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SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Budget Enforcement Simplification Trust Act’’.
(b) TABLE OF CONTENTS.—
Sec. 1. Short title and table of contents.
TITLE I—BUDGET PROCESS REFORM
Sec. 101. Definitions.
Sec. 102. Timetable.
Sec. 103. Biennial joint budget resolution.
Sec. 104. Committee allocations.
Sec. 105. Backstop budget resolution.
Sec. 106. Revisions to joint budget resolutions and spending caps.
Sec. 107. Budget enforcement provisions.
Spending caps.
Reporting excess spending.
Presidential orders to eliminate excess spending.
Enforcing discretionary spending limits.
Enforcing direct spending limits.
Exempt programs and activities.
Special rules.
The current law baseline.
PAYGO.
TITLE II—ITEM VETO AND ENHANCED RESCISSION AUTHORITY
CHAPTER A—LINE-ITEM VETO ACT
CHAPTER B—ENHANCED RESCISSION AUTHORITY
TITLE III—GENERAL PROVISIONS
Sec. 301. Transition rules.
Sec. 302. Effective dates.
Sec. 303. Conforming amendments.
Sec. 304. Amendments to title 31, United States Code.
Sec. 305. Effects of certain judicial action.
TITLE I—BUDGET PROCESS
REFORM
SEC. 101. DEFINITIONS.
Section 3 of the Congressional Budget Act of 1974
is amended to read as follows:
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‘‘SEC. 3. IN GENERAL.
‘‘For purposes of this Act—
‘‘(1) The term ‘biennial budget years’ means
the two year period encompassing a fiscal year be-
ginning in a calendar year that ends in an odd num-
ber and the subsequent fiscal year.
‘‘(2) The term ‘budget biennium’ means the two
year period consisting of the biennial budget years.
‘‘(3) The term ‘eligible population’ shall mean
those individuals to whom the United States is obli-
gated to make a payment under the provisions of a
law creating entitlement authority. Such term shall
not include States, localities, corporations or other
non-living entities.
‘‘(4) The terms ‘sequester’ and ‘sequestration’
refer to or mean the cancellation of budgetary re-
sources provided by discretionary appropriations or
direct spending law.
‘‘(5) The term ‘breach’ means, for any fiscal
year—
‘‘(A) the amount (if any) by which new
budget authority or outlays for that year (with-
in a category of discretionary appropriations) is
above that category’s discretionary spending
cap for new budget authority or outlays for that
year, as the case may be; or
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‘‘(B) the amount (if any) by which outlays
for that year (within a category of direct spend-
ing) is above that category’s direct spending
cap for that year.
‘‘(6) The term ‘baseline’ means the projection
(described in section 657 of this Act) of current-year
levels of new budget authority, outlays, receipts, and
the surplus or deficit into the budget year and the
outyears.
‘‘(7) The term ‘budgetary resources’ means new
budget authority; unobligated balances; direct spend-
ing authority; and obligation limitations.
‘‘(8) The term ‘discretionary appropriations’
means budgetary resources (except to fund direct-
spending programs) provided in appropriation Acts.
If an appropriations Act alters the level of direct
spending or offsetting collections, that effect shall be
treated as discretionary spending. Discretionary ap-
propriations shall be those so designated in the joint
statement of managers accompanying the conference
report on the Budget Enforcement Simplification
Truth Act. Classifications of new accounts or activi-
ties and changes in classifications shall be made in
consultation with the Committees on Appropriations
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and the Budget of the House of Representatives and
the Senate.
‘‘(9) The term ‘direct spending’ means—
‘‘(A) budget authority provided by law
other than appropriations Acts, including enti-
tlement authority; and
‘‘(B) the food stamp program.
If a law other than an appropriations Act alters the
level of discretionary appropriations or offsetting col-
lections, that effect shall be treated as direct spend-
ing.
‘‘(10) The term ‘entitlement authority’ means
authority (whether temporary or permanent) to
make payments (including loans and grants), the
budget authority for which is not provided for in ad-
vance by appropriations Acts, to any person or gov-
ernment if, under the provisions of the law contain-
ing such authority, the United States is obligated to
make such payments to persons or governments who
meet the requirements established by such law.
‘‘(11) The term ‘current’ means, with respect to
OMB estimates included with a budget submission
under section 1105(a) of title 31, the estimates con-
sistent with the economic and technical assumptions
underlying that budget.
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‘‘(12) The term ‘account’ means an item for
which appropriations are made in any appropriations
Act and, for items not provided for in appropriations
Acts, such term means an item which is identified
in the section ‘Federal Programs by Agency and Ac-
count’ as it appears in the ‘Analytical Perspectives’
to the President’s fiscal year 1996 budget proposal
beginning at page 337.
‘‘(13) The term ‘budget year’ means the fiscal
year of the Government that starts on the next Oc-
tober 1.
‘‘(14) The term ‘current year’ means, with re-
spect to a budget year, the fiscal year that imme-
diately precedes that budget year.
‘‘(15) The term ‘outyear’ means, with respect
to a budget year, any of the fiscal years that follow
the budget year.
‘‘(16) The term ‘OMB’ means the Director of
the Office of Management and Budget.
‘‘(17) The term ‘CBO’ means the Director of
the Congressional Budget Office.
‘‘(18) The terms ‘budget outlays’ and ‘outlays’
mean, with respect to any fiscal year, expenditures
of funds under budget authority during such year.
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‘‘(19) Budget authority and new budget author-
ity:
‘‘(A) IN GENERAL.—The term ‘budget au-
thority’ means the authority provided by Fed-
eral law to incur financial obligations, as fol-
lows—
‘‘(i) provisions of law that make funds
available for obligation and expenditure
(other than borrowing authority), including
the authority to obligate and expend the
proceeds of offsetting receipts and collec-
tions;
‘‘(ii) 
borrowing 
authority, 
which
means authority granted to a Federal en-
tity to borrow and obligate and expend the
borrowed funds, including through the is-
suance of promissory notes or other mone-
tary credits;
‘‘(iii) contract authority, which means
the making of funds available for obliga-
tion but not for expenditure; and
‘‘(iv) offsetting receipts and collections
as negative budget authority, and the re-
duction thereof as positive budget author-
ity.
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‘‘(B) LIMITATIONS ON BUDGET AUTHOR-
ITY.—Any amount that is precluded from obli-
gation in a fiscal year by a provision of law
(such as a limitation or a benefit formula) shall
not be budget authority in that year.
‘‘(C) NEW
BUDGET
AUTHORITY.—The
term ‘new budget authority’ means, with re-
spect to a fiscal year—
‘‘(i) budget authority that first be-
comes available for obligation in that year,
including budget authority that becomes
available in that year as a result of a reap-
propriation; or
‘‘(ii) a change in any account in the
availability of unobligated balances of
budget authority carried over from a prior
year, resulting from a provision of law first
effective in that year;
‘‘(iii) and includes a change in the es-
timated level of new budget authority pro-
vided in indefinite amounts by existing law.
The term includes the cost for direct loan
and loan guarantee programs, as those
terms are defined by title V.
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‘‘(20) The term ‘tax expenditures’ means those
revenue losses attributable to provisions of the Fed-
eral tax laws which allow a special exclusion, exemp-
tion, or deduction from gross income or which pro-
vide a special credit, a preferential rate of tax, or a
deferral of tax liability; and the term ‘tax expendi-
tures budget’ means an enumeration of such tax ex-
penditures.
‘‘(21) The term ‘joint resolution on the budget’
means—
‘‘(A) a joint resolution setting forth the
congressional budget for the United States Gov-
ernment for a fiscal year as provided in section
301 of this Act; and
‘‘(B) any other joint resolution revising the
congressional budget for the United States Gov-
ernment for a fiscal year as described in section
304 of this Act.
‘‘(22) The term ‘appropriation Act’ means an
Act referred to in section 105 of title 1 of the
United States Code.
‘‘(23) The term ‘deficit’ means, with respect to
a fiscal year, the amount by which outlays exceed re-
ceipts during that year.
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‘‘(24) The term ‘surplus’ means, with respect to
a fiscal year, the amount by which receipts exceed
outlays during that year.
‘‘(25) The term ‘government-sponsored enter-
prise’ means a corporate entity created by a law of
the United States that—
‘‘(A)(i) has a Federal charter authorized
by law;
‘‘(ii) is privately owned, as evidenced by
capital stock owned by private entities or indi-
viduals;
‘‘(iii) is under the direction of a board of
directors, a majority of which is elected by pri-
vate owners;
‘‘(iv) is a financial institution with power
to—
‘‘(I) make loans or loan guarantees
for limited purposes such as to provide
credit for specific borrowers or one sector;
and
‘‘(II) raise funds by borrowing (which
does not carry the full faith and credit of
the Federal Government) or to guarantee
the debt of others in unlimited amounts;
and
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‘‘(B)(i) does not exercise powers that are
reserved to the Government as sovereign (such
as the power to tax or to regulate interstate
commerce);
‘‘(ii) does not have the power to commit
the Government financially (but it may be a re-
cipient of a loan guarantee commitment made
by the Government); and
‘‘(iii) has employees whose salaries and ex-
penses are paid by the enterprise and are not
Federal employees subject to title 5 of the
United States Code.
‘‘(26) The sale of an asset means the sale to
the public of any physical asset owned in whole or
in part by the United States.’’.
SEC. 102. TIMETABLE.
Section 300 of the Congressional Budget Act is
amended to read as follows:
‘‘SEC. 300. The timetable with respect to the congres-
sional budget process for any budget biennium is as fol-
lows:
‘‘ODD-NUMBERED YEARS
‘‘On or before:
Action to be completed:
January 15 ....................................
CBO economic and budget update.
First Monday in February ............
President’s budget: includes seques-
tration update based on new as-
sumptions.
April 15 .........................................
House and Senate pass joint budget
resolution.
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‘‘On or before:
Action to be completed:
May 15 ..........................................
President signs joint budget resolu-
tion.
July 1 ............................................
Cut-off for in-session sequestration
(sequesters triggered by legislative
action).
August 1 ........................................
Baseline update.
August 15 ......................................
Preview report.
October 1 .......................................
Start of new fiscal year; start of first
year of biennium.
December 15 ..................................
OMB issues final (lookback) report
for prior year and preview for cur-
rent year.
December 15 ..................................
Presidential sequester order.
‘‘EVEN-NUMBERED YEARS
‘‘On or before:
Action to be completed:
January 15 ....................................
CBO economic and budget update.
First Monday in February ............
OMB baseline revision.
July 1 ............................................
Cut-off for in-session sequester.
August 1 ........................................
Revised baseline.
August 15 ......................................
Preview fiscal years ending and be-
ginning on October 1.
October 1 .......................................
Fiscal year begins; starts second year
of biennium.
December 15 ..................................
OMB issues final (lookback) report
for prior year and preview for cur-
rent fiscal year.’’.
SEC. 103. BIENNIAL JOINT BUDGET RESOLUTION.
Section 301 of the Congressional Budget and Im-
poundment Control Act of 1974 is amended to read as
follows:
‘‘BIENNIAL ADOPTION OF JOINT RESOLUTION ON THE
BUDGET
SEC. 301. (a) CONTENT OF JOINT RESOLUTION ON
THE BUDGET.—Beginning in calendar year 1997, on or
before May 15 of each odd numbered year, the Congress
shall complete action on a joint resolution on the budget
for the fiscal year beginning on October 1 of such year
and for the following fiscal year (the biennial budget
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years). The joint resolution shall also set forth appropriate
levels for each of the two ensuing budget biennia. The
joint resolution shall specify the following for each fiscal
year—
‘‘(1) total new budget authority and outlays;
‘‘(2) total Federal revenues and the amount, if
any, by which the aggregate level of Federal reve-
nues should be increased or decreased by bills and
resolutions to be reported by the appropriate com-
mittees;
‘‘(3) the budget surplus or deficit;
‘‘(4) new budget authority and budget outlays
for each major functional category, based on alloca-
tions of the total levels set forth pursuant to para-
graph (1);
‘‘(5) the public debt;
‘‘(6) amounts for spending caps for all budget
authority, outlays and entitlement authority (except
for matters exempted from the caps under section
606 of this Act), including—
‘‘(A) total discretionary spending, which
may 
be 
subdivided 
according 
to 
section
301(b)(3) of this Act; and
‘‘(B) total direct spending, with separate
caps for—
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‘‘(i) programs (as described in table
10 of the August 1995 Congressional
Budget Office Report entitled ‘‘The Eco-
nomic and Budget Outlook: An Update’’)
with estimated outlays for any fiscal year
that equal or exceed $20 billion;
‘‘(ii) such other programs or groups of
programs as may be provided in the joint
resolution.
‘‘(iii) the remainder of direct spending
programs.
‘‘(7) an amount of budget authority and outlays
for each fiscal year equal to or greater than one per-
cent of the spending caps for total discretionary
budget authority and total discretionary outlays for
such fiscal year (as set forth pursuant to section
301(a)(6)(A) of this Act) that is withheld from allo-
cation pursuant to section 302(a) of this act to pro-
vide a reserve fund for contingencies.
‘‘(b) ADDITIONAL MATTERS
IN JOINT RESOLU-
TION.—The joint resolution on the budget may—
‘‘(1) include reconciliation directives described
in section 310;
‘‘(2) require a procedure under which all or cer-
tain bills or resolutions providing new budget au-
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thority or new entitlement authority for the biennial
budget years shall not be enrolled until the Congress
has completed action on any reconciliation bill or
reconciliation resolution or both required by such
joint resolution to be reported in accordance with
section 310(b);
‘‘(3) require or modify a procedure establishing
firewalls between categories of spending or programs
subject to specific caps as provided in section
301(a)(6)(A) of this Act; and
‘‘(4) set forth such other matters, and require
such other procedures, relating to the budget as may
be appropriate to carry out the purposes of this Act
and the joint resolution.
‘‘(c) VIEWS AND ESTIMATES OF OTHER COMMIT-
TEES.—Within 6 weeks after the President submits a
budget under section 1105(a) of title 31, United States
Code, each committee of the House of Representatives
having legislative jurisdiction shall submit to the Commit-
tee on the Budget of the House and each committee of
the Senate having legislative jurisdiction shall submit to
the Committee on the Budget of the Senate its views and
estimates (as determined by the committee making such
submission) with respect to all matters set forth in sub-
sections (a) and (b) which relate to matters within the
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jurisdiction or functions of such committee. Any other
Committee of the House of Representatives or the Senate
may submit to the Committee on the Budget of its House,
and any joint committee of the Congress may submit to
the Committees on the Budget of both Houses, its views
and estimates with respect to all matters set forth in sub-
sections (a) and (b) which relate to matters within its ju-
risdiction or functions.
‘‘(d) HEARINGS AND REPORT.—In developing the
joint resolution on the budget referred to in subsection (a)
for each budget biennium, the Committee on the Budget
of each House shall hold hearings and shall receive testi-
mony from Members of Congress and such appropriate
representatives of Federal departments and agencies, the
general public, and national organizations as the commit-
tee deems desirable. The report accompanying such joint
resolution shall include, but not be limited to—
‘‘(1) a comparison of revenues estimated by the
committee with those estimated in the budget sub-
mitted by the President;
‘‘(2) a comparison of the appropriate levels of
total budget outlays and total new budget authority
as set forth in such joint resolution with those esti-
mated or requested in the budget submitted by the
President;
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‘‘(3) with respect to each major functional cat-
egory, an estimate of budget outlays and an appro-
priate level of new budget authority for all proposed
programs and for all existing programs (including
renewals thereof), with the estimate and level for ex-
isting programs being divided between permanent
authority and funds provided in appropriation Acts,
and with each such division being subdivided be-
tween controllable amounts and all other amounts;
‘‘(4) an allocation of the level of Federal reve-
nues recommended in the concurrent resolution
among the major sources of such revenues;
‘‘(5) the economic assumptions and objectives
which underlie each of the matters set forth in such
concurrent resolution and any alternative economic
assumptions and objectives which the committee
considered;
‘‘(6) projections (not limited to the following),
for the period of ten fiscal years beginning with such
fiscal year, of the estimated levels of total budget
outlays and total new budget authority, the esti-
mated revenues to be received, and the estimated
surplus or deficit, if any, for each fiscal year in such
period, and the estimated levels of tax expenditures
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(the tax expenditures budget) by major functional
categories;
‘‘(7) a statement of any significant changes in
the proposed levels of Federal assistance to State
and local governments;
‘‘(8) information, data, and comparisons indi-
cating the manner in which, and the basis on which,
the committee determined each of the matters set
forth in the joint resolution;
‘‘(9) allocations described in section 302(a); and
‘‘(10) an analysis, prepared after consultation
with the Director of the Congressional Budget Of-
fice, of the joint resolution’s impact on the inter-
national competitiveness of United States business
and the United States balance of payments position
and shall include the following projections, based
upon the best information available at the time, for
the fiscal years covered by the joint resolution—
‘‘(A) the amount of borrowing by the Gov-
ernment in private credit markets;
‘‘(B) net domestic savings (defined as per-
sonal savings, corporate savings, and the fiscal
surplus of State and local government);
‘‘(C) net private domestic investment;
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‘‘(D) the merchandise trade and current
accounts;
‘‘(E) the net increase or decrease in for-
eign indebtedness (defined as net foreign invest-
ment); and
‘‘(F) the estimated direction and extent of
the influence of the Government’s borrowing in
private credit markets on United States dollar
interest rates and on the real effective exchange
rate of the United States dollar.
‘‘(e) ECONOMIC ASSUMPTIONS.—
‘‘(1) The joint explanatory statement accom-
panying a conference report on a joint resolution on
the budget shall set forth the common economic as-
sumptions upon which such joint statement and con-
ference report are based, or upon which any amend-
ment contained in the joint explanatory statement to
be proposed by the conferees in the case of technical
disagreement, is based.
‘‘(2) Subject to periodic re-estimation based on
changed economic conditions or technical estimates,
determinations under titles III, IV and VI of the
Congressional Budget Act of 1974 shall be based
upon such common economic and technical assump-
tions.’’.
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SEC. 104. COMMITTEE ALLOCATIONS.
Section 302 of the Congressional Budget Act of 1974
is amended to read as follows:
‘‘COMMITTEE ALLOCATIONS
‘‘SEC. 302. ‘‘(a) ALLOCATION OF TOTALS.—
‘‘(1) For the House of Representatives, the
joint explanatory statement accompanying a con-
ference report on a joint resolution on the budget
shall include an estimated allocation, based on such
joint resolution as recommended in such conference
report, of the appropriate levels of total budget out-
lays, total budget authority, and total entitlement
authority among each committee of the House of
Representatives which has jurisdiction over laws,
bills and resolutions providing such new budget au-
thority and such entitlement authority. Pursuant to
paragraph (3), the allocation shall insure that
amounts set aside for natural disasters shall be
available only for such purposes.
‘‘(2) For the Senate, the joint explanatory
statement accompanying a conference report on a
joint resolution on the budget shall include an esti-
mated allocation, based upon such joint resolution as
recommended in such conference report, of the ap-
propriate levels for each fiscal year of total budget
outlays, total budget authority and total entitlement
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authority among each committee of the Senate
which has jurisdiction over bills and resolutions pro-
viding such budget authority. Pursuant to paragraph
(3), the allocation shall insure that amounts set
aside for natural disasters shall be available only for
such purposes.
‘‘(3) CONTINGENCY
RESERVE
FOR
NATURAL
DISASTERS.—The joint resolution on the budget
shall specify the amount of new budget authority
and outlays within the discretionary spending cap
that shall be withheld from allocation to the commit-
tees and reserved for natural disasters, and a proce-
dure for releasing such funds for allocation to the
committee of jurisdiction. The amount withheld shall
be equal to one percent of the total discretionary
cap, unless additional amounts are specified.
‘‘(A) Such procedure shall insure that
funds are released for allocation only if—
‘‘(i) The President has made a re-
quest for such disaster funds;
‘‘(ii) The programs to be funded are
included in the Presidential request;
‘‘(iii) The projected obligations for un-
foreseen emergency needs exceed the ten-
year rolling average annual expenditure for
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existing programs included in the Presi-
dential request for the applicable fiscal
year or fiscal years.
‘‘(B) Notwithstanding any other provision
of law, such procedure shall also—
‘‘(i) Require States and localities to
maintain effort and ensure that Federal
assistance 
payments 
do 
not 
replace,
subvent or otherwise have the effect of re-
ducing regularly budgeted State and local
expenditures for law enforcement, fire
fighting, road construction and mainte-
nance, building construction and mainte-
nance and/or any other category of regular
government expenditure. The purpose of
this clause is to ensure that Federal disas-
ter assistance payments are made only for
incremental costs directly attributable to
unforeseen events resulting from unfore-
seen disasters, and do not replace or re-
duce regular State and local expenditures
for the same or similar purposes.
‘‘(ii) Prohibit the President from tak-
ing administrative action to waive any re-
quirement for States and/or localities to
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make minimum matching payments as a
condition of receiving Federal disaster as-
sistance; and/or prohibit the President
from taking administrative action to waive
all or part of any repayment of Federal
loans for the State and/or local matching
share required as a condition of receiving
Federal disaster assistance. This clause
shall apply to all matching share require-
ment and loans to meet matching share re-
quirements under the Robert T. Stafford
Disaster Relief and Emergency Assistance
Act (42 U.S.C. 5121 et seq.) and/or any
and all other Acts pursuant to which the
President may declare a disaster or disas-
ters and States and/or localities otherwise
qualify for Federal disaster assistance.
‘‘(iii) Require a two-thirds vote in
each House of Congress, for each emer-
gency, to reduce or waive the State match-
ing requirement or to forgive all or part of
loans for the State matching share as re-
quired under the Robert T. Stafford Disas-
ter Relief and Emergency Assistance Act
(42 U.S.C. 5121 et seq.).
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‘‘(b) REPORTS BY COMMITTEES.—As soon as prac-
ticable after a joint resolution on the budget is enacted—
‘‘(1) the Committees on Appropriations of each
House shall, after consulting with the Committee on
Appropriations of the other House subdivide among
its subcommittees the allocation of budget outlays,
and new budget authority allocated to it in the joint
budget resolution; and
‘‘(2) every other committee of the House and
Senate to which an allocation was made in such
joint budget resolution shall, after consulting with
the committee or committees of the other house to
which all or part of its allocation was made, sub-
divide such allocation among its subcommittees or
among programs over which it has jurisdiction.
Each such committee shall promptly report to its House
the subdivisions made by it pursuant to this subsection.
‘‘(c) POINT OF ORDER.—It shall not be in order in
the House of Representatives or the Senate to consider
any bill or resolution, or amendment thereto, providing—
‘‘(1) new budget authority for a fiscal year; or
‘‘(2) new spending authority as described in
section 3(11) of this Act for a fiscal year—
within the jurisdiction of any committee which has re-
ceived an appropriate allocation of such authority pursu-
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ant to subsection (a) for such fiscal year, unless and until
such committee makes the allocation of subdivisions re-
quired by subsection (b), in connection with the most re-
cently enacted joint resolution on the budget for such fis-
cal year.
‘‘(d) SUBSEQUENT JOINT RESOLUTIONS.—In the
case of a joint resolution on the budget referred to in sec-
tion 304(a) of this Act, the subdivisions under subsection
(b) shall be required only to the extent necessary to take
into account revisions made in the most recently enacted
joint resolution on the budget.
‘‘(e) ALTERATION OF ALLOCATIONS.—At any time
after a committee reports the subdivision required to be
made under subsection (b), such committee may report to
its House an alteration of such subdivision. Any alteration
of such subdivision must be consistent with any actions
already taken by its House on legislation within the com-
mittee’s jurisdiction.
‘‘(f) LEGISLATION SUBJECT TO POINT OF ORDER.—
After enactment of a joint resolution on the budget for
a fiscal year, it shall not be in order in the House of Rep-
resentatives or the Senate to consider any bill, resolution,
or amendment providing new budget authority for such
fiscal year, or new entitlement authority effective during
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such fiscal year for such fiscal year, or any conference re-
port on any such bill or resolution, if—
‘‘(1) the enactment of such bill or resolution as
reported;
‘‘(2) the adoption and enactment of such
amendment; or
‘‘(3) the enactment of such bill or resolution in
the form recommended in such conference report;
would cause the appropriate allocation made pursuant to
subsection (a) or subdivision made under subsection (b)
of this section for each fiscal year of new discretionary
budget authority or new entitlement authority to be ex-
ceeded.
‘‘(g) DETERMINATIONS BY BUDGET COMMITTEES.—
For purposes of this section, the levels of new budget au-
thority, entitlement authority, and outlays for a fiscal year
shall be determined on the basis of estimates made by the
Committee on the Budget of the House of Representatives
or the Senate, as the case may be.’’.
SEC. 105. BACKSTOP BUDGET RESOLUTION.
Section 303 of the Congressional Budget Act of 1974
is amended to read as follows:
‘‘BACKSTOP BUDGET RESOLUTION
‘‘SEC. 303. BACKSTOP BUDGET RESOLUTION.
‘‘Following May 15 of any odd numbered year, if a joint
resolution on the budget has not yet been enacted for the
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upcoming biennial budget years, then the amounts and
caps established for those years in the most recently en-
acted joint budget resolution shall be binding as if they
had been enacted pursuant to this section.’’.
SEC. 106. REVISIONS TO JOINT BUDGET RESOLUTIONS AND
SPENDING CAPS.
Section 304 of the Congressional Budget Act is
amended to read as follows:
‘‘REVISIONS TO JOINT BUDGET RESOLUTIONS AND
SPENDING CAPS
‘‘SEC. 304. PERMISSIBLE REVISIONS TO JOINT RESOLU-
TIONS ON THE BUDGET AND SPENDING CAPS.
‘‘(a) REVISIONS TO JOINT BUDGET RESOLUTIONS.—
At any time after the enactment of a joint resolution on
the budget pursuant to section 301 of this Act, Congress
may consider a joint resolution on the budget which re-
vises or reaffirms the joint resolution on the budget for
the biennial budget years most recently agreed to.
‘‘(b) REVISIONS TO SPENDING CAPS.—
‘‘(1) AUTOMATIC ADJUSTMENTS TO SPENDING
LIMITS.—When the President submits the budget
under section 1105(a) of title 31, United States
Code, for any year, and when reports are submitted
pursuant to section 602 of this Act, OMB shall cal-
culate (in the order set forth below), and the budget
and reports shall include, adjustments to the spend-
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ing limits (and those limits as cumulatively ad-
justed) for the budget year and each outyear, to re-
flect the following:
‘‘(A) CHANGES IN CONCEPTS AND DEFINI-
TIONS.—The adjustments produced by changes
in concepts and definitions shall equal the base-
line levels of new budget authority and outlays
using up-to-date concepts and definitions minus
those levels using the concepts and definitions
in effect before such changes. Such changes in
concepts and definitions may only be made in
consultation with the Committees on Appropria-
tions, the Budget, Government Reform and
Oversight and Governmental Affairs of the
House of Representatives and Senate.
‘‘(B) CHANGES IN INFLATION.—
‘‘(i) There shall be no adjustment to
discretionary spending caps for changes in
inflation. For direct spending programs
where adjustments for inflation are re-
quired by existing law, the direct spending
caps shall be adjusted for inflation. The
adjustments produced by changes in infla-
tion shall equal the level of new budget au-
thority and outlays in the most recently
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published current law baseline recalculated
with baseline inflation factor for the bien-
nium covered in reports submitted pursu-
ant to section 602.
‘‘(ii) For the biennium, the inflation
adjustment factors shall equal the ratio be-
tween the level of year-over-year inflation
measured for the fiscal year most recently
completed and the applicable estimated
level for those years included in the Joint
Statement of Managers pursuant to section
301(e).
‘‘(iii) Inflation shall be measured as
follows: for indexed programs, inflation
shall be measured by the changes in the
index specified in law; for programs provid-
ing health care, inflation shall be measured
by changes in the consumer price index for
all urban consumers for medical care com-
ponents (CPI–U medical care); and for all
other programs, inflation shall be meas-
ured by changes in the consumer price
index for all urban consumers (CPI–U).
‘‘(C) CHANGES
IN
UNEMPLOYMENT
AND
INTEREST
RATES.—For direct spending caps,
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OMB shall make adjustments in new budget
authority and outlays for changes in actual un-
employment and interest rates, in the most re-
cent period for which such data is available, rel-
ative to the baseline contained in the Statement
of Managers accompanying the most recently
enacted joint budget resolution, pursuant to
section 301(e) of this Act. The baseline and the
caps for direct spending programs shall be ad-
justed to reflect those changes.
‘‘(D) 
CHANGES
IN
ELIGIBLE
POPU-
LATIONS.—For direct spending caps, OMB
shall make adjustments in new budget authority
and outlays for changes in the number of eligi-
ble beneficiaries (the eligible population), com-
pared to the number projected to be eligible in
the calculation of the baseline contained in the
Statement of Managers accompanying the most
recently enacted joint budget resolution, pursu-
ant to section 301(e) of this Act.
‘‘(E) Intra-budgetary payments from dis-
cretionary accounts to mandatory accounts.
‘‘(2) PERMISSIBLE
REVISIONS
TO
SPENDING
CAPS.—Spending caps enacted pursuant to section
301(a)(6) of this Act may be revised as follows:
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‘‘(A) PERMISSIBLE
ADJUSTMENTS.—Ex-
cept for amendments offered pursuant to sub-
section (c), spending caps enacted pursuant to
section 301(a)(6) of this Act may only be
amended by recorded vote. It shall be a matter
of highest privilege in the House of Representa-
tives and the Senate for a Member of the
House of Representatives or the Senate to in-
sist on a recorded vote solely on the question
of amending such spending caps.
‘‘(c) LOCK-BOX AMENDMENT.—Notwithstanding any
other law or any rule of the House of Representatives or
the Senate, it shall always be in order to offer an amend-
ment to a bill providing discretionary budget authority or
budget outlays that would—
‘‘(1) only reduce such budget authority or budg-
et outlays; and
‘‘(2) reduce the appropriate caps in the most
recently enacted joint budget resolution for such
budget authority or budget outlays by an amount
less than or equal to the amount of the reduction in
the amendment.’’.
SEC. 107. BUDGET ENFORCEMENT PROVISIONS.
Title VI of the Congressional Budget Act of 1974 is
amended to read as follows—
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‘‘TITLE VI—BUDGET
ENFORCEMENT PROVISIONS
‘‘SEC. 601. ENFORCING SPENDING CAPS.
‘‘(a) GENERAL STATEMENT ON SPENDING CAPS.—
This title provides enforcement of the caps on categories
of spending established in joint budget resolutions under
section 301(a)(6) of this Act. The provisions of this title
trigger sequestration of discretionary and direct spending
that exceeds an applicable spending cap.
‘‘(b) OVERALL RULES.—
‘‘(1) ELIMINATING A BREACH.—Each non-ex-
empt account within a category shall be reduced by
a dollar amount calculated by multiplying the base-
line level of sequestrable budgetary resources in that
account at that time by the uniform percentage nec-
essary to eliminate a breach within that category. If,
within a category, the discretionary spending limits
for both new budget authority and outlays are
breached, the uniform percentage shall be calculated
by—
‘‘(A) first, calculating the uniform percent-
age necessary to eliminate the breach in new
budget authority, and
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‘‘(B) second, if any breach in outlays re-
mains, increasing the uniform percentage to a
level sufficient to eliminate that breach.
‘‘(2) 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 identi-
fied in the section ‘Federal Programs by Agency and
Account’ as it appears in the Analytical Perspectives
to the President’s fiscal year 1996 budget proposal
beginning at page 337.
‘‘(3) ADMINISTRATIVE EXPENSES ASSOCIATED
WITH
CERTAIN
PROGRAMS.—Notwithstanding any
exemption, general rule or special rule in this Act,
administrative expenses associated with all programs
shall be fully subject to sequestration under this sec-
tion.
‘‘(4) INDEFINITE AUTHORITY.—Except as oth-
erwise 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-
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questration and succeeding fiscal years are reduced,
from the level that would actually have occurred, by
the applicable sequestration percentage or percent-
ages.
‘‘(5) 
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.
‘‘(6) IMPLEMENTING REGULATIONS.—Adminis-
trative regulations or similar actions implementing
the sequestration of a program or activity shall be
made within 30 days of the effective date of the se-
questration of that program or activity.
‘‘(7) PART YEAR APPROPRIATIONS.—If, within
15 days after Congress adjourns to end a session,
there is in effect an Act making or continuing ap-
propriations for part of a fiscal year for any budget
account, then the dollar sequestration calculated for
that account under paragraph (1) shall be sub-
tracted from—
‘‘(A) the annualized amount otherwise
available by law in that account under that or
a subsequent part-year appropriation; and
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‘‘(B) when a full-year appropriation for the
account is enacted, from the amount otherwise
provided by the full-year appropriation.
‘‘(8) MILITARY PERSONNEL.—If the President
uses the authority to exempt any military personnel
from sequestration under section 606(j) each ac-
count within subfunctional category 051 (other than
those military personnel accounts for which the au-
thority provided under section 606(j) has been exer-
cised) shall be further reduced by a dollar amount
calculated by multiplying the enacted levels of non-
exempt budgetary resources in that account at that
time by the uniform percentage necessary to offset
the total dollar amount by which outlays are not re-
duced in military personnel accounts by reason of
the use of such authority.
‘‘SEC. 602. REPORTING EXCESS SPENDING.
‘‘(a) ANALYSIS OF ACTUAL SPENDING LEVELS.—
Following the end of any fiscal year the Director of the
Office of Management and Budget shall compile a state-
ment of actual spending for that year. The statement shall
identify such spending by categories contained in section
301(a)(6) of this Act.
‘‘(b) ESTIMATE OF NECESSARY SPENDING REDUC-
TION.—Based on the statement provided under subsection
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(a), the Director of the Office of Management and Budget
shall issue a report to the President and the Congress on
December 15 of any year in which such statement identi-
fies actual spending in excess of amounts allocated under
the most recently enacted joint resolution on the budget
by more than one percent of the budget cap established
for total discretionary spending and total direct spending
over the course of a budget biennium. Such report shall
identify:
‘‘(1) All instances in which actual spending has
exceeded the appropriate budget cap or caps estab-
lished pursuant to Section 301(a)(6) of this Act;
‘‘(2) The amount by which actual spending has
exceeded the appropriate budget cap or caps as iden-
tified under the preceding paragraph;
‘‘(3) For the current fiscal year, the difference
between the amount of spending available under the
budget caps identified under paragraph (1) and esti-
mated actual spending for the categories associated
with such caps;
‘‘(4) The amounts by which spending must be
reduced in the current fiscal year so that total ac-
tual and estimated spending for all cap categories
identified under paragraph (1) for the current and
immediately preceding fiscal years shall not exceed
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the total amounts available for such fiscal years in
the most recently enacted joint resolution on the
budget.
‘‘(5) If the excess spending, in whole or in part,
has resulted solely from changes in inflation, interest
rates, unemployment or eligible population, the
amounts by which such spending has resulted solely
from such factors.
‘‘(c) TIMETABLE.—The timetable with respect to re-
ports and orders required under this title is as follows:
ODD-NUMBERED YEARS
‘‘Date
Action to be Completed
January 15 ....................................
CBO economic and budget update.
First Monday in February ............
President’s budget (Includes seques-
tration update based on new as-
sumptions).
August 1 ........................................
Baseline update.
August 15 ......................................
Preview report.
December 15 ..................................
OMB issues final (lookback) report
for prior year and preview for cur-
rent year.
December 15 ..................................
Presidential sequester order.
EVEN-NUMBERED YEARS
‘‘Date
Action to be Completed
January 15 ....................................
CBO economic and budget update
First Monday in February ............
OMB baseline revision.
August 1 ........................................
Revised baseline.
August 15 ......................................
Preview fiscal years ending and be-
ginning on October 1.
December 15 ..................................
OMB issues final (lookback) report
for prior year and preview for cur-
rent year.
‘‘SEC. 603. PRESIDENTIAL ORDERS TO ELIMINATE EXCESS
SPENDING.
‘‘(a) IN GENERAL.—Following the submission of any
report made by the Director of the Office of Management
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and Budget under section 602 of this Act, the President
shall issue an order eliminating all excess actual and esti-
mated spending.
‘‘(b) TIMING OF ORDER.—The order required under
this section shall be issued on December 15.
‘‘SEC. 604. ENFORCING DISCRETIONARY SPENDING LIMITS.
‘‘(a) DISCRETIONARY SPENDING.—All discretionary
appropriations shall be subject to budget authority and
outlay caps for each fiscal year. Consistent with the total
cap or caps, such cap may be subdivided according to the
procedures established pursuant to section 301(b)(3) of
this Act.
‘‘(b) GENERAL RULES.—
‘‘(1) LOOKBACK
ADJUSTMENT
FOR
DISCRE-
TIONARY SPENDING.—For fiscal years where actual
spending exceeded spending permitted under the dis-
cretionary spending budget authority or outlay caps
as established under section 301(a)(6), the sequester
shall eliminate the entire overage or overages and:
‘‘(A) The budget authority cap or caps for
such discretionary spending for the current fis-
cal year shall be revised downward by an
amount sufficient to eliminate the overage or
overages, and the outlay cap or caps for such
discretionary spending for the current and sub-
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sequent (if necessary) fiscal year or years shall
be adjusted downward by an amount sufficient
to eliminate the overage.
‘‘(B) Where no firewalls have been estab-
lished, the entire overage shall be sequestered
from spending under the aggregate cap and the
appropriate cap or caps shall be adjusted ac-
cordingly.
‘‘(C) Where discretionary spending fire-
walls have been established, and if spending is
projected to exceed any discretionary spending
cap or caps, all excess spending in a particular
firewall category shall be sequestered from that
category and the cap or caps for that category
or categories shall be adjusted accordingly.
‘‘(2) PROSPECTIVE ADJUSTMENT FOR DISCRE-
TIONARY SPENDING.—For fiscal years where actual
spending is projected to exceed spending permitted
under a discretionary spending cap or caps, excess
spending shall be sequestered following the proce-
dures set forth in subparagraphs (1) (C) and (D).
‘‘(3) WITHIN-SESSION SEQUESTERS.—If a bill
or resolution providing discretionary appropriations
for a fiscal year in progress is enacted before July
1 of that fiscal year that causes a breach within a
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discretionary spending cap or caps for that year, 15
days later there shall be a sequestration to eliminate
that breach within that cap or caps following the
procedures set forth in subparagraphs (1) (C) and
(D).
‘‘(c) SPECIAL RULES FOR DISCRETIONARY SPEND-
ING.—
‘‘(1) 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 pre-sequestration level of
appropriations.
‘‘(2) BIENNIAL APPROPRIATIONS.—With regard
to new budget authority which is provided in an ap-
propriation Act for two more years, the following
special rules shall apply—
‘‘(A) Sequestration following the end of a
biennial budget period shall eliminate 100 per-
cent of any overage for the biennium.
‘‘(B) Sequestration following the end of
the first year of a biennial budget period shall
eliminate the lesser of—
‘‘(i) the actual overage in the first
year of the biennium, or
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‘‘(ii) 50 percent of the total overage
projected for the biennium.
‘‘SEC. 605. ENFORCING DIRECT SPENDING LIMITS.
‘‘(a) IN GENERAL.—All direct spending (except mat-
ters exempted from the caps under section 606 of this Act)
shall be subject to caps on total outlays for each fiscal
year. Consistent with the cap on total outlays, separate
caps shall be established for—
‘‘(1) any program (as named in Table 10 of the
August 1995 Congressional Budget Office Report
entitled ‘‘The Economic and Budget Outlook: An
Update’’) with outlays equal to or in excess of $20
billion in any fiscal year;
‘‘(2) such other program or group of programs
as may be identified in the joint budget resolution;
and
‘‘(3) the remainder of direct spending pro-
grams.
‘‘(b) DIRECT SPENDING.—For all direct spending
programs (except matters exempted from the caps under
section 606 and programs subject to the special rules set
forth under section 607), notwithstanding any other provi-
sion of law, any sequestration required under this Act
shall reduce benefit levels by an amount sufficient to elimi-
nate all excess spending identified in the report issued
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pursuant to section 602, except for those amounts identi-
fied under section 602(b)(5), while maintaining the same
uniform percentage reduction in the monetary value of
benefits subject to reduction under this subsection.
‘‘(c) GENERAL RULES FOR DIRECT SPENDING.—For
programs subject to direct spending caps:
‘‘(1) Sequestration is triggered if total direct
spending subject to the caps exceeds or is projected
to exceed the aggregate cap for direct spending for
the biennium.
‘‘(2) Sequestration shall reduce spending under
each separate direct spending cap in proportion to
the amounts each category of direct spending con-
tributes or contributed to the overage.
‘‘(3) UNIFORM PERCENTAGES.—In calculating
the uniform percentage applicable to the sequestra-
tion of all direct spending programs or activities, or
the uniform percentage applicable to the sequestra-
tion of nonexempt direct spending programs or ac-
tivities, the sequestrable base for direct spending
programs and activities is the total level of outlays
for the biennium for those programs or activities in
the current law baseline.
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‘‘(4) Sequestration following the end of a bien-
nial budget period shall eliminate 100 percent of any
overage for the biennium.
‘‘(5) Sequestration following the end of the first
year of a biennial budget period shall eliminate the
lesser of—
‘‘(A) the actual overage in the first year of
the biennium, or
‘‘(B) 50 percent of the total overage pro-
jected for the biennium.
‘‘(6) PERMANENT SEQUESTRATION OF DIRECT
SPENDING.—Obligations in sequestered direct spend-
ing 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 seques-
tration, 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.
‘‘(7) 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.
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‘‘(C) That delay reduces the amount of en-
titlement authority that is subject to sequestra-
tion in the budget, the uniform percentage oth-
erwise 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.
‘‘(D) If the uniform percentage otherwise
applicable to the budget-year sequestration of a
program or activity is increased due to the
delay, then it shall revert to the uniform per-
centage calculated under paragraph (3) when
the budget year is completed.
‘‘(8) 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 (commonly called
‘cost of living adjustments’),
sequestration shall first be applied to the cost of liv-
ing adjustment before reductions are made to the
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base benefit. For the first fiscal year to which a se-
questration order applies, the benefit payment re-
ductions in such programs accomplished by the
order shall take effect starting with the payment
made at the beginning of January following a final
sequester order. For the purposes of this subsection,
Veterans Compensation shall be considered a pro-
gram that meets the conditions of the preceding sen-
tence.
‘‘(9) LOAN PROGRAMS.—For all loan programs
subject to direct spending caps made on or after the
date of a sequestration, the fees paid by borrowers
shall be increased by a uniform percentage sufficient
to produce the dollar savings in such loan programs
for the fiscal year of the sequestration required by
this section. 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 Treas-
ury, in any year for which a sequester affecting such
programs is in effect, notwithstanding any other
provision of law).
‘‘(10) INSURANCE PROGRAMS.—Any sequestra-
tion in a Federal program that sells insurance con-
tracts to the public (including the Federal Crop In-
surance Fund, the National Insurance Development
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Fund, the National Flood Insurance Fund, insur-
ance activities of the Overseas Private Insurance
Corporation, and Veterans’ life insurance programs)
shall be accomplished by increasing premiums on
contracts entered into after the date a sequestration
order takes effect by the uniform sequestration per-
centage. Proceeds from the premium increase shall
be paid from the insurance fund or account to the
general fund of the Treasury in any year for which
a sequester affecting such programs are in effect.
‘‘(11) STATE GRANT FORMULAS.—For all stage
grant programs subject to direct spending caps the
total amount of funds available for all states shall be
reduced by the amount required to be sequestered.
‘‘(d) WITHIN SESSION SEQUESTER.—If a bill or reso-
lution providing direct spending for a fiscal year in
progress is enacted before July 1 of that fiscal year that
causes a breach within a direct spending cap or caps for
that year, 15 days later there shall be a sequestration to
eliminate that breach within that cap or caps following
the procedures set forth in subsection (a).
‘‘SEC. 606. EXEMPT PROGRAMS AND ACTIVITIES.
‘‘The following budget accounts, activities within ac-
counts, or income shall be exempt from sequestration—
‘‘(a) net interest;
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‘‘(b) all payments to trust funds from excise
taxes or other receipts or collections properly cred-
itable to those trust funds;
‘‘(c) offsetting receipts and collections;
‘‘(d) all payments from one Federal direct
spending budget account to another Federal budget
account; all intragovernmental funds including those
from which funding is derived primarily from other
Government accounts;
‘‘(e) expenses to the extent they result from pri-
vate donations, bequests, or voluntary contributions
to the Government;
‘‘(f) nonbudgetary activities, including but not
limited to—
‘‘(1) credit liquidating and financing ac-
counts;
‘‘(2) the Pension Benefit Guarantee Cor-
poration Trust Funds;
‘‘(3) the Thrift Savings Fund;
‘‘(4) the Federal Reserve System; and
‘‘(5) appropriations for the District of Co-
lumbia to the extent they are appropriations of
locally raised funds;
‘‘(g) payments resulting from Government in-
surance, Government guarantees, or any other form
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of contingent liability, to the extent those payments
result from contractual or other legally binding com-
mitments of the Government at the time of any se-
questration;
‘‘(h) the following accounts, which largely fulfill
requirements of the Constitution or otherwise make
payments to which the Government is committed—
‘‘(1) Bureau of Indian Affairs, miscellane-
ous trust funds, tribal trust funds (14–9973–0–
7–999);
‘‘(2) Claims, defense;
‘‘(3) Claims, judgments, and relief act
(20–1895–0–1–806);
‘‘(4) Compact of Free Association, eco-
nomic assistance pursuant to Public Law 99–
658 (14–0415–0–1–806);
‘‘(5) Compensation of the President (11–
0001–0–1–802);
‘‘(6) Customs Service, miscellaneous per-
manent appropriations (20–9992–0–2–852);
‘‘(7) Eastern Indian land claims settlement
fund (14–2202–0–1–806);
‘‘(8) Farm Credit System Financial Assist-
ance Corporation, interest payments (20–1850–
0–1–351);