Act alters the level of direct spending, that effect
shall be treated as discretionary spending.
(10) The term ‘‘legislative day’’ means, with re-
spect to either House of Congress, any day of ses-
sion.
(11) The term ‘‘OMB’’ means the Director of
the Office of Management and Budget.
(12) The term ‘‘outyear’’ means any of the 4
fiscal years that follow a budget year.
(13) The terms ‘‘sequester’’ and ‘‘sequestra-
tion’’ mean the cancellation under section 8 or 9 of
direct spending authority.
SEC. 4. ESTABLISHMENT OF DIRECT SPENDING TARGETS.
(a) COVERAGE.—The direct spending targets shall
apply to all direct spending programs within the Federal
budget except for net interest and deposit insurance.
(b) INITIAL REPORT.—Not later than 30 days after
the date of enactment of this Act, OMB shall submit a
report to Congress setting forth the direct spending tar-
gets for each of fiscal years 1995 through 2000 in accord-
ance with this section.
(c) DETERMINING DIRECT SPENDING LIMITS.—In
calculating the direct spending targets, OMB shall—
(1) calculate the projected level of direct spend-
ing outlays for fiscal year 1995;
(2) calculate the increase in the direct spending
targets for each subsequent fiscal year through fiscal
year 2000 to allow growth in direct spending outlays
to reflect—
(A) changes in the Consumer Price Index;
(B) changes in the number of beneficiaries
under direct spending programs for which the
number of beneficiaries is a variable in deter-
mining costs; and
(C) an additional growth allowance of—
(i) 1 percent in 1996;
(ii) 1 percent in 1997; and
(iii) 1 percent in 1998;
(d) ADJUSTMENT FOR HEALTH CARE REFORM.—
OMB shall calculate adjustments to the direct spending
targets to reflect any increase in direct spending resulting
from health care reform legislation, enacted into law by
December 31, 1994, if such legislation would not increase
the total deficit for the period of fiscal years 1995 through
1999.
(e) ANNUAL ADJUSTMENTS.—When the President
submits a budget under section 1105(a) of title 31, United
States Code, for a fiscal year, OMB shall calculate adjust-
ments to the direct spending targets to reflect the follow-
ing:
(1) Changes in inflation projections from the
Director’s initial report under section 4(b).
(2) Changes in projections of the number of
beneficiaries from the Director’s initial report under
section 4(b).
(3) The costs of direct spending legislation to
the extent that it is offset by revenue increases or
designated as an emergency by Congress and the
President under section 252 of the Balanced Budget
and Emergency Deficit Control Act of 1985.
(4) Legislation reducing direct spending to the
extent that it offsets the deficit impact of a tax cut
under section 252 of the Balanced Budget and
Emergency Deficit Control Act of 1985.
SEC. 5. SPECIAL DIRECT SPENDING MESSAGE BY PRESI-
DENT.
(a) SPECIAL MESSAGE.—If the OMB sequestration
preview report submitted under section 12(e) indicates
that direct spending for the budget year or any outyear
will exceed the applicable direct spending target, the budg-
et submitted under section 1105(a) of title 31, United
States Code, shall include a special direct spending mes-
sage that includes proposed legislative changes to offset
the net deficit impact of the excess identified by that OMB
sequestration preview report for each such year through
any combination of:
(1) Reductions in direct spending outlays.
(2) Increases in the direct spending targets, if
the President has submitted a written determination
that, because of economic or programmatic reasons,
only some or none of the excess should be offset.
(b) INTRODUCTION
OF PRESIDENT’S PACKAGE.—
Within 10 days after the President submitted a special
direct spending message, the text referred to in subsection
(a) shall be introduced as a concurrent resolution in the
House of Representatives by the chairman of its Commit-
tee on the Budget and in the Senate by the chairman of
its Committee on the Budget. If the chairman fails to do
so, after the 10th day the resolution may be introduced
by any Member of the House of Representatives or the
Senate, as the case may be. A concurrent resolution intro-
duced under this subsection shall be referred to the Com-
mittee on the Budget of the House of Representatives or
the Senate, as the case may be.
SEC. 6. CONGRESSIONAL ACTION REQUIRED.
(a) IN GENERAL.—The requirements of this section
shall be in effect for any year in which the OMB seques-
tration preview report submitted under section 12(e) indi-
cates that direct spending for the budget year or any out-
year will exceed the applicable direct spending target.
(b) REQUIREMENTS FOR SPECIAL BUDGET RESOLU-
TION IN THE HOUSE.—The Committee on the Budget in
the House shall report not later than March 15 a concur-
rent resolution, either as a separate section of the concur-
rent resolution on the budget reported pursuant to section
301 of the Congressional Budget Act of 1974 or as a sepa-
rate resolution, that includes reconciliation instructions in-
structing the appropriate committees of the House and
Senate to report changes in laws within their jurisdiction
to offset any excess in direct spending identified in the
OMB sequestration preview report submitted under sec-
tion 12(e) as follows:
(1) Reductions in direct spending programs.
(2) Increases in the direct spending targets, ex-
cept that any increase in those targets may not be
greater than the increase included in the special rec-
onciliation message submitted by the President.
(c) PROCEDURE IF HOUSE BUDGET COMMITTEE
FAILS TO REPORT REQUIRED RESOLUTION.—
(1) AUTOMATIC DISCHARGE OF HOUSE BUDGET
COMMITTEE.—In the event that the House Commit-
tee on the Budget fails to report a resolution meet-
ing the requirements of subsection (b), the commit-
tee shall be automatically discharged from further
consideration of the concurrent resolution reflecting
the President’s recommendations introduced pursu-
ant to section 5(b), and the concurrent resolution
shall be placed on the appropriate calendar.
(2) CONSIDERATION BY HOUSE OF DISCHARGED
RESOLUTION.—Ten days after the House Committee
on the Budget has been discharged under paragraph
(1), any member may move that the House proceed
to consider the resolution. Such motion shall be
highly privileged and not debatable. It shall not be
in order to consider any amendment to the resolu-
tion except amendments which are germane and
which do not change the net deficit impact of the
resolution. Consideration of such resolution shall be
pursuant to the procedures set forth in section 305
of the Congressional Budget Act of 1974 and sub-
section (d).
(d) CONSIDERATION BY THE HOUSE OF REPRESENT-
ATIVES.—(1) It shall not be in order in the House of Rep-
resentatives to consider a concurrent resolution on the
budget unless that concurrent resolution fully addresses
the entirety of any excess of the direct spending targets
as identified in the OMB sequestration preview report sub-
mitted under section 12(e) through reconciliation instruc-
tions requiring spending reductions, or changes in the di-
rect spending targets.
(2) If the concurrent resolution on the budget pro-
poses to eliminate or offset less than the entire excess for
budget year and any subsequent fiscal years, then the
Committee on the Budget shall report a separate resolu-
tion directing the Committee on Government Operations
to report legislation increasing the direct spending targets
for each applicable year by the full amount of the excess
not offset or eliminated. It shall not be in order to consider
any concurrent resolution on the budget that does not off-
set the full amount of the excess until the House of Rep-
resentatives has agreed to the resolution directing the in-
crease in the direct spending targets.
(e) TRANSMITTAL TO SENATE.—If a concurrent reso-
lution passes the House pursuant to subsection (d), the
Clerk of the House of Representatives shall cause the reso-
lution to be engrossed, certified, and transmitted to the
Senate within one calendar day of the day on which the
resolution is passed. The resolution shall be referred to
the Senate Committee on the Budget.
(f) REQUIREMENTS FOR SPECIAL BUDGET RESOLU-
TION IN THE SENATE.—The Committee on the Budget in
the Senate shall report not later than April 1 a concurrent
resolution, either as a separate section of a budget resolu-
tion reported pursuant to section 301 of the Congressional
Budget Act of 1974 or as a separate resolution, that shall
include reconciliation instructions instructing the appro-
priate committees of the House and Senate to report
changes in laws within their jurisdiction to offset any ex-
cess through any combination of:
(1) Reductions in direct spending programs.
(2) Increases in the direct spending targets, ex-
cept that any increase in those targets may not be
greater than the increase included in the special rec-
onciliation message submitted by the President.
(g) PROCEDURE IF SENATE BUDGET COMMITTEE
FAILS TO REPORT REQUIRED RESOLUTION.—
(1) AUTOMATIC DISCHARGE OF SENATE BUDG-
ET COMMITTEE.—In the event that the Senate Com-
mittee on the Budget fails to report a resolution
meeting the requirements of subsection (f), the com-
mittee shall be automatically discharged from fur-
ther consideration of the concurrent resolution re-
flecting the President’s recommendations introduced
pursuant to section 5(b), and the concurrent resolu-
tion shall be placed on the appropriate calendar.
(2) CONSIDERATION
BY
SENATE
OF
DIS-
CHARGED RESOLUTION.—Ten days after the Senate
Committee on the Budget has been discharged under
paragraph (1), any member may move that the Sen-
ate proceed to consider the resolution. Such motion
shall be privileged and not debatable. Consideration
of such resolution shall be pursuant to the proce-
dures set forth in section 305 of the Congressional
Budget Act of 1974 and subsection (h).
(h) CONSIDERATION BY SENATE.—(1) It shall not be
in order in the Senate to consider a concurrent resolution
on the budget unless that concurrent resolution fully ad-
dresses the entirety of any excess of the direct spending
targets as identified in the OMB sequestration report sub-
mitted under section 12(e) through reconciliation instruc-
tions requiring direct spending reductions, or changes in
the direct spending targets.
(2) If the concurrent resolution on the budget pro-
poses to eliminate or offset less than the entire overage
of a budget year, then the Committee on the Budget shall
report a resolution increasing the direct spending target
by the full amount of the overage not eliminated. It shall
not be in order to consider any concurrent resolution on
the budget that does not offset the entire amount of the
overage until the Senate has agreed to the resolution di-
recting the increase in the direct spending targets.
(i) CONFERENCE REPORTS MUST FULLY ADDRESS
OVERAGE.—It shall not be in order in the House of Rep-
resentatives or the Senate to consider a conference report
on a concurrent resolution on the budget unless that con-
ference report fully addresses the entirety of any excess
identified by the OMB sequestration preview report sub-
mitted pursuant to section 12(e) through reconciliation in-
structions requiring direct spending reductions, or changes
in the direct spending targets.
(j) WAIVERS.—The points of order established by
subsection (d)(1), (h)(1), or (i) may be waived or sus-
pended—
(1) in the House of Representatives only by a
resolution devoted solely to the subject of waiving
that point of order, or
(2) in the Senate only by an affirmative vote of
three-fifths of the Members duly chosen and sworn.
SEC. 7. SPIN-OFF LEGISLATION.
(a) ALLOCATIONS OF DIRECT SPENDING.—The joint
explanatory statement accompanying a conference report
on a concurrent resolution on the budget shall include an
estimated allocation based upon such concurrent resolu-
tion as recommended in such conference report, of the ap-
propriate levels of direct spending budget authority and
outlays for each major functional category.
(b) INTRODUCTION OF SPIN-OFF LEGISLATION.—On
the third legislative day after adoption of a concurrent res-
olution on the budget, the chairman of the Committee on
the Budget of the House of Representatives or the Senate,
as the case may be, shall introduce legislation specifying
the budget year amount of direct spending allowed by
budget functional categories, based on the allocations set
forth in the joint explanatory statement accompanying the
conference report on such concurrent resolution. The total
amount of direct spending under such legislation may not
exceed the target set forth for that fiscal year by section
4 unless Congress has adopted a resolution directing an
increase in the direct spending targets. Legislation intro-
duced under this subsection shall be referred to the Com-
mittee on the Budget.
(c) PROCEDURE IN HOUSE OF REPRESENTATIVES.—
(1) AUTOMATIC DISCHARGE OF HOUSE BUDGET
COMMITTEE.—In the event that the House Budget
Committee fails to report legislation introduced pur-
suant to subsection (b) within 7 legislative days of
the introduction of the bill in the House, the com-
mittee shall be automatically discharged from fur-
ther consideration of such legislation.
(2) CONSIDERATION
BY
HOUSE
OF
SPIN-OFF
LEGISLATION.—Three legislative days after the
House Budget Committee has reported spin-off leg-
islation described in subsection (b) or has been dis-
charged under paragraph (1), it shall be in order to
move that the House proceed to consider the legisla-
tion. Such motion shall be highly privileged and not
debatable.
(3) DEBATE IN HOUSE.—General debate on any
spin-off legislation in the House of Representatives
shall be limited to not more than 5 hours, which
shall be divided equally between the majority and
minority parties. A motion to further limit debate
shall not be in order. It shall not be in order to con-
sider any amendments which would cause the total
amount of direct spending under the spin-off legisla-
tion to exceed the target set forth for the fiscal year
under section 4.
(4) HOUSE
CONSIDERATION
OF
CONFERENCE
REPORT.—Debate in the House of Representatives
on the conference report on spin-off legislation shall
be limited to not more than 1 hour, which shall be
divided equally between the majority and minority
parties. A motion to further limit debate is not de-
batable. A motion to recommit the conference report
is not in order, and it is not in order to move to re-
consider the vote by which the conference report is
agreed to or disagreed to.
(d) PROCEDURE IN THE SENATE.—
(1) AUTOMATIC DISCHARGE OF SENATE BUDG-
ET
COMMITTEE.—In the event that the Senate
Budget Committee fails to report legislation de-
scribed in subsection (b), the committee shall be
automatically discharged from further consideration
of such legislation.
(2) CONSIDERATION BY SENATE OF SPIN-OFF
LEGISLATION.—Three days after the Senate Budget
Committee has reported spin-off legislation described
in subsection (b) or has been discharged under para-
graph (1), it shall be in order to move that the Sen-
ate proceed to consider the legislation. Such motion
shall be privileged and not debatable.
(3) DEBATE IN SENATE.—Debate in the Senate
on any spin-off legislation, and all amendments
thereto and debatable motions and appeals in con-
nection therewith, shall be limited to not more than
25 hours. The time shall be equally divided between,
and controlled by, the majority leader and the mi-
nority leader or their designees. It shall not be in
order to consider any amendments which would
cause the total amount of direct spending under the
spin-off legislation to exceed the target set forth for
the fiscal year under section 4 or includes provisions
on a subject other than the levels of budget year
amount or direct spending allowed by budget func-
tional categories.
(4) A MOTION TO FURTHER LIMIT DEBATE IS
NOT DEBATABLE.—A motion to recommit (except a
motion to recommit with instruction to report back
within a specified number of days, not to exceed 3,
not counting any day on which the Senate is not in
session) is not in order. Debate on any such motion
to recommit shall be limited to 1 hour, to be equally
divided between, and controlled by, the mover and
the manager of the concurrent resolution.
(5) MOTION TO PROCEED TO CONFERENCE IN
SENATE.—A motion to proceed to the consideration
of the conference report on any spin-off legislation
may be made even though a previous motion to the
same effect has been disagreed to.
(6) SENATE CONSIDERATION OF CONFERENCE
REPORT.—Debate in the Senate on a conference re-
port on spin-off legislation shall be limited to not
more than 5 hours, which shall be divided equally
between the majority leader and minority leader or
their designees. A motion to further limit debate is
not debatable. Debate on any debatable motion or
appeal related to the conference report (or a mes-
sage between House) shall be limited to 1 hour, to
that total direct spending for each functional category is
no more than allowed for the budget year.
(2) The amount to be sequestered for the budget year
from direct spending programs in each functional category
is the amount by which direct spending during the budget
year results in a greater amount of direct spending than
allowed in that functional category in the spin-off law.
(c) SEQUESTRATION.—Within 15 days after Con-
gress adjourns to end a session, there shall be a sequestra-
tion to reduce the amount of direct spending in the cur-
rent policy baseline in any functional category by the
amount specified in subsection (b)(2). The amount re-
quired to be sequestered from direct spending in a func-
tional category shall be achieved by reducing each non-
exempt direct spending account (or activity within an ac-
count) within that functional category by the uniform per-
centage necessary to achieve that amount.
SEC. 9. COMPREHENSIVE SEQUESTRATION.
(a) APPLICATION.—This section shall apply for any
budget year unless a spin-off law as described in section
7 is in effect for that year on the date of the final seques-
tration report described in section 12.
(b) SEQUESTRATION
BASED
ON
BUDGET-YEAR
SHORTFALL.—The amount to be sequestered for the
budget year is the amount (if any) by which direct spend-
ing exceeds the cap for that year under section 4.
(c) SEQUESTRATION.—Within 15 days after Con-
gress adjourns to end a session, there shall be a sequestra-
tion to reduce the amount of direct spending in the cur-
rent policy baseline by the amounts specified in subsection
(b). The amount required to be sequestered shall be
achieved by reducing each direct spending account (or ac-
tivity within an account) by the uniform percentage nec-
essary to achieve that amount.
SEC. 10. EXEMPT PROGRAMS AND ACTIVITIES.
The following budget accounts, activities within ac-
counts, or income shall be exempt from sequestration—
(1) net interest;
(2) deposit insurance and pension benefit guar-
antees;
(3) all payments to trust funds from excise
taxes or other receipts or collections properly cred-
itable to those trust funds;
(4) offsetting receipts and collections;
(5) all payments from one Federal direct spend-
ing budget account to another Federal budget ac-
count; all intragovernmental funds including those
from which funding is derived primarily from other
Government accounts;
(6) expenses to the extent they result from pri-
vate donations, bequests, or voluntary contributions
to the Government;
(7) nonbudgetary activities, including but not
limited to—
(A) credit liquidating and financing ac-
counts;
(B) the Pension Benefit Guarantee Cor-
poration Trust Funds;
(C) the Thrift Savings Fund;
(D) the Federal Reserve System; and
(E) appropriations for the District of Co-
lumbia to the extent they are appropriations of
locally raised funds;
(8) payments resulting from 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;
(9) 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);
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 as-
sistance pursuant to Public Law 99–658 (14–
0415–0–1–806);
Compensation of the President (11–0001–
0–1–802);
Customs Service, miscellaneous permanent
appropriations (20–9992–0–2–852);
Eastern Indian land claims settlement
fund (14–2202–0–1–806)
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 the United States territories,
fiscal assistance (14–0418–0–1–801);
Salaries of Article III judges;
Soldier’s and Airmen’s Home, payment of
claims (84–8930–0–7–705);
Washington Metropolitan Area Transit Au-
thority, interest payments (46–0300–0–1–401);
(10) the following noncredit special, revolving,
or trust-revolving funds:
Coinage profit fund (20–5811–0–2–803);
Exchange Stabilization Fund (20–4444–0–
3–155);
Foreign Military Sales trust fund (11–
82232–0–7–155);
(11)(A) any amount paid as regular unemploy-
ment compensation by a State from its account in
the Unemployment Trust Fund (established by sec-
tion 904(a) of the Social Security Act);
(B) any advance made to a State from the Fed-
eral unemployment account (established by section
904(g) of such Act) under title XII of such Act and
any advance appropriated to the Federal unemploy-
ment account pursuant to section 1203 of such Act;
(C) any payment made from the Federal Em-
ployees Compensation Account (as established under
section 909 of such Act) for the purpose of carrying
out chapter 85 of title 5, United States Code, and
funds appropriated or transferred to or otherwise
deposited in such Account;
(12) the earned income tax credit (payments to
individuals pursuant to section 32 of the Internal
Revenue Code of 1986); and
(13) the uranium enrichment program.
SEC. 11. GENERAL AND SPECIAL SEQUESTRATION RULES.
(a) 
PERMANENT
SEQUESTRATION
OF
DIRECT
SPENDING.—
(1) The purpose of any direct spending seques-
tration under this Act is to ensure deficit reduction
in the budget year and all subsequent fiscal years,
so that the budget-year direct spending cap in sec-
tion 4 is not exceeded.
(2) Obligations in sequestered direct spending
accounts shall be reduced in the fiscal year in which
a sequestration occurs and in all succeeding fiscal
years. Notwithstanding any other provision of this
section, after the first direct spending sequestration,
any later sequestration shall reduce direct spending
by an amount in addition to, rather than in lieu of,
the reduction in direct spending in place under the
existing sequestration or sequestrations.
(b) UNIFORM PERCENTAGES.—
(1) In calculating the uniform percentage appli-
cable to the sequestration of all direct spending pro-
grams or activities under section 9, or the uniform
percentage applicable to the sequestration of
nonexempt direct spending programs or activities
within a functional category under section 8, the
sequestrable base for direct spending programs and
activities is the total budget-year level of outlays for
those programs or activities in the current policy
baseline minus—
(A) those budget-year outlays resulting
from obligations incurred in the current or
prior fiscal years, and
(B) those budget-year outlays resulting
from exemptions under section 10.
(2) For any direct spending program in
which—
(A) outlays pay for entitlement benefits,
(B) a budget-year sequestration takes ef-
fect after the 1st day of the budget year, and
(C) that delay reduces the amount of enti-
tlement authority that is subject to sequestra-
tion in the budget year,
the uniform percentage otherwise applicable to the
sequestration of that program in the budget year
shall be increased as necessary to achieve the same
budget-year outlay reduction in that program as
would have been achieved had there been no delay.
(3) If the uniform percentage otherwise applica-
ble to the budget-year sequestration of a program or
activity is increased under paragraph (2), then it
shall revert to the uniform percentage calculated
under paragraph (1) when the budget year is com-
pleted.
(c) GENERAL RULES FOR SEQUESTRATION.—
(1) INDEFINITE AUTHORITY.—Except as other-
wise provided, sequestration in accounts for which
obligations are indefinite shall be taken in a manner
to ensure that obligations in the fiscal year of a se-
questration and succeeding fiscal years are reduced,
from the level that would actually have occurred, by
the applicable sequestration percentage or percent-
ages.
(2) 
CANCELLATION
OF
BUDGETARY
RE-
SOURCES.—Budgetary resources sequestered from
any account other than an entitlement trust, special,
or revolving fund account shall revert to the Treas-
ury and be permanently canceled or repealed.
(3) INDEXED BENEFIT PAYMENTS.—If, under
any entitlement program—
(A) benefit payments are made to persons
or governments more frequently than once a
year, and
(B) the amount of entitlement authority is
periodically adjusted under existing law to re-
flect changes in a price index,
then for the first fiscal year to which a sequestration
order applies, the benefit reductions in that program
accomplished by the order shall take effect starting
with the payment made at the beginning of January
or 7 weeks after the order is issued, whichever is
later. For the purposes of this subsection, Veterans
Compensation shall be considered a program that
meets the conditions of the preceding sentence.
(4) PROGRAMS, PROJECTS, OR
ACTIVITIES.—
Except as otherwise provided, the same percentage
sequestration shall apply to all programs, projects,
and activities within a budget account (with pro-
grams, projects, and activities as delineated in the
appropriation Act or accompanying report for the
relevant fiscal year covering that account, or for ac-
counts not included in appropriation Acts, as delin-
eated in the most recently submitted President’s
budget).
(5) IMPLEMENTING
REGULATIONS.—Adminis-
trative regulations or similar actions implementing
the sequestration of a program or activity shall be
made within 120 days of the effective date of the se-
questration of that program or activity.
(6) DISTRIBUTION FORMULAS.—To the extent
that distribution or allocation formulas differ at dif-
ferent levels of budgetary resources within an ac-
count, program, project, or activity, a sequestration
shall be interpreted as producing a lower total ap-
propriation, with that lower appropriation being obli-
gated as though it had been the pre-sequestration
appropriation and no sequestration had occurred.
(7) CONTINGENT
FEES.—In any account for
which fees charged to the public are legally deter-
mined by the level of appropriations, fees shall be
charged on the basis of the presequestration level of
appropriations.
(d) NON-JOBS PORTION OF AFDC.—Any sequestra-
tion order shall accomplish the full amount of any required
reduction in payments for the non-jobs portion of the aid
to families with dependant children program under the So-
cial Security Act by reducing the Federal reimbursement
percentage (for the fiscal year involved) by multiplying
that reimbursement percentage, on a State-by-State basis,
by the uniform percentage applicable to the sequestration
of nonexempt direct spending programs or activities.
(e) JOBS PORTION OF AFDC.—
(1) FULL
AMOUNT
OF
SEQUESTRATION
RE-
QUIRED.—Any sequestration order shall accomplish
the full amount of any required reduction of the job
opportunities and basic skills training program
under section 402(a)(19), and part F of title VI, of
the Social Security Act, in the manner specified in
this subsection. Such an order may not reduce any
Federal matching rate pursuant to section 403(l) of
the Social Security Act.
(2) NEW ALLOTMENT FORMULA.—
(A) 
GENERAL
RULE.—Notwithstanding
section 403(k) of the Social Security Act, each
State’s percentage share of the amount avail-
able after sequestration for direct spending pur-
suant to section 403(l) of such Act shall be
equal to that percentage of the total amount
paid to the States pursuant to such section
403(l) for the prior fiscal year that is rep-
resented by the amount paid to such State pur-
suant to such section 403(l) for the prior fiscal
year, except that a State may not be allotted an
amount under this subparagraph that exceeds
the amount that would have been allotted to
such State pursuant to such section 403(k) had
the sequestration not been in effect.
(B) REALLOTMENT OF AMOUNTS REMAIN-
ING UNALLOTTED AFTER APPLICATION OF GEN-
ERAL RULE.—Any amount made available after
sequestration for direct spending pursuant to
section 403(l) of the Social Security Act that
remains unallotted as a result of subparagraph
(A) of this paragraph shall be allotted among
the States in proportion to the absolute dif-
ference between the amount allotted, respec-
tively, to each State as a result of such sub-
paragraph and the amount that would have
been allotted to such State pursuant to section
403(k) of such Act had the sequestration not
been in effect, except that a State may not be
allotted an amount under this subparagraph
that results in a total allotment to the State
under this paragraph of more than the amount
that would have been allotted to such State
pursuant to such section 403(k) had the seques-
tration not been in effect.
(f) CHILD SUPPORT ENFORCEMENT PROGRAM.—Any
sequestration order shall accomplish the full amount of
any required reduction in payments under sections 455
and 458 of the Social Security Act by reducing the Fed-
eral matching rate for State administrative costs under
the program, as specified (for the fiscal year involved) in
section 455(a) of such Act, to the extent necessary to re-
duce such expenditures by that amount.
(g) COMMODITY CREDIT CORPORATION.—
(1) EFFECTIVE
DATE.—For the Commodity
Credit Corporation, the date on which a sequestra-
tion order takes effect in a fiscal year shall vary for
each crop of a commodity. In general, the sequestra-
tion order shall take effect when issued, but for each
crop of a commodity for which 1-year contracts are
issued as an entitlement, the sequestration order
shall take effect with the start of the sign-up period
for that crop that begins after the sequestration
order is issued. Payments for each contract in such
a crop shall be reduced under the same terms and
conditions.
(2) DAIRY PROGRAM.—As the sole means of
achieving any reduction in outlays under the milk
price-support program, the Secretary of Agriculture
shall provide for a reduction to be made in the price
received by producers for all milk produced in the
United States and marketed by producers for com-
mercial use. That price reduction (measured in cents
per hundredweight of milk marketed) shall occur
under subparagraph (A) of section 201(d)(2) of the
Agricultural Act of 1949 (7 U.S.C. 1446(d)(2)(A)),
shall begin on the day any sequestration order is is-
sued, and shall not exceed the aggregate amount of
the reduction in outlays under the milk price-support
program, that otherwise would have been achieved
by reducing payments made for the purchase of milk
or the products of milk under this subsection during
that fiscal year.
(3) EFFECT OF DELAY.—For purposes of sub-
section (b)(1), the sequestrable base for the Com-
modity Credit Corporation is the budget-year level of
gross outlays resulting from new budget authority
that is subject to reduction under paragraphs (1)
and (2), and subsection (b)(2) shall not apply.
(4) CERTAIN
AUTHORITY
NOT
TO
BE
LIM-
ITED.—Nothing in this Act shall restrict the Cor-
poration in the discharge of its authority and re-
sponsibility as a corporation to buy and sell com-
modities in world trade, or limit or reduce in any
way any appropriation that provides the Corporation
with funds to cover its net realized losses.
(h) EXTENDED UNEMPLOYMENT COMPENSATION.—
(1) A State may reduce each weekly benefit payment made
under the Federal-State Extended Unemployment Com-
pensation Act of 1970 for any week of unemployment oc-
curring during any period with respect to which payments
are reduced under any sequestration order by a percentage
not to exceed the percentage by which the Federal pay-
ment 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 1986.
(i) FEDERAL
EMPLOYEES
HEALTH
BENEFITS
FUND.—For the Federal Employees Health Benefits
Fund, a sequestration order shall take effect with the next
open season. The sequestration shall be accomplished by
annual payments from that Fund to the General Fund of
the Treasury. Those annual payments shall be financed
solely by charging higher premiums. For purposes of sub-
section (b)(1), the sequestrable base for the Fund is the
budget-year level of gross outlays resulting from claims
paid after the sequestration order takes effect, and sub-
section (b)(2) shall not apply.
(j) FEDERAL HOUSING FINANCE BOARD.—Any se-
questration of the Federal Housing Finance Board shall
be accomplished by annual payments (by the end of each
fiscal year) from that Board to the general fund of the
Treasury, in amounts equal to the uniform sequestration
percentage for that year times the gross obligations of the
Board in that year.
(k) FEDERAL PAY.—
(1) IN GENERAL.—Except as provided in sec-
tion 10(b)(3), new budget authority to pay Federal
personnel from direct spending accounts shall be re-
duced by the uniform percentage calculated under
section 8 or 9, as applicable, 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, Unit-
ed States Code, or section 302 of the Federal Em-
ployees Pay Comparability Act of 1990) or the rate
of any element of military pay to which any individ-
ual is entitled under title 37, United States Code, or
any increase in rates of pay which is scheduled to
take effect 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.
(l) GUARANTEED STUDENT LOANS.—(A) For all stu-
dent loans under part B of title IV of the Higher Edu-
cation Act of 1965 made on or after the date of a seques-
tration, the origination fees shall be increased by a uni-
form percentage sufficient to produce the dollar savings
in student loan programs for the fiscal year of the seques-
tration required by section 8 or 9, and all subsequent
origination fees shall be increased by the same percentage,
notwithstanding any other provision of law.
(B) The origination fees to which paragraph (A) ap-
plies are those specified in sections 428H(f)(1) and 438(c)
of that Act.
(m) INSURANCE PROGRAMS.—Any sequestration in a
Federal program that sells insurance contracts to the pub-
lic (including the Federal Crop Insurance Fund, the Na-
tional Insurance Development Fund, the National Flood
Insurance Fund, insurance activities of the Overseas Pri-
vate Insurance Corporation, and Veterans’ life insurance
programs) shall be accomplished by annual payments from
the insurance fund or account to the general fund of the
Treasury. The amount of each annual payment by each
such fund or account shall be the amount received by the
fund or account by increasing premiums on contracts en-
tered into after the date a sequestration order takes effect
by the uniform sequestration percentage, and premiums
shall be increased accordingly.
(n) MEDICAID.—The November 15th estimate of
medicaid spending by States shall be the base estimate
from which the uniform percentage reduction under any
sequestration, applied across-the-board by State, shall be
made. Succeeding Federal payments to States shall reflect
that reduction. The Health Care Financing Administra-
tion shall reconcile actual medicaid spending for each fis-
cal year with the base estimate as reduced by the uniform
percentage, and adjust each State’s grants as soon as
practicable, but no later than 100 days after the end of
the fiscal year to which the base estimate applied, to com-
ply with the sequestration order.
(o) MEDICARE.—
(1) TIMING
OF
APPLICATION
OF
REDUC-
TIONS.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), if a reduction is made 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. For purposes of the previous sen-
tence, in the case of inpatient services furnished
for an individual, the services shall be consid-
ered to be furnished on the date of the individ-
ual’s discharge from the inpatient facility.
(B) PAYMENT ON THE BASIS OF COST RE-
PORTING PERIODS.—In the case in which pay-
ment for services of a provider of services is
made under title XVIII of the Social Security
Act on a basis relating to the reasonable cost
incurred for the services during a cost reporting
period of the provider, if a reduction is made in
payment amounts pursuant to a sequestration
order, the reduction shall be applied to payment
for costs for such services incurred at any time
during each cost reporting period of the pro-
vider any part of which occurs after the effec-
tive date of the order, but only (for each such
cost reporting period) in the same proportion as
the fraction of the cost reporting period that oc-
curs after the effective date of the order.
(2) NO INCREASE IN BENEFICIARY CHARGES IN
ASSIGNMENT-RELATED
CASES.—If a reduction in
payment amounts is made pursuant to a sequestra-
tion order 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.
(3) NO EFFECT ON COMPUTATION OF AAPCC.—
In computing the adjusted average per capita cost
for purposes of section 1876(a)(4) of the Social Se-
curity Act, the Secretary of Health and Human
Services shall not take into account any reductions
in payment amounts which have been or may be ef-
fected under this part.
(p) POSTAL SERVICE FUND.—Any sequestration of
the Postal Service Fund shall be accomplished by annual
payments from that Fund to the General Fund of the
Treasury, and the Postmaster General of the United
States shall have the duty to make those payments during
the fiscal year to which the sequestration order applies
and each succeeding fiscal year. The amount of each an-
nual payment shall be—
(1) the uniform sequestration percentage, times
(2) the estimated gross obligations of the Postal
Service Fund in that year other than those obliga-
tions financed with an appropriation for revenue
foregone for that year.
Any such payment for a fiscal year shall be made as soon
as possible during the fiscal year, except that it may be
made in installments within that year if the payment
schedule is approved by the Secretary of the Treasury.
Within 30 days after the sequestration order is issued, the
Postmaster General shall submit to the Postal Rate Com-
mission a plan for financing the annual payment for that
fiscal year and publish that plan in the Federal Register.
The plan may assume efficiencies in the operation of the
Postal Service, reductions in capital expenditures, in-
creases in the prices of services, or any combination, but
may not assume a lower Fund surplus or higher Fund
deficit and must follow the requirements of existing law
governing the Postal Service in all other respects. Within
30 days of the receipt of that plan, the Postal Rate Com-
mission shall approve the plan or modify it in the manner
that modifications are allowed under current law. If the
Postal Rate Commission does not respond to the plan
within 30 days, the plan submitted by the Postmaster
General shall go into effect. Any plan may be later revised
by the submission of a new plan to the Postal Rate Com-
mission, which may approve or modify it.
(q) POWER
MARKETING
ADMINISTRATIONS
AND
T.V.A.—Any sequestration of the Department of Energy
power marketing administration funds or the Tennessee
Valley Authority fund shall be accomplished by annual
payments from those funds to the General Fund of the
Treasury, and the administrators of those funds shall have
the duty to make those payments during the fiscal year
to which the sequestration order applies and each succeed-
ing fiscal year. The amount of each annual payment by
a fund shall be—
(1) the direct spending uniform sequestration
percentage, times
(2) the estimated gross obligations of the fund
in that year other than those obligations financed
from discretionary appropriations for that year.
Any such payment for a fiscal year shall be made as soon
as possible during the fiscal year, except that it may be
made in installments within that year if the payment
schedule is approved by the Secretary of the Treasury. An-
nual payments by a fund may be financed by reductions
in costs required to produce the presequester amount of
power (but those reductions shall not include reductions
in the amount of power supplied by the fund), by reduc-
tions in capital expenditures, by increases in rates, or by
any combination, but may not be financed by a lower fund
surplus or a higher fund deficit and must follow the re-
quirements of existing law governing the fund in all other
respects. The administrator of a fund or the TVA Board
is authorized to take the actions specified above in order
to make the annual payments to the Treasury.
(r) VETERANS’ HOUSING LOANS.—(1) For all hous-
ing loans guaranteed, insured, or made under chapter 37
of title 38, United States Code, on or after the date of
a sequestration, the origination fees shall be increased by
a uniform percentage sufficient to produce the dollar sav-
ings in veterans’ housing programs for the fiscal year of
the sequestration required by section 8 or 9, and all subse-
quent origination fees shall be increased by the same per-
centage, notwithstanding any other provision of law.
(2) The origination fees to which paragraph (1) ap-
plies are those referred to in section 3729 of title 38,
United States Code.
SEC. 12. ESTIMATING ASSUMPTIONS, REPORTS, AND OR-
DERS.
(a) TIMETABLE.—The timetable with respect to this
part for any budget year is as follows:
Date:
Action to be completed:
The President’s budget submission
OMB publishes sequestration preview
report.
Within 10 days after end of ses-
sion.
OMB and CBO issue final budget
year sequestration reports.
Date:
Action to be completed:
5 days later ....................................
President issues sequestration order.
(b) SUBMISSION AND AVAILABILITY OF REPORTS.—
Each report required by this section shall be submitted,
in the case of CBO, to the House of Representatives, the
Senate, and OMB, and, in the case of OMB, to the House
of Representatives, the Senate, and the President on the
day it is issued. On the following day a notice of the report
shall be printed in the Federal Register.
(c) EXCHANGE OF PRELIMINARY CURRENT POLICY
BASELINES.—On January 15, OMB and CBO shall ex-
change their preliminary current policy baselines for the
budget-year session starting in January.
(d) SEQUESTRATION PREVIEW REPORTS.—
(1) REPORTING
REQUIREMENT.—On January
31, whichever is later, OMB and CBO shall each
submit a sequestration preview report.
(2) CONTENTS.—Each preview report shall set
forth the following:
(A) MAJOR ESTIMATING ASSUMPTIONS.—
The major estimating assumptions for the cur-
rent year, the budget year, and the outyears,
and an explanation of them.
(B) CURRENT POLICY BASELINE.—A de-
tailed display of the current policy baseline for
the current year, the budget year, and the out-
years, with an explanation of changes in the
baseline since it was last issued that includes
the effect of policy decisions made during the
intervening period and an explanation of the
differences between OMB and CBO for each
item set forth in the report.
(C) ADJUSTING
DIRECT
SPENDING
TAR-
GETS.—A determination of any adjustments to
the direct spending targets under section 4 and
an explanation of any adjustments.
(D) REQUIREMENTS FOR DIRECT SPEND-
ING.—An estimate of the reductions in direct
spending to be achieved for the budget year
necessary to comply with the direct spending
targets.
(E) DIRECT SPENDING SEQUESTRATION.—
Estimates of the uniform percentage and the
amount of comprehensive sequestration of di-
rect spending programs that will be necessary
under section 9.
(e) OFFICIAL SEQUESTRATION PREVIEW REPORT.—
The OMB sequestration preview report shall be the official
report for purposes of this Act. That report shall be set
forth, without change, in the budget submitted by the
President under section 1105(a) of title 31, United States
Code, for the budget year.
(f) FINAL SEQUESTRATION REPORTS.—
(1) REPORTING REQUIREMENT.—Not later than
10 days following the end of a budget-year session,
OMB and CBO shall each submit a final sequestra-
tion report.
(2) CONTENTS.—That report shall be based
upon laws enacted through the date of the report
and shall set forth all the information and estimates
required of a sequestration preview report required
by subsections (d)(2)(C) through (E). In addition,
that report shall include for each account to be se-
questered, the baseline level of sequestrable budg-
etary resources and the resulting reductions in new
budget authority and outlays.
(g) PRESIDENTIAL ORDER.—On the day that OMB
issues a final sequestration report, the President shall
issue an order fully implementing without change all se-
questrations actions required by the final sequestration re-
port that requires the lesser total amount of direct spend-
ing sequestration under section 8 or 9 (as applicable). The
order shall be effective on issuance and shall be issued
only if sequestration is required.
(h) USE OF MAJOR ESTIMATING ASSUMPTIONS AND
SCOREKEEPING CONVENTIONS.—In the estimates, projec-
tions, and reports under this subtitle, OMB shall use the
same economic and technical assumptions as used in the
most recent budget submitted by the President under sec-
tion 1105(a) of title 31, United States Code. CBO shall
use the same economic and technical assumptions as used
in the most recent report submitted by CBO under section
202(f)(1) of the Congressional Budget Act of 1974.
SEC. 13. THE CURRENT POLICY BASELINE.
(a) IN GENERAL.—For any budget year, the baseline
refers to a projection of current-year levels of new budget
authority, outlays, revenues, and the surplus or deficit into
the budget year and the outyears based on laws enacted
through, and discretionary regulations promulgated as
final by, the applicable date.
(b) DIRECT SPENDING.—For the current year, the
budget year, and each outyear, the baseline shall be cal-
culated using the following assumptions:
(1) IN GENERAL.—Laws providing or creating
direct spending are assumed to operate in the man-
ner specified in those laws for each such year, fund-
ing for entitlement authority is assumed to be ade-
quate to make all payments required by those enti-
tlements, and funding for deposit insurance is as-
sumed to be adequate to meet the costs of the Fi-
nancial Institutions Reform, Recovery, and Enforce-
ment Act of 1989 or successor laws.
(2) EXCEPTIONS.—Except as provided in para-
graph (3):
(A) No program with estimated current-
year gross new budget authority greater than
$100 million is assumed to expire in the budget
year or outyears. In carrying out the preceding
sentence, expiring entitlement programs and
programs financed by indefinite budget author-
ity are assumed to continue as in effect just
prior to their expiration, and other expiring
programs are assumed to continue with new
budget authority projected as equal to budget
authority in the last year for which budget au-
thority is enacted.
(B) The percentage increase for veterans’
compensation for a fiscal year is assumed to be
the same as that required by law for veterans’
pensions unless otherwise provided by a law en-
acted in that session.
(3) CUTOFF DATE.—Programs that expire on
or before December 31 and that have not been reau-
thorized by the date of the final sequestration report
are assumed to expire. If an increase in veterans
compensation has not been enacted by the date of
the final sequestration report, it is not assumed.
(c) UP-TO-DATE CONCEPTS.—In deriving the base-
line for any budget year or outyear, current-year amounts
shall be calculated using the concepts and definitions that
are required for that budget year.
SEC. 14. RELATIONSHIP TO PAY-AS-YOU-GO.
Reductions in outlays resulting in legislation enacted
pursuant to section 6 shall not be taken into account for
purposes of section 252 of the Balanced Budget and
Emergency Deficit Control Act of 1985, except to the ex-
tent necessary to achieve a balance in the paygo scorecard
under such section 252(d).
SEC. 15. JUDICIAL REVIEW.
(a) EXPEDITED REVIEW.—
(1) Any Member of Congress may bring an ac-
tion, in the United States District Court for the Dis-
trict of Columbia, for declaratory judgment and in-
junctive relief on the ground that any order that
might be issued pursuant to section 12 violates the
Constitution.
(2) Any Member of Congress, or any other per-
son adversely affected by any action taken under
this Act, may bring an action, in the United States
(b) APPEAL TO SUPREME COURT.—Notwithstanding
any other provision of law, any order of the United States
District Court for the District of Columbia which is issued
pursuant to an action brought under paragraph (1), (2),
or (3) of subsection (a) shall be reviewable by appeal di-
rectly to the Supreme Court of the United States. Any
such appeal shall be taken by a notice of appeal filed with-
in 10 days after such order is entered; and the jurisdic-
tional statement shall be filed within 30 days after such
order is entered. No stay of an order issued pursuant to
an action brought under paragraph (1), (2), or (3) of sub-
section (a) shall be issued by a single Justice of the Su-
preme Court.
(c) EXPEDITED CONSIDERATION.—It shall be the
duty of the District Court for the District of Columbia
and the Supreme Court of the United States to advance
on the docket and to expedite to the greatest possible ex-
tent the disposition of any matter brought under sub-
section (a).
(d) NONCOMPLIANCE WITH SEQUESTRATION PROCE-
DURES.—
(1) If it is finally determined by a court of com-
petent jurisdiction that an order issued by the Presi-
dent under section 12 for any fiscal year does not
fully implement without change all sequestrations re-
quired by the OMB report, the President shall, with-
in 20 days after such determination is made, revise
the order in accordance with such determination.
(2) If the order issued by the President under
section 12 for any fiscal year does not fully imple-
ment without change all sequestrations required by
the OMB report which is the basis for the order on
the claim or defense that the constitutional powers
of the President prevent such sequestration or re-
duction or permit the avoidance of such sequestra-
tion or reduction, and such claim or defense is fi-
nally determined by the Supreme Court of the Unit-
ed States to be valid, then the entire order issued
pursuant to section 12 for such fiscal year shall be
null and void.
(e) TIMING
OF RELIEF.—No order of any court
granting declaratory or injunctive relief from the order of
the President issued under section 12, including relief per-
mitting or requiring the expenditure of funds sequestered
by such order, shall take effect during the pendency of
the action before such court, during the time appeal may
be taken, or, if appeal is taken, during the period before
the court to which such appeal is taken has entered its
final order disposing of such action.
(f) PRESERVATION OF OTHER RIGHTS.—The rights
created by this section are in addition to the rights of any
person under law, subject to subsection (e).
(g) ECONOMIC DATA, ASSUMPTIONS, AND METH-
ODOLOGIES.—The economic data and economic and tech-
nical assumptions and estimation of methodologies used
by OMB or CBO in preparing any report issued under
section 12 shall not be subject to review in any judicial
or administrative proceeding.
SEC. 16. APPLICATION.
The application of provisions, procedures, and points
of order under House Resolution 235, One Hundred Third
Congress, agreed to August 5, 1993, shall not be effective
for fiscal year 1995 or any later fiscal year.
SEC. 17. EFFECTIVE DATE.
Except as otherwise specified, this Act and the
amendments made by it shall take effect on the date of
its enactment and shall apply to fiscal years 1995 and sub-
sequent fiscal years.
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