‘‘(12)(A) FDIC, Bank Insurance Fund (51- 
4064-0-3-373); 
‘‘(B) FDIC, FSLIC Resolution Fund (51-4065- 
0-3-373); and 
‘‘(C) FDIC, Savings Association Insurance 
Fund (51-4066-0-3-373). 
‘‘(c) FEDERAL RETIREMENT AND DISABILITY AC-
COUNTS.—The following Federal retirement and disability 
accounts shall be exempt from reduction under any order 
issued under this part: 
‘‘Civil service retirement and disability fund 
(24–8135–0–7–602). 
‘‘Black Lung Disability Trust Fund (20-8144- 
0-7-601). 
‘‘Foreign Service Retirement and Disability 
Fund (19-8186-0-7-602). 
‘‘District of Columbia Judicial Retirement and 
Survivors Annuity Fund (20-8212-0-7-602). 
‘‘Judicial Survivors’ Annuities Fund (10-8110- 
0-7-602). 
‘‘Payments to the Railroad Retirement Ac-
counts (60-0113-0-1-601). 
‘‘Tax Court Judges Survivors Annuity Fund 
(23-8115-0-7-602).
‘‘Employees Life Insurance Fund (24-8424-0-8- 
602). 
‘‘(d) FEDERAL ADMINISTRATIVE EXPENSES.— 
‘‘(1) Notwithstanding any provision of law 
other than paragraph (3), administrative expenses 
incurred by the departments and agencies, including 
independent agencies, of the Government in connec-
tion with any program, project, activity, or account 
shall be subject to reduction pursuant to any seques-
tration order, without regard to any exemption, ex-
ception, limitation, or special rule otherwise applica-
ble with respect to such program, project, activity, 
or account, and regardless of whether the program, 
project, activity, or account is self-supporting and 
does not receive appropriations. 
‘‘(2) Payments made by the Government to re-
imburse or match administrative costs incurred by a 
State or political subdivision under or in connection 
with any program, project, activity, or account shall 
not be considered administrative expenses of the 
Government for purposes of this section, and shall 
be subject to sequestration to the extent (and only 
to the extent) that other payments made by the Gov-
ernment under or in connection with that program, 
project, activity, or account are subject to that re-
duction or sequestration; except that Federal pay-
ments made to a State as reimbursement of admin-
istrative costs incurred by that State under or in 
connection with the unemployment compensation 
programs specified in subsection (a)(11) shall be 
subject to reduction or sequestration under this part 
notwithstanding the exemption otherwise granted to 
such programs under that subsection. 
‘‘(3) Notwithstanding any other provision of 
law, the administrative expenses of the following 
programs shall be exempt from sequestration: 
‘‘(A) Comptroller of the Currency. 
‘‘(B) Federal Deposit Insurance Corpora-
tion. 
‘‘(C) Office of Thrift Supervision. 
‘‘(D) National Credit Union Administra-
tion. 
‘‘(E) National Credit Union Administra-
tion, central liquidity facility. 
‘‘(F) Federal Retirement Thrift Invest-
ment Board. 
‘‘(G) Resolution Funding Corporation. 
‘‘(H) Resolution Trust Corporation. 
‘‘(I) Board of Governors of the Federal 
Reserve System.
‘‘(e) VETERANS’ PROGRAMS.—The following pro-
grams shall be exempt from reduction under any order 
issued under this part: 
‘‘General Post Funds (36-8180-0-7-705). 
‘‘Veterans Insurance and Indemnities (36-0120- 
0-1-701). 
‘‘Service-Disabled Veterans Insurance Funds 
(36-4012-0-3-701). 
‘‘Veterans Reopened Insurance Fund (36-4010- 
0-3-701). 
‘‘Servicemembers’ Group Life Insurance Fund 
(36-4009-0-3-701). 
‘‘Post-Vietnam Era Veterans Education Ac-
count (36-8133-0-7-702). 
‘‘National Service Life Insurance Fund (36- 
8132-0-7-701). 
‘‘United States Government Life Insurance 
Fund (36-8150-0-7-701). 
‘‘Veterans Special Life Insurance Fund (36- 
8455-0-8-701). 
‘‘(f) OPTIONAL
EXEMPTION
OF
DEFENSE
AND 
HOMELAND SECURITY ACCOUNTS.— 
‘‘(1) IN GENERAL.—The President may, with 
respect to any defense or homeland security account, 
exempt that account from sequestration or provide
for a lower uniform percentage reduction than would 
otherwise apply. 
‘‘(2) LIMITATION.—The President may not use 
the authority provided by paragraph (1) unless the 
President notifies the Congress of the manner in 
which such authority will be exercised on or before 
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) STUDENT LOANS.—For all student loans under 
part B or D of title IV of the Higher Education Act of
1965 made during the period when a sequestration order 
under section 254 is in effect as required by section 252 
or 253, origination fees under sections 438(c)(2) and 
455(c) of that Act shall each be increased by 0.50 percent-
age point. 
‘‘(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)Payments to the Foreign 
Service Retirement and Disability Fund (72- 
1036-0-1-153). 
‘‘Judicial Officer’ 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 HEALTH
AND RETIREMENT.—To 
achieve the total percentage reduction in military retire-
ment 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), pay-
ments to the military retirement fund (97–0040–0–1– 
054), and the Defense Health Program (97–0130–0–1– 
051) shall in no event exceed 2 percent. 
‘‘(i) MEDICARE PROGRAM.— 
‘‘(1) CALCULATION
OF
REDUCTION
IN
INDI-
VIDUAL PAYMENT AMOUNTS.—To achieve the total 
percentage reduction in those programs required by 
any order issued under this part, the percentage re-
duction that shall apply to payments under the 
health insurance programs under title XVIII of the 
Social Security Act (other than payments described 
in section 255(a)(2)) that are subject to such order 
for services furnished after any sequestration order 
is issued shall be such that the reduction made in 
payments under that order shall achieve the required 
total percentage reduction in those payments for 
that fiscal year as determined on a 12-month basis. 
However, the percentage reduction under any such
program shall in no case exceed 2 percent under any 
sequestration order. 
‘‘(2) TIMING
OF
APPLICATION
OF
REDUC-
TIONS.—If a reduction is made under paragraph (1) 
in payment amounts pursuant to a sequestration 
order, the reduction shall be applied to payment for 
services furnished after the effective date of the 
order. 
‘‘(3) NO INCREASE IN BENEFICIARY CHARGES 
IN ASSIGNMENT-RELATED CASES.—If a reduction in 
payment amounts is made under paragraph (1) for 
services for which payment under part B of title 
XVIII of the Social Security Act is made on the 
basis of an assignment described in section 
1842(b)(3)(B)(ii), 
in 
accordance 
with 
section 
1842(b)(6)(B), or under the procedure described in 
section 1870(f)(1) of such Act, the person furnishing 
the services shall be considered to have accepted 
payment of the reasonable charge for the services, 
less any reduction in payment amount made pursu-
ant to a sequestration order, as payment in full. 
‘‘(4) APPLICATION TO PARTS C AND D.—The 
reductions otherwise required under parts C and D 
of title XVIII of the Social Security Act with respect 
to a fiscal year shall be applied to the calendar year
that begins after the end of the fiscal year to which 
the applicable sequestration order applies. 
‘‘(j) 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. 
‘‘(k) 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. 
‘‘(l) EXTENDED UNEMPLOYMENT COMPENSATION.— 
(1) A State may reduce each weekly benefit payment made 
under the Federal-State Extended Unemployment Com-