(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 realized losses.
(c) EARNED INCOME TAX CREDIT.—
(1) The sequestrable base for earned income
tax credit program is the dollar value of all current
year benefits to the entire eligible population.
(2) In the event sequestration is triggered to re-
duce earned income tax credits, all earned income
tax credits shall be reduced, whether or not such
credits otherwise would result in cash payments to
beneficiaries, by a uniform percentage sufficient to
produce the dollar savings required by the sequestra-
tion.
(d) REGULAR
AND
EXTENDED
UNEMPLOYMENT
COMPENSATION.—
(1) A State may reduce each weekly benefit
payment made under the regular and extended un-
employment benefit programs for any week of unem-
ployment occurring during any period with respect
to which payments are reduced under any sequestra-
tion order by a percentage not to exceed the percent-
age by which the Federal payment to the State is to
be reduced for such week as a result of such order.
(2) A reduction by a State in accordance with
paragraph (1) shall not be considered as a failure to
fulfill the requirements of section 3304(a)(11) of the
Internal Revenue Code of 1986.
(e) 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. The sequestrable base
for the Fund is the current-year level of gross outlays re-
sulting from claims paid after the sequestration order
takes effect.
(f) FEDERAL HOUSING FINANCE BOARD.— Any se-
questration of the Federal Housing Board shall be accom-
plished 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.
(g) FEDERAL PAY.—
(1) IN GENERAL.— New budget authority to
pay Federal personnel from direct spending accounts
shall be reduced by the uniform percentage cal-
culated under section 203(c)(3), 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 in-
creased by any amount payable under section 5304
of title 5, 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
1109 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
403(a) and 405 of such title; and
(iii) cadet pay and midshipman pay
under section 203(c) of such title; and
(C) the term ‘‘uniformed services’’ shall
have the same meaning given that term in sec-
tion 101(3) of title 37, United States Code.
(h) 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 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 order, but only (for each such cost
reporting period) in the same proportion as the
fraction of the cost reporting period that occurs
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) PART
B
PREMIUMS.—In computing the
amount and method of sequestration from part B of
title XVIII of the Social Security Act—
(A) the amount of sequestration shall be
calculated by multiplying the total amount by
which Medicare spending exceeds the appro-
priate spending cap by a percentage that re-
flects the ratio of total spending under Part B
to total Medicare spending; and
(B) sequestration in the Part B program
shall be accomplished by increasing premiums
to beneficiaries.
(4) 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.
(i) 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 and shall have the duty to make those payments
during the first fiscal year to which the sequestration
order applies and each succeeding fiscal year. The amount
of each annual 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 for-
gone 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
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 tax rates, or
by any combination, but may not be financed by a lower
fund surplus, a higher fund deficit, additional borrowing,
delay in repayment of principal on outstanding debt and
must follow the requirements 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 speci-
fied in this subsection in order to make the annual pay-
ments to the Treasury.
(k) BUSINESSLIKE TRANSACTIONS.—Notwithstand-
ing any other provision of law, for programs which provide
a businesslike service in exchange for a fee, sequestration
shall be accomplished through a uniform increase in fees
(sufficient to produce the dollar savings in such programs
for the fiscal year of the sequestration required by section
201(a)(2), all subsequent fees shall be increased by the
same percentage, and all proceeds from such fees shall be
paid into the general fund of the Treasury, in any year
for which a sequester affecting such programs are in ef-
fect.
SEC. 206. THE CURRENT LAW BASELINE.
(a) DETERMINATION OF THE BUDGET BASELINE.—
CBO and OMB shall submit to the President and the Con-
gress reports setting forth the budget baselines for the
budget year and at least the subsequent nine fiscal years.
The CBO report shall be submitted on or before January
15. The OMB report shall accompany the President’s
budget.
(1) The budget baseline shall be based on the
commoneconomic assumptions set forth in section
103, adjusted to reflect revisions pursuant to sub-
section (b).
(2) The budget baseline shall consist of a pro-
jection of current year levels of budget authority,
outlays, revenues and the surplus or deficit into the
budget year and the relevant outyears based on cur-
rent enacted laws as of the date of the projection.
(b) REVISIONS
TO
THE BASELINE.—The baseline
shall be adjusted for up-to-date economic assumptions
when CBO submits its Economic and Budget Update and
when OMB submits its Budget Update, and by August
1 each year, when CBO and OBM submit their Midyear
Reviews.
(1) For Discretionary spending items, the base-
line shall be the spending caps in effect pursuant to
section 601(a)(2) of the Congressional Budget Act
of 1974. For years in which there are no caps, the
baseline for discretionary spending shall be the same
as in the last year for which there were statutory
caps.
(2) For all other expenditures and for revenues,
the baseline shall be adjusted by comparing unem-
ployment, inflation, interest rates, growth and other
economic indicators-and changes ineligible popu-
lation-for the most recent period for which actual
data are available, compared to the assumptions
contained in section 103.
(3) The budget baseline shall provide the basis
for scorekeeping procedures pursuant to title II.
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