. FRANKS of Arizona, Mr. GIBBONS, Mr. GILLMOR, Mr. HOUGHTON, 
Mrs. KELLY, Mrs. MYRICK, Mr. PLATTS, Mr. RYAN of Wisconsin, Mr. 
SHAYS, Mr. UPTON, Mrs. BIGGERT, and Mrs. JOHNSON of Connecticut) 
introduced the following bill; which was referred to the Committee on the 
Budget, for a period ending not later than June 1, 2004, and in addition 
to the Committees on Rules, Ways and Means, and Government Reform, 
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 amend the Congressional Budget Act of 1974 and the 
Balanced Budget and Emergency Deficit Control Act 
of 1985 to reform Federal budget procedures, provide 
for budget discipline, accurately account for Government 
spending, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Deficit Control Act of 2004’’. 
(b) TABLE OF CONTENTS.—
Sec. 1. Short title; table of contents. 
Sec. 2. Effective date. 
TITLE I—A SIMPLE AND BINDING BUDGET 
Subtitle A—Joint Budget Resolutions 
Sec. 101. Declaration of purposes for the Budget Act. 
Sec. 102. The timetable. 
Sec. 103. Annual joint resolutions on the budget. 
Sec. 104. Budget required before spending bills may be considered. 
Sec. 105. Amendments to effectuate joint resolutions on the budget. 
Subtitle B—Rainy Day Fund for Emergencies 
Sec. 111. Purpose. 
Sec. 112. Repeal of adjustments for emergencies. 
Sec. 113. OMB emergency criteria. 
Sec. 114. Development of guidelines for application of emergency definition. 
Sec. 115. Reserve fund for emergencies in President’s budget. 
Sec. 116. Adjustments and reserve fund for emergencies in joint budget resolu-
tions. 
Sec. 117. Application of section 306 to emergencies in excess of amounts in re-
serve fund. 
Sec. 118. Up-to-date tabulations. 
Sec. 119. Prohibition on amendments to emergency reserve fund. 
Subtitle C—The Baseline 
Sec. 121. Elimination of inflation adjustment. 
Sec. 122. The President’s budget. 
Sec. 123. The congressional budget. 
Sec. 124. Congressional budget office reports to committees. 
Sec. 125. Treatment of emergencies. 
TITLE II—IMPLEMENTING FEDERAL SPENDING DISCLIPINE 
Subtitle A—Spending Safeguards on the Growth of Entitlements and 
Mandatories 
Sec. 201. Spending caps on growth of entitlements and mandatories. 
Sec. 202. Exempt programs and activities. 
Sec. 203. Exceptions, limitations, and special rules. 
Sec. 204. Point of order. 
Sec. 205. Technical and conforming amendments. 
Subtitle B—Discretionary Spending Limits 
Sec. 211. Enforcing discretionary spending limits.
TITLE III—COMBATING WASTE, FRAUD, AND ABUSE. 
Subtitle A—Enhanced Rescissions of Budget Authority Identified by the 
President as Wasteful Spending 
Sec. 301. Enhanced consideration of certain proposed rescissions. 
Subtitle B—Commission to Eliminate Waste, Fraud, and Abuse 
Sec. 311. Establishment of Commission. 
Sec. 312. Duties of the Commission. 
Sec. 313. Powers of the Commission. 
Sec. 314. Commission personnel matters. 
Sec. 315. Termination of the Commission. 
Sec. 316. Authorization of appropriations. 
TITLE IV—TRUTH IN ACCOUNTING 
Subtitle A—Accrual Funding of Pensions and Retirement Pay for Federal 
Employees and Uniformed Services Personnel 
Sec. 401. Civil Service Retirement System. 
Sec. 402. Central Intelligence Agency Retirement and Disability System. 
Sec. 403. Foreign Service Retirement and Disability System. 
Sec. 404. Public Health Service Commissioned Corps Retirement System. 
Sec. 405. National Oceanic and Atmospheric Administration Commissioned Of-
ficer Corps Retirement System. 
Sec. 406. Coast Guard Military Retirement System. 
Subtitle B—Accrual Funding of Post-Retirement Health Benefits Costs for 
Federal Employees 
Sec. 411. Federal employees health benefits fund. 
Sec. 412. Funding uniformed services health benefits for all retirees. 
Sec. 413. Effective date. 
Subtitle C—Limit on the Public Debt 
Sec. 421. Limit on public debt. 
TITLE V—EXPEDITING THE BUDGET PROCESS 
Subtitle A—Further Enforcement Amendments 
Sec. 501. Super-majority points of order. 
Sec. 502. Budget resolution enforcement point of order. 
Sec. 503. Point of order waiver protection. 
Subtitle B—PAYGO Extension 
Sec. 511. PAYGO extension.
SEC. 2. EFFECTIVE DATE. 
Except as otherwise specifically provided, this Act 
and the amendments made by this Act shall become effec-
tive on the date of enactment of this Act and shall apply 
with respect to fiscal years beginning after September 30, 
2005. 
TITLE I—A SIMPLE AND BINDING 
BUDGET 
Subtitle A—Joint Budget 
Resolutions 
SEC. 101. DECLARATION OF PURPOSES FOR THE BUDGET 
ACT. 
Paragraphs (1) and (2) of section 2 of the Congres-
sional Budget and Impoundment Control Act of 1974 are 
amended to read as follows: 
‘‘(1) to assure effective control over the budg-
etary process; 
‘‘(2) to facilitate the determination each year of 
the appropriate level of Federal revenues and ex-
penditures by the Congress and the President;’’. 
SEC. 102. THE TIMETABLE. 
The timetable set forth in section 300 of the Congres-
sional Budget Act of 1974 is amended by striking ‘‘con-
current’’ each place it appears and inserting ‘‘joint’’. 
SEC. 103. ANNUAL JOINT RESOLUTIONS ON THE BUDGET. 
(a) CONTENT OF ANNUAL JOINT RESOLUTIONS ON 
THE BUDGET.—Section 301(a) of the Congressional 
Budget Act of 1974 is amended as follows:
(1) Strike paragraph (4) and insert the fol-
lowing new paragraph: 
‘‘(4) subtotals of new budget authority and out-
lays for nondefense discretionary spending, defense 
discretionary spending, direct spending (excluding 
interest), and interest; and for fiscal years to which 
the amendments made by subtitle B of title I of the 
Deficit Control Act of 2004 apply, subtotals of new 
budget authority and outlays for emergencies;’’. 
(2) Strike the last sentence of such subsection. 
(b) ADDITIONAL MATTERS IN JOINT RESOLUTION.—
Section 301(b) of the Congressional Budget Act of 1974 
is amended as follows: 
(1) Strike paragraphs (2), (4), and (6) through 
(9). 
(2) After paragraph (1), insert the following 
new paragraph: 
‘‘(2) if submitted by the Committee on Ways 
and Means of the House of Representatives or the 
Committee on Finance of the Senate to the Com-
mittee on the Budget of that House of Congress, 
amend section 3101 of title 31, United States Code, 
to change the statutory limit on the public debt;’’. 
(3) After paragraph (3), insert the following 
new paragraph:
‘‘(4) require such other congressional proce-
dures, relating to the budget, as may be appropriate 
to carry out the purposes of this Act;’’; and 
(4) After paragraph (5), insert the following 
new paragraph: 
‘‘(6) set forth procedures in the Senate whereby 
committee allocations, aggregates, and other levels 
can be revised for legislation if that legislation would 
not increase the deficit, or would not increase the 
deficit when taken with other legislation enacted 
after the adoption of the resolution, for the first fis-
cal year or the total period of fiscal years covered by 
the resolution.’’. 
(c) REQUIRED
CONTENTS
OF
REPORT.—Section 
301(e)(2) of the Congressional Budget Act of 1974 is 
amended as follows: 
(1) Redesignate subparagraphs (A), (B), (C), 
(D), (E), and (F) as subparagraphs (B), (C), (E), 
(F), (H), and (I), respectively. 
(2) Before subparagraph (B) (as redesignated), 
insert the following new subparagraph: 
‘‘(A) new budget authority and outlays for 
each major functional category, based on alloca-
tions of the total levels set forth pursuant to 
subsection (a)(1);’’.
(3) In subparagraph (C) (as redesignated), 
strike ‘‘mandatory’’ and insert ‘‘direct spending’’. 
(4) After subparagraph (C) (as redesignated), 
insert the following new subparagraph: 
‘‘(D) a measure, as a percentage of gross 
domestic product, of total outlays, total Federal 
revenues, the surplus or deficit, and new out-
lays for nondefense discretionary spending, de-
fense spending, and direct spending as set forth 
in such resolution;’’. 
(5) After subparagraph (F) (as redesignated), 
insert the following new subparagraph: 
‘‘(G) if the joint resolution on the budget 
includes any allocation to a committee other 
than the Committee on Appropriations of levels 
in excess of current law levels, a justification 
for not subjecting any program, project, or ac-
tivity (for which the allocation is made) to an-
nual discretionary appropriations;’’. 
(d) ADDITIONAL CONTENTS OF REPORT.—Section 
301(e)(3) of the Congressional Budget Act of 1974 is 
amended as follows: 
(1) Redesignate subparagraphs (A) and (B) as 
subparagraphs (B) and (C), respectively, strike sub-
paragraphs (C) and (D), and redesignate subpara-
graph (E) as subparagraph (D). 
(2) Before subparagraph (B), insert the fol-
lowing new subparagraph: 
‘‘(A) reconciliation directives described in 
section 310;’’. 
(e) PRESIDENT’S BUDGET SUBMISSION TO THE CON-
GRESS.—(1) The first two sentences of section 1105(a) 
of title 31, United States Code, are amended to read as 
follows: 
‘‘On or after the first Monday in January but not later 
than the first Monday in February of each year the Presi-
dent shall submit a budget of the United States Govern-
ment for the following fiscal year which shall set forth the 
following levels: 
‘‘(A) totals of new budget authority and out-
lays; 
‘‘(B) total Federal revenues and the amount, if 
any, by which the aggregate level of Federal reve-
nues should be increased or decreased by bills and 
resolutions to be reported by the appropriate com-
mittees; 
‘‘(C) the surplus or deficit in the budget; 
‘‘(D) subtotals of new budget authority and 
outlays for nondefense discretionary spending, de-
fense discretionary spending, direct spending, and 
interest; and for fiscal years to which the amend-
ments made by subtitle B of title I of the Deficit 
Control Act of 2004 apply, subtotals of new budget 
authority and outlays for emergencies; and 
‘‘(E) the public debt. 
Each budget submission shall include a budget message 
and summary and supporting information and, as a sepa-
rately delineated statement, the levels required in the pre-
ceding sentence for at least each of the 9 ensuing fiscal 
years.’’. 
(2) The third sentence of section 1105(a) of title 31, 
United States Code, is amended by inserting ‘‘submission’’ 
after ‘‘budget’’. 
(f) LIMITATION ON CONTENTS OF BUDGET RESOLU-
TIONS.—Section 305 of the Congressional Budget Act of 
1974 is amended by adding at the end the following new 
subsection: 
‘‘(e) LIMITATION ON CONTENTS.—(1) It shall not be 
in order in the House of Representatives or in the Senate 
to consider any joint resolution on the budget or any 
amendment thereto or conference report thereon that con-
tains any matter referred to in paragraph (2). 
‘‘(2) Any joint resolution on the budget or any 
amendment thereto or conference report thereon that con-
tains any matter not permitted in section 301(a) or (b) 
shall not be treated in the House of Representatives or 
the Senate as a budget resolution under subsection (a) or 
(b) or as a conference report on a budget resolution under 
subsection (c) of this section.’’. 
SEC. 104. BUDGET REQUIRED BEFORE SPENDING BILLS 
MAY BE CONSIDERED. 
(a) AMENDMENTS TO SECTION 302.—Section 302(a) 
of the Congressional Budget Act of 1974 is amended by 
striking paragraph (5). 
(b) AMENDMENTS
TO SECTION 303 AND CON-
FORMING AMENDMENTS.—(1) Section 303 of the Con-
gressional Budget Act of 1974 is amended by striking ‘‘(a) 
IN GENERAL.—’’, by striking ‘‘as reported to the House 
or Senate’’, by striking ‘‘to become effective’’ in paragraph 
(1), and by striking subsections (b) and (c); and 
(2) by striking its section heading and inserting the 
following new section heading: ‘‘CONSIDERATION
OF 
BUDGET-RELATED
LEGISLATION
BEFORE
BUDGET
BE-
COMES LAW’’. 
(c) 
ADDITIONAL
AMENDMENTS.—(1) 
Section 
302(g)(1) of the Congressional Budget Act of 1974 is 
amended by striking ‘‘and, after April 15, section 303’’.
(2)(A) Section 904(c)(1) of the Congressional Budget 
Act of 1974 is amended by inserting ‘‘303,’’ before 
‘‘305(b)(2),’’. 
(B) Section 904(d)(2) of the Congressional Budget 
Act of 1974 is amended by inserting ‘‘303,’’ before 
‘‘305(b)(2),’’. 
SEC. 105. AMENDMENTS TO EFFECTUATE JOINT RESOLU-
TIONS ON THE BUDGET. 
(a) DEFINITION.—Paragraph (4) of section 3 of the 
Congressional Budget Act of 1974 is amended to read as 
follows: 
‘‘(4) the term ‘joint resolution on the budget’ 
means—
‘‘(A) a joint resolution setting forth the 
budget for the United States Government for a 
fiscal year as provided in section 301; and 
‘‘(B) any other joint resolution revising the 
budget for the United States Government for a 
fiscal year as described in section 304.’’. 
(b) ADDITIONAL AMENDMENTS TO THE CONGRES-
SIONAL BUDGET AND IMPOUNDMENT CONTROL ACT OF 
1974.—(1)(A) Sections 301, 302, 303, 305, 308, 310, 
311, 312, 314, 405, and 904 of the Congressional Budget 
Act of 1974 (2 U.S.C. 621 et seq.) are amended by strik-
ing ‘‘concurrent’’ each place it appears and inserting 
‘‘joint’’. 
(B)(i) Sections 302(d), 302(g), 308(a)(1)(A), and 
310(d)(1) of the Congressional Budget Act of 1974 are 
amended by striking ‘‘most recently agreed to concurrent 
resolution on the budget’’ each place it occurs and insert-
ing ‘‘most recently enacted joint resolution on the budget 
or agreed to concurrent resolution on the budget (as appli-
cable)’’. 
(ii) The section heading of section 301 is amended 
by striking ‘‘adoption of concurrent resolution’’ and insert-
ing ‘‘joint resolutions’’; and 
(iii) Section 304 of such Act is amended to read as 
follows: 
‘‘PERMISSIBLE REVISIONS OF BUDGET RESOLUTIONS 
‘‘SEC. 304. At any time after the joint resolution on 
the budget for a fiscal year has been enacted pursuant 
to section 301, and before the end of such fiscal year, the 
two Houses and the President may enact a joint resolution 
on the budget which revises or reaffirms the joint resolu-
tion on the budget for such fiscal year most recently en-
acted.’’. 
(C) Sections 302, 303, 310, and 311, of such Act 
are amended by striking ‘‘agreed to’’ each place it appears 
and by inserting ‘‘enacted’’.
(2)(A) Paragraph (4) of section 3 of the Congres-
sional Budget and Impoundment Control Act of 1974 is 
amended by striking ‘‘concurrent’’ each place it appears 
and by inserting ‘‘joint’’. 
(B) The table of contents set forth in section 1(b) 
of such Act is amended—
(i) in the item relating to section 301, by strik-
ing ‘‘adoption of concurrent resolution’’ and insert-
ing ‘‘joint resolutions’’; 
(ii) by striking the item relating to section 303 
and inserting the following:
‘‘Sec. 303. Consideration of budget-related legislation before budget becomes 
law.’’;
(iii) by striking ‘‘concurrent’’ and inserting 
‘‘joint’’ in the item relating to section 305. 
(c) CONFORMING AMENDMENTS TO THE RULES OF 
THE HOUSE
OF REPRESENTATIVES.—Clauses 1(e)(1), 
4(a)(4), 4(b)(2), 4(f)(1)(A), and 4(f)(2) of rule X, clause 
10 of rule XVIII, and clause 10 of rule XX of the Rules 
of the House of Representatives are amended by striking 
‘‘concurrent’’ each place it appears and inserting ‘‘joint’’. 
(d) CONFORMING AMENDMENTS TO THE BALANCED 
BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF 
1985.—Section 258C(b)(1) of the Balanced Budget and 
Emergency Deficit Control Act of 1985 (2 U.S.C.
907d(b)(1)) is amended by striking ‘‘concurrent’’ and in-
serting ‘‘joint’’. 
(e) CONFORMING AMENDMENTS
TO SECTION 310 
REGARDING RECONCILIATION DIRECTIVES.—(1) The side 
heading of section 310(a) of the Congressional Budget Act 
of 1974 (as amended by subsection (b)) is further amend-
ed by inserting ‘‘JOINT EXPLANATORY STATEMENT AC-
COMPANYING CONFERENCE REPORT ON’’ before ‘‘JOINT’’. 
(2) Section 310(a) of such Act is amended by striking 
‘‘A’’ and inserting ‘‘The joint explanatory statement ac-
companying the conference report on a’’. 
(3) The first sentence of section 310(b) of such Act 
is amended by striking ‘‘If’’ and inserting ‘‘If the joint 
explanatory statement accompanying the conference re-
port on’’. 
(4) Section 310(c)(1) of such Act is amended by in-
serting ‘‘the joint explanatory statement accompanying 
the conference report on’’ after ‘‘pursuant to’’. 
(f) CONFORMING AMENDMENTS TO SECTION 3 RE-
GARDING DIRECT SPENDING.—Section 3 of the Congres-
sional Budget and Impoundment Control Act of 1974 is 
amended by adding at the end the following new para-
graph: 
‘‘(11) The term ‘direct spending’ has the mean-
ing given to such term in section 250(c)(8) of the
Balanced Budget and Emergency Deficit Control 
Act of 1985.’’. 
Subtitle B—Rainy Day Fund for 
Emergencies 
SEC. 111. PURPOSE. 
The purposes of this subtitle are to—
(1) develop budgetary and fiscal procedures for 
emergencies; 
(2) subject spending for emergencies to budg-
etary procedures and controls; and 
(3) establish criteria for determining compliance 
with emergency requirements. 
SEC. 112. REPEAL OF ADJUSTMENTS FOR EMERGENCIES. 
(a) ELIMINATION OF EMERGENCY DESIGNATION.—
Sections 252(e) and 252(d)(4)(B) of the Balanced Budget 
and Emergency Deficit Control Act of 1985 are repealed. 
(b) ELIMINATION OF ADJUSTMENTS.—Section 314 of 
the Congressional Budget Act of 1974 is repealed. 
(c) CONFORMING AMENDMENT.—Clause 2 of rule 
XXI of the Rules of the House of Representatives is 
amended by repealing paragraph (e) and by redesignating 
paragraph (f) as paragraph (e). 
SEC. 113. OMB EMERGENCY CRITERIA. 
(a) DEFINITION OF EMERGENCY.—Section 3 of the 
Congressional Budget and Impoundment Control Act of
1974 (as amended by section 105(f)) is further amended 
by adding at the end the following new paragraph: 
‘‘(12)(A) The term ‘emergency’ means a situa-
tion that—
‘‘(i) requires new budget authority and 
outlays (or new budget authority and the out-
lays flowing therefrom) for the prevention or 
mitigation of, or response to, loss of life or 
property, or a threat to national security; and 
‘‘(ii) is unanticipated. 
‘‘(B) As used in subparagraph (A), the term 
‘unanticipated’ means that the situation is—
‘‘(i) sudden, which means quickly coming 
into being or not building up over time; 
‘‘(ii) urgent, which means a pressing and 
compelling need requiring immediate action; 
‘‘(iii) unforeseen, which means not pre-
dicted or anticipated as an emerging need; and 
‘‘(iv) temporary, which means not of a per-
manent duration.’’. 
(b) CONFORMING AMENDMENT.—The term ‘emer-
gency’ has the meaning given to such term in section 3 
of the Congressional Budget and Impoundment Control 
Act of 1974.’’.
SEC. 114. DEVELOPMENT OF GUIDELINES FOR APPLICA-
TION OF EMERGENCY DEFINITION. 
Not later than 5 months after the date of enactment 
of this Act, the chairmen of the Committees on the Budget 
(in consultation with the President) shall, after consulting 
with the chairmen of the Committees on Appropriations 
and applicable authorizing committees of their respective 
Houses and the Directors of the Congressional Budget Of-
fice and the Office of Management and Budget, jointly 
publish in the Congressional Record guidelines for applica-
tion of the definition of emergency set forth in section 
3(12) of the Congressional Budget and Impoundment 
Control Act of 1974. 
SEC. 115. RESERVE FUND FOR EMERGENCIES IN PRESI-
DENT’S BUDGET. 
Section 1105(f) of title 31, United States Code is 
amended by adding at the end the following new sen-
tences: ‘‘Such budget submission shall also comply with 
the requirements of section 316(b) of the Congressional 
Budget Act of 1974 and, in the case of any budget author-
ity requested for an emergency, such submission shall in-
clude a detailed justification of why such emergency is an 
emergency within the meaning of section 3(12) of the Con-
gressional Budget Act of 1974.’’.
SEC. 116. ADJUSTMENTS AND RESERVE FUND FOR EMER-
GENCIES IN JOINT BUDGET RESOLUTIONS. 
(a) EMERGENCIES.—Title III of the Congressional 
Budget Act of 1974 is amended by adding at the end the 
following new section: 
‘‘EMERGENCIES 
‘‘SEC. 316. (a) ADJUSTMENTS.—
‘‘(1) IN GENERAL.—After the reporting of a bill 
or joint resolution or the submission of a conference 
report thereon that provides budget authority for 
any emergency as identified pursuant to subsection 
(d) that is not covered by subsection (c)—
‘‘(A) the chairman of the Committee on 
the Budget of the House of Representatives or 
the Senate shall determine and certify, pursu-
ant to the guidelines referred to in section 114 
of the Deficit Control Act of 2004, the portion 
(if any) of the amount so specified that is for 
an emergency within the meaning of section 
3(12); and 
‘‘(B) such chairman shall make the adjust-
ment set forth in paragraph (2) for the amount 
of new budget authority (or outlays) in that 
measure and the outlays flowing from that 
budget authority.
‘‘(2) MATTERS TO BE ADJUSTED.—The adjust-
ments referred to in paragraph (1) are to be made 
to the allocations made pursuant to the appropriate 
joint resolution on the budget pursuant to section 
302(a) and shall be in an amount not to exceed the 
amount reserved for emergencies pursuant to the re-
quirements of subsection (b). 
‘‘(b) RESERVE FUND FOR EMERGENCIES.—
‘‘(1) AMOUNTS.—The amount set forth in the 
reserve fund for emergencies (other than those cov-
ered by subsection (c)) for budget authority and out-
lays for a fiscal year pursuant to section 301(a)(4) 
shall equal—
‘‘(A) the average of the enacted levels of 
budget authority for emergencies (other than 
those covered by subsection (c)) in the 5 fiscal 
years preceding the current year; and 
‘‘(B) the average of the levels of outlays 
for emergencies in the 5 fiscal years preceding 
the current year flowing from the budget au-
thority referred to in subparagraph (A), but 
only in the fiscal year for which such budget 
authority first becomes available for obligation. 
‘‘(2) AVERAGE LEVELS.—For purposes of para-
graph (1), the amount used for a fiscal year to cal-
culate the average of the enacted levels when one or 
more of such 5 preceding fiscal years is any of fiscal 
years 2000 through 2004 is as follows: the amount 
of enacted levels of budget authority and the amount 
of new outlays flowing therefrom for emergencies, 
but only in the fiscal year for which such budget au-
thority first becomes available for obligation for each 
of such 5 fiscal years, which shall be determined by 
the Committees on the Budget of the House of Rep-
resentatives and the Senate after receipt of a report 
on such matter transmitted to such committees by 
the Director of the Congressional Budget Office 6 
months after the date of enactment of this section 
and thereafter in February of each calendar year. 
‘‘(c) TREATMENT OF EMERGENCIES TO FUND CER-
TAIN MILITARY OPERATIONS.—Whenever the Committee 
on Appropriations reports any bill or joint resolution that 
provides budget authority for any emergency that is a 
threat to national security and the funding of which car-
ries out a military operation authorized by a declaration 
of war or a joint resolution authorizing the use of military 
force and the report accompanying that bill or joint resolu-
tion, pursuant to subsection (d), identifies any provision 
that increases outlays or provides budget authority (and 
the outlays flowing therefrom) for such emergency, the en-
actment of which would cause the total amount of budget 
authority or outlays provided for emergencies for the 
budget year in the joint resolution on the budget (pursu-
ant to section 301(a)(4)) to be exceeded: 
‘‘(A) Such bill or joint resolution shall be re-
ferred to the Committee on the Budget of the House 
or the Senate, as the case may be, with instructions 
to report it without amendment, other than that 
specified in subparagraph (B), within 5 legislative 
days of the day in which it is reported from the orig-
inating committee. If the Committee on the Budget 
of either House fails to report a bill or joint resolu-
tion referred to it under this subparagraph within 
such 5-day period, the committee shall be automati-
cally discharged from further consideration of such 
bill or joint resolution and such bill or joint resolu-
tion shall be placed on the appropriate calendar. 
‘‘(B) An amendment to such a bill or joint reso-
lution referred to in this subsection shall only consist 
of an exemption from section 251 of the Balanced 
Budget and Emergency Deficit Control Act of 1985 
of all or any part of the provisions that provide 
budget authority (and the outlays flowing therefrom) 
for such emergency if the committee determines, 
pursuant to the guidelines referred to in section 114
of the Deficit Control Act of 2004, that such budget 
authority is for an emergency within the meaning 
of section 3(12). 
‘‘(C) If such a bill or joint resolution is reported 
with an amendment specified in subparagraph (B) 
by the Committee on the Budget of the House of 
Representatives or the Senate, then the budget au-
thority and resulting outlays that are the subject of 
such amendment shall not be included in any deter-
minations under section 302(f) or 311(a) for any 
bill, joint resolution, amendment, motion, or con-
ference report. 
‘‘(d) COMMITTEE NOTIFICATION
OF EMERGENCY 
LEGISLATION.—Whenever the Committee on Appropria-
tions or any other committee of either House (including 
a committee of conference) reports any bill or joint resolu-
tion that provides budget authority for any emergency, the 
report accompanying that bill or joint resolution (or the 
joint explanatory statement of managers in the case of a 
conference report on any such bill or joint resolution) shall 
identify all provisions that provide budget authority and 
the outlays flowing therefrom for such emergency and in-
clude a statement of the reasons why such budget author-
ity meets the definition of an emergency pursuant to the
guidelines referred to in section 114 of the Deficit Control 
Act of 2004.’’. 
(b) CONFORMING AMENDMENT.—The table of con-
tents set forth in section 1(b) of the Congressional Budget 
and Impoundment Control Act of 1974 is amended by in-
serting after the item relating to section 315 the following 
new item:
‘‘Sec. 316. Emergencies.’’.
SEC. 117. APPLICATION OF SECTION 306 TO EMERGENCIES 
IN EXCESS OF AMOUNTS IN RESERVE FUND. 
Section 306 of the Congressional Budget Act of 1974 
is amended by inserting at the end the following new sen-
tence: ‘‘No amendment reported by the Committee on the 
Budget (or from the consideration of which such com-
mittee has been discharged) pursuant to section 316(c) 
may be amended.’’. 
SEC. 118. UP-TO-DATE TABULATIONS. 
Section 308(b)(2) of the Congressional Budget Act 
of 1974 is amended by striking ‘‘and’’ at the end of sub-
paragraph (B), by striking the period at the end of sub-
paragraph (C) and inserting ‘‘; and’’, and by adding at 
the end the following new subparagraph: 
‘‘(D) shall include an up-to-date tabulation 
of amounts remaining in the reserve fund for 
emergencies.’’.
SEC. 119. PROHIBITION ON AMENDMENTS TO EMERGENCY 
RESERVE FUND. 
(a) POINT OF ORDER.—Section 305 of the Congres-
sional Budget Act of 1974 (as amended by section 103(f)) 
is further amended by adding at the end the following new 
subsection: 
‘‘(f) POINT OF ORDER REGARDING EMERGENCY RE-
SERVE FUND.—It shall not be in order in the House of 
Representatives or in the Senate to consider an amend-
ment to a joint resolution on the budget which changes 
the amount of budget authority and outlays set forth in 
section 301(a)(4) for emergency reserve fund.’’. 
(b) TECHNICAL AMENDMENT.—(1) Section 904(c)(1) 
of the Congressional Budget Act of 1974 is amended by 
inserting ‘‘305(e), 305(f),’’ after ‘‘305(c)(4),’’. 
(2) Section 904(d)(2) of the Congressional Budget 
Act of 1974 is amended by inserting ‘‘305(e), 305(f),’’ 
after ‘‘305(c)(4),’’.
Subtitle C—The Baseline 
SEC. 121. ELIMINATION OF INFLATION ADJUSTMENT. 
Section 257(c) of the Balanced Budget and Emer-
gency Deficit Control Act of 1985 is amended—
(1) in paragraph (1) by striking ‘‘for inflation 
as specified in paragraph (5),’’; and 
(2) by striking paragraph (5) and redesignating 
paragraph (6) as paragraph (5).
SEC. 122. THE PRESIDENT’S BUDGET. 
(a) Paragraph (5) of section 1105(a) of title 31, 
United States Code, is amended to read as follows: 
‘‘(5) except as provided in subsection (b) of this 
section, estimated expenditures and appropriations 
for the current year and estimated expenditures and 
proposed appropriations the President decides are 
necessary to support the Government in the fiscal 
year for which the budget is submitted and the 4 fis-
cal years following that year, and, except for detailed 
budget estimates, the percentage change from the 
current year to the fiscal year for which the budget 
is submitted for estimated expenditures and for ap-
propriations.’’. 
(b) Section 1105(a)(6) of title 31, United States 
Code, is amended to read as follows: 
‘‘(6) estimated receipts of the Government in 
the current year and the fiscal year for which the 
budget is submitted and the 4 fiscal years after that 
year under—
‘‘(A) laws in effect when the budget is sub-
mitted; and 
‘‘(B) proposals in the budget to increase 
revenues, 
and the percentage change (in the case of each cat-
egory referred to in subparagraphs (A) and (B)) be-
tween the current year and the fiscal year for which 
the budget is submitted and between the current 
year and each of the 9 fiscal years after the fiscal 
year for which the budget is submitted.’’. 
(c) Section 1105(a)(12) of title 31, United States 
Code, is amended to read as follows: 
‘‘(12) for each proposal in the budget for legis-
lation that would establish or expand a Government 
activity or function, a table showing—
‘‘(A) the amount proposed in the budget 
for appropriation and for expenditure because 
of the proposal in the fiscal year for which the 
budget is submitted; 
‘‘(B) the estimated appropriation required 
because of the proposal for each of the 4 fiscal 
years after that year that the proposal will be 
in effect; and 
‘‘(C) the estimated amount for the same 
activity or function, if any, in the current fiscal 
year, 
and, except for detailed budget estimates, the per-
centage change (in the case of each category re-
ferred to in subparagraphs (A), (B), and (C)) be-
tween the current year and the fiscal year for which 
the budget is submitted.’’.
(d) Section 1105(a)(18) of title 31, United States 
Code, is amended by inserting ‘‘new budget authority 
and’’ before ‘‘budget outlays’’. 
(e) Section 1105(a) of title 31, United States Code, 
is amended by adding at the end the following new para-
graphs: 
‘‘(35) a comparison of levels of estimated ex-
penditures and proposed appropriations for each 
function and subfunction in the current fiscal year 
and the fiscal year for which the budget is sub-
mitted, along with the proposed increase or decrease 
of spending in percentage terms for each function 
and subfunction. 
‘‘(36) a table on sources of growth in total di-
rect spending under current law and as proposed in 
this budget submission for the budget year and the 
ensuing 9 fiscal years, which shall include changes 
in outlays attributable to the following: cost-of-living 
adjustments; changes in the number of program re-
cipients; increases in medical care prices, utilization 
and intensity of medical care; and residual factors.’’. 
(f) Section 1109(a) of title 31, United States Code, 
is amended by inserting after the first sentence the fol-
lowing new sentence: ‘‘For discretionary spending, these 
estimates shall assume the levels set forth in the discre-
tionary spending limits under section 251(b) of the Bal-
anced Budget and Emergency Deficit Control Act of 1985, 
as adjusted, for the appropriate fiscal years (and if no 
such limits are in effect, these estimates shall assume the 
adjusted levels for the most recent fiscal year for which 
such levels were in effect).’’. 
SEC. 123. THE CONGRESSIONAL BUDGET. 
Section 301(e) of the Congressional Budget Act of 
1974 (as amended by section 103) is further amended—
(1) in paragraph (1), by inserting at the end 
the following: ‘‘The basis of deliberations in devel-
oping such joint resolution shall be the estimated 
budgetary levels for the preceding fiscal year. Any 
budgetary levels pending before the committee and 
the text of the joint resolution shall be accompanied 
by a document comparing such levels or such text to 
the estimated levels of the prior fiscal year. Any 
amendment offered in the committee that changes a 
budgetary level and is based upon a specific policy 
assumption for a program, project, or activity shall 
be accompanied by a document indicating the esti-
mated amount for such program, project, or activity 
in the current year.’’; and 
(2) in paragraph (2), by striking ‘‘and’’ at the 
end of subparagraph (H) (as redesignated), by strik-
ing the period and inserting ‘‘; and’’ at the end of 
subparagraph (I) (as redesignated), and by adding 
at the end the following new subparagraph: 
‘‘(J) a comparison of levels for the current 
fiscal year with proposed spending and revenue 
levels for the subsequent fiscal years along with 
the proposed increase or decrease of spending 
in percentage terms for each function.’’. 
SEC. 124. CONGRESSIONAL BUDGET OFFICE REPORTS TO 
COMMITTEES. 
(a) The first sentence of section 202(e)(1) of the Con-
gressional Budget Act of 1974 is amended by inserting 
‘‘compared to comparable levels for the current year’’ be-
fore the comma at the end of subparagraph (A) and before 
the comma at the end of subparagraph (B). 
(b) Section 202(e)(1) of the Congressional Budget 
Act of 1974 is amended by inserting after the first sen-
tence the following new sentence: ‘‘Such report shall also 
include a table on sources of spending growth in total di-
rect spending for the budget year and the ensuing 4 fiscal 
years, which shall include changes in outlays attributable 
to the following: cost-of-living adjustments; changes in the 
number of program recipients; increases in medical care 
prices, utilization and intensity of medical care; and resid-
ual factors.’’.
(c) Section 308(a)(1)(B) of the Congressional Budget 
Act of 1974 is amended by inserting ‘‘and shall include 
a comparison of those levels to comparable levels for the 
current fiscal year’’ before ‘‘if timely submitted’’. 
SEC. 125. TREATMENT OF EMERGENCIES. 
Section 257(c) of the Balanced Budget and Emer-
gency Deficit Control Act of 1985 (as amended by section 
121) is further amended by adding at the end the fol-
lowing new paragraph: 
‘‘(6) EMERGENCIES.—Budgetary resources for 
emergencies shall be at the level provided in the re-
serve fund for emergencies for that fiscal year pur-
suant to section 301(a)(4) of the Congressional 
Budget Act of 1974.’’.
TITLE II—IMPLEMENTING FED-
ERAL SPENDING DISCIPLINE
Subtitle A—Spending Safeguards 
on the Growth of Entitlements 
and Mandatories 
SEC. 201. SPENDING CAPS ON GROWTH OF ENTITLEMENTS 
AND MANDATORIES. 
(a) 
CONTROL
OF
ENTITLEMENTS
AND 
MANDATORIES.—The Balanced Budget and Emergency 
Deficit Control Act of 1985 is amended by adding after 
section 252 the following new section:
‘‘SEC. 252A. ENFORCING CONTROLS ON DIRECT SPENDING. 
‘‘(a) CAP ON GROWTH OF ENTITLEMENTS.—Effec-
tive for fiscal year 2006 and for each ensuing fiscal year, 
the total level of direct spending for all direct spending 
programs, projects, and activities (excluding social secu-
rity) for any such fiscal year shall not exceed the total 
level of spending for all such programs, projects, and ac-
tivities for the previous fiscal year after the direct spend-
ing for each such program, project, or activity is increased 
by the inflator (if any) applicable to that program, project, 
or activity and the growth in eligible population for such 
program, project, or activity. 
‘‘(b) SEQUESTRATION.—Within 15 days after Con-
gress adjourns to end a session (other than of the second 
session of the One Hundred Eighth Congress), and on the 
same day as a sequestration (if any) under section 251, 
there shall be a sequestration to reduce the amount of di-
rect spending for the fiscal year beginning in the year the 
Congress adjourns by any amount necessary to reduce 
such spending to the level set forth in subsection (a) un-
less that amount is less than $250,000,000. 
‘‘(c) UNIFORM
REDUCTIONS; LIMITATIONS.—The 
amount required to be sequestered for the fiscal year 
under subsection (a) shall be obtained from nonexempt di-
rect spending accounts by actions taken in the following 
order:
‘‘(1) FIRST.—The reductions in the programs 
specified in section 256(a) (National Wool Act and 
special milk), section 256(b) (guaranteed student 
loans), and section 256(c) (foster care and adoption 
assistance) shall be made. 
‘‘(2) SECOND.—Any additional reductions that 
may be required shall be achieved by reducing each 
remaining nonexempt direct spending account by the 
uniform percentage necessary to achieve those addi-
tional reductions, except that—
‘‘(A) the low-income programs specified in 
section 256(d) shall not be reduced by more 
than 2 percent; and 
‘‘(B) the retirement and veterans benefits 
specified in sections 256(f), (g), and (h) shall 
not be reduced by more than 2 percent in the 
manner specified in that section. 
The limitations set forth in subparagraphs (A) and 
(B) shall be applied iteratively, and after each 
iteration the uniform percentage applicable to all 
other programs under this paragraph shall be in-
creased (if necessary) to a level sufficient to achieve 
the reductions required by this paragraph.’’. 
(b) TABLE OF CONTENTS AMENDMENT.—The table 
of contents set forth in 250(c) of the Balanced Budget
and Emergency Deficit Control Act of 1985 is amended 
by adding after the item relating to section 252 the fol-
lowing new item:
‘‘Sec. 252A. Enforcing controls on direct spending.’’.
SEC. 202. EXEMPT PROGRAMS AND ACTIVITIES. 
Section 255 of the Balanced Budget and Emergency 
Deficit Control Act of 1985 is amended to read as follows: 
‘‘SEC. 255. EXEMPT PROGRAMS AND ACTIVITIES. 
‘‘(a) SOCIAL SECURITY BENEFITS; TIER I RAILROAD 
RETIREMENT BENEFITS; AND MEDICARE BENEFITS.—
(1) Benefits payable under the old-age, survivors, and dis-
ability insurance program established under title II of the 
Social Security Act, and benefits payable under section 
3(a), 3(f)(3), 4(a), or 4(f) of the Railroad Retirement Act 
of 1974, shall be exempt from reduction under any order 
issued under this part. 
‘‘(2) Payments made under title XVIII (relating to 
medicare of the Social Security Act shall be exempt from 
reduction under any order issued under this part. 
‘‘(b) DESCRIPTIONS
AND
LISTS.—The following 
budget accounts or activities shall be exempt from seques-
tration: 
‘‘(1) net interest; 
‘‘(2) all payments to trust funds from excise 
taxes or other receipts or collections properly cred-
itable to those trust funds;
‘‘(3) all payments from one Federal direct 
spending budget account to another Federal budget 
account; and all intragovernmental funds including 
those from which funding is derived primarily from 
other Government accounts, except to the extent 
that such funds are augmented by direct appropria-
tions for the fiscal year for which the order is in ef-
fect; 
‘‘(4) activities resulting from private donations, 
bequests, or voluntary contributions to the Govern-
ment; 
‘‘(5) payments from any revolving fund or 
trust-revolving fund (or similar activity) that pro-
vides deposit insurance or other Government insur-
ance, Government guarantees, or any other form of 
contingent liability, to the extent those payments re-
sult from contractual or other legally binding com-
mitments of the Government at the time of any se-
questration; 
‘‘(6) credit liquidating and financing accounts; 
‘‘(7) the following accounts, which largely fulfill 
requirements of the Constitution or otherwise make 
payments to which the Government is committed:
‘‘Administration of Territories, Northern 
Mariana Islands Covenant grants (14–0412–0–
1–806); 
‘‘Armed Forces Retirement Home Trust 
Fund, payment of claims (84–8930–0–7–705); 
‘‘Bureau of Indian Affairs, miscellaneous 
payments to Indians (14–2303–0–1–452); 
‘‘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 perma-
nent appropriations (20–9992–0–2–852); 
‘‘Eastern Indian land claims settlement 
fund (14–2202–0–1–806); 
‘‘Farm Credit Administration, Limitation 
on Administration Expenses (78–4131–0–3–
351);
‘‘Farm Credit System Financial Assistance 
Corporation, interest payments (20–1850–0–1–
351); 
‘‘Internal Revenue collections of Puerto 
Rico (20–5737–0–2–852); 
‘‘Panama Canal Commission, operating ex-
penses and capital outlay (95–5190–0–2–403); 
‘‘Payments of Vietnam and USS Pueblo 
prisoner-of-war claims (15–0104–0–1–153); 
‘‘Payments to copyright owners (03–5175–
0–2–376); 
‘‘Payments to health care trust funds (75–
0580–0–1–571); 
‘‘Payments to social security trust funds 
(75–0404–0–1–651); 
‘‘Payments to the United States terri-
tories, fiscal assistance (14–0418–0–1–801); 
‘‘Payments to widows and heirs of de-
ceased Members of Congress (00–0215–0–1–
801); 
‘‘Pension Benefit Guaranty Corporation 
Fund (16–4204–0–3–601); 
‘‘Salaries of Article III judges;
‘‘Washington Metropolitan Area Transit 
Authority, interest payments (46–0300–0–1–
401); 
‘‘(8) the following noncredit special, revolving, 
or trust-revolving funds: 
‘‘Coinage profit fund (20–5811–0–2–803); 
‘‘Comptroller of the Currency; 
‘‘Director of the Office of Thrift Super-
vision; 
‘‘Exchange Stabilization Fund (20–4444–
0–3–155); 
‘‘Federal Housing Finance Board; 
‘‘Foreign Military Sales trust fund (11–
82232–0–7–155); 
‘‘National Credit Union Administration, 
central liquidating facility (25–4470–0–3–373); 
‘‘National Credit Union Administration, 
credit union insurance fund (25–4468–0–3–
373); 
‘‘National Credit Union Administration op-
erating fund (25–4056–0–3–373); and 
‘‘Resolution Trust Corporation Revolving 
Fund (22–4055–0–3–373); 
‘‘(9) Thrift Savings Fund;
the date specified in section 254(a) for the budget 
year.’’. 
SEC. 203. EXCEPTIONS, LIMITATIONS, AND SPECIAL RULES. 
(a) IN GENERAL.—Section 256 of the Balanced 
Budget and Emergency Deficit Control Act of 1985 is 
amended to read as follows: 
‘‘SEC. 
256. 
EXCEPTIONS, 
LIMITATIONS, 
AND 
SPECIAL 
RULES. 
‘‘(a) NATIONAL WOOL ACT AND THE SPECIAL MILK 
PROGRAM.—Automatic spending increases are increases 
in outlays due to changes in indexes in the following pro-
grams: 
‘‘(1) National Wool Act; and 
‘‘(2) Special milk program. 
In those programs all amounts other than the automatic 
spending increases shall be exempt from reduction under 
any sequestration order.
‘‘(b) THE
GUARANTEED
STUDENT
LOAN
PRO-
GRAM.—(1) Any reductions which are required to be 
achieved from the student loan programs operated pursu-
ant to part B of title IV of the Higher Education Act of 
1965 under any sequestration order shall be achieved only 
from loans described in paragraphs (2) and (3) by the ap-
plication of the measures described in such paragraphs.
‘‘(2) For any loan made during the period beginning 
on the date that a sequestration order takes effect with 
respect to a fiscal year, the rate used in computing the 
special 
allowance 
payment 
pursuant 
to 
section 
438(b)(2)(A)(iii) of such Act for each of the first four spe-
cial allowance payments for such loan shall be adjusted 
by reducing such rate by the lesser of—
‘‘(A) 0.40 percent, or 
‘‘(B) the percentage by which the rate specified 
in such section exceeds 3 percent. 
‘‘(3) For any loan made during the period beginning 
on the date that a sequestration order takes effect with 
respect to a fiscal year, the origination fee which is author-
ized to be collected pursuant to section 438(c)(2) of such 
Act shall be increased by 0.50 percent. 
‘‘(c) FOSTER CARE
AND ADOPTION ASSISTANCE 
PROGRAMS.—Any sequestration order shall make the re-
duction otherwise required under the foster care and adop-
tion assistance programs (established by part E of title 
IV of the Social Security Act) only with respect to pay-
ments and expenditures made by States in which increases 
in foster care maintenance payment rates or adoption as-
sistance payment rates (or both) are to take effect during 
the fiscal year involved, and only to the extent that the 
required reduction can be accomplished by applying a uni-
form percentage reduction to the Federal matching pay-
ments that each such State would otherwise receive under 
section 474 of that Act (for such fiscal year) for that por-
tion of the State’s payments attributable to the increases 
taking effect during that year. No State’s matching pay-
ments from the Government for foster care maintenance 
payments or for adoption assistance maintenance pay-
ments may be reduced by a percentage exceeding the ap-
plicable domestic sequestration percentage. No State may, 
after the date of the enactment of this Act, make any 
change in the timetable for making payments under a 
State plan approved under part E of title IV of the Social 
Security Act which has the effect of changing the fiscal 
year in which expenditures under such part are made. 
‘‘(d) LOW-INCOME PROGRAMS.—(1) Benefit pay-
ments or payments to States or other entities for the pro-
grams listed in paragraph (2) shall not be reduced by 
more than 2 percent under any sequestration order. When 
reduced under an end-of-session sequestration order, those 
benefit reductions shall occur starting with the payment 
made at the start of January. When reduced under a with-
in-session sequestration order, those benefit reductions 
shall occur starting with the next periodic payment. 
‘‘(2) The programs referred to in paragraph (1) are 
the following:
‘‘Child Nutrition (12–3539–0–1–605). 
‘‘Food Stamp Programs (12–3505–0–1–605). 
‘‘Grants to States for Medicaid (75–0512–0–1–
551). 
‘‘State Children’s Health Insurance Fund (75–
0515–0–1–551). 
‘‘Supplemental Security Income Program (75–
0406–0–1–609). 
‘‘Temporary Assistance for Needy Families 
(75–1552–0–1–609). 
‘‘Special supplemental nutrition program for 
women, infants, and children (WIC) (12–3510–0–1–
605). 
‘‘(e) VETERANS’ MEDICAL CARE.—The maximum 
permissible reduction in budget authority for Veterans’ 
medical care (36–0160–0–1–703) for any fiscal year, pur-
suant to an order issued under section 254, shall be 2 
percent. 
‘‘(f) FEDERAL RETIREMENT PROGRAMS.—
‘‘(1) For each of the programs listed in para-
graph (2) and except as provided in paragraph (3), 
monthly (or other periodic) benefit payments shall 
be reduced by the uniform percentage applicable to 
direct spending sequestrations for such programs, 
which shall in no case exceed 2 percent under any
sequestration order. When reduced under an end-of-
session sequestration order, those benefit reductions 
shall occur starting with the payment made at the 
start of January or 7 weeks after the order is 
issued, whichever is later. When reduced under a 
within-session sequestration order, those benefit re-
ductions shall occur starting with the next periodic 
payment. 
‘‘(2) The programs subject to paragraph (1) 
are: 
‘‘Central Intelligence Agency Retirement 
and Disability Fund (56–3400–0–1–054). 
‘‘Comptrollers General Retirement System 
(05–0107–0–1–801) 
‘‘Judicial Officers’ Retirement Fund (10–
8122–0–7–602). 
‘‘Claims Judges’ Retirement Fund (10–
8124–0–7–602). 
‘‘Pensions for former Presidents (47–
0105–0–1–802). 
‘‘National Oceanic and Atmospheric Ad-
ministration Retirement (13–1450–0–1–306). 
‘‘Railroad Industry Pension Fund (60–
8011–0–7–601).
‘‘Retired pay, Coast Guard (70–0602–0–1–
403). 
‘‘Retirement pay and medical benefits for 
commissioned officers, Public Health Service 
(75–0379–0–1–551). 
‘‘Payments to Civil Service Retirement and 
Disability Fund (24–0200–0–1–805). 
‘‘Payments to the Foreign Service Retire-
ment and Disability Fund (72–1036–0–1–153) 
‘‘Payments to Judiciary Trust Funds (10–
0941–0–1–752). 
‘‘(g) VETERANS PROGRAMS.—To achieve the total 
percentage reduction required by any order issued under 
this part, the percentage reduction that shall apply to pay-
ments under the following programs shall in no event ex-
ceed 2 percent: 
‘‘Canteen Service Revolving Fund (36–4014–0–
3–705). 
‘‘Medical Center Research Organizations (36–
4026–0–3–703). 
‘‘Disability Compensation Benefits (36–0102–
0–1–701). 
‘‘Education Benefits (36–0137–0–1–702). 
‘‘Vocational Rehabilitation and Employment 
Benefits (36–0135–0–1–702).
‘‘Pensions Benefits (36–0154–0–1–701). 
‘‘Burial Benefits (36–0139–0–1–701). 
‘‘Guaranteed Transitional Housing Loans For 
Homeless Veterans Program Account (36–1119–0–
1–704). 
‘‘Housing Direct Loan Financing Account (36–
4127–0–1–704). 
‘‘Housing Guaranteed Loan Financing Account 
(36–4129–0–3–704). 
‘‘Vocational Rehabilitation and Education Di-
rect Loan Financing Account (36–4259–0–3–702). 
‘‘(h) MILITARY RETIREMENT.—To achieve the total 
percentage reduction in military retirement required by 
any order issued under this part, the percentage reduction 
that shall apply to payments under the military retirement 
fund (97–8097–0–7–602) and payments to the military 
retirement fund (97–0040–0–1–054) shall in no event ex-
ceed 2 percent. 
‘‘(i) FEDERAL PAY.—
‘‘(1) IN GENERAL.—For purposes of any order 
issued under section 254, new budget authority to 
pay Federal personnel shall be reduced by the appli-
cable uniform percentage, 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 section 302 of the Federal Employees Pay 
Comparability Act of 1990) or the rate of any ele-
ment of military pay to which any individual is enti-
tled under title 37, United States Code, or any in-
crease in rates of pay which is scheduled to take ef-
fect under section 5303 of title 5, United States 
Code, section 1009 of title 37, United States Code, 
or any other provision of law. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) The term ‘statutory pay system’ shall 
have the meaning given that term in section 
5302(1) of title 5, United States Code. 
‘‘(B) The term ‘elements of military pay’ 
means—
‘‘(i) the elements of compensation of 
members of the uniformed services speci-
fied in section 1009 of title 37, United 
States Code, 
‘‘(ii) allowances provided members of 
the uniformed services under sections 403a 
and 405 of such title, and
‘‘(iii) cadet pay and midshipman pay 
under section 203(c) of such title. 
‘‘(C) The term ‘uniformed services’ shall 
have the meaning given that term in section 
101(3) of title 37, United States Code.
‘‘(j) CHILD SUPPORT ENFORCEMENT PROGRAM.—
Any sequestration order shall accomplish the full amount 
of any required reduction in expenditures under sections 
455 and 458 of the Social Security Act by reducing the 
Federal matching rate for State administrative costs 
under such program, as specified (for the fiscal year in-
volved) in section 455(a) of such Act, to the extent nec-
essary to reduce such expenditures by that amount. 
‘‘(k) 
EXTENDED
UNEMPLOYMENT
COMPENSA-
TION.—(1) A State may reduce each weekly benefit pay-
ment made under the Federal-State Extended Unemploy-
ment Compensation Act of 1970 for any week of unem-
ployment occurring during any period with respect to 
which payments are reduced under an order issued under 
this title by a percentage not to exceed the percentage by 
which the Federal payment to the State under section 204
of such Act is to be reduced for such week as a result 
of such order. 
‘‘(2) A reduction by a State in accordance with sub-
paragraph (A) shall not be considered as a failure to fulfill
the requirements of section 3304(a)(11) of the Internal 
Revenue Code of 1954. 
‘‘(l) COMMODITY CREDIT CORPORATION.—
‘‘(1) POWERS AND AUTHORITIES OF THE COM-
MODITY CREDIT CORPORATION.—This title shall not 
restrict the Commodity Credit Corporation in the 
discharge of its authority and responsibility as a cor-
poration to buy and sell commodities in world trade, 
to use the proceeds as a revolving fund to meet 
other obligations and otherwise operate as a corpora-
tion, the purpose for which it was created. 
‘‘(2) REDUCTION IN PAYMENTS MADE UNDER 
CONTRACTS.—(A) Payments and loan eligibility 
under any contract entered into with a person by the 
Commodity Credit Corporation prior to the time any 
sequestration order has been issued shall not be re-
duced by an order subsequently issued. Subject to 
subparagraph (B), after any sequestration order is 
issued for a fiscal year, any cash payments made by 
the Commodity Credit Corporation—
‘‘(i) under the terms of any one-year con-
tract entered into in or after such fiscal year 
and after the issuance of the order; and 
‘‘(ii) out of an entitlement account,
to any person (including any producer, lender, or 
guarantee entity) shall be subject to reduction under 
the order. 
‘‘(B) Each contract entered into with producers 
or producer cooperatives with respect to a particular 
crop of a commodity and subject to reduction under 
subparagraph (A) shall be reduced in accordance 
with the same terms and conditions. If some, but 
not all, contracts applicable to a crop of a com-
modity have been entered into prior to the issuance 
of any sequestration order, the order shall provide 
that the necessary reduction in payments under con-
tracts applicable to the commodity be uniformly ap-
plied to all contracts for succeeding crops of the 
commodity, under the authority provided in para-
graph (3). 
‘‘(3) DELAYED REDUCTION IN OUTLAYS PER-
MISSIBLE.—Notwithstanding any other provision of 
this title, if any sequestration order is issued with 
respect to a fiscal year, any reduction under the 
order applicable to contracts described in paragraph 
(2) may provide for reductions in outlays for the ac-
count involved to occur in the fiscal years following 
the fiscal year to which the order applies.
‘‘(4) UNIFORM PERCENTAGE RATE OF REDUC-
TION AND OTHER LIMITATIONS.—All reductions de-
scribed in paragraph (2) that are required to be 
made in connection with any sequestration order 
with respect to a fiscal year—
‘‘(A) shall be made so as to ensure that 
outlays for each program, project, activity, or 
account involved are reduced by a percentage 
rate that is uniform for all such programs, 
projects, activities, and accounts, and may not 
be made so as to achieve a percentage rate of 
reduction in any such item exceeding the rate 
specified in the order; and 
‘‘(B) with respect to commodity price sup-
port and income protection programs, shall be 
made in such manner and under such proce-
dures as will attempt to ensure that—
‘‘(i) uncertainty as to the scope of 
benefits under any such program is mini-
mized; 
‘‘(ii) any instability in market prices 
for agricultural commodities resulting from 
the reduction is minimized; and 
‘‘(iii) normal production and mar-
keting relationships among agricultural
commodities (including both contract and 
non-contract commodities) are not dis-
torted. 
In meeting the criterion set out in clause (iii) 
of subparagraph (B) of the preceding sentence, 
the President shall take into consideration that 
reductions under an order may apply to pro-
grams for two or more agricultural commodities 
that use the same type of production or mar-
keting resources or that are alternative com-
modities among which a producer could choose 
in making annual production decisions. 
‘‘(5) CERTAIN
AUTHORITY
NOT
TO
BE
LIM-
ITED.—Nothing in this title shall limit or reduce in 
any way any appropriation that provides the Com-
modity Credit Corporation with funds to cover the 
Corporation’s net realized losses. 
‘‘(m) POSTAL SERVICE FUND.—Notwithstanding any 
other provision of law, any sequestration of the Postal 
Service Fund shall be accomplished by a payment from 
that Fund to the General Fund of the Treasury, and the 
Postmaster General of the United States shall make the 
full amount of that payment during the fiscal year to 
which the presidential sequestration order applies.
‘‘(n) EFFECTS OF SEQUESTRATION.—The effects of 
sequestration shall be as follows: 
‘‘(1) Budgetary resources sequestered from any 
account other than an entitlement trust, special, or 
revolving fund account shall revert to the Treasury 
and be permanently canceled. 
‘‘(2) Except as otherwise provided, the same 
percentage sequestration shall apply to all programs, 
projects, and activities within a budget account (with 
programs, projects, and activities as delineated in 
the appropriation Act or accompanying report for 
the relevant fiscal year covering that account, or for 
accounts not included in appropriation Acts, as de-
lineated in the most recently submitted President’s 
budget). 
‘‘(3) Administrative regulations or similar ac-
tions implementing a sequestration shall be made 
within 120 days of the sequestration order. To the 
extent that formula allocations differ at different 
levels of budgetary resources within an account, pro-
gram, project, or activity, the sequestration shall be
interpreted as producing a lower total appropriation, 
with that lower appropriation being obligated as 
though it had been the pre-sequestration appropria-
tion and no sequestration had occurred.
‘‘(4) Except as otherwise provided, obligations 
in sequestered direct spending accounts shall be re-
duced in the fiscal year in which a sequestration oc-
curs and in all succeeding fiscal years. 
‘‘(5) If an automatic spending increase is se-
questered, the increase (in the applicable index) that 
was disregarded as a result of that sequestration 
shall not be taken into account in any subsequent 
fiscal year. 
‘‘(6) Except as otherwise provided, sequestra-
tion in accounts for which obligations are indefinite 
shall be taken in a manner to ensure that obliga-
tions in the fiscal year of a sequestration and suc-
ceeding fiscal years are reduced, from the level that 
would actually have occurred, by the applicable se-
questration percentage.’’. 
(b) CONFORMING AMENDMENT.—The table of con-
tents set forth in 250(c) of the Balanced Budget and 
Emergency Deficit Control Act of 1985 is amended by 
amending the item relating to section 256 to read as fol-
lows:
‘‘Sec. 256. Exceptions, limitations, and special rules.’’.
SEC. 204. POINT OF ORDER. 
(a) ENTITLEMENT POINT OF ORDER.—Section 312 
of the Congressional Budget Act of 1974 is amended by 
adding at the end the following new subsection:
‘‘(g) ENTITLEMENT POINT OF ORDER.—It shall not 
be in order in the House of Representatives or the Senate 
to consider any bill, joint resolution, amendment, or con-
ference report that—
‘‘(1) increases aggregate level of direct spending 
for any ensuing fiscal year or 
‘‘(2) includes any provision that has the effect 
of modifying the application of section 252A of the 
Balanced Budget and Emergency Deficit Control 
Act of 1985 to any entitlement program subject to 
sequestration or exempt from sequestration under 
such Act.’’. 
SEC. 205. TECHNICAL AND CONFORMING AMENDMENTS. 
The Balanced Budget and Emergency Deficit Control 
Act of 1985 is amended as follows: 
(1) Section 251(a)(1) is amended by inserting 
‘‘, section 252A,’’ after ‘‘section 252’’. 
(2) Section 254(c)(4)(B) is amended by insert-
ing ‘‘or section 252A’’ after ‘‘section 252’’. 
(3) Section 254(c) is amended by redesignating 
paragraph (5) as paragraph (6) and by inserting 
after paragraph (4) the following new paragraph: 
‘‘(5) DIRECT SPENDING CONTROL SEQUESTRA-
TION REPORTS.—The preview reports shall set forth,
for the current year and the budget year, estimates 
for each of the following: 
‘‘(A) The total level of direct spending for 
all programs, projects, and activities (excluding 
social security). 
‘‘(B) The sequestration percentage or (if 
the required sequestration percentage is greater 
than the maximum allowable percentage for 
medicare) percentages necessary to comply with 
section 252A.’’. 
(4) Section 254(f) is amended by redesignating 
paragraphs (4) and (5) as paragraphs (5) and (6) 
and by inserting after paragraph (3) the following 
new paragraph: 
‘‘(4) DIRECT SPENDING CONTROL SEQUESTRA-
TION REPORTS.—The final reports shall contain all 
the information required in the direct spending con-
trol sequestration preview reports. In addition, these 
reports shall contain, for the budget year, for each 
account to be sequestered, estimates of the baseline 
level of sequesterable budgetary resources and re-
sulting outlays and the amount of budgetary re-
sources to be sequestered and resulting outlay reduc-
tions. The reports shall also contain estimates of the
effects on outlays of the sequestration in each out-
year for direct spending programs.’’. 
(5) Section 258C(a)(1) is amended by inserting 
‘‘, 252A,’’ after ‘‘section 252’’. 
Subtitle B—Discretionary 
Spending Limits 
SEC. 211. ENFORCING DISCRETIONARY SPENDING LIMITS. 
(a) DISCRETIONARY SPENDING LIMITS.—Sections 
251(b) and (c) of the Balanced Budget and Emergency 
Deficit Control of Act of 1985 are amended to read as 
follows: 
‘‘(b) DISCRETIONARY SPENDING LIMIT.—As used in 
this part, the term ‘discretionary spending limit’ means—
‘‘(1) with respect to fiscal year 2006—
‘‘(A) $816,697,800,000 in new budget au-
thority 
of 
which 
no 
more 
than 
$431,533,400,000 shall be for the nondefense 
category; and 
‘‘(B) $llll in outlays of which no 
more than $llll shall be for the non-
defense category; 
‘‘(2) with respect to fiscal year 2007—
‘‘(A) $834,665,100,000 in new budget au-
thority 
of 
which 
no 
more 
than
$441,027,200,000 shall be for the nondefense 
category; and 
‘‘(B) $llll in outlays of which no 
more than $llll shall be for the non-
defense category; 
‘‘(3) with respect to fiscal year 2008—
‘‘(A) $853,027,800,000 in new budget au-
thority 
of 
which 
no 
more 
than 
$450,729,800,000 shall be for the nondefense 
category; and 
‘‘(B) $llll in outlays of which no 
more than $llll shall be for the non-
defense category; 
‘‘(4) with respect to fiscal year 2009—
‘‘(A) $871,794,400,000 in new budget au-
thority 
of 
which 
no 
more 
than 
$460,645,800,000 shall be for the nondefense 
category; and 
‘‘(B) $llll in outlays of which no 
more than $llll shall be for the non-
defense category; 
‘‘(5) with respect to fiscal year 2010—
‘‘(A) $890,973,900,000 in new budget au-
thority 
of 
which 
no 
more 
than
$470,780,000,000 shall be for the nondefense 
category; and 
‘‘(B) $llll in outlays of which no 
more than $llll shall be for the non-
defense category; 
‘‘(6) with respect to fiscal year 2011—
‘‘(A) $910,575,300,000 in new budget au-
thority 
of 
which 
no 
more 
than 
$481,137,200,000 shall be for the nondefense 
category; and 
‘‘(B) $llll in outlays of which no 
more than $llll shall be for the non-
defense category; 
‘‘(7) with respect to fiscal year 2012—
‘‘(A) $930,607,900,000 in new budget au-
thority 
of 
which 
no 
more 
than 
$491,722,200,000 shall be for the nondefense 
category; and 
‘‘(B) $llll in outlays of which no 
more than $llll shall be for the non-
defense category; 
‘‘(8) with respect to fiscal year 2013—
‘‘(A) $951,081,300,000 in new budget au-
thority 
of 
which 
no 
more 
than
$502,540,100,000 shall be for the nondefense 
category; and 
‘‘(B) $llll in outlays of which no 
more than $llll shall be for the non-
defense category; and 
‘‘(9) with respect to fiscal year 2014—
‘‘(A) $972,005,100,000 in new budget au-
thority 
of 
which 
no 
more 
than 
$513,596,000,000 shall be for the nondefense 
category; and 
‘‘(B) $llll in outlays of which no 
more than $llll shall be for the non-
defense category;’’. 
(b) DISCRETIONARY SPENDING LIMIT POINT
OF 
ORDER.—Section 312 of the Congressional Budget Act of 
1974 (as amended by section 204(a)) is further amended 
by adding at the end the following new subsection: 
‘‘(h) DISCRETIONARY SPENDING LIMIT POINT OF 
ORDER.—It shall not be in order in the House of Rep-
resentatives or the Senate to consider any bill, joint resolu-
tion, amendment, or conference report that—
‘‘(1) increases the discretionary spending limits 
for any ensuing fiscal year after the budget year; or 
‘‘(2) would cause the discretionary spending 
limits for the budget year to be breached.’’.
(c) ADVANCE APPROPRIATION POINT OF ORDER.—
Section 312 of the Congressional Budget Act of 1974 (as 
amended by this section) is further amended by adding 
at the end the following new subsection: 
‘‘(i) ADVANCE APPROPRIATION POINT OF ORDER.—
It shall not be in order in the House of Representatives 
or the Senate to consider any appropriation bill or joint 
resolution, or amendment thereto or conference report 
thereon, that provides advance discretionary new budget 
authority that first becomes available for any fiscal year 
after the budget year at an amount for any program, 
project, or activity above the amount of appropriations for 
fiscal year 2004 for such program, project, or activity.’’. 
TITLE III—COMBATING WASTE, 
FRAUD, AND ABUSE. 
Subtitle A—Enhanced Rescissions 
of Budget Authority Identified 
by the President as Wasteful 
Spending 
SEC. 301. ENHANCED CONSIDERATION OF CERTAIN PRO-
POSED RESCISSIONS. 
(a) IN GENERAL.—Part B of title X of the Congres-
sional Budget and Impoundment Control Act of 1974 (2 
U.S.C. 681 et seq.) is amended by redesignating sections 
1013 through 1017 as sections 1014 through 1018, re-
spectively, and by inserting after section 1012 the fol-
lowing new section: 
‘‘ENHANCED CONSIDERATION OF CERTAIN PROPOSED 
RESCISSIONS 
‘‘SEC. 1013. (a) PROPOSED RESCISSION OF BUDGET 
AUTHORITY IDENTIFIED AS WASTEFUL SPENDING.—The 
President may propose, at the time and in the manner 
provided in subsection (b), the rescission of any budget 
authority provided in an appropriation Act that he identi-
fies as wasteful spending. If the President proposes a re-
scission of budget authority, he may also propose to reduce 
the appropriate discretionary spending limits for new 
budget authority and outlays flowing therefrom set forth 
in section 251(b) of the Balanced Budget and Emergency 
Deficit Control Act of 1985 by an amount that does not 
exceed the amount of the proposed rescission. Funds made 
available for obligation under this procedure may not be 
proposed for rescission again under this section. 
‘‘(b) TRANSMITTAL OF SPECIAL MESSAGE.—
‘‘(1) The President may transmit to Congress a 
special message proposing to rescind amounts of 
budget authority and include with that special mes-
sage a draft bill that, if enacted, would only rescind 
that budget authority unless the President also pro-
poses a reduction in the appropriate discretionary 
spending limits set forth in section 251(b) of the
Balanced Budget and Emergency Deficit Control 
Act of 1985. That bill shall clearly identify the 
amount of budget authority that is proposed to be 
rescinded for each program, project, or activity to 
which that budget authority relates. 
‘‘(2) In the case of an appropriation Act that 
includes accounts within the jurisdiction of more 
than one subcommittee of the Committee on Appro-
priations, the President in proposing to rescind 
budget authority under this section shall send a sep-
arate special message and accompanying draft bill 
for accounts within the jurisdiction of each sub-
committee. 
‘‘(3) Each special message shall specify, with 
respect to the budget authority proposed to be re-
scinded, the following: 
‘‘(A) The amount of budget authority 
which he proposes to be rescinded. 
‘‘(B) Any account, department, or estab-
lishment of the Government to which such 
budget authority is available for obligation, and 
the specific project or governmental functions 
involved.
‘‘(C) The reasons why the budget authority 
should be rescinded, including why he considers 
it to be wasteful spending. 
‘‘(D) To the maximum extent practicable, 
the estimated fiscal, economic, and budgetary 
effect (including the effect on outlays and re-
ceipts in each fiscal year) of the proposed re-
scission. 
‘‘(E) All facts, circumstances, and consid-
erations relating to or bearing upon the pro-
posed rescission and the decision to effect the 
proposed rescission, and to the maximum extent 
practicable, the estimated effect of the proposed 
rescission upon the objects, purposes, and pro-
grams for which the budget authority is pro-
vided. 
‘‘(F) A reduction in the appropriate discre-
tionary spending limits set forth in section 
251(b) of the Balanced Budget and Emergency 
Deficit Control Act of 1985, if proposed by the 
President. 
‘‘(c) PROCEDURES
FOR
EXPEDITED
CONSIDER-
ATION.—
‘‘(1)(A) Before the close of the second legisla-
tive day of the House of Representatives after the
date of receipt of a special message transmitted to 
Congress under subsection (b), the majority leader 
or minority leader of the House of Representatives 
shall introduce (by request) the draft bill accom-
panying that special message. If the bill is not intro-
duced as provided in the preceding sentence, then, 
on the third legislative day of the House of Rep-
resentatives after the date of receipt of that special 
message, any Member of that House may introduce 
the bill. 
‘‘(B) The bill shall be referred to the Com-
mittee on Appropriations. The committee shall re-
port the bill without substantive revision and with or 
without recommendation. The bill shall be reported 
not later than the seventh legislative day of that 
House after the date of receipt of that special mes-
sage. If that committee fails to report the bill within 
that period, that committee shall be automatically 
discharged from consideration of the bill, and the 
bill shall be placed on the appropriate calendar. 
‘‘(C) A vote on final passage of the bill shall be 
taken in the House of Representatives on or before 
the close of the 10th legislative day of that House 
after the date of the introduction of the bill in that 
House. If the bill is passed, the Clerk of the House
of Representatives shall cause the bill to be en-
grossed, certified, and transmitted to the Senate 
within one calendar day of the day on which the bill 
is passed. 
‘‘(2)(A) A motion in the House of Representa-
tives to proceed to the consideration of a bill under 
this section shall be highly privileged and not debat-
able. An amendment to the motion shall not be in 
order, nor shall it be in order to move to reconsider 
the vote by which the motion is agreed to or dis-
agreed to. 
‘‘(B) Debate in the House of Representatives 
on a bill under this section shall not exceed 4 hours, 
which shall be divided equally between those favoring 
and those opposing the bill. A motion to further 
limit debate shall not be debatable. It shall not be 
in order to move to recommit a bill under this sec-
tion or to move to reconsider the vote by which the 
bill is agreed to or disagreed to. 
‘‘(C) Appeals from decisions of the Chair relat-
ing to the application of the Rules of the House of 
Representatives to the procedure relating to a bill 
under this section shall be decided without debate. 
‘‘(D) Except to the extent specifically provided 
in the preceding provisions of this subsection, con-
sideration of a bill under this section shall be gov-
erned by the Rules of the House of Representatives. 
It shall not be in order in the House of Representa-
tives to consider any rescission bill introduced pursu-
ant to the provisions of this section under a suspen-
sion of the rules or under a special rule.
‘‘(3) A bill transmitted to the Senate pursuant 
to paragraph (1)(D) shall be referred to its Com-
mittee on Appropriations. That committee shall re-
port the bill without substantive revision and with or 
without recommendation. The bill shall be reported 
not later than the seventh legislative day of the Sen-
ate after it receives the bill. A committee failing to 
report the bill within such period shall be automati-
cally discharged from consideration of the bill, and 
the bill shall be placed upon the appropriate cal-
endar. 
‘‘(4)(A) A motion in the Senate to proceed to 
the consideration of a bill under this section shall be 
privileged and not debatable. An amendment to the 
motion shall not be in order, nor shall it be in order 
to move to reconsider the vote by which the motion 
is agreed to or disagreed to. 
‘‘(B) Debate in the Senate on a bill under this 
section, and all debatable motions and appeals in
connection therewith (including debate pursuant to 
subparagraph (C)), shall not exceed 10 hours. The 
time shall be equally divided between, and controlled 
by, the majority leader and the minority leader or 
their designees. 
‘‘(C) Debate in the Senate or any debatable mo-
tion or appeal in connection with a bill under this 
section shall be limited to not more than 1 hour, to 
be equally divided between, and controlled by, the 
mover and the manager of the bill, except that in 
the event the manager of the bill is in favor of any 
such motion or appeal, the time in opposition there-
to, shall be controlled by the minority leader or his 
designee. Such leaders, or either of them, may, from 
time under their control of the passage of a bill, 
allot additional time to any Senator during the con-
sideration of any debatable motion or appeal. 
‘‘(D) A motion in the Senate to further limit 
debate on a bill under this section is not debatable. 
A motion to recommit a bill under this section is not 
in order. 
‘‘(d) AMENDMENT AND DIVISIONS PROHIBITED.—No 
amendment to a bill considered under this section shall 
be in order in either the House of Representatives or the 
Senate. It shall not be in order to demand a division of
the question in the House of Representatives (or in a Com-
mittee of the Whole) or in the Senate. No motion to sus-
pend the application of this subsection shall be in order 
in either House, nor shall it be in order in either House 
to suspend the application of this subsection by unanimous 
consent. 
‘‘(e) REQUIREMENT TO MAKE AVAILABLE FOR OBLI-
GATION.—Any amount of budget authority proposed to be 
rescinded in a special message transmitted to Congress 
under subsection (b) shall be made available for obligation 
on the day after the date on which either House rejects 
the bill transmitted with that special message. 
‘‘(f) DEFINITIONS.—For purposes of this section: 
‘‘(1) The term ‘appropriation Act’ means any 
general or special appropriation Act, and any Act or 
joint resolution making supplemental, deficiency, or 
continuing appropriations. 
‘‘(2) The term ‘legislative day’ means, with re-
spect to either House of Congress, any day of ses-
sion. 
‘‘(3) The term ‘rescind’ means, with respect to 
an appropriation Act, to reduce the amount of budg-
et authority appropriated in that Act, and reducing 
budget authority shall include reducing obligation 
limitations set forth in that Act.’’.
(b) EXERCISE OF RULEMAKING POWERS.—Section 
904 of the Congressional Budget Act of 1974 (2 U.S.C. 
621 note) is amended—
(1) in subsection (a), by striking ‘‘and 1017’’ 
and inserting ‘‘1012, and 1017’’; and 
(2) in subsection (d), by striking ‘‘section 
1017’’ and inserting ‘‘sections 1012 and 1017’’. 
(c) CONFORMING AMENDMENTS.—
(1) Section 1011 of the Congressional Budget 
Act of 1974 (2 U.S.C. 682(5)) is amended by re-
pealing paragraphs (3) and (5) and by redesignating 
paragraph (4) as paragraph (3). 
(2) Section 1014 of such Act (2 U.S.C. 685) is 
amended—
(A) in subsection (b)(1), by striking ‘‘or 
the reservation’’; and 
(B) in subsection (e)(1), by striking ‘‘or a 
reservation’’ and by striking ‘‘or each such res-
ervation’’. 
(3) Section 1015(a) of such Act (2 U.S.C. 686) 
is amended by striking ‘‘is to establish a reserve or’’, 
by striking ‘‘the establishment of such a reserve or’’, 
and by striking ‘‘reserve or’’ each other place it ap-
pears.
(4) Section 1017 of such Act (2 U.S.C. 687) is 
amended—
(A) in subsection (a), by striking ‘‘rescis-
sion bill introduced with respect to a special 
message or’’; 
(B) in subsection (b)(1), by striking ‘‘re-
scission bill or’’, by striking ‘‘bill or’’ the second 
place it appears, by striking ‘‘rescission bill with 
respect to the same special message or’’, and by 
striking ‘‘, and the case may be,’’; 
(C) in subsection (b)(2), by striking ‘‘bill 
or’’ each place it appears; 
(D) in subsection (c), by striking ‘‘rescis-
sion’’ each place it appears and by striking ‘‘bill 
or’’ each place it appears; 
(E) in subsection (d)(1), by striking ‘‘re-
scission bill or’’ and by striking ‘‘, and all 
amendments thereto (in the case of a rescission 
bill)’’; 
(F) in subsection (d)(2)—
(i) by striking the first sentence; 
(ii) by amending the second sentence 
to read as follows: ‘‘Debate on any debat-
able motion or appeal in connection with 
an impoundment resolution shall be limited
to 1 hour, to be equally divided between, 
and controlled by, the mover and the man-
ager of the resolution, except that in the 
event that the manager of the resolution is 
in favor of any such motion or appeal, the 
time in opposition thereto shall be con-
trolled by the minority leader or his des-
ignee.’’; 
(iii) by striking the third sentence; 
and 
(iv) in the fourth sentence, by striking 
‘‘rescission 
bill 
or’’ 
and 
by 
striking 
‘‘amendment, debatable motion,’’ and by 
inserting ‘debatable motion’; 
(G) in paragraph (d)(3), by striking the 
second and third sentences; and 
(H) by striking paragraphs (4), (5), (6), 
and (7) of paragraph (d). 
(d) CLERICAL AMENDMENTS.—The table of sections 
for subpart B of title X of the Congressional Budget and 
Impoundment Control Act of 1974 is amended by redesig-
nating the item relating to sections 1014 through 1018 
as items 1015 through 1019, respectively, and by inserting 
after the item relating to section 1012 the following new 
item:
‘‘Sec. 1013. Enhanced consideration of certain proposed rescissions.’’.
Subtitle B—Commission to 
Eliminate Waste, Fraud, and Abuse 
SEC. 311. ESTABLISHMENT OF COMMISSION. 
(a) ESTABLISHMENT.—There is established the Com-
mission to Eliminate Waste, Fraud, and Abuse (hereafter 
in this subtitle referred to as the ‘‘Commission’’). 
(b) MEMBERSHIP.—
(1) IN GENERAL.—The Commission shall con-
sist of 12 members, all of whom shall be appointed 
by the President not later than 90 days after the 
date of enactment of this Act. 
(2) CHAIRPERSON AND VICE CHAIRPERSON.—
The President shall designate a chairperson and vice 
chairperson from among the members of the Com-
mission. 
(c) PERIOD OF APPOINTMENT; VACANCIES.—Mem-
bers shall be appointed for the life of the Commission. Any 
vacancy in the Commission shall not affect its powers, but 
shall be filled in the same manner as the original appoint-
ment. 
(d) MEETINGS.—
(1) INITIAL MEETING.—Not later than 30 days 
after the date on which all members of the Commis-
sion have been appointed, the Commission shall hold 
its first meeting.
(2) SUBSEQUENT MEETINGS.—The Commission 
shall meet at the call of the chairperson. 
(e) QUORUM.—A majority of the members of the 
Commission shall constitute a quorum, but a lesser num-
ber of members may hold hearings. 
SEC. 312. DUTIES OF THE COMMISSION. 
(a) DEFINITIONS.—In this section, the following defi-
nitions shall apply: 
(1) AGENCY.—The term ‘‘agency’’ has the 
meaning given the term ‘‘Executive agency’’ under 
section 105 of title 5, United States Code. 
(2) PROGRAM.—The term ‘‘program’’ means 
any activity or function of an agency. 
(b) IN GENERAL.—The Commission shall—
(1) evaluate all agencies and programs within 
those agencies, using the criteria under subsection 
(c); and 
(2) submit to Congress a plan with rec-
ommendations of the agencies and programs that 
should be realigned or eliminated. 
(c) CRITERIA.—
(1) DUPLICATIVE.—If 2 or more agencies or 
programs are performing the same essential function 
and the function can be consolidated or streamlined 
into a single agency or program, the Commission
(B) submit, to the Commission, assess-
ments of not less than 1⁄2 of all programs cov-
ered under subsection (b)(1) that use the meth-
od established under subparagraph (A). 
(2) METHOD OBJECTIVES.—The method estab-
lished under paragraph (1) shall—
(A) recognize different types of federal 
programs; 
(B) assess programs based primarily on 
the achievement of performance goals (as de-
fined under section 1115(f)(4) of title 31, 
United States Code); and 
(C) assess programs based in part on the 
adequacy of the program’s performance meas-
ures, financial management, and other factors 
determined by the President. 
(3) DEVELOPMENT.—The method established 
under paragraph (1) shall not be implemented until 
it has been reviewed and accepted by the Commis-
sion. 
(4) CONSIDERATION
OF
ASSESSMENTS.—The 
Commission shall consider assessments submitted 
under this subsection when evaluating programs 
under subsection (b)(1).
(e) COMMON PERFORMANCE MEASURES.—Not later 
than 1 year after the date of enactment of this Act, the 
President shall identify common performance measures 
for programs covered in subsection (b)(1) that have simi-
lar functions and, to the extent feasible, provide the Com-
mission with data on such performance measures. 
(f) REPORT.—Not later than 2 years after the date 
of enactment of this Act, the Commission shall submit to 
the President and Congress a report that includes the plan 
described under subsection (b)(2), with supporting docu-
mentation for all recommendations. 
SEC. 313. POWERS OF THE COMMISSION. 
(a) HEARINGS.—The Commission or, at its direction, 
any subcommittee or member of the Commission, may, for 
the purpose of carrying out this subtitle—
(1) hold such hearings, sit and act at such 
times and places, take such testimony, receive such 
evidence, and administer such oaths as any member 
of the Commission considers advisable; 
(2) require, by subpoena or otherwise, the at-
tendance and testimony of such witnesses as any 
member of the Commission considers advisable; and 
(3) require, by subpoena or otherwise, the pro-
duction of such books, records, correspondence, 
memoranda, papers, documents, tapes, and other
evidentiary materials relating to any matter under 
investigation by the Commission. 
(b) SUBPOENAS.—
(1) ISSUANCE.—Subpoenas issued under sub-
section (a) shall bear the signature of the chair-
person of the Commission and shall be served by any 
person or class of persons designated by the chair-
person for that purpose. 
(2) ENFORCEMENT.—In the case of contumacy 
or failure to obey a subpoena issued under sub-
section (a), the United States district court for the 
judicial district in which the subpoenaed person re-
sides, is served, or may be found, may issue an order 
requiring such person to appear at any designated 
place to testify or to produce documentary or other 
evidence. Any failure to obey the order of the court 
may be punished by the court as a contempt of that 
court. 
(c) INFORMATION FROM FEDERAL AGENCIES.—The 
Commission may secure directly from any Federal depart-
ment or agency such information as the Commission con-
siders necessary to carry out this Act. Upon request of 
the chairperson of the Commission, the head of such de-
partment or agency shall furnish such information to the 
Commission.
(d) POSTAL SERVICES.—The Commission may use 
the United States mails in the same manner and under 
the same conditions as other departments and agencies of 
the Government. 
(e) GIFTS.—The Commission may accept, use, and 
dispose of gifts or donations of services or property. 
SEC. 314. COMMISSION PERSONNEL MATTERS. 
(a) COMPENSATION OF MEMBERS.—
(1) NON-FEDERAL MEMBERS.—Except as pro-
vided under subsection (b), each member of the 
Commission who is not an officer or employee of the 
Government shall not be compensated. 
(2) FEDERAL OFFICERS OR EMPLOYEES.—All 
members of the Commission who are officers or em-
ployees of the United States shall serve without com-
pensation in addition to that received for their serv-
ices as officers or employees of the United States. 
(b) TRAVEL EXPENSES.—The members of the Com-
mission shall be allowed travel expenses, including per 
diem in lieu of subsistence, at rates authorized for employ-
ees of agencies under subchapter I of chapter 57 of title 
5, United States Code, while away from their homes or 
regular places of business in the performance of services 
for the Commission. 
(c) STAFF.—
(1) IN GENERAL.—The chairperson of the Com-
mission may, without regard to the civil service laws 
and regulations, appoint and terminate an executive 
director and such other additional personnel as may 
be necessary to enable the Commission to perform 
its duties. The employment of an executive director 
shall be subject to confirmation by the Commission. 
(2) COMPENSATION.—Upon the approval of the 
chairperson, the executive director may fix the com-
pensation of the executive director and other per-
sonnel without regard to chapter 51 and subchapter 
III of chapter 53 of title 5, United States Code, re-
lating to classification of positions and General 
Schedule pay rates, except that the rate of pay for 
the executive director and other personnel may not 
exceed the maximum rate payable for a position at 
GS–15 of the General Schedule under section 5332 
of such title. 
(3) PERSONNEL AS FEDERAL EMPLOYEES.—
(A) IN GENERAL.—The executive director 
and any personnel of the Commission who are 
employees shall be employees under section 
2105 of title 5, United States Code, for pur-
poses of chapters 63, 81, 83, 84, 85, 87, 89, 
and 90 of that title.
(B) MEMBERS OF COMMISSION.—Subpara-
graph (A) shall not be construed to apply to 
members of the Commission. 
(d) DETAIL
OF GOVERNMENT EMPLOYEES.—Any 
Government employee may be detailed to the Commission 
without reimbursement, and such detail shall be without 
interruption or loss of civil service status or privilege. 
(e) PROCUREMENT OF TEMPORARY AND INTERMIT-
TENT SERVICES.—The chairperson of the Commission 
may procure temporary and intermittent services under 
section 3109(b) of title 5, United States Code, at rates 
for individuals which do not exceed the daily equivalent 
of the annual rate of basic pay prescribed for level V of 
the Executive Schedule under section 5316 of such title. 
SEC. 315. TERMINATION OF THE COMMISSION. 
The Commission shall terminate 90 days after the 
date on which the Commission submits its report. 
SEC. 316. AUTHORIZATION OF APPROPRIATIONS. 
There are authorized to be appropriated such sums 
as may be necessary for carrying out this subtitle for each 
of the fiscal years 2006 through 2008.
TITLE IV—TRUTH IN 
ACCOUNTING 
Subtitle 
A—Accrual 
Funding 
of 
Pensions and Retirement Pay 
for Federal Employees and Uni-
formed Services Personnel 
SEC. 401. CIVIL SERVICE RETIREMENT SYSTEM. 
(a) CIVIL SERVICE RETIREMENT AND DISABILITY 
FUND.—Chapter 83 of title 5, United States Code, is 
amended—
(1) in section 8331—
(A) in paragraph (17)—
(i) by striking ‘‘normal cost’’ and in-
serting ‘‘normal cost percentage’’; and 
(ii) by inserting ‘‘and standards 
(using dynamic assumptions)’’ after ‘‘prac-
tice’’; 
(B) by amending paragraph (18) to read 
as follows: 
‘‘(18) ‘Fund balance’ means the current net as-
sets of the Fund available for payment of benefits, 
as determined by the Office in accordance with ap-
propriate accounting standards, but does not include 
any amount attributable to—
‘‘(A) the Federal Employees’ Retirement 
System; or 
‘‘(B) contributions made under the Federal 
Employees’ Retirement Contribution Temporary 
Adjustment Act of 1983 by or on behalf of any 
individual who became subject to the Federal 
Employees’ Retirement System;’’
(C) by amending paragraph (19) to read 
as follows: 
‘‘(19) ‘accrued liability’ means the estimated ex-
cess of the present value of all benefits payable from 
the Fund to employees and Members, and former 
employees and Members, subject to this subchapter, 
and their survivors, over the present value of deduc-
tions to be withheld from the future basic pay of em-
ployees and Members currently subject to this sub-
chapter and of future agency contributions to be 
made in their behalf;’’
(D) in paragraph (27) by striking ‘‘and’’ 
at the end; 
(E) in paragraph (28) by striking the pe-
riod at the end and inserting a semicolon; and 
(F) by adding at the end the following 
paragraphs:
‘‘(29) ‘dynamic assumptions’ means economic 
assumptions that are used in determining actuarial 
costs and liabilities of a retirement system and in 
anticipating the effects of long-term future—
‘‘(A) investment yields; 
‘‘(B) increases in rates of basic pay; and 
‘‘(C) rates of price inflation; and 
‘‘(30) ‘unfunded liability’ means the estimated 
excess of—
‘‘(A) the actuarial present value of all fu-
ture benefits payable from the Fund under this 
subchapter based on the service of current or 
former employees or Members, over 
‘‘(B) the sum of—
‘‘(i) the actuarial present value of de-
ductions to be withheld from the future 
basic pay of employees and Members cur-
rently subject to this chapter pursuant to 
section 8334; 
‘‘(ii) the actuarial present value of the 
future contributions to be made pursuant 
to section 8334 with respect to employees 
and Members currently subject to this sub-
chapter;
‘‘(iii) the Fund balance, as defined in 
paragraph (18), as of the date the un-
funded liability is determined; and 
‘‘(iv) any other appropriate amount, 
as determined by the Office of Personnel 
Management in accordance with generally 
accepted actuarial practices and prin-
ciples.’’; 
(2) in section 8334—
(A) in subsection (a)(1)—
(i) by striking the last two sentences; 
(ii) by redesignating that subsection, 
as so amended, as (a)(1)(A); and 
(iii) by adding at the end the fol-
lowing new subparagraphs: 
‘‘(B) Except as provided in subparagraph (E), each 
employing agency having any employees or Members sub-
ject to subparagraph (A) shall contribute from amounts 
available for salaries and expenses an amount equal to the 
sum of—
‘‘(i) the product of—
‘‘(I) the normal cost percentage, as deter-
mined for employees (other than employees cov-
ered by clause (ii)), multiplied by
‘‘(II) the aggregate amount of basic pay 
payable by the agency, for the period involved, 
to employees (under subclause (I)) who are 
within such agency; and 
‘‘(ii) the product of—
‘‘(I) the normal cost percentage, as deter-
mined for Members, Congressional employees, 
law enforcement officers, firefighters, air traffic 
controllers, bankruptcy judges, Court of Fed-
eral Claims judges, United States magistrates, 
judges of the United States Court of Appeals 
for the Armed Forces, members of the Capitol 
Police, nuclear materials couriers, and members 
of the Supreme Court Police, multiplied by 
‘‘(II) the aggregate amount of basic pay 
payable by the agency for the period involved, 
to employees and Members (under subclause 
(I)) who are within such agency. 
‘‘(C) In determining the normal cost percentage to 
be applied under subparagraph (B), amounts provided for 
under subparagraph (A) shall be taken into account. 
‘‘(D) Contributions under this paragraph shall be 
paid—
‘‘(i) in the case of law enforcement officers, 
firefighters, 
air 
traffic 
controllers, 
bankruptcy
judges, Court of Federal Claims judges, United 
States magistrates, judges of the United States 
Court of Appeals for the Armed Forces, members of 
the Supreme Court Police, nuclear materials couriers 
and other employees, from the appropriations or 
fund used to pay such law enforcement officers, fire-
fighters, air traffic controllers, bankruptcy judges, 
Court of Federal Claims judges, United States mag-
istrates, judges of the United States Court of Ap-
peals for the Armed Forces, members of the Su-
preme Court Police, nuclear materials couriers and 
other employees, respectively; 
‘‘(ii) in the case of elected officials, from an ap-
propriation or fund available for payment of other 
salaries of the same office or establishment; and 
‘‘(iii) in the case of employees of the legislative 
branch paid by the Clerk of the House of Represent-
atives, from the contingent fund of the House. 
‘‘(E) In the case of the United States Postal Service, 
the Metropolitan Washington Airports Authority, and the 
government of the District of Columbia, an amount equal 
to that withheld under subparagraph (A) shall be contrib-
uted from the appropriation or fund used to pay the em-
ployee.’’; and 
(B) in subsection (k)—
(i) in paragraph (1)—
(I) in subparagraph (A) by strik-
ing ‘‘the first sentence of subsection 
(a)(1) of this section’’ and inserting 
‘‘subsection (a)(1)(A)’’; and 
(II) by amending subparagraph 
(B) to read as follows: 
‘‘(B) the amount of the contribution under sub-
section (a)(1)(B) shall be the amount which would 
have been contributed under such subsection if this 
subsection had not been enacted.’’; and 
(ii) in paragraph (2)(C)(iii) by strik-
ing ‘‘the first sentence of subsection 
(a)(1)’’ 
and 
inserting 
‘‘subsection 
(a)(1)(A)’’; and
(3) in section 8348—
(A) by repealing subsection (f); 
(B) by amending subsection (g) to read as 
follows: 
‘‘(g)(1)(A) Not later than June 30, 2005, the Office 
of the Actuary shall determine the unfunded liability of 
the Fund, as of September 30, 2004, attributable to bene-
fits payable under this chapter and make recommenda-
tions regarding its liquidation. After considering such rec-
ommendations, the Office shall establish an amortization
schedule, including a series of annual installments com-
mencing October 1, 2005, which provides for the liquida-
tion of such liability by October 1, 2044. 
‘‘(B) The Office shall redetermine the unfunded li-
ability of the Fund as of the close of the fiscal year, for 
each fiscal year beginning after September 30, 2004, 
through the fiscal year ending September 30, 2039, and 
shall establish a new amortization schedule, including a 
series of annual installments commencing on October 1 
of the second subsequent fiscal year, which provides for 
the liquidation of such liability by October 1, 2044. 
‘‘(C) The Office shall redetermine the unfunded li-
ability of the Fund as of the close of the fiscal year for 
each fiscal year beginning after September 30, 2039, and 
shall establish a new amortization schedule, including a 
series of annual installments commencing on October 1 
of the second subsequent fiscal year, which provides for 
the liquidation of such liability over five years. 
‘‘(D) Amortization schedules established under this 
paragraph shall be set in accordance with generally accept-
ed actuarial practices and principles, with interest com-
puted at the rate used in the most recent valuation of the 
Civil Service Retirement System. 
‘‘(2) At the beginning of each fiscal year, beginning 
on October 1, 2005, the Office shall notify the Secretary
of the Treasury of the amount of the first installment 
under the most recent amortization schedule established 
under paragraph (1). The Secretary shall credit that 
amount to the Fund, as a Government contribution, out 
of any money in the Treasury of the United States not 
otherwise appropriated. 
‘‘(3) For the purpose of carrying out paragraph (1) 
with respect to any fiscal year, the Office may—
‘‘(A) require the Board of Actuaries of the Civil 
Service Retirement System to make actuarial deter-
minations and valuations, make recommendations, 
and maintain records in accordance with section 
8347(f); and 
‘‘(B) use the latest actuarial determinations 
and valuations made by such Board of Actuaries.’’; 
(C) in subsections (h), (i), and (m) by 
striking ‘‘unfunded’’ and inserting ‘‘accrued’’ 
each place it appears; and 
(D) by adding at the end the following new 
subsection: 
‘‘(n) Under regulations prescribed by the Office, the 
head of an agency may request reconsideration of any 
amount determined to be payable with respect to such 
agency under section 8334(a)(1)(B)–(D). Any such re-
quest shall be referred to the Board of Actuaries of the
Civil Service Retirement System. The Board of Actuaries 
shall review the computations of the Office and may make 
any adjustment with respect to any such amount which 
the Board determines appropriate. A determination by the 
Board of Actuaries under this subsection shall be final.’’. 
(b) GOVERNMENT CONTRIBUTIONS.—Section 8423 
of title 5, United States Code, is amended—
(1) in subsection (a)(2) by striking ‘‘section 
8422’’ and inserting ‘‘section 8422(a)’’; and 
(2) in subsection (b)(2) by striking ‘‘equal an-
nual installments’’ and inserting ‘‘annual install-
ments set in accordance with generally accepted ac-
tuarial practices and principles’’. 
SEC. 402. CENTRAL INTELLIGENCE AGENCY RETIREMENT 
AND DISABILITY SYSTEM. 
(a) Section 101 of the Central Intelligence Agency 
Retirement Act (50 U.S.C. 2001) is amended—
(1) in paragraph (5), to read as follows: 
‘‘(5) UNFUNDED
LIABILITY.—The term ‘un-
funded liability’ means the estimated excess of—
‘‘(A) the actuarial present value of all fu-
ture benefits payable from the Fund under title 
II of this Act based on the service of current 
or former participants, over 
‘‘(B) the sum of—
‘‘(i) the actuarial present value of de-
ductions to be withheld from the future 
basic pay of participants currently subject 
to title II of this Act pursuant to section 
211; 
‘‘(ii) the actuarial present value of the 
future contributions to be made pursuant 
to section 211 with respect to participants 
currently subject to title II of this Act; 
‘‘(iii) the Fund balance, as defined in 
paragraph (4), as of the date the unfunded 
liability is determined; and 
‘‘(iv) any other appropriate amount, 
as determined by the Director in accord-
ance with generally accepted actuarial 
practices and principles.’’; 
(2) in paragraph (6)—
(A) by striking ‘‘ ‘normal cost’ ’’ and in-
serting ‘‘ ‘normal cost percentage’ ’’; and 
(B) by inserting ‘‘and standards (using dy-
namic assumptions)’’ after ‘‘practice’’; and 
(3) by adding at the end the following para-
graph: 
‘‘(10) DYNAMIC ASSUMPTIONS.—The term ‘dy-
namic assumptions’ means economic assumptions
that are used in determining actuarial costs and li-
abilities of a retirement system and in anticipating 
the effects of long-term future—
‘‘(A) investment yields; 
‘‘(B) increases in rates of basic pay; and 
‘‘(C) rates of price inflation.’’. 
(b) Section 202 of such Act (50 U.S.C. 2012) is 
amended by adding at the end the following: ‘‘The Fund 
is appropriated for the payment of benefits as provided 
by this title.’’. 
(c) Section 211(a)(2) of such Act (50 U.S.C. 
2021(a)(2)) is amended to read as follows: 
‘‘(2) AGENCY
CONTRIBUTIONS.—The Agency 
shall contribute to the Fund the amount computed 
in a manner similar to that used under section 
8334(a) of title 5, United States Code, pursuant to 
determinations of the normal cost percentage of the 
Central Intelligence Agency Retirement and Dis-
ability System by the Director. Contributions under 
this paragraph shall be paid from amounts available 
for salaries and expenses.’’. 
(d) Section 261 of such Act (50 U.S.C. 2091) is 
amended—
(1) by striking subsections (c), (d), and (e); and
(2) by inserting after subsection (b) the fol-
lowing new subsections: 
‘‘(c)(1) Not later than June 30, 2005, the Director 
shall cause to be made actuarial valuations of the Fund 
that determine the unfunded liability of the Fund, as of 
September 30, 2004, attributable to benefits payable 
under this title and make recommendations regarding its 
liquidation. After considering such recommendations, the 
Director shall establish an amortization schedule, includ-
ing a series of annual installments commencing October 
1, 2005, which provides for the liquidation of such liability 
by October 1, 2044. 
‘‘(2) The Director shall redetermine the unfunded li-
ability of the Fund as of the close of the fiscal year, for 
each fiscal year beginning after September 30, 2004, 
through the fiscal year ending September 30, 2039, and 
shall establish a new amortization schedule, including a 
series of annual installments commencing on October 1 
of the second subsequent fiscal year, which provides for 
the liquidation of such liability by October 1, 2044. 
‘‘(3) The Director shall redetermine the unfunded li-
ability of the Fund as of the close of the fiscal year for 
each fiscal year beginning after September 30, 2039, and 
shall establish a new amortization schedule, including a 
series of annual installments commencing on October 1
of the second subsequent fiscal year, which provides for 
the liquidation of such liability over five years. 
‘‘(4) Amortization schedules established under this 
subsection shall be set in accordance with generally accept-
ed actuarial practices and principles, with interest com-
puted at the rate used in the most recent valuation of the 
Civil Service Retirement and Disability System. 
‘‘(d) At the beginning of each fiscal year, beginning 
on October 1, 2005, the Director shall notify the Secretary 
of the Treasury of the amount of the first installment 
under the most recent amortization schedule established 
under subsection (c). The Secretary shall credit that 
amount to the Fund, as a Government contribution, out 
of any money in the Treasury of the United States not 
otherwise appropriated. For the purposes of Section 504 
of the National Security Act of 1947, this amount shall 
be considered authorized.’’. 
(e)(1) Title III of such Act (50 U.S.C. 2151 et seq.) 
is amended by adding at the end the following new section: 
‘‘SEC. 308. FULL FUNDING OF RETIREE COSTS FOR EM-
PLOYEES DESIGNATED UNDER SECTION 302. 
‘‘(a) In addition to other government contributions 
required by law, the Agency shall contribute to the Civil 
Service Retirement and Disability fund (hereinafter in this 
section referred to as the ‘Fund’) amounts calculated in
accordance with section 8423 of title 5, United States 
Code, based on the projected number of employees to be 
designated pursuant to section 302 of this Act. In addi-
tion, the Agency, in a manner similar to that established 
for employee contributions to the Fund by section 8422 
of title 5, United States Code, will contribute an amount 
equal to the difference between that which would be con-
tributed by the number of employees projected to be des-
ignated under section 302 and the amounts that are actu-
ally being deducted and contributed from the basic pay 
of an equal number of employees pursuant to section 
8422. The amounts of the Agency’s contributions under 
this subsection shall be determined by the Director of the 
Office of Personnel Management, in consultation with the 
Director, and shall be paid by the Agency from funds 
available for salaries and expenses. Agency employees des-
ignated pursuant to section 302 of this Act shall, com-
mencing with such designation, have deducted from their 
basic pay the full amount required by section 8422 of title 
5, United States Code, and such deductions shall be con-
tributed to the Fund. 
‘‘(b)(1) The Director of the Office of Personnel Man-
agement, in consultation with the Director, shall deter-
mine the total amount of unpaid contributions (govern-
ment and employee contributions) and interest attrib-
100
utable to the number of individuals employed with the 
Agency on September 30, 2005, who are projected to be 
designated under section 302 of this Act, but are not yet 
designated under that section as of that date. The amount 
shall be referred to as the section 302 unfunded liability. 
‘‘(2) Not later than June 30, 2006, the Director of 
the Office of Personnel Management, in consultation with 
the Director, shall establish an amortization schedule, set-
ting forth a series of annual installments commencing 
September 30, 2006, which provides for the liquidation of 
the section 302 unfunded liability by September 30, 2013. 
‘‘(3) At the end of each fiscal year, beginning on Sep-
tember 30, 2006, the Director shall notify the Secretary 
of the Treasury of the amount of the annual installment 
under the amortization schedule established under para-
graph (2) of this subsection. Before closing the accounts 
for that fiscal year, the Secretary shall credit that amount 
to the Fund, out of any money in the Treasury of the 
United States not otherwise appropriated. 
‘‘(c) Amounts paid by the Agency pursuant to this 
section are deemed to be specifically authorized by the 
Congress for the purposes of section 504 of the National 
Security Act of 1947.’’.
101
(2) The table of contents of such Act is amended by 
inserting after the item relating to section 307 the fol-
lowing new item:
‘‘Sec. 308. Full funding of retiree costs for employees designated under section 
302.’’.
SEC. 403. FOREIGN SERVICE RETIREMENT AND DISABILITY 
SYSTEM. 
Chapter 8 of title I of the Foreign Service Act of 
1980, Public Law 96–465 (22 U.S.C. 4041 et seq.) 94 
Stat. 2071, as amended, is further amended—
(1) in section 804 (22 U.S.C. 4044)—
(A) by amending paragraph (5) to read as 
follows: 
‘‘(5) ‘normal cost percentage’ means the entry-
age normal cost computed in accordance with gen-
erally accepted actuarial practice and standards 
(using dynamic assumptions) and expressed as a 
level percentage of aggregate basic pay;’’; 
(B) by amending paragraph (14) to read 
as follows: 
‘‘(14) ‘unfunded liability’ means the estimated 
excess of—
‘‘(A) the actuarial present value of all fu-
ture benefits payable from the Fund under this 
part based on the service of current or former 
participants, over
102
‘‘(B) the sum of—
‘‘(i) the actuarial present value of de-
ductions to be withheld from the future 
basic pay of participants currently subject 
to this part pursuant to section 805; 
‘‘(ii) the actuarial present value of the 
future contributions to be made pursuant 
to section 805 with respect to participants 
currently subject to this part; 
‘‘(iii) the Fund balance, as defined in 
paragraph (7), as of the date the unfunded 
liability is determined, excluding any 
amount attributable to the Foreign Service 
Pension System, or contributions made 
under the Federal Employees’ Retirement 
Contribution Temporary Adjustment Act 
of 1983 by or on behalf of any individual 
who became subject to the Foreign Service 
Pension System; and 
‘‘(iv) any other appropriate amount, 
as determined by the Secretary of the 
Treasury in accordance with generally ac-
cepted actuarial practices and principles.’’; 
and
103
(C)(i) by striking the period at the end of 
paragraph (15) and inserting ‘‘; and’’; and 
(ii) by adding at the end the following new 
paragraph: 
‘‘(16) ‘dynamic assumptions’ means economic 
assumptions that are used in determining actuarial 
costs and liabilities of a retirement system and in 
anticipating the effects of long-term future—
‘‘(A) investment yields; 
‘‘(B) increases in rates of basic pay; and 
‘‘(C) rates of price inflation.’’; 
(2) in section 852 (22 U.S.C. 4071a)—
(A) in paragraph (4)—
(i) by striking ‘‘normal cost’’ and in-
serting ‘‘normal cost percentage’’; and 
(ii) by striking ‘‘by the Secretary of 
State’’; 
(B) in paragraph (7)—
(i) by striking ‘‘supplemental’’ and in-
serting ‘‘unfunded’’; 
(ii) in subparagraph (B)(i) by striking 
‘‘(I)’’ and ‘‘and (II) contributions for past 
civilian and military service’’; and 
(iii) in subparagraph (B)(ii) by insert-
ing before the semicolon ‘‘with respect to
104
participants currently subject to this part’’; 
and 
(C)(i) at the end of paragraph (8) by strik-
ing ‘‘and’’; 
(ii) at the end of paragraph (9) by striking 
the period and inserting ‘‘; and’’; and 
(iii) by adding at the end the following new 
paragraph: 
‘‘(10) ‘dynamic assumptions’ means economic 
assumptions that are used in determining actuarial 
costs and liabilities of a retirement system and in 
anticipating the effects of long-term future—
‘‘(A) investment yields;
‘‘(B) increases in rates of basic pay; and 
‘‘(C) rates of price inflation.’’; 
(3) 
in 
section 
805(a)(1) 
(22 
U.S.C. 
4045(a)(i))—
(A) by striking the second sentence; 
(B) by redesignating that subsection, as so 
amended, as (a)(1)(A); 
(C) by redesignating the last sentence of 
that subsection, as so amended as (a)(1)(C); 
(D) by inserting after subparagraph (A) 
the following new subparagraph:
105
‘‘(B) Each employing agency having par-
ticipants shall contribute to the Fund the 
amount computed in a manner similar to that 
used under section 8334(a) of title 5, United 
States Code, pursuant to determinations of the 
normal cost percentage of the Foreign Service 
Retirement and Disability System. Contribu-
tions under this subparagraph shall be paid 
from the appropriations or fund used for pay-
ment of the salary of the participant.’’; 
(E) in subsection (a)(2)(A) by striking 
‘‘An equal amount shall be contributed by the 
Department’’ and inserting in its place ‘‘Each 
employing agency having participants shall con-
tribute to the Fund the amount computed in a 
manner similar to that used under section 
8334(a) of title 5, United States Code, pursu-
ant to determinations of the normal cost per-
centage of the Foreign Service Retirement and 
Disability System’’; and 
(F) in subsection (a)(2)(B) by striking 
‘‘An equal amount shall be contributed by the 
Department’’ and inserting in its place ‘‘Each 
employing agency having participants shall con-
tribute to the Fund from amounts available for
106
salaries and expenses the amount computed in 
a manner similar to that used under section 
8334(a) of title 5, United States Code, pursu-
ant to determinations of the normal cost per-
centage of the Foreign Service Retirement and 
Disability System’’; 
(4) by repealing sections 821 and 822 (22 
U.S.C. 4061 and 4062) and by adding the following 
new section: 
‘‘SEC. 821. UNFUNDED LIABILITY.—(a)(1) Not later 
than June 30, 2005, the Secretary of State shall cause 
to be made actuarial valuations of the Fund that deter-
mine the unfunded liability of the Fund, as of September 
30, 2004, attributable to benefits payable under this sub-
chapter and make recommendations regarding its liquida-
tion. After considering such recommendations, the Sec-
retary of State shall establish an amortization schedule, 
including a series of annual installments commencing Oc-
tober 1, 2004, which provides for the liquidation of such 
liability by October 1, 2044. 
‘‘(2) The Secretary of State shall redetermine the un-
funded liability of the Fund as of the close of the fiscal 
year, for each fiscal year beginning after September 30, 
2004, through the fiscal year ending September 30, 2039, 
and shall establish a new amortization schedule, including
107
a series of annual installments commencing on October 1 
of the second subsequent fiscal year, which provides for 
the liquidation of such liability by October 1, 2044. 
‘‘(3) The Secretary of State shall redetermine the un-
funded liability of the Fund as of the close of the fiscal 
year for each fiscal year beginning after September 30, 
2039, and shall establish a new amortization schedule, in-
cluding a series of annual installments commencing on Oc-
tober 1 of the second subsequent fiscal year, which pro-
vides for the liquidation of such liability over five years. 
‘‘(4) Amortization schedules established under this 
subsection shall be set in accordance with generally accept-
ed actuarial practices and principles, with interest com-
puted at the rate used in the most recent valuation of the 
Foreign Service Retirement and Disability System. 
‘‘(b) At the beginning of each fiscal year, beginning 
on October 1, 2005, the Secretary of State shall notify 
the Secretary of the Treasury of the amount of the first 
installment under the most recent amortization schedule 
established under paragraph (1). The Secretary of the 
Treasury shall credit that amount to the Fund, as a Gov-
ernment contribution, out of any money in the Treasury 
of the United States not otherwise appropriated.’’; 
(5) 
in 
section 
857(b)(1) 
(22 
U.S.C. 
4071f(b)(1)) by striking ‘‘equal annual installments’’
108
and inserting ‘‘annual installments set in accordance 
with generally accepted actuarial practices and prin-
ciples’’; 
(6) in section 859 (22 U.S.C. 4071h) by adding 
‘‘percentage’’ after ‘‘normal cost’’; 
(7) in section 802 (22 U.S.C. 4042) by adding 
at the end the following: ‘‘The Fund is appropriated 
for the payment of benefits as provided by this sub-
chapter.’’; and 
(8) in section 818 (22 U.S.C. 4058) by striking 
‘‘System’’ and inserting ‘‘Systems under this sub-
chapter’’. 
SEC. 404. PUBLIC HEALTH SERVICE COMMISSIONED CORPS 
RETIREMENT SYSTEM. 
(a) IN GENERAL.—Title II of the Public Health Serv-
ice Act (42 U.S.C. 202 et seq.) is amended by adding at 
the end the following new part: 
‘‘PART C—PUBLIC HEALTH SERVICE 
COMMISSIONED CORPS RETIREMENT SYSTEM 
‘‘ESTABLISHMENT AND PURPOSE OF FUND 
‘‘SEC. 251. There is established on the books of the 
Treasury a fund to be known as the Public Health Service 
Commissioned Corps Retirement Fund (hereinafter in this 
part referred to as the ‘Fund’), which shall be adminis-
tered by the Secretary. The Fund shall be used for the
109
accumulation of funds in order to finance on an actuarially 
sound basis liabilities of the Department of Health and 
Human Services for benefits payable on account of retire-
ment, disability, or death to commissioned officers of the 
Public Health Service and to their survivors pursuant to 
part A of this title. 
‘‘ASSETS OF THE FUND 
‘‘SEC. 252. There shall be deposited into the Fund 
the following, which shall constitute the assets of the 
Fund: 
‘‘(1) Amounts paid into the Fund under section 
255. 
‘‘(2) Any return on investment of the assets of 
the Fund. 
‘‘(3) Amounts transferred into the Fund pursu-
ant to section 404(c) of the Deficit Control Act of 
2004.
‘‘PAYMENT FROM THE FUND 
‘‘SEC. 253. There shall be paid from the Fund bene-
fits payable on account of retirement, disability, or death 
to commissioned officers of the Public Health Service and 
to their survivors pursuant to part A of this title. 
‘‘DETERMINATION OF CONTRIBUTIONS TO THE FUND 
‘‘SEC. 254. (a)(1) Not later than June 30, 2005, the 
Secretary shall determine the unfunded liability of the 
Fund attributable to service performed as of September
110
30, 2004, which is ‘active service’ for the purpose of sec-
tion 212. The Secretary shall establish an amortization 
schedule, including a series of annual installments com-
mencing October 1, 2005, which provides for the liquida-
tion of such liability by October 1, 2044. 
‘‘(2) The Secretary shall redetermine the unfunded 
liability of the Fund as of the close of the fiscal year, for 
each fiscal year beginning after September 30, 2004, 
through the fiscal year ending September 30, 2039, and 
shall establish a new amortization schedule, including a 
series of annual installments commencing on October 1 
of the second subsequent fiscal year, which provides for 
the liquidation of such liability by October 1, 2044. 
‘‘(3) The Secretary shall redetermine the unfunded 
liability of the Fund as of the close of the fiscal year for 
each fiscal year beginning after September 30, 2039, and 
shall establish a new amortization schedule, including a 
series of annual installments commencing on October 1 
of the second subsequent fiscal year, which provides for 
the liquidation of such liability over 5 years. 
‘‘(b) The Secretary shall determine each fiscal year, 
in sufficient time for inclusion in the budget request for 
the following fiscal year, the total amount of Department 
of Health and Human Services contributions to be made
111
to the Fund during the fiscal year under section 255(a). 
That amount shall be the sum of—
‘‘(1) the product of—
‘‘(A) the current estimate of the value of 
the single level percentage of basic pay to be de-
termined under subsection (c)(1) at the time of 
the most recent actuarial valuation under sub-
section (c); and 
‘‘(B) the total amount of basic pay ex-
pected to be paid during that fiscal year to 
commissioned officers of the Public Health 
Service on active duty (other than active duty 
for training); and 
‘‘(2) the product of—
‘‘(A) the current estimate of the value of 
the single level percentage of basic pay and of 
compensation (paid pursuant to section 206 of 
title 37, United States Code) to be determined 
under subsection (c)(2) at the time of the most 
recent actuarial valuation under subsection (c); 
and 
‘‘(B) the total amount of basic pay and of 
compensation (paid pursuant to section 206 of 
title 37, United States Code) expected to be 
paid during the fiscal year to commissioned of-
112
ficers of the Reserve Corps of the Public Health 
Service (other than officers on full-time duty 
other than for training) who are not otherwise 
described in subparagraph (A). 
‘‘(c) Not less often than every four years thereafter 
(or by the fiscal year end prior to the effective date of 
any statutory change affecting benefits payable on account 
of retirement, disability, or death to commissioned officers 
or their survivors), the Secretary shall carry out an actu-
arial valuation of benefits payable on account of retire-
ment, disability, or death to commissioned officers of the 
Public Health Service and to their survivors pursuant to 
part A of this title. Each such actuarial valuation shall 
be signed by an enrolled Actuary and shall include—
‘‘(1) a determination (using the aggregate 
entry-age normal cost method) of a single level per-
centage of basic pay for commissioned officers of the 
Public Health Service on active duty (other than ac-
tive duty for training); and 
‘‘(2) a determination (using the aggregate 
entry-age normal cost method) of a single level per-
centage of basic pay and of compensation (paid pur-
suant to section 206 of title 37, United States Code) 
of commissioned officers of the Reserve Corps of the 
Public Health Service (other than officers on full
113
time duty other than for training) who are not oth-
erwise described in paragraph (1). 
‘‘(d) All determinations under this section shall be in 
accordance with generally accepted actuarial principles 
and practices and, where appropriate, shall follow the gen-
eral pattern of methods and assumptions approved by the 
Department of Defense Retirement Board of Actuaries. 
‘‘(e) The Secretary shall provide for the keeping of 
such records as are necessary for determining the actu-
arial status of the Fund. 
‘‘PAYMENTS INTO THE FUND 
‘‘SEC. 255. (a) From amounts available to the De-
partment of Health and Human Services for salaries and 
expenses, the Secretary shall pay into the Fund at the end 
of each month the amount that is the sum of—
‘‘(1) the product of—
‘‘(A) the level percentage of basic pay de-
termined using all the methods and assump-
tions approved for the most recent (as of the 
first day of the current fiscal year) actuarial 
valuation under sections 254(c)(1) (except that 
any statutory change affecting benefits payable 
on account of retirement, disability, or death to 
commissioned officers or their survivors that is 
effective after the date of that valuation and on
114
or before the first day of the current fiscal year 
shall be used in such determination); and 
‘‘(B) the total amount of basic pay accrued 
for that month by commissioned officers of the 
Public Health Service on active duty (other 
than active duty for training); and 
‘‘(2) the product of—
‘‘(A) the level percentage of basic pay and 
of compensation (paid pursuant to section 206 
of title 37, United States Code) determined 
using all the methods and assumptions ap-
proved for the most recent (as of the first day 
of the current fiscal year) actuarial valuation 
under section 254(c)(2) (except that any statu-
tory change affecting benefits payable on ac-
count of retirement, disability, or death to com-
missioned officers or their survivors that is ef-
fective after the date of that valuation and on 
or before the first day of the current fiscal year 
shall be used in such determinations); and 
‘‘(B) the total amount of basic pay and of 
compensation (paid pursuant to section 206 of 
title 37, United States Code) accrued for that 
month by commissioned officers of the Reserve 
Corps of the Public Health Service (other than
115
officers on full-time duty other than for train-
ing). 
‘‘(b) At the beginning of each fiscal year, beginning 
on October 1, 2005, the Secretary shall certify to the Sec-
retary of the Treasury the amount of the first installment 
under the most recent amortization schedule established 
under section 254(a). The Secretary of the Treasury shall 
pay into the Fund from the General Fund of the Treasury 
the amount so certified. Such payment shall be the con-
tribution to the Fund for that fiscal year. 
‘‘INVESTMENTS OF ASSETS OF FUND 
‘‘SEC. 256. The Secretary may request the Secretary 
of the Treasury to invest such portion of the Fund as is 
not, in the judgment of the Secretary, required to meet 
the current needs of the Fund. Such investments shall be 
made by the Secretary of the Treasury in public debt secu-
rities with maturities suitable to the needs of the Fund, 
as determined by the Secretary, and bearing interest at 
rates determined by the Secretary of the Treasury, taking 
into consideration current market yields on outstanding 
marketable obligations of the United States of comparable 
maturities. The income on such investments shall be cred-
ited to and form a part of the Fund. 
‘‘IMPLEMENTATION YEAR EXCEPTIONS 
‘‘SEC. 257. (a) To avoid funding shortfalls in the first 
year should formal actuarial determinations not be avail-
116
able in time for budget preparation, the amounts used in 
the first year in sections 255(a)(1)(A) and 255(a)(2)(A)
shall be set equal to those estimates in sections 
254(b)(1)(A) and 254(b)(2)(A) if final determinations are 
not available. The original unfunded liability as defined 
in section 254(a) shall include an adjustment to correct 
for this difference between the formal actuarial determina-
tions and the estimates in sections 254(b)(1)(A) and 
254(b)(2)(A).’’. 
(b) CONFORMING AMENDMENTS.—
(1) CONDITION OF DETAIL.—Section 214 of the 
Public Health Service Act (42 U.S.C. 215) is 
amended by adding at the end the following new 
subsection: 
‘‘(e) The Secretary shall condition any detail under 
subsection (a), (b), or (c) upon the agreement of the exec-
utive department, State, subdivision, Committee of the 
Congress, or institution concerned to pay to the Depart-
ment of Health and Human Services, in advance or by 
way of reimbursement, for the full cost of the detail in-
cluding that portion of the contributions under section 
255(a) that is attributable to the detailed personnel.’’. 
(2) EXEMPTION FROM SEQUESTRATION.—Sec-
tion 255(g)(1) of the Balanced Budget and Emer-
117
gency Deficit Control Act of 1985 (2 U.S.C. 
905(g)(1)) is amended—
(A) in subparagraph (A), by inserting after 
the item relating to ‘‘payment to the foreign 
service retirement and disability fund’’ the fol-
lowing item: ‘‘Payment to the Public Health 
Service Commissioned Corps Retirement Fund 
(75–0380–0–1–551);’’; and 
(B) in subparagraph (B), by inserting 
after the item relating to the ‘‘Pensions for 
former Presidents’’ the following item: ‘‘Public 
Health Service Commissioned Corps Retirement 
Fund (75–8274–0–7–602);’’. 
(c) TRANSFER OF APPROPRIATIONS.—There shall be 
transferred on October 1, 2006, into the fund established 
under section 251 of the Public Health Service Act, as 
added by subsection (a), any obligated or unobligated bal-
ances of appropriations made to the Department of Health 
and Human Services that are currently available for bene-
fits payable on account of retirement, disability, or death 
to commissioned officers of the Public Health Service and 
to their survivors pursuant to part A of title II of the Pub-
lic Health Service Act, and amounts so transferred shall 
be part of the assets of the Fund.
118
SEC. 405. NATIONAL OCEANIC AND ATMOSPHERIC ADMIN-
ISTRATION COMMISSIONED OFFICER CORPS 
RETIREMENT SYSTEM. 
(a) IN GENERAL.—The National Oceanic and Atmos-
pheric Administration Commissioned Officer Corps Act of 
2002 (title II of Public Law 107–372) is amended by in-
serting after section 246 (33 U.S.C. 3046) the following 
new section: 
‘‘SEC. 246A. (a) ESTABLISHMENT AND PURPOSE OF 
NOAA COMMISSIONED OFFICER CORPS RETIREMENT 
FUND.—(1) There is established on the books of the 
Treasury a fund to be known as the National Oceanic and 
Atmospheric Administration Commissioned Officer Corps 
Retirement Fund (hereinafter in this section referred to 
as the ‘Fund’), which shall be administered by the Sec-
retary. The Fund shall be used for the accumulation of 
funds in order to finance on an actuarially sound basis 
liabilities of the Department of Commerce under military 
retirement and survivor benefit programs for the commis-
sioned officers corps. 
‘‘(2) The term ‘military retirement and survivor ben-
efit program’ means—
‘‘(A) the provisions of this title and title 10, 
United States Code, creating entitlement to, or de-
termining, the amount of retired pay;
119
‘‘(B) the programs under the jurisdiction of the 
Department of Defense providing annuities for sur-
vivors and members and former members of the 
Armed Forces, including chapter 73 of title 10, sec-
tion 4 of Public Law 92–425, and section 5 of Pub-
lic Law 96–202, as made applicable to the commis-
sioned officer corps by section 261. 
‘‘(b) ASSETS OF THE FUND.—There shall be depos-
ited into the Fund the following, which shall constitute 
the assets of the Fund: 
‘‘(1) Amounts paid into the Fund under sub-
section (e). 
‘‘(2) Any return on investment of the assets of 
the Fund. 
‘‘(3) Amounts transferred into the Fund pursu-
ant to section 405(c) of the Deficit Control Act of 
2004.
‘‘(c) PAYMENTS FROM THE FUND.—There shall be 
paid from the Fund benefits payable on account of mili-
tary retirement and survivor benefit programs to commis-
sioned officers of the commissioned officer corps and their 
survivors. 
‘‘(d) DETERMINATION OF CONTRIBUTIONS TO THE 
FUND.—(1)(A) Not later than June 30, 2004, the Sec-
retary shall determine the unfunded liability of the Fund
120
attributable to service performed as of September 30, 
2004, which is ‘active service’ for the purpose of this title. 
The Secretary shall establish an amortization schedule, in-
cluding a series of annual installments commencing Octo-
ber 1, 2005, which provides for the liquidation of such 
liability by October 1, 2044. 
‘‘(B) The Secretary shall redetermine the unfunded 
liability of the Fund as of the close of the fiscal year, for 
each fiscal year beginning after September 30, 2004, 
through the fiscal year ending September 30, 2039, and 
shall establish a new amortization schedule, including a 
series of annual installments commencing on September 
30 of the subsequent fiscal year, which provides for the 
liquidation of such liability by October 1, 2044. 
‘‘(C) The Secretary shall redetermine the unfunded 
liability of the Fund as of the close of the fiscal year for 
each fiscal year beginning after September 30, 2039, and 
shall establish a new authorization schedule, including se-
ries of annual installments commencing on October 1 of 
the second subsequent fiscal year, which provides for the 
liquidation of such liability over 5 years. 
‘‘(2) The Secretary shall determine each fiscal year, 
in sufficient time for inclusion in the budget request for 
the following fiscal year, the total amount of Department 
of Commerce contributions to be made to the Fund during
127
armed forces, including chapter 73 of title 10, sec-
tion 4 of Public Law 92–425, and section 5 of Pub-
lic Law 96–402; and 
‘‘(3) the authority provided in section 1048(h) 
of title 10. 
‘‘(c) SECRETARY DEFINED.—In this subchapter, the 
term ‘Secretary’ means the Secretary of Homeland Secu-
rity when the Coast Guard is not operating as a service 
in the Navy and the Secretary of Defense when the Coast 
Guard is operating as a service in the Navy. 
‘‘§ 442. Assets of the Fund 
‘‘There shall be deposited into the Fund the fol-
lowing, which shall constitute the assets of the Fund: 
‘‘(1) Amounts paid into the Fund under section 
445 of this title. 
‘‘(2) Any return on investment of the assets of 
the Fund. 
‘‘(3) Amounts transferred into the Fund pursu-
ant to section 406(d) of the Deficit Control Act of 
2004. 
‘‘§ 443. Payments from the Fund 
‘‘(a) IN GENERAL.—There shall be paid from the 
Fund the following: 
‘‘(1) Retired pay payable to persons on the re-
tired list of the Coast Guard.
134
valuation and on or before the first day of the 
current fiscal year shall be used in such deter-
mination); and 
‘‘(B) the total amount of basic pay and of 
compensation (paid pursuant to section 206 of 
title 37) accrued for that month by members of 
the Ready Reserve (other than members of full-
time Reserve duty other than for training) who 
are not otherwise described in paragraph 
(1)(B). 
‘‘(b) ANNUAL PAYMENT FOR UNFUNDED LIABIL-
ITIES.—(1) At the beginning of each fiscal year, beginning 
on October 1, 2005, the Secretary shall certify to the Sec-
retary of the Treasury the amount of the first installment 
under the most recent amortization schedule established 
under section 254(a). The Secretary of the Treasury shall 
promptly pay into the Fund from the General Fund of 
the Treasury the amount so certified. Such payment shall 
be the contribution to the Fund for that fiscal year. 
‘‘§ 446. Investment of assets of the Fund 
‘‘The Secretary may request the Secretary of the 
Treasury to invest such portion of the Fund as is not, 
in the judgment of the Secretary, required to meet the 
current needs of the Fund. Such investments shall be 
made by the Secretary of the Treasury in public debt secu-