SEC. 2. DESIGNATION OF AMOUNTS FOR REDUCTION OF
PUBLIC DEBT.
(a) IN GENERAL.—Subchapter A of chapter 61 of the
Internal Revenue Code of 1986 (relating to returns and
records) is amended by adding at the end the following
new part:
‘‘PART IX—DESIGNATION FOR REDUCTION OF
PUBLIC DEBT
‘‘Sec. 6097. Designation.
‘‘SEC. 6097. DESIGNATION.
‘‘(a) IN GENERAL.—Every individual with adjusted
income tax liability for any taxable year may designate
that a portion of such liability (not to exceed 10 percent
thereof) shall be used to reduce the public debt.
‘‘(b) MANNER AND TIME OF DESIGNATION.—A des-
ignation under subsection (a) may be made with respect
to any taxable year only at the time of filing the return
of tax imposed by chapter 1 for the taxable year. The des-
ignation shall be made on the first page of the return or
on the page bearing the taxpayer’s signature.
‘‘(c) ADJUSTED INCOME TAX LIABILITY.—For pur-
poses of this section, the term ‘adjusted income tax liabil-
ity’ means income tax liability (as defined in section
6096(b)) reduced by any amount designated under section
6096 (relating to designation of income tax payments to
Presidential Election Campaign Fund).’’
(b) CLERICAL AMENDMENT.—The table of parts for
such subchapter A is amended by adding at the end the
following new item:
‘‘Part IX. Designation for reduction of public debt.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after the
date of the enactment of this Act.
SEC. 3. PUBLIC DEBT REDUCTION TRUST FUND.
(a) IN GENERAL.—Subchapter A of chapter 98 of the
Internal Revenue Code of 1986 (relating to trust fund
code) is amended by adding at the end the following sec-
tion:
‘‘SEC. 9511. PUBLIC DEBT REDUCTION TRUST FUND.
‘‘(a) CREATION OF TRUST FUND.—There is estab-
lished in the Treasury of the United States a trust fund
to be known as the ‘Public Debt Reduction Trust Fund’,
consisting of any amount appropriated or credited to the
Trust Fund as provided in this section or section 9602(b).
‘‘(b) TRANSFERS TO TRUST FUND.—There are here-
by appropriated to the Public Debt Reduction Trust Fund
amounts equivalent to the amounts designated under sec-
tion 6097 (relating to designation for public debt reduc-
tion).
‘‘(c) EXPENDITURES.—Amounts in the Public Debt
Reduction Trust Fund shall be used by the Secretary of
the Treasury for purposes of paying at maturity, or to
redeem or buy before maturity, any obligation of the Fed-
eral Government included in the public debt (other than
an obligation held by the Federal Old-Age and Survivors
Insurance Trust Fund, the Civil Service Retirement and
Disability Fund, or the Department of Defense Military
Retirement Fund). Any obligation which is paid, re-
deemed, or bought with amounts from the Public Debt Re-
duction Trust Fund shall be canceled and retired and may
not be reissued.’’
(b) CLERICAL AMENDMENT.—The table of sections
for such subchapter is amended by adding at the end the
following new item:
‘‘Sec. 9511. Public Debt Reduction Trust Fund.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts received after the date
of the enactment of this Act.
SEC. 4. TAXPAYER-GENERATED SEQUESTRATION OF FED-
ERAL SPENDING TO REDUCE THE PUBLIC
DEBT.
(a) SEQUESTRATION
TO
REDUCE
THE
PUBLIC
DEBT.—Part C of the Balanced Budget and Emergency
Deficit Control Act of 1985 is amended by inserting after
section 253 the following new section:
‘‘SEC. 253A. SEQUESTRATION TO REDUCE THE PUBLIC
DEBT.
‘‘(a) SEQUESTRATION.—Notwithstanding sections
255 and 256, within 15 days after Congress adjourns to
end a session, and on the same day as sequestration (if
any) under sections 251, 252, and 253, but after any se-
questration required by those sections, there shall be a se-
questration equivalent to the estimated aggregate amount
designated under section 6097 of the Internal Revenue
Code of 1986 for the last taxable year ending one year
before the beginning of that session of Congress, as esti-
mated by the Department of the Treasury on October 1
and as modified by the total of (1) any amounts by which
net discretionary spending is reduced by legislation below
the discretionary spending limits enacted after the enact-
ment of this section related to the fiscal year subject to
the sequestration (or, in the absence of such limits, any
net deficit change from the baseline amount calculated
under section 257 (except that such baseline for fiscal year
1999 and thereafter shall be based upon fiscal year 1998
enacted appropriations less any 1998 sequesters); and (2)
the net deficit change that has resulted from all direct
spending legislation enacted after the enactment of this
section related to the fiscal year subject to the sequestra-
tion, as estimated by OMB. If the reduction in spending
under clauses (1) and (2) for a fiscal year is greater than
the estimated aggregate amount designated under section
6097 of the Internal Revenue Code of 1986 respecting
that fiscal year, then there shall be no sequestration under
this section.
‘‘(b) APPLICABILITY.—
‘‘(1) IN
GENERAL.—Except as provided by
paragraph (2), each account of the United States
shall be reduced by a dollar amount calculated by
multiplying the level of budgetary resources in that
account at that time by the uniform percentage nec-
essary to carry out subsection (a). All obligational
authority reduced under this section shall be done in
a manner that makes such reductions permanent.
‘‘(2) EXEMPT
ACCOUNTS.—No order issued
under this part may—
‘‘(A) reduce benefits payable to the old-age
and survivors insurance program established
under title II of the Social Security Act;
‘‘(B) reduce retired or retainer pay payable
to a member or former member of the uni-
formed services;
‘‘(C) reduce benefits payable under a re-
tirement system for employees of the Govern-
ment;
‘‘(D) reduce payments for net interest (all
of major functional category 900); or
‘‘(E) make any reduction in the following
accounts:
‘‘Federal Deposit Insurance Corpora-
tion, Bank Insurance Fund;
‘‘Federal Deposit Insurance Corpora-
tion, FSLIC Resolution Fund;
‘‘Federal Deposit Insurance Corpora-
tion, Savings Association Insurance Fund;
‘‘National Credit Union Administra-
tion, credit union share insurance fund; or
‘‘Resolution Trust Corporation.’’.
(b) REPORTS.—Section 254 of the Balanced Budget
and Emergency Deficit Control Act of 1985 is amended—
(1) in subsection (a), by adding at the end of
the table the following new item:
‘‘October 1 .....................................
Department of Treasury report to
Congress estimating amount of in-
come tax designated pursuant to
section 6097 of the Internal Rev-
enue Code of 1986.’’;
(2) in subsection (c)(1), by inserting ‘‘, and se-
questration to reduce the public debt,’’ after ‘‘se-
questration’’;
(3) in subsection (c), by redesignating para-
graph (5) as paragraph (6) and by inserting after
paragraph (4) the following new paragraph:
‘‘(5) REPORTS ON SEQUESTRATION TO REDUCE
THE PUBLIC DEBT.—The preview reports shall set
forth for the budget year estimates for each of the
following:
‘‘(A) The aggregate amount designated
under section 6097 of the Internal Revenue
Code of 1986 for the last taxable year ending
before the budget year.
‘‘(B) The amount of reductions required
under section 253A and the deficit remaining
after those reductions have been made.
‘‘(C) The sequestration percentage nec-
essary to achieve the required reduction in ac-
counts under section 253A(b).’’; and
(4) in subsection (f), by redesignating para-
graphs (4) and (5) as paragraphs (5) and (6), re-
spectively, and by inserting after paragraph (3) the
following new paragraph:
‘‘(4) REPORTS ON SEQUESTRATION TO REDUCE
THE PUBLIC DEBT.—The final reports shall contain
all of the information contained in the public debt
taxation designation report required on October 1.’’.
(c) CONFORMING AMENDMENT.—The table of con-
tents in section 250(a) of the the Balanced Budget and
Emergency Deficit Control Act of 1985 is amended by in-
serting after the item relating to section 253 the following
new item:
‘‘Sec. 253A. Sequestration to reduce the public debt.’’.
(d) EFFECTIVE
DATE.—Notwithstanding section
275(b) of the Balanced Budget and Emergency Deficit
Control Act of 1985, the expiration date set forth in that
section shall not apply to the amendments made by this
section. The amendments made by this section shall cease
to have any effect after the first fiscal year during which
there is no public debt.
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