SEC. 2. EXTENSION OF DISCRETIONARY SPENDING LIMITS. 
(a) ADJUSTMENTS
TO DISCRETIONARY SPENDING 
LIMITS.—In the matter that precedes subparagraph (A) 
of section 251(b)(2) of the Balanced Budget and Emer-
gency Deficit Control Act of 1985, strike ‘‘through 2002’’. 
(b) DISCRETIONARY
SPENDING
LIMIT.—Section 
251(c) of the Balanced Budget and Emergency Deficit 
Control Act of 1985 is amended as follows: 
(1) Strike paragraphs (1) through (16) and in-
sert the following new paragraphs: 
‘‘(1) with respect to fiscal year 2006, for the 
discretionary category: $837,196,960,000 in total 
new budget authority of which not less than 
$434,139,940,000 shall be for the defense category 
and of which not less than $32,180,020,000 shall be 
for homeland security activities outside of the de-
fense category and $906,352,000,000 in total out-
lays of which not less than $439,419,000,000 shall 
be for the defense category and of which not less 
than $30,854,000,000 in total outlays shall be for 
the homeland security category outside of the de-
fense category; 
‘‘(2) with respect to fiscal year 2007, for the 
discretionary category: an amount of new budget au-
thority equal to the amount of total new budget au-
thority specified in paragraph (1) adjusted to reflect
the change in Consumer Price Index over the pre-
vious 12 months prior to October 1, 2005; 
‘‘(3) with respect to fiscal year 2008, for the 
discretionary category: an amount of new budget au-
thority equal to the amount of total new budget au-
thority provided under paragraph (2) adjusted to re-
flect the change in Consumer Price Index over the 
previous 12 months prior to October 1, 2006; 
‘‘(4) with respect to fiscal year 2009, for the 
discretionary category: an amount of new budget au-
thority equal to the amount of total new budget au-
thority specified in paragraph (3) adjusted to reflect 
the change in Consumer Price Index over the pre-
vious 12 months prior to October 1, 2007; and 
‘‘(5) with respect to fiscal year 2010, for the 
discretionary category: an amount of new budget au-
thority equal to the amount of total new budget au-
thority specified in paragraph (4) adjusted to reflect 
the change in Consumer Price Index over the pre-
vious 12 months prior to October 1, 2008;’’. 
(c) ADJUSTMENTS
TO DISCRETIONARY SPENDING 
LIMITS.—
(1) Section 251(b)(2) of the Balanced Budget 
and Emergency Deficit Control Act of 1985 is 
amended by striking subparagraphs (C) through (H)
and by inserting after subparagraph (B) the fol-
lowing new subparagraph: 
‘‘(C) ACCRUAL ACCOUNTING.—If a bill or 
joint resolution is enacted that charges Federal 
agencies for the full cost of accrued Federal re-
tirement and health benefits and a bill or joint 
resolution making appropriations is enacted 
that provides new budget authority to carry out 
the legislation charging Federal agencies for 
such accrued costs, the adjustment shall be 
equal to the reduction in mandatory budget au-
thority and the outlays flowing therefrom esti-
mated to result from the legislation charging 
Federal agencies for such accrued costs.’’. 
(2) Section 251(b)(2)(A) of the Balanced Budg-
et and Emergency Deficit Control Act of 1985 is 
amended by striking the last sentence. 
(d) DEFINITION OF CONSUMER PRICE INDEX.—Sec-
tion 3 of the Congressional Budget and Impoundment 
Control Act of 1974 is amended by adding at the end the 
following new paragraph: 
‘‘(11) The term ‘Consumer Price Index’ refers 
to the Consumer Price Index for All Urban Con-
sumers (all items; United States city average), pub-
lished by the Bureau of Labor Statistics.’’.
SEC. 3. EXTENSION OF PAY-AS-YOU-GO. 
Section 252 of the Balanced Budget and Emergency 
Deficit Control Act of 1985 is amended to read as follows: 
‘‘SEC. 252. ENFORCING PAY-AS-YOU-GO. 
‘‘(a) PURPOSE.—The purpose of this section is to as-
sure that any legislation enacted before October 1, 2010, 
affecting direct spending that increases the deficit will 
trigger an offsetting sequestration. 
‘‘(b) SEQUESTRATION.—
‘‘(1) TIMING.—Not later than 15 calendar days 
after the date Congress adjourns to end a session 
and on the same day as a sequestration (if any) 
under section 251, there shall be a sequestration to 
offset the amount of any net deficit increase caused 
by all direct spending legislation enacted before Oc-
tober 1, 2010, as calculated under paragraph (2). 
‘‘(2) CALCULATION
OF
DEFICIT
INCREASE.—
OMB shall calculate the amount of deficit increase 
or decrease by adding—
‘‘(A) all OMB estimates for the budget 
year of direct spending legislation transmitted 
under subsection (d); 
‘‘(B) the estimated amount of savings in 
direct spending programs applicable to budget 
year resulting from the prior year’s sequestra-
tion under this section or, if any, as published