gations referred to in paragraph (1) which are is-
sued during a fiscal year are in the form of indexed
obligations.
‘‘(c) AGGREGATE LIMIT.—Not more than 50 percent
of the aggregate face amount of obligations issued under
section 3102 or 3103 which mature on any day shall be
in the form of indexed obligations.
‘‘(d) INDEXED OBLIGATIONS.—For purposes of this
section—
‘‘(1) IN GENERAL.—The term ‘indexed obliga-
tions’ means any obligation—
‘‘(A) which has a redemption value at ma-
turity equal to its indexed face amount,
‘‘(B) which has a face amount at issuance
of at least $1,000 but not more than $5,000,
‘‘(C) which may not be redeemed before
maturity, and
‘‘(D) the interest (if any) on which is pay-
able for any period on the basis of its indexed
face amount as of the beginning of such period.
‘‘(2) INDEXED FACE AMOUNT.—The term ‘in-
dexed face amount’ means, as of any date, the sum
of—
‘‘(A) the face amount of the obligation at
issuance, plus
‘‘(B) such face amount multiplied by the
percentage by which—
‘‘(i) the selected index for such date,
exceeds
‘‘(ii) the selected index for the issue
date of the obligation.
‘‘(3) SELECTED
INDEX
FOR
DATE.—The se-
lected index for any date is the selected index for the
second calendar month preceding the calendar
month in which such date occurs. If the selected
index is not determined on a monthly basis, the Sec-
retary of the Treasury shall prescribe a rule for de-
termining the selected index for any date, and such
prescribed rule shall apply in lieu of the preceding
sentence.
‘‘(4) SELECTED INDEX.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘selected index’
means the CPI.
‘‘(B) ANOTHER INDEX MAY BE USED.—If
the Secretary of the Treasury and the Chair-
man of the Board of Governors of the Federal
Reserve System—
‘‘(i) agree that the use of the CPI for
purposes of paragraph (2) is unsatisfactory
and that the use of another index would be
more satisfactory for such purposes, and
‘‘(ii) submit a report to Congress
jointly recommending the use of such other
index,
the term ‘selected index’ means such other
index.
‘‘(C) CHANGES
IN
INDEX.—The selected
index applicable to any indexed obligation shall
be such index as of the date of issue of such ob-
ligation, and such index shall be determined,
with respect to such obligation, without regard
to changes in its structure or computation after
such date.
‘‘(5) 
CPI.—The 
term 
‘CPI’ 
means 
the
Consumer Price Index for all urban consumers pub-
lished by the Department of Labor.
‘‘(e) TERMS AND CONDITIONS.—Indexed obligations
may be offered for sale on a competitive or other basis
under such regulations and upon such terms and condi-
tions as the Secretary of the Treasury may prescribe. The
Secretary shall provide that such obligations shall be avail-
able for purchase by individuals both directly from the De-
partment of the Treasury and through Federal Reserve
System facilities.
‘‘(f) CONSULTATION WITH FEDERAL RESERVE.—
The Secretary of the Treasury shall consult with the
Chairman of the Board of Governors of the Federal Re-
serve System in determining the amounts, maturities, and
timing of issuances of indexed obligations under this sec-
tion. The Secretary shall maintain appropriate records of
all recommendations received from the Chairman in such
consultations.
‘‘(g) 
CONSIDERATIONS.—In 
determining 
the
amounts, maturities, and timing of issuances of indexed
obligations under this section, the Secretary of the Treas-
ury shall—
‘‘(1) attribute reasonable benefits to improve-
ments in monetary management resulting from the
issuance of indexed obligations, including reasonable
estimates for reduced interests costs on obligations
that are not indexed obligations arising from better
inflation control and from smaller budget deficits as
a consequence of improved economic stabilization,
and
‘‘(2) assure liquidity and pricing reliability in
indexed obligations and the competitiveness of such
obligations with nonindexed obligations issued under
section 3102 and 3103 with comparable maturities,
including assuring that each issue of interest-bearing
indexed obligations is of an amount sufficient to per-
mit the right to receive interest on such obligations
to be traded separately from the underlying obliga-
tions.
The Secretary shall periodically announce expected issu-
ance and maturity dates of issues of indexed obligations
and the expected proportion of the total obligations issued
under sections 3102 and 3103 having those maturity dates
which are expected to be indexed obligations. Such an-
nouncements shall precede expected issuance dates by at
least 1 year.
‘‘(h) MONITORING.—The Secretary of the Treasury
shall monitor the ownership and trading activity of in-
dexed and nonindexed obligations issued under section
3102 or 3103 having the same maturity dates for pur-
poses of assuring liquidity and pricing reliability with re-
spect to indexed obligations.
‘‘(i) REPORTS.—Not later than 2 years after the date
of the enactment of this section, and not later than the
close of each 2-year period thereafter, the Secretary of the
Treasury shall submit to the Congress a report on the pro-
gram established under this section. No report shall be
required under this subsection for any period after the
10th year after the date of the enactment of this section.’’.
(b) PROCEDURE.—Subsection (a) of section 3121 of
such title 31 is amended by striking ‘‘and’’ at the end of
paragraph (6), by redesignating paragraph (7) as para-
graph (8), and by inserting after paragraph (6) the follow-
ing new paragraph:
‘‘(7) whether the obligation is to be issued as
an indexed obligation; and’’.
(c) CLERICAL AMENDMENT.—The table of sections
for subchapter I of chapter 31 of title 31 of such Code
is amended by adding at the end thereof the following new
item:
‘‘3114. Indexed obligations.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to fiscal years beginning after the
date of the enactment of this Act.
(e) TAXATION.—It is the intent of the Congress
that—
(1) except for changes to minimize any Federal
income tax incentives or disincentives to acquiring
indexed obligations as compared to nonindexed obli-
gations, Federal income tax changes which affect
nonindexed obligations should apply to the fullest ex-
tent feasible to indexed obligations, and
(2) there should be symmetrical treatment ap-
plied to increases and decreases in the indexed face
amount of an indexed obligation such that, for ex-