I
105TH CONGRESS
1ST SESSION
H. R. 898
To achieve a balanced Federal budget by fiscal year 2002 and each year
thereafter, achieve significant deficit reduction in fiscal year 1998 and
each year through 2002, establish a Board of Estimates, require the
President’s budget and the congressional budget process to meet specified
deficit reduction and balance requirements, enforce those requirements
through a multiyear congressional budget process and, if necessary, se-
questration, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 27, 1997
Mr. VISCLOSKY (for himself and Mr. STENHOLM) introduced the following bill;
which was referred to the Committee on the Budget, and in addition to
the Committees on Ways and Means and Rules, for a period to be subse-
quently determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
A BILL
To achieve a balanced Federal budget by fiscal year 2002
and each year thereafter, achieve significant deficit re-
duction in fiscal year 1998 and each year through 2002,
establish a Board of Estimates, require the President’s
budget and the congressional budget process to meet
specified deficit reduction and balance requirements, en-
force those requirements through a multiyear congres-
sional budget process and, if necessary, sequestration,
and for other purposes.
(10) to provide that reconciliation savings and
sequestration savings shall be permanent.
SEC. 3. TABLE OF CONTENTS.
TITLE I—BALANCING THE BUDGET
PART A—PURPOSE
Sec. 1. Short titles; repealers.
Sec. 2. Purpose.
Sec. 3. Table of contents.
Sec. 4. Effective dates.
PART B—THE DEFICIT ELIMINATION ACT OF 1997
Sec. 100. Definitions and treatments.
Sec. 101. Direct spending and receipts: deficit reduction requirements.
Sec. 102. Discretionary funding limits.
Sec. 103. Balancing the budget in 2002.
Sec. 104. Preventing deficits after 2002.
Sec. 105. Spin-off law.
Sec. 106. Direct spending and receipts scorecard.
Sec. 107. Discretionary scorecard.
Sec. 108. Targeted sequestration.
Sec. 109. Comprehensive sequestration.
Sec. 110. Across-the-board reduction of discretionary programs.
Sec. 111. Exempt programs and activities.
Sec. 112. General and special sequestration rules.
Sec. 113. Sequestration through tax changes.
Sec. 114. Estimating assumptions, reports, and orders.
Sec. 115. The current policy baseline.
Sec. 116. Baseline assuming deficit reduction.
Sec. 117. Stabilization Reserve Fund.
Sec. 118. Modifications if war or low growth.
Sec. 119. Board of estimates.
Sec. 120. Judicial review.
TITLE II—TECHNICAL AND CONFORMING AMENDMENTS
Sec. 201. Amendments to the Congressional Budget and Impoundment Control
Act of 1974.
Sec. 202. Amendments to the Federal Credit Reform Act of 1990.
Sec. 203. Amendments to the Rules of the House of Representatives.
Sec. 204. Amendments to the Standing Rules of the Senate.
Sec. 205. President’s budget and supplemental budget estimates.
Sec. 206. Amendments to other laws.
SEC. 4. EFFECTIVE DATES.
Except as otherwise specified, this Act and the
amendments made by it shall take effect on its date of
enactment and shall apply to fiscal year 1998 and subse-
quent fiscal years.
PART B—THE DEFICIT ELIMINATION ACT OF 1997
SEC. 100. DEFINITIONS AND TREATMENTS.
As used in this part:
(1) The terms ‘‘budget authority’’, ‘‘new budget
authority’’, ‘‘entitlement authority’’, ‘‘outlays’’, and
‘‘deficit’’ have the meanings given to such terms in
section 3 of the Congressional Budget and Impound-
ment Control Act of 1974, and the term ‘‘receipts’’
shall be treated as a synonym for the term ‘‘reve-
nues’’ as it is used in that Act.
(2) The term ‘‘account’’ means an item for
which appropriations are made in any appropriation
Act and, for items not provided for in appropriation
Acts, such term means an item for which there is a
designated budget account identification code num-
ber in the President’s budget.
(3) The term ‘‘aggregate first-year spendout
rate’’ means the percent of new budget authority
that is expended in the fiscal year for which the
budget authority is provided.
(4) The term ‘‘Board of Estimates’’ or ‘‘Board’’
refers to the entity established by section 119.
(5) The term ‘‘budget year’’ means, with re-
spect to a session of Congress, the fiscal year of the
Government that starts on October 1 of the calendar
year in which that session begins.
(6) The term ‘‘budget-year session’’ means any
session of Congress that starts in the calendar year
in which that budget year starts.
(7) The term ‘‘category’’ refers to all direct
spending within the jurisdiction of a standing com-
mittee of the House of Representatives as so des-
ignated in the joint statement of managers accom-
panying the conference report on this Act, as modi-
fied from time to time by the Board of Estimates
upon the written recommendation of the Speaker of
the House of Representatives.
(8) The term ‘‘CBO’’ means the Director of the
Congressional Budget Office.
(9) The term ‘‘current policy baseline’’ means
the projection (described in section 115) of current-
year levels of new budget authority, outlays, receipts,
and the surplus or deficit into the budget year and
the outyears.
(10) The term ‘‘current year’’ means the fiscal
year that immediately precedes a budget year.
(11) The term ‘‘deposit insurance’’ refers to the
expenses of the Federal Deposit Insurance Corpora-
tion and the funds it incorporates, the Resolution
Trust Corporation, the National Credit Union Ad-
ministration and the funds it incorporates, the Of-
fice of Thrift Supervision; the Comptroller of the
Currency Assessment Funds, and the RTC Office of
the Inspector General.
(12) The term ‘‘direct spending’’ means—
(A) budget authority provided by law other
than appropriation Acts;
(B) entitlement authority; and
(C) the food stamp program.
If a law other than an appropriation Act alters the
level of discretionary appropriations, that effect shall
be treated as direct spending. Budget authority pro-
vided from a transportation trust fund in any Act
shall not be considered to be provided by a law other
than an appropriation Act.
(13) The term ‘‘discretionary appropriations’’
means new budget authority (except to fund entitle-
ment authority) provided by appropriation Acts and
the term ‘‘discretionary programs’’ refers to pro-
grams so financed. New budget authority provided
from transportation trust funds by any Act shall be
considered to be provided by an appropriation Act.
If an appropriation Act alters the level of direct
spending, that effect shall be treated as a discre-
tionary appropriation.
(14) The term ‘‘discretionary funding limit’’
means the total amount of discretionary new budget
authority that, under section 102 or 104, may be en-
acted in any fiscal year.
(15) The term ‘‘discretionary regulations’’ re-
fers to regulations issued by the executive branch for
which Congress delegates the authority to vary
amounts, levels, rates, effective dates, or other fac-
tors.
(16) The term ‘‘major estimating assumptions’’
refers to the list of items set forth under that head-
ing in the joint explanatory statement of managers
accompanying the conference report on this Act as
modified by the Board under section 119.
(17) The term ‘‘OMB’’ means the Director of
the Office of Management and Budget.
(18) The term ‘‘outyear’’ means any of the 4
fiscal years that follow a budget year.
(19) The term ‘‘real economic growth’’ means
the growth in the gross domestic product, adjusted
for inflation, consistent with Department of Com-
merce definitions.
(20) The terms ‘‘sequester’’ and ‘‘sequestra-
tion’’ refer to or mean the cancellation under section
110 of budget authority provided by discretionary
appropriations, the cancellation under section 108 or
109 of direct spending authority, or the change in
taxes under section 113.
(21) The term ‘‘sequestrable budget authority’’
means, for non-exempt accounts or activities within
major functional category 050 (national defense), all
budget authority, and for all other non-exempt ac-
counts or activities, new budget authority.
(22) The term ‘‘Stabilization Reserve Fund’’ re-
fers to the deposit fund established by section 117.
(23)(A) The following shall be treated as posi-
tive numbers:
(i) A deficit.
(ii) A deficit increase or surplus decrease.
(iii) A deficit or surplus change and a defi-
cit or surplus change target when the deficit is
increased by, or the surplus is reduced by, the
change.
(iv) A deficit reduction shortfall.
(v) An amount to be sequestered.
(B) The following shall be treated as negative
numbers:
(i) A surplus.
(ii) A deficit reduction or surplus increase.
(iii) A deficit or surplus change and a defi-
cit or surplus change target when the deficit is
reduced by, or the surplus is increased by, the
change.
SEC. 101. DIRECT SPENDING AND RECEIPTS: DEFICIT RE-
DUCTION REQUIREMENTS.
The deficit reduction targets for direct spending and
receipts legislation are as follows:
Fiscal Year
Deficit Reduction (in billions of dollars)
1998 ..........................................
-19.903
1999 ..........................................
-40.491
2000 ..........................................
-55.685
2001 ..........................................
-69.731
2002 ..........................................
-85.227
The deficit reduction target for fiscal year 2002 shall be
adjusted, if necessary, as provided by section 103.
SEC. 102. DISCRETIONARY FUNDING LIMITS.
(a) INITIAL AMOUNTS.—Subject to modifications
under subsection (b), discretionary funding limits, meas-
ured in terms of new budget authority, are as follows:
Fiscal Year
Limits (in billions of dollars)
1998 ..............................................................
540.0
1999 ..............................................................
545.4
2000 ..............................................................
540.854
2001 ..............................................................
556.363
Fiscal Year
Limits (in billions of dollars)
2002 ..............................................................
561.926
(b) ADJUSTMENTS TO FUNDING LIMITS.—Whenever
appropriate, adjustments to the discretionary funding lim-
its (and to those limits as cumulatively adjusted) for one
or more fiscal years shall be made to reflect the following:
(1) CHANGES
IN
CONCEPTS.—For any fiscal
year, the adjustments produced by any change in
budget accounting concepts (including scorekeeping
conventions, budget classifications, and definitions)
shall equal the current-year levels of new budget au-
thority using up-to-date concepts minus those levels
using the concepts in effect before the change. Such
changes in concepts may only be made in consulta-
tion with the Committees on Appropriations and the
Budget of the House of Representatives and Senate,
CBO, and OMB. A change in budget classifications
includes any change from the assumption that all
amounts provided in appropriation Acts are classi-
fied as discretionary except those included under the
heading ‘‘Mandatory Appropriations’’ in the joint ex-
planatory statement of managers accompanying the
conference report on this Act.
(2) CHANGES
IN
INFLATION.—(A) For the
budget year and each outyear through 2002, the ad-
justments produced by changes in inflation shall
equal the discretionary funding limit for each such
year multiplied by the inflation adjustment factor
(for the fiscal year immediately preceding the cur-
rent year) computed under subparagraph (B).
(B) The inflation adjustment factor shall be
calculated by subtracting 1 from the ratio of (i) the
level of year-over-year inflation measured for the fis-
cal year immediately preceding the current year, and
(ii) the applicable estimated level for that year set
forth below:
For 1997, 1.029
For 1998, 1.029
For 1999, 1.030
For 2000, 1.030
For 2001, 1.030
For 2002, 1.030
Inflation shall be measured by the average of the es-
timated consumer price index for all urban consum-
ers for a fiscal year divided by the average index for
the prior fiscal year.
(3) EXPIRING HOUSING CONTRACTS.—For each
budget year through 2002, the adjustment shall be
the amount of new budget authority needed to renew
expiring multiyear subsidized housing contracts or
provide contracts to replace units lost due to prepay-
ments, with the per-contract renewal/replacement
cost equal to the average current-year cost of re-
newal or replacement contracts.
(4) EMERGENCIES.—If for any fiscal year ap-
propriations for discretionary accounts are enacted
that are designated as emergency requirements by
statute, the adjustment shall be the amount of those
appropriations that the President also designates, in
writing, as emergency requirements within 5 days of
the enactment of those appropriations. If any
amount previously designated as an emergency re-
quirement is rescinded, the adjustment shall be the
amount of that rescission.
(5) NEW LIMITS FOR 2002 AND THEREAFTER.—
The adjustment for fiscal year 2002 shall be the ad-
justment (if any) under section 103, and the limit
for any succeeding fiscal year shall be the limit es-
tablished under section 104.
(6) TRANSPORTATION TRUST FUNDS.—For any
fiscal year, the adjustment produced by the enact-
ment of any law that raises excise taxes dedicated to
a transportation trust fund shall be the amount of
the net receipts produced by that tax increase which
that law specifically appropriates for that purpose.
SEC. 103. BALANCING THE BUDGET IN 2002.
If at the start of the 2002 budget-year session the
baseline assuming deficit reduction (set forth in section
116) projects a deficit (or surplus) for that year, then the
direct spending and receipts deficit reduction requirement
for that year under section 101 and the discretionary
funding limit for that year under section 102 shall each
be changed by amounts that, when debt service effects are
added, will produce a balanced budget. These changes
shall be accomplished by the enactment of a spin-off law
described in section 105; or if no spin-off law is enacted,
then the direct spending and receipts deficit reduction re-
quirement for fiscal year 2002 under section 101 shall be
adjusted by two-thirds of the total required change (ex-
cluding debt service effects) and the discretionary funding
limit for fiscal year 2002 under section 102 shall be ad-
justed to produce an outlay change equal to one-third of
the total required change (excluding debt service effects).
Any adjustment in the discretionary funding limit (wheth-
er in a spin-off law or by application of the above formula)
shall be assumed to produce an outlay change equal to
the change in new budget authority times the aggregate
first-year spendout rate for fiscal year 2002 chosen by the
Board of Estimates.
SEC. 104. PREVENTING DEFICITS AFTER 2002.
Starting with the 2003 budget-year session, the re-
quired change in the level of direct spending and receipts
(relative to the current policy baseline described in section
115) for the budget year and a discretionary funding limit
for that year shall be established. That change in direct
spending and receipts and that discretionary funding limit
(plus the associated effect on debt service) shall produce
a balanced budget. That change and that limit shall be
specified in a spin-off law described in section 105; or if
no spin-off law is enacted, then the change in direct spend-
ing and receipts for the budget year shall be two-thirds
of the baseline level of deficit or surplus (excluding debt
service effects) and the discretionary funding limit for the
budget year shall be the baseline level of discretionary new
budget authority adjusted to produce an outlay change
equal to one-third of the baseline level of deficit or surplus
(excluding debt service changes). Any adjustment in the
discretionary funding limit relative to the baseline level of
discretionary new budget authority (whether in a spin-off
law or by application of the above formula) shall be as-
sumed to produce an outlay change equal to the change
in new budget authority times the aggregate first-year
spendout rate for budget year chosen by the Board of
Estimates.
SEC. 105. SPIN-OFF LAW.
(a) Through the use of the procedures described in
section 301(b)(5) or 310(c) of the Congressional Budget
Act of 1974 or by other means, a law to carry out section
103 or 104 may be enacted. If required by section 103
or 104, that law shall specify a discretionary funding limit
for the budget year. That law shall specify the budget-
year amount of direct spending change required of or al-
lowed by each committee of the House of Representatives
in laws within that committee’s jurisdiction and the
budget-year amount of receipts change required of or al-
lowed by the Committee on Ways and Means of the House
of Representatives in laws within that committee’s juris-
diction. A law shall not be considered a spin-off law under
this section unless—
(1) for each of fiscal years 1998 through 2001,
the total of those amounts for the budget year
equals the amount specified in section 101 less the
amount of deficit reduction achieved for that year
measured under section 106; or
(2) for fiscal year 2002 and each year there-
after, the targets set by the spin-off bill for the
budget year will produce a balanced budget in that
year under the estimates and assumptions chosen by
the Board of Estimates for that year.
SEC. 106. DIRECT SPENDING AND RECEIPTS SCORECARD.
(a) ESTABLISHMENT OF SCORECARD: 1998–2002.—
There shall be a scorecard for each fiscal year through
2002 upon which shall be entered the estimated increase
or decrease in the deficit (relative to the start-of-session
current policy baseline described in section 115) for the
current year, the budget year, and each fiscal year through
2002 due to—
(1) the enactment, after August 15, 1997, of
any law,
(2) the imposition of any sequestration under
section 108 or 109, or
(3) the change in the baseline from the applica-
tion of section 115(b)(3), which relates to certain ex-
piring provisions of law and to veterans’ compensa-
tion,
affecting the level of direct spending or the level of re-
ceipts. Entries under the preceding sentence shall not in-
clude resulting debt service changes or any incidental
changes in intragovernmental receipts of Federal trust
funds. Amounts shall be entered on the scorecard within
10 days after the enactment of each such law or the impo-
sition of any sequestration, and may not thereafter be al-
tered except to reflect decisions made by the Board of Es-
timates or to correct clerical errors or errors in the appli-
cation of this Act.
(b) ESTABLISHMENT
OF SCORECARD: 2003 AND
THEREAFTER.—There shall be a scorecard, created anew
for each budget year starting with 2003, upon which shall
be entered the estimated increase or decrease in the deficit
or surplus (relative to the start-of-session current policy
baseline described in section 115) for the budget year, in
any amount that would have been entered if subsection
(a) applied to budget years after 2002.
(c) DEFICIT REDUCTION REQUIREMENTS.—For each
fiscal year, the scorecard shall also include, as applicable,
the amount of the direct spending and receipts deficit re-
duction target for that year under section 101 or the
amount (if any) of the direct spending and receipts deficit
change target under section 104. Each such deficit reduc-
tion amount shall be entered as though it were a deficit
increase, so that an equal amount of deficit reduction will
have to be achieved to forestall a sequestration, and each
such surplus decrease amount (if any) shall be entered as
though it were a surplus increase, so that the amount of
later surplus decreases will be limited.
(d) LOOKBACK.—If in any budget-year session a law
is enacted affecting the current-year level of direct spend-
ing or receipts, the amount of that current-year effect
shall be entered on the scorecard under the column for
the budget year. To mandate year-after savings of
amounts that would have been saved but for the lower se-
questration rule in that section, entries shall also be made
as specified in paragraphs (2) and (3) of section 114(j).
(e) DIVISION BETWEEN DIRECT SPENDING AND RE-
CEIPTS.—The scorecard shall be divided between changes
in the deficit resulting from direct spending changes and
changes in the deficit resulting from changes in receipts.
Solely for purposes of this section, any change in the defi-
cit resulting from an alteration of the Federal tax treat-
ment of a direct spending benefit shall be treated as a
change in direct spending.
(f) EMERGENCIES.—If after the enactment of this
Act a provision of direct spending or receipts legislation
is enacted that is designated as an emergency requirement
by statute and that the President also designates, in writ-
ing, as an emergency requirement within 5 days of the
enactment of that legislation, then no entries resulting
from that provision shall be made on the scorecard.
(g) TREATMENT OF CERTAIN DEDICATED EXCISE
TAXES.—For each fiscal year, the scorecard shall also in-
clude only that part of the net increase in receipts result-
ing from an increase in an excise tax dedicated to a trans-
portation trust fund that—
(1) was not specifically appropriated (as pro-
vided in section 102(b)(6)); or
(2) to the extent specifically appropriated (as
provided in section 102(b)(6)), is not estimated to be
expended in that fiscal year.
SEC. 107. DISCRETIONARY SCORECARD.
(a) ESTABLISHMENT OF SCORECARD.—There shall
be a scorecard for each fiscal year starting with 1998 upon
which shall be entered the amount of discretionary appro-
priations for that fiscal year due to—
(1) the enactment of any law in the budget-year
session,
(2) the enactment of any law in any previous
session of Congress, or
(3) the imposition of any sequestration under
section 110.
Amounts shall be entered on the scorecard within 10 days
after the enactment of each such law or the imposition
of any sequestration, and may not thereafter be altered
except to reflect decisions made by the Board of Estimates
or to correct clerical errors or errors in the application
of this Act.
(b) LOOKBACK.—(1) If in any current-year session
any discretionary appropriation is enacted that would
cause the discretionary funding limit for the current year
to be exceeded, then the amount of that excess shall be
entered on the scorecard under the column for the budget
year. To mandate year-after savings of amounts that
would have been saved but for the lower sequestration rule
in that section, entries shall also be made as specified in
paragraphs (2) and (3) of section 114(j).
(2) If any discretionary appropriation is enacted after
June 30, 1997, and before October 1, 1997, that would
have caused a look-back sequester under section 251(a)(5)
of the Balanced Budget and Emergency Deficit Control
Act of 1985 as in effect immediately before the date of
enactment of this Act, then the amount that would have
been sequestered shall be entered on the scorecard as a
cost under the column for the budget year.
SEC. 108. TARGETED SEQUESTRATION.
(a) APPLICATION.—This section shall apply for any
budget year only if a spin-off law as described in section
105 is in effect for that year on the date of the final se-
questration report described in section 114.
(b) SEQUESTRATION IN EACH CATEGORY BASED ON
BUDGET-YEAR SHORTFALL.—(1) The purpose of this
subsection is to ensure that the changes achieved during
a session in direct spending for each category and in re-
ceipts are at least as great as those required, or are no
more than those allowed, for the budget year.
(2) The amount to be sequestered for the budget year
from direct spending programs in each category is the
amount by which changes in direct spending achieved dur-
ing the budget-year session are estimated under section
106 to result in a greater amount of direct spending than
allowed in that category in the spin-off law.
(3) The amount that receipts are to be increased for
the budget year by the imposition of surtaxes is the
amount by which changes in receipts achieved during that
budget-year session are estimated under section 106 to re-
sult in lower total receipts for that year than allowed in
the spin-off law.
(c) SEQUESTRATION IN EACH CATEGORY BASED ON
OUTYEAR SHORTFALL.—(1) The purpose of this sub-
section is to ensure that the outyear changes in direct
spending for each category and the outyear changes in re-
ceipts achieved during a session are, on average, at least
as great as those required, or are no more than those al-
lowed, for the budget year.
(2) The amount to be sequestered for the budget year
in any category under subsection (b)(2), if any, shall be
increased whenever the average outyear change in direct
spending in that category achieved during that budget-
year session estimated under section 106 or paragraph (4)
would produce higher deficits during the outyears than if
that average change had equaled the budget-year target
for changes in direct spending in that category. That in-
creased amount to be sequestered (if applicable) shall be—
(A) one-quarter of the sum of those changes in
direct spending for the 4 outyears; minus
(B) the budget-year target for changes in direct
spending.
(3) The amount that receipts are to be increased for
the budget year under subsection (b)(3), if any, shall be
increased whenever the average outyear change in receipts
achieved during that budget-year session estimated under
section 106 or paragraph (4) would produce higher deficits
during the outyears than if that average change had
equaled the budget-year target for changes in receipts.
That additional amount that receipts are to be increased
(if applicable) shall be—
(A) one-quarter of the sum of those changes in
receipts for the four outyears achieved; minus
(B) the budget-year target for changes in re-
ceipts.
(4) For any outyear after 2002, CBO and OMB shall
make cost estimates within 10 days after the enactment
of any direct spending or receipts legislation of the outyear
effects of that legislation that would have gone on the di-
rect spending and receipts scorecard under section 106(a)
if the scorecard had covered that outyear.
(d) FINGERPRINT RULE.—For purposes of this sec-
tion, the category to which a change in direct spending
is attributed shall be the category of the committee that
authored the change or reported the legislation to which
the change was offered as an amendment. If it is impos-
sible to tell which committee authored a change, the cat-
egory to which such a change is attributed shall be the
category of the committee with jurisdiction over the pro-
gram that was changed, as defined under section 100(9).
(e) SEQUESTRATION.—Within 15 days after Con-
gress adjourns to end a session and on the same day as
a sequestration, if any, under section 110, there shall be
a sequestration—
(1) to reduce the amount of direct spending in
the current policy baseline in any category by the
sum of the amounts specified in subsections (b)(2)
and (c)(2) unless that sum is less than $50,000,000;
and
(2) to increase the amount of receipts in the
current policy baseline by the sum of the amounts
specified in subsections (b)(3) and (c)(3) unless that
sum is less than $250,000,000.
The amount required to be sequestered from direct spend-
ing in a category shall be achieved by reducing each non-
exempt direct spending account (or activity within an ac-
count) within that category by the uniform percentage
necessary to achieve 80 percent of that amount, and in-
creasing receipts to achieve the other 20 percent of that
amount as specified in sections 59B, 59C, and 59D of the
Internal Revenue Code of 1986, necessary to achieve that
amount.
SEC. 109. COMPREHENSIVE SEQUESTRATION.
(a) APPLICATION.—This section shall apply for any
budget year unless a spin-off law as described in section
105 is in effect for that year on the date of the final se-
questration report described in section 114.
(b) SEQUESTRATION
BASED
ON
BUDGET-YEAR
SHORTFALL.—The amount to be sequestered for the
budget year is the amount (if any) by which the sum of
all budget-year entries on the direct spending and receipts
scorecard under section 106 is greater than zero.
(c) SEQUESTRATION BASED ON OUTYEAR SHORT-
FALL.—(1) The purpose of this subsection is to ensure
that the outyear changes in direct spending and in receipts
achieved during a session are, on average, at least as great
as those required, or are no more than those allowed, for
the budget year.
(2) The amount to be sequestered under subsection
(b), if any, shall be increased whenever the average out-
year change in direct spending and receipts, combined,
achieved during that budget-year session would result in
higher deficits than if that average change had equaled
the amount targeted for the budget year, with that budg-
et-year target being the amount that the sequestration
preview report for the budget year shows was needed to
bring the budget-year entries on the direct spending and
receipts scorecard to zero. That increased amount to be
sequestered shall be—
(A) one-quarter of the sum of those achieved
changes in direct spending and receipts, combined,
for the 4 outyears; minus
(B) the budget-year target for changes in direct
spending and receipts, combined.
(d) SEQUESTRATION.—Within 15 days after Con-
gress adjourns to end a session and on the same day as
a sequestration, if any, under section 110, there shall be
a sequestration to reduce the amount of direct spending
and increase the amount of receipts in the current policy
baseline by the sum of the amounts specified in sub-
sections (b) and (c) unless that sum is less than
$500,000,000. The amount required to be sequestered
shall be achieved by reducing each non-exempt direct
spending account (or activity within an account) by the
uniform percentage necessary to achieve 80 percent of
that sum, and increasing receipts to achieve the other 20
percent of that sum as specified in sections 59B, 59C, and
59D of the Internal Revenue Code of 1986, necessary to
achieve that amount.
SEC. 110. ACROSS-THE-BOARD REDUCTION OF DISCRE-
TIONARY PROGRAMS.
(a) SEQUESTRATION.—Within 15 days after Con-
gress adjourns to end a session, and on the same day as
a sequestration (if any) under section 108 or 109, there
shall be a sequestration to reduce the amount of discre-
tionary sequestrable budget authority in the current policy
baseline for the budget year by the amount (if any) needed
to eliminate any excess of new budget authority for that
year over the discretionary funding limit for that year as
measured under section 107, unless that excess is less
than $250,000,000.
(b) UNIFORM REDUCTION.—Each nonexempt ac-
count (or activity within an account) shall be reduced by
a dollar amount calculated by multiplying the level of
sequestrable budget authority in the baseline for that ac-
count or activity by the uniform percentage necessary to
reduce new budget authority by the amount in subsection
(a).
(c) FEDERAL PERSONNEL.—If the President uses
the authority under section 111(b) to exempt any amounts
appropriated for military personnel from sequestration, all
remaining sequestrable budget authority within subfunc-
tion 051 shall be further reduced by the uniform percent-
age needed to fully offset the reduction in the amount se-
questered resulting from that exemption.
(d) PART-YEAR APPROPRIATIONS.—If, on the date
specified in subsection (a), there is in effect an Act making
or continuing appropriations for part of a fiscal year for
any budget account, then the dollar reduction calculated
for that account under subsections (b) and (c) shall be
applied to—
(1) the annualized amount otherwise available
by law in that account under that or a subsequent
part-year appropriation; and
(2) when a full-year appropriation for that ac-
count is enacted, from the amount otherwise pro-
vided by that appropriation.
SEC. 111. EXEMPT PROGRAMS AND ACTIVITIES.
(a) DESCRIPTIONS AND LISTS.—Except as provided
in subsection (c), the following budget accounts, activities
within accounts, or income shall be exempt from seques-
tration—
(1) net interest;
(2) deposit insurance and pension benefit guar-
antees;
(3) all payments to trust funds from excise
taxes or other receipts or collections properly cred-
itable to those trust funds;
(4) offsetting receipts and collections;
(5) all payments from one Federal direct spend-
ing budget account to another Federal budget ac-
count; all intragovernmental funds including those
from which funding is derived primarily from other
Government accounts, except to the extent that such
funds are augmented by direct appropriations for
the fiscal year for which the order is in effect; and
those obligations of discretionary accounts or activi-
ties that are financed by intragovernmental pay-
ments from another discretionary account or activ-
ity;
(6) expenses to the extent they result from pri-
vate donations, bequests, or voluntary contributions
to the Government;
(7) nonbudgetary activities, including but not
limited to—
(A) credit liquidating and financing ac-
counts;
(B) the Pension Benefit Guarantee Cor-
poration Trust Funds;
(C) the Thrift Savings Fund;
(D) the Federal Reserve System; and
(E) appropriations for the District of Co-
lumbia to the extent they are appropriations of
locally raised funds;
(8) payments resulting from Government insur-
ance, Government guarantees, or any other form of
contingent liability, to the extent those payments re-
sult from contractual or other legally binding com-
mitments of the Government at the time of any se-
questration;
(9) the following accounts, which largely fulfill
requirements of the Constitution or otherwise make
payments to which the Government is committed—
Administration of Territories, Northern
Mariana Islands Covenant grants (14–0412–0–
1–806);
Bureau of Indian Affairs, miscellaneous
payments to Indians (14–2303–0–1–452);
Bureau of Indian Affairs, miscellaneous
trust funds, tribal trust funds (14–9973–0–7–
999);
Claims, defense;
Claims, judgments, and relief act (20–
1895–0–1–806);
Compact of Free Association, economic as-
sistance pursuant to Public Law 99–658 (14–
0415–0–1–806);
Compensation of the President (11–0001–
0–1–802);
Customs Service, miscellaneous permanent
appropriations (20–9992–0–2–852);
Eastern Indian land claims settlement
fund (14–2202–0–1–806)
Farm Credit System Financial Assistance
Corporation, interest payments (20–1850–0–1–
351);
Internal Revenue collections of Puerto Rico
(20–5737–0–2–852);
Panama Canal Commission, operating ex-
penses and capital outlay (95–5190–0–2–403);
Payments of Vietnam and USS Pueblo
prisoner-of-war claims (15–0104–0–1–153);
Payments to copyright owners (03–5175–
0–2–376);
Payments to the United States territories,
fiscal assistance (14–0418–0–1–801);
Salaries of Article III judges;
Soldier’s and Airmen’s Home, payment of
claims (84–8930–0–7–705);
Washington Metropolitan Area Transit Au-
thority, interest payments (46–0300–0–1–401).
(10) the following noncredit special, revolving,
or trust-revolving funds—
Coinage profit fund (20–5811–0–2–803);
Exchange Stabilization Fund (20–4444–0–
3–155);
Foreign Military Sales trust fund (11–
82232–0–7–155);
(11)(A) any amount paid as regular unemploy-
ment compensation by a State from its account in
the Unemployment Trust Fund (established by sec-
tion 904(a) of the Social Security Act);
(B) any advance made to a State from the Fed-
eral unemployment account (established by section
904(g) of such Act) under title XII of such Act and
any advance appropriated to the Federal unemploy-
ment account pursuant to section 1203 of such Act;
and
(C) any payment made from the Federal Em-
ployees Compensation Account (as established under
section 909 of such Act) for the purpose of carrying
out chapter 85 of title 5, United States Code, and
funds appropriated or transferred to or otherwise
deposited in such Account;
(12) the earned income tax credit (payments to
individuals pursuant to section 32 of the Internal
Revenue Code of 1986).
(b) OPTIONAL EXEMPTIONS OF MILITARY PERSON-
NEL.—(1) The President may exempt some or all of the
budgetary resources of any military personnel account
from sequestration under section 109.
(2) The President may not use the authority under
paragraph (1) unless he notifies the Congress of the extent
to which such authority will be exercised for the budget
year on or before the preceding August 29.
(c) FEDERAL ADMINISTRATIVE EXPENSES.—
(1) Notwithstanding any provision of law other
than paragraph (3), administrative expenses in-
curred by the departments and agencies, including
independent agencies, of the Federal Government in
connection with any program, project, activity, or ac-
count shall be subject to reduction pursuant to any
sequestration order, without regard to the exemp-
tions under subsection (a) and regardless of whether
the program, project, activity, or account is self-sup-
porting and does not receive appropriations.
(2) Payments made by the Federal Government
to reimburse or match administrative costs incurred
by a State or political subdivision under or in con-
nection with any program, project, activity, or ac-
count shall not be considered administrative ex-
penses of the Federal Government for purposes of
this section, and shall be subject to sequestration to
the extent (and only to the extent) that other pay-
ments made by the Federal Government under or in
connection with that program, project, activity, or
account are subject to that reduction or sequestra-
tion; except that Federal payments made to a State
as reimbursement of administrative costs incurred
by that State under or in connection with the unem-
ployment compensation programs specified in sub-
section (a)(11) shall be subject to reduction or se-
questration under this part notwithstanding the ex-
emption otherwise granted to such programs under
that subsection.
(3) Notwithstanding any other provision of law,
the administrative expenses of the following pro-
grams shall be exempt from sequestration:
(A) Deposit insurance.
(B) The Federal Retirement Thrift Invest-
ment Board.
(C) The Federal Reserve System.
SEC. 112. GENERAL AND SPECIAL SEQUESTRATION RULES.
(a) 
PERMANENT
SEQUESTRATION
OF
DIRECT
SPENDING AND RECEIPTS.—
(1) The purpose of any direct spending or re-
ceipts sequestration under this Act is to ensure defi-
cit reduction in the budget year and all subsequent
fiscal years, so that the budget-year deficit reduction
target in section 101 is met and so that it will be
feasible to meet the increasingly ambitious targets
for the subsequent years.
(2) Obligations in sequestered direct spending
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 sequestration
or receipts sequestration, any later sequestration
shall reduce direct spending or increase receipts (as
the case may be) by an amount in addition to, rath-
er than in lieu of, the reduction in direct spending
or the increase in receipts in place under the exist-
ing sequestration or sequestrations.
(b) UNIFORM PERCENTAGES.—
(1) In calculating the uniform percentage appli-
cable to the sequestration of all nonexempt direct
spending programs or activities and receipts under
section 109, or the uniform percentage applicable to
the sequestration of nonexempt direct spending pro-
grams or activities within a category under section
108, the sequestrable base for direct spending rules
and activities is the total budget-year level of outlays
for those programs or activities in the current policy
baseline minus—
(A) those budget-year outlays resulting
from obligations incurred in the current or
prior fiscal years, and
(B) those budget-year outlays resulting
from exemptions under section 111.
(2) 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, and
(C) that delay reduces the amount of enti-
tlement authority that is subject to sequestra-
tion in the budget year,
the uniform percentage otherwise 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.
(3) If the uniform percentage otherwise applica-
ble to the budget-year sequestration of a program or
activity is increased under paragraph (2), then it
shall revert to the uniform percentage calculated
under paragraph (1) when the budget year is com-
pleted.
(c) GENERAL RULES FOR SEQUESTRATION.—
(1) INDEFINITE AUTHORITY.—Except as other-
wise 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-
questration and succeeding fiscal years are reduced,
from the level that would actually have occurred, by
the applicable sequestration percentage or percent-
ages.
(2) 
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.
(3) 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,
then for the first fiscal year to which a sequestration
order applies, the benefit reductions in that program
accomplished by the order shall take effect starting
with the payment made at the beginning of January
or 7 weeks after the order is issued, whichever is
later. For the purposes of this subsection, Veterans
Compensation shall be considered a program that
meets the conditions of the preceding sentence.
(4) 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 delin-
eated in the most recently submitted President’s
budget).
(5) IMPLEMENTING
REGULATIONS.—Adminis-
trative regulations or similar actions implementing
the sequestration of a program or activity shall be
made within 120 days of the effective date of the se-
questration of that program or activity.
(6) DISTRIBUTION FORMULAS.—To the extent
that distribution or allocation formulas differ at dif-
ferent levels of budgetary resources within an ac-
count, program, project, or activity, a sequestration
shall be interpreted as producing a lower total ap-
propriation, with that lower appropriation being obli-
gated as though it had been the pre-sequestration
appropriation and no sequestration had occurred.
(7) 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 presequestration level of
appropriations.
(d) BLOCK GRANTS TO STATES FOR TEMPORARY AS-
SISTANCE
FOR NEEDY FAMILIES.—Any sequestration
order shall accomplish the full amount of any required re-
duction in payments under sections 403 and 418 of the
Social Security Act by reducing the amount otherwise pay-
able to each State (within the meaning of part A of title
IV of such Act) under the section involved for the fiscal
year involved by the uniform percentage applicable to the
sequestration of nonexempt direct spending programs or
activities.
(e) CHILD SUPPORT ENFORCEMENT PROGRAM.—
Any sequestration order shall accomplish the full amount
of any required reduction in payments under sections 455
and 458 of the Social Security Act by reducing the Fed-
eral matching rate for State administrative costs under
the program, as specified (for the fiscal year involved) in
section 455(a) of such Act, to the extent necessary to re-
duce such expenditures by that amount.
(f) COMMODITY CREDIT CORPORATION.—
(1) GENERAL
EFFECTIVE
DATE.—Except as
provided in paragraph (2), for the Commodity Credit
Corporation, a sequestration order shall take effect
on the date on which the order is issued.
(2) SPECIAL
EFFECTIVE
DATE
FOR
CERTAIN
CCC CONTRACTS.—For each crop of a commodity for
which 1-year contracts are issued as an entitlement,
a sequestration order shall take effect with the start
of the sign-up period for that crop that begins after
the sequestration order is issued. In the case of a
commodity for which a production flexibility contract
is in effect under section 111 of the Agricultural
Market Transition Act (7 U.S.C. 7211), a sequestra-
tion order shall take effect on October 1 of the fiscal
year that begins after the sequestration order is is-
sued. Payments for each contract shall be reduced
under the same terms and conditions.
(3) DAIRY PROGRAM.—As the sole means of
achieving any reduction in outlays under the milk
price support program, the Secretary of Agriculture
shall provide for a reduction to be made in the price
received by producers for all milk produced in the
United States and marketed by producers for com-
mercial use. The price reduction shall be measured
in cents per hundredweight of milk marketed. The
reduction in outlays as a result of the price reduc-
tion shall not exceed the aggregate amount of the
reduction in outlays under the milk price support
program that otherwise would have been achieved by
reducing payments made for the purchase of milk
or the products of milk under section 141 of the Ag-
ricultural Market Transition Act (7 U.S.C. 7251)
during the fiscal year involved.
(4) EFFECT OF DELAY.—For purposes of sub-
section (b)(1), the sequestrable base for the Com-
modity Credit Corporation is the budget-year level of
gross outlays resulting from new budget authority
that is subject to reduction under paragraphs (2)
and (3), and subsection (b)(2) shall not apply.
(5) 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 net realized losses.
(g) CONSERVATION RESERVE PROGRAM.—Multiyear
contracts under the conservation reserve program shall be
considered binding and not subject to sequestration, but
any contract entered into after a sequestration applicable
to that program takes effect shall provide for payments
reduced by the uniform percentage or percentages applica-
ble to that sequestration.
(h) EXTENDED UNEMPLOYMENT COMPENSATION.—
(1) A State may reduce each weekly benefit payment made
under the Federal-State Extended Unemployment Com-
pensation Act of 1970 for any week of unemployment oc-
curring during any period with respect to which payments
are reduced under any sequestration order by a percentage
not to exceed the percentage by which the Federal pay-
ment to the State under section 204 of such Act is to be
reduced for such week as a result of such order.
(2) A reduction by a State in accordance with sub-
paragraph (A) shall not be considered as a failure to fulfill
the requirements of section 3304(a)(11) of the Internal
Revenue Code of 1986.
(i) 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. For purposes of sub-
section (b)(1), the sequestrable base for the Fund is the
budget-year level of gross outlays resulting from claims
paid after the sequestration order takes effect, and sub-
section (b)(2) shall not apply.
(j) FEDERAL HOUSING FINANCE BOARD.—Any se-
questration of the Federal Housing Finance Board shall
be accomplished 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.
(k) FEDERAL PAY.—
(1) IN GENERAL.—Except as provided in sec-
tion 111(b)(3), new budget authority to pay Federal
personnel shall be reduced by the uniform percent-
age calculated under section 108, 109, or 110, 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 increased by any amount payable under
section 5304 of title 5, United States Code, or sec-
tion 302 of the Federal Employees Pay Comparabil-
ity Act of 1990) or the rate of any element of mili-
tary pay to which any individual is entitled under
title 37, United States Code, or any increase in rates
of pay which is scheduled to take effect under sec-
tion 5303 of title 5, United States Code, section
1009 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 403a
and 405 of such title, and
(iii) cadet pay and midshipman pay
under section 203(c) of such title.
(C) The term ‘‘uniformed services’’ shall
have the meaning given that term in section
101(3) of title 37, United States Code.
(l) GUARANTEED STUDENT LOANS.—(A) For all stu-
dent loans under parts B and D of title IV of the Higher
Education Act of 1965 made on or after the date of a
sequestration, the origination fees shall be increased by
a uniform percentage sufficient to produce the dollar sav-
ings in student loan programs for the fiscal year of the
sequestration required by section 108 or 109, and all sub-
sequent origination fees shall be increased by the same
percentage, notwithstanding any other provision of law.
(B) The origination fees to which paragraph (A) ap-
plies are those specified in sections 428H(f)(1), 438(c),
and 455(c) of that Act.
(m) INSURANCE PROGRAMS.—Any sequestration in a
Federal program that sells insurance contracts to the pub-
lic (including the Federal Crop Insurance Fund, the Na-
tional Insurance Development Fund, the National Flood
Insurance Fund, insurance activities of the Overseas Pri-
vate Insurance Corporation, and Veterans’ life insurance
programs) shall be accomplished by annual payments from
the insurance fund or account to the general fund of the
Treasury. The amount of each annual payment by each
such fund or account shall be the amount received by the
fund or account by increasing premiums on contracts en-
tered into after the date a sequestration order takes effect
by the uniform sequestration percentage, and premiums
shall be increased accordingly.
(n) MEDICAID.—The November 15th estimate of
medicaid spending by States shall be the base estimate
from which the uniform percentage reduction under any
sequestration, applied across-the-board by State, shall be
made. Succeeding Federal payments to States shall reflect
that reduction. The Health Care Financing Administra-
tion shall reconcile actual medicaid spending for each fis-
cal year with the base estimate as reduced by the uniform
percentage, and adjust each State’s grants as soon as
practicable, but no later than 100 days after the end of
the fiscal year to which the base estimate applied, to com-
ply with the sequestration order.
(o) 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 a 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 the order, but only (for each such
cost reporting period) in the same proportion as
the fraction of the cost reporting period that oc-
curs 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) 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.
(p) 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 shall have the duty to make those payments during
the fiscal year to which the sequestration order applies
and each succeeding fiscal year. The amount of each an-
nual 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
foregone for 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
within 30 days, the plan submitted by the Postmaster
General shall go into effect. Any plan may be later revised
by the submission of a new plan to the Postal Rate Com-
mission, which may approve or modify it.
(q) POWER
MARKETING
ADMINISTRATIONS
AND
TVA.—Any sequestration of the Department of Energy
power marketing administration funds or the Tennessee
Valley Authority fund shall be accomplished by annual
payments from those funds to the General Fund of the
Treasury, and the administrators of those funds shall have
the duty to make those payments during the fiscal year
to which the sequestration order applies and each succeed-
ing fiscal year. The amount of each annual payment by
a fund shall be—
(1) the direct spending uniform sequestration
percentage, times
(2) the estimated gross obligations of the fund
in that year other than those obligations financed
from discretionary appropriations for 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. An-
nual payments by a fund may be financed by reductions
in costs required to produce the presequester amount of
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 rates, or by
any combination, but may not be financed by a lower fund
surplus or a higher fund deficit and must follow the re-
quirements 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 specified above in order
to make the annual payments to the Treasury.
(r) VETERANS’ HOUSING LOANS.—(1) For all hous-
ing loans guaranteed, insured, or made under chapter 37
of title 38, United States Code, on or after the date of
a sequestration, the origination fees shall be increased by
a uniform percentage sufficient to produce the dollar sav-
ings in veterans’ housing programs for the fiscal year of
the sequestration required by section 108 or 109, and all
subsequent origination fees shall be increased by the same
percentage, notwithstanding any other provision of law.
(2) The origination fees to which paragraph (1) ap-
plies are those referred to in section 3729 of title 38,
United States Code.
SEC. 113. SEQUESTRATION THROUGH SURTAXES.
(a) GENERAL RULE.—Subchapter A of chapter 1 of
the Internal Revenue Code of 1986 (relating to determina-
tion of tax liability) is amended by adding at the end
thereof the following new part:
‘‘PART VIII—TAX SEQUESTRATION SURTAXES
‘‘Sec. 59B. Imposition of surtax on individuals.
‘‘Sec. 59C. Imposition of surtax on corporations.
‘‘Sec. 59D. Definitions and special rules.
‘‘SEC. 59B. IMPOSITION OF SURTAX ON INDIVIDUALS.
‘‘(a) SECTION 1.—In the case of an individual, the
amount of the tax imposed under section 1 for any taxable
year shall be increased by the applicable surtax percentage
of the tax imposed under section 1 for such taxable year
(determined without regard to this section).
‘‘(b) MINIMUM TAX.—In the case of an individual,
the amount of the tentative minimum tax determined
under section 55 for any taxable year shall be increased
by the applicable surtax percentage of the amount of the
tentative minimum tax for such taxable year (determined
without regard to this section).
‘‘(c) SURTAX TO APPLY TO ESTATES AND TRUSTS.—
For purposes of this section, the term ‘individual’ includes
any estate or trust taxable under section 1.
‘‘(d) COORDINATION WITH OTHER PROVISIONS.—
The provisions of this section—
‘‘(1) shall be applied after section 1(h), but
‘‘(2) before the application of any other provi-
sion of this title which refers to the amount of the
tax imposed by section 1 or 55, as the case may be.
‘‘SEC. 59C. IMPOSITION OF SURTAX ON CORPORATIONS.
‘‘(a) NORMAL CORPORATE TAX.—
‘‘(1) IN GENERAL.—In the case of a corpora-
tion, the amount of the tax imposed under section
11 for any taxable year shall be increased by the ap-
plicable surtax percentage of the amount of the tax
imposed under section 11 for such taxable year (de-
termined without regard to this section).
‘‘(2) TREATMENT
OF
CERTAIN
TAXES.—For
purposes of paragraph (1), a tax shall be treated as
imposed under section 11 if the amount of such tax
is determined by reference to the provisions of sec-
tion 11 (or by reference to any rate contained there-
in).
‘‘(b) MINIMUM TAX.—In the case of a corporation,
the amount of the tentative minimum tax determined
under section 55 for any taxable year shall be increased
by the applicable surtax percentage of the amount of the
tentative minimum tax for such taxable year (determined
without regard to this section).
‘‘(c) COORDINATION WITH OTHER PROVISIONS.—
The provisions of this section shall be applied—
‘‘(1) after the application of section 1201 and
801(a)(2), but
‘‘(2) before the application of any other provi-
sion of this title which refers to the amount of tax
imposed by section 11 or 55, as the case may be.
‘‘SEC. 59D. DEFINITIONS AND SPECIAL RULES.
‘‘(a) APPLICABLE SURTAX PERCENTAGE.—For pur-
poses of this subpart—
‘‘(1) IN GENERAL.—The term ‘applicable surtax
percentage’ means, with respect to a taxable year be-
ginning in a calendar year, the sum, rounded up to
the nearest 0.5 percentage point, of—
‘‘(A) the surtax percentage (if any) deter-
mined under paragraph (2) for such calendar
year, plus
‘‘(B) the sum of the surtax percentages (if
any) for all preceding calendar years.
‘‘(2) SURTAX PERCENTAGE.—The surtax per-
centage for a calendar year is the surtax percentage
included in the final sequestration report effectuated
by the sequestration order under section 114 of the
Deficit Elimination Act of 1997 for the fiscal year
in which the calendar year begins.
‘‘(b) SECTION 15 NOT TO APPLY.—Section 15 shall
not apply to any change in rates under this part.
‘‘(c) ADJUSTMENT
TO APPLICATION
OF CERTAIN
PROVISIONS.—
‘‘(1) DIVIDENDS PAID ON CERTAIN PREFERRED
STOCK.—In computing for a taxable year of a cor-
poration 
the 
fractions 
described 
in 
sections
244(a)(2) and 247(a)(2), the denominator shall,
under regulations prescribed by the Secretary, be in-
creased to reflect the provisions of this part.
‘‘(2) SHAREHOLDERS OF REGULATED INVEST-
MENT COMPANIES.—In computing the adjustment to
basis described in section 852(b)(3)(D)(iii), the per-
centage set forth therein shall be adjusted, under
regulations prescribed by the Secretary, to reflect
the provisions of this part.’’
(b) CLERICAL AMENDMENT.—The table of parts for
subchapter A of chapter 1 of such Code is amended by
adding at the end thereof the following new item:
‘‘Part VIII. Tax sequestration surtaxes.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1997.
SEC. 114. ESTIMATING ASSUMPTIONS, REPORTS, AND OR-
DERS.
(a) TIMETABLE.—The timetable with respect to this
part for any budget year is as follows:
Date:
Action to be completed:
Dec. 31 ..........................................
OMB and CBO sequestration preview
reports submitted to Board.
Jan. 15 ..........................................
Board selects sequestration preview
report.
The President’s budget submission
OMB publishes sequestration preview
report.
August 29: .....................................
President’s midsession review; notifi-
cation regarding military personnel.
Within 10 days after end of ses-
sion.
OMB and CBO final budget year se-
questration reports submitted to
Board.
5 days later ....................................
Board selects final sequestration re-
port; President issues sequestration
order.
(b) SUBMISSION AND AVAILABILITY OF REPORTS.—
Each report required by this section shall be submitted,
in the case of CBO, to the House of Representatives, the
Senate, OMB, and the Board and, in the case of OMB,
to the House of Representatives, the Senate, the Presi-
dent, and the Board on the day it is issued. On the follow-
ing day a notice of the report shall be printed in the Fed-
eral Register.
(c) EXCHANGE OF PRELIMINARY CURRENT POLICY
BASELINES.—On December 15 or 3 weeks after Congress
adjourns to end a session, whichever is later, OMB and
CBO shall exchange their preliminary current policy base-
lines for the budget-year session starting in January.
(d) SEQUESTRATION PREVIEW REPORTS.—
(1) REPORTING REQUIREMENT.—On December
31 or 2 weeks after exchanging preliminary current
policy baselines, whichever is later, OMB and CBO
shall each submit a sequestration preview report.
(2) CONTENTS.—Each preview report shall set
forth the following:
(A) MAJOR ESTIMATING ASSUMPTIONS.—
The major estimating assumptions for the cur-
rent year, the budget year, and the outyears,
and an explanation of them.
(B) CURRENT POLICY BASELINE.—A de-
tailed display of the current policy baseline for
the current year, the budget year, and the out-
years, with an explanation of changes in the
baseline since it was last issued that includes
the effect of policy decisions made during the
intervening period and an explanation of the
differences between OMB and CBO for each
item set forth in the report.
(C) DEFICITS
ASSUMING
COMPLIANCE.—
Estimates for the budget year and each subse-
quent year through fiscal year 2002 of the defi-
cits or surpluses in the current policy baseline
assuming deficit reduction specified in section
116.
(D) DISCRETIONARY
FUNDING
LIMITS.—
(i) estimates for the current year, the budget
year, and each outyear through 2002 of the dis-
cretionary funding limits and an explanation of
each adjustment made to those limits under
section 102(b), (ii) starting with fiscal year
2002, an estimate of the aggregate first-year
spendout rate for the budget year for discre-
tionary programs, (iii) starting with budget
year 2002, an estimate for the current year and
for the budget year of the discretionary funding
limits under the spinoff law under section 105,
or if no such law exists for a fiscal year, for
those limits established under the automatic ap-
plication of section 103 or 104.
(E) SEQUESTRATION
OF
DISCRETIONARY
ACCOUNTS.—Estimates of the uniform percent-
age and the amount of budgetary resources to
be sequestered from discretionary programs
given the baseline level of appropriations, and if
the President chooses to exempt some or all
military personnel from sequestration, the effect
of that decision on the percentage and amounts.
(F) DEFICIT REDUCTION REQUIREMENTS
FOR DIRECT SPENDING AND RECEIPTS.—An es-
timate for direct spending and receipts of the
deficit reduction remaining to be achieved for
the budget year under section 101 or 104 or of
the decrease in the surplus allowed for that
year under section 104 (given the amount al-
ready achieved as measured under section 106).
(G) DIRECT SPENDING SEQUESTRATION.—
Estimates of the uniform percentage and the
amount of targeted sequestration under section
108 that will be necessary in each direct spend-
ing category to meet the direct spending targets
for the budget year in the spin-off law under
section 105, or if no such law has been enacted
for the budget year, the uniform percentage and
the amount of comprehensive sequestration of
direct spending programs that will be necessary
under section 109.
(H) 
RECEIPTS
SEQUESTRATION.—Esti-
mates of the increase in receipts under section
108 that will be necessary to meet the receipts
targets for the budget year in the spin-off law
under section 105, or if no such law has been
enacted for the budget year, the increase in re-
ceipts that will be necessary under section 109;
including the surtax percentage needed to
achieve the increase in receipts required under
section 108 or the uniform percentage under
section 109.
(e) SELECTION OF OFFICIAL SEQUESTRATION PRE-
VIEW REPORT.—On January 15 or 2 weeks after receiving
the OMB and CBO sequestration preview reports, which-
ever is later, the Board shall choose either the OMB or
CBO sequestration preview report as the official report for
purposes of this Act. The Board shall add to the chosen
report an analysis of which reports submitted in previous
years have proven to be more accurate and recommenda-
tions about methods of improving the accuracy of future
reports. That report shall be set forth, without change,
in the budget submitted by the President under section
1105(a) of title 31, United States Code, for the budget
year.
(f) AGREEING ON EARLIER DATES.—The Chairman
of the Board may set earlier dates for subsections (c), (d),
and (e) if OMB and CBO concur.
(g) NOTIFICATION REGARDING MILITARY PERSON-
NEL.—On or before August 29, the President shall notify
the Congress of the manner in which he intends to exercise
flexibility with respect to military personnel accounts
under section 111(b).
(h) FINAL SEQUESTRATION REPORTS.—
(1) REPORTING REQUIREMENT.—Not later than
10 days following the end of a budget-year session,
OMB and CBO shall each submit a final sequestra-
tion report.
(2) CONTENTS.—That report shall be based
upon laws enacted through the date of the report
and shall set forth all the information and estimates
required of a sequestration preview report required
by subsection (d)(2) (D) through (H). In addition,
that report shall include—
(A) for each account to be sequestered, the
baseline level of sequestrable budgetary re-
sources and the resulting reductions in new
budget authority and outlays;
(B) the effects of sequestration on the level
of direct spending outlays for each fiscal year
through 2002; and
(C) the effects of sequestration on the level
of receipts for each fiscal year through 2002.
(i) SELECTION OF OFFICIAL FINAL SEQUESTRATION
REPORT.—Not later than 5 days after receiving the final
OMB and CBO sequestration reports, the Board shall
choose either the OMB or CBO final sequestration report
as the official report for purposes of this Act, and shall
issue a report stating that decision and making any com-
ments that the Board chooses.
(j) PRESIDENTIAL ORDER.—(1) On the day that the
Board chooses a final sequestration report, the President
shall issue an order fully implementing without change all
sequestrations and tax actions required by—
(A) the final sequestration report that requires
the lesser amount of discretionary sequestration
under section 110; and
(B) the final sequestration report that requires
the lesser total amount of direct spending and re-
ceipts sequestration under section 108 or 109 (as
applicable).
The order shall be effective on issuance and shall be issued
only if sequestration is required.
(2)(A) If both the CBO and OMB final sequestration
reports require a sequestration of discretionary programs,
and the Board chooses the report requiring the greater
sequestration, then a positive amount equal to the dif-
ference between the CBO and OMB estimates of discre-
tionary new budget authority for the budget year shall be
subtracted from the budget-year column and added to the
column for the first outyear of the discretionary scorecard
under section 107 as though that amount had been en-
acted in the next session of Congress.
(B) If one final sequestration report requires a se-
questration of discretionary programs and the Board
chooses that report, then an amount equal to the dif-
ference between that report’s estimate of discretionary
new budget authority for the budget year and the discre-
tionary funding limit for that year shall be subtracted
from the budget-year column and added to column for the
first outyear of the discretionary scorecard under section
107 as though that amount had been enacted in the next
session of Congress.
(3)(A) If both the CBO and OMB final sequestration
reports require a sequestration of direct spending or re-
ceipts, and the Board chooses the report requiring the
greater sequestration, then a positive amount equal to the
difference between the total CBO and OMB estimates of
required budget-year direct spending and receipts seques-
trations shall be subtracted from the budget-year column
and added to the column for the first outyear of the direct
spending and receipts scorecard under section 106 as
though that amount had been enacted in the next session
of Congress.
(B) If one final sequestration report requires a se-
questration of direct spending or receipts and the Board
chooses that report, then the estimate of total required
budget-year direct spending and receipts sequestrations
shall be subtracted from the budget-year column and
added to column for the first outyear of the direct spend-
ing and receipts scorecard under section 106 as though
that amount had been enacted in the next session of
Congress.
(k) LOW-GROWTH REPORT.—At any time until the
end of fiscal year 1999, the Director of the Board shall
notify the Congress if—
(1) during the period consisting of the quarter
during which such notification is given, the quarter
preceding that notification, and the 4 quarters fol-
lowing that notification, CBO or OMB has deter-
mined that real economic growth is projected or esti-
mated to be less than zero for each of any 2 con-
secutive quarters within that period; or
(2) the most recent of the Department of Com-
merce’s advance, preliminary, or final reports of ac-
tual real economic growth for each of the most re-
cently reported quarter and the immediately preced-
ing quarter is less than 1 percent.
(l) USE OF MAJOR ESTIMATING ASSUMPTIONS AND
SCOREKEEPING CONVENTIONS.—In the estimates, projec-
tions, and reports under subsections (c) and (d), CBO and
OMB shall use the best and most recent estimating as-
sumptions available. In all other reports required by this
section and in all estimates or calculations required by this
Act, CBO and OMB shall use—
(1) current-year and budget-year discretionary
funding limits chosen by the Board and the esti-
mates chosen by the Board of the deficit reduction
(or decrease in the surplus) through changes in di-
rect spending and receipts required (or allowed) in
the budget year;
(2) in estimating the effects of bills and discre-
tionary regulations, the major estimating assump-
tions most recently chosen by the Board, except to
the extent that they must be altered to reflect actual
results occurring or measured after the Board’s
choice; and
(3) scorekeeping conventions determined after
consultation among the House and Senate Commit-
tees on the Budget, CBO, and OMB.
In applying the two previous sentences, the major estimat-
ing assumptions and other calculations required by this
Act that are included in the statement of managers accom-
panying the conference report on this Act shall be consid-
ered, for all purposes of this Act, to be the report of the
Board chosen under subsection (e) for fiscal year 1998.
(m) BILL COST ESTIMATES.—Within 10 days after
the enactment of any discretionary appropriations, direct
spending, or receipts legislation, CBO and OMB shall
transmit to each other, the Board, and to the Congress
an estimate of the budgetary effects of that law, following
the estimating requirements of this section. Those esti-
mates may not change after the 10-day period except—
(1) to the extent those estimates are subsumed
within (and implicitly changed by) the estimates
made in preparation of a new baseline under sub-
sections (c), (d), and (h);
(2) to reflect a choice of the Board regarding
an official set of estimates under subsections (l) and
(n); and
(3) to correct clerical errors or errors in the ap-
plication of this Act.
SEC. 115. THE CURRENT POLICY BASELINE.
(a) IN GENERAL.—For any budget year, the baseline
refers to a projection of current-year levels of new budget
authority, outlays, revenues, and the surplus or deficit into
the budget year and the outyears based on laws enacted
through, and discretionary regulations promulgated as
final by, the applicable date.
(b) DIRECT SPENDING AND RECEIPTS.—For the cur-
rent year, the budget year, and each outyear, the baseline
shall be calculated using the following assumptions:
(1) IN GENERAL.—Laws providing or creating
direct spending and receipts are assumed to operate
in the manner specified in those laws for each such
year, funding for entitlement authority is assumed
to be adequate to make all payments required by
those entitlements, and funding for deposit insur-
ance is assumed to be adequate to meet the costs of
the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 or successor laws.
(2) EXCEPTIONS.—Except as provided in para-
graph (3):
(A) No program with estimated current-
year gross new budget authority greater than
$100 million is assumed to expire in the budget
year or outyears. In carrying out the preceding
sentence, expiring entitlement programs and
programs financed by indefinite budget author-
ity are assumed to continue as in effect just
prior to their expiration, and other expiring
programs are assumed to continue with new
budget authority projected as under subsection
(c)(4).
(B) The percentage increase for veterans’
compensation for a fiscal year is assumed to be
the same as that required by law for veterans’
pensions unless otherwise provided by a law en-
acted in that session.
(C) Excise taxes dedicated to a trust fund,
if expiring, are assumed to continue at the rates
in effect immediately prior to their expiration.
(3) CUTOFF DATE.—Programs or taxes that ex-
pire on or before December 31 and that have not
been reauthorized by the date of the final sequestra-
tion report are assumed to expire. If an increase in
veterans compensation has not been enacted by the
date of the final sequestration report, it is not
assumed.
(c) DISCRETIONARY APPROPRIATIONS.—For the cur-
rent year, the budget year, and each outyear, the baseline
shall be calculated using the following assumptions regard-
ing discretionary programs:
(1) INFLATION OF CURRENT-YEAR APPROPRIA-
TIONS.—New budget authority shall be at the level
provided for that fiscal year in appropriation Acts.
If for any account an appropriation has not yet been
enacted, new budget authority is assumed to be at
the level available in the current year, adjusted se-
quentially and cumulatively for expiring housing con-
tracts as specified in paragraph (2), for inflation as
specified in paragraph (3), and to account for
changes required by law in the level of agency pay-
ments for personnel benefits other than pay.
(2) EXPIRING
HOUSING
CONTRACTS.—New
budget authority to renew expiring multiyear sub-
sidized housing contracts or provide contracts to re-
place units lost due to prepayments shall be adjusted
to reflect the difference in the number of such con-
tracts that are estimated to expire or be prepaid in
that fiscal year and the number expiring or being
prepaid in the current year, with the per-contract re-
newal/replacement cost equal to the average current-
year cost of renewal or replacement contracts.
(3) INFLATORS.—The inflator to adjust new
budget authority relating to personnel is the percent
by which the average rate of basic pay for statutory
pay systems, computed as specified in section
5303(a) of title 5, United States Code, for that fis-
cal year exceeds the average rate of pay for the cur-
rent year. The inflator to adjust all other budgetary
resources is the percent by which the average of the
estimated gross domestic product fixed-weight price
index for that fiscal year differs from the average of
such estimated index for the current year.
(4) PART-YEAR
APPROPRIATIONS; PERMISSIVE
TRANSFERS.—If, for any account, a continuing ap-
propriation is in effect for less than an entire fiscal
year, then the amount available for that fiscal year
is assumed to equal the amount that would be avail-
able if that continuing appropriation covered the en-
tire fiscal year. If law permits the transfer of budget
authority among budget accounts in the current
year, the current-year level for an account shall re-
flect transfers accomplished by the applicable date
or assumed for the current year in the President’s
original budget or midsession review for the budget
year.
(d) UP-TO-DATE CONCEPTS.—In deriving the base-
line for any budget year or outyear, current-year amounts
shall be calculated using the concepts and definitions that
are required for that budget year.
SEC. 116. BASELINE ASSUMING DEFICIT REDUCTION.
For any budget year, a baseline assuming deficit re-
duction refers to a projection of current policy baseline
surpluses or deficits into the budget year and the outyears
that is adjusted in aggregate by—
(1) assuming compliance with the deficit reduc-
tion targets for direct spending and receipts legisla-
tion under section 101 without any adjustment pur-
suant to section 103;
(2) assuming compliance with the discretionary
funding limits under section 102 without any adjust-
ment pursuant to section 103; and
(3) excluding amounts resulting from legislation
that has been designated as an emergency require-
ment under section 102(b)(4) or 106(f).
SEC. 117. STABILIZATION RESERVE FUND.
(a) ESTABLISHMENT AND PURPOSE.—There is here-
by established as a deposit fund in the Treasury a Sta-
bilization Reserve Fund (‘‘Fund’’), to be administered by
the Secretary of the Treasury. The purpose of that Fund
is to accumulate balances during years of comparative
prosperity, which balances may later be used to cover the
loss of receipts and the increase in outlays that occur dur-
ing times of comparative economic distress.
(b) AMOUNTS PAID TO THE FUND.—On the last day
of any fiscal year for which an actual surplus has oc-
curred, the amount of that surplus shall be paid to the
Fund. In fiscal year 2003, the Secretary of the Treasury
shall pay an additional $10 billion from the general fund
of the Treasury to the Fund. In each fiscal year starting
with 2000, the Secretary of the Treasury shall pay an ad-
ditional $20 billion to the Fund from the general fund of
the Treasury. Balances in the Fund shall not receive inter-
est.
(c) TRANSFER OF FUND BALANCES.—At any time
starting with the fiscal year 2003 session, a law may be
enacted withdrawing some or all of the current balance
of the Stabilization Reserve Fund and paying that
amount, as a receipt, to the General Fund of the Treas-
ury. That law may also provide for the later transfer to
the Treasury (as a receipt) of some or all of the current-
year estimated surplus (if any), to be paid into the Sta-
bilization Reserve Fund at the end of the current year
under subsection (b). Except for transfers to the General
Fund of the Treasury, no law reducing the balances of
the Stabilization Reserve Fund may be enacted in any
year.
SEC. 118. MODIFICATIONS IF WAR OR LOW GROWTH.
(a) WAR.—Upon the enactment of a declaration of
war—
(1) the subsequent issuance of any sequestra-
tion report or any sequestration order is precluded;
(2) sections 302(f), 310(d), and 311 of the
Congressional Budget Act of 1974 are suspended;
and
(3) sections 1105(f) and 1103 of title 31, Unit-
ed States Code, are suspended.
(b) PEACE.—In the event of a suspension of seques-
tration procedures due to a declaration of war, then, effec-
tive with the first fiscal year that begins in the session
after the state of war is concluded by Senate ratification
of the necessary treaties, the provisions of subsection (a)
triggered by that declaration of war are no longer effec-
tive. The provisions of this Act that would have applied
to the fiscal year that started in the calendar year in which
the declaration of war was enacted shall instead apply to
the first fiscal year that begins in the session after the
state of was is concluded. The preceding sentence shall
apply in the same manner to each succeeding fiscal year.
If the implementation of this subsection requires adding
entries to the direct spending and receipts scorecard under
section 106, CBO and OMB shall submit estimates of
those entries as part of their next sequestration preview
report under section 114.
(c) LOW GROWTH.—
(1) TRIGGER.—Within 20 days after the Board
issues a low-growth report under section 114(k), the
majority leader of the House of Representatives
may, and the majority leader of the Senate shall, in-
troduce a joint resolution in the form set forth in
paragraph (2).
(2) FORM OF JOINT RESOLUTION.—
(A) The matter after the resolving clause
in any joint resolution introduced pursuant to
paragraph (1) shall be as follows: ‘‘That the
conditions specified in section 114(k) of the
Deficit Elimination Act of 1997 are met. The
implementation of the Congressional Budget
Act of 1974, chapter 11 of title 31, United
States Code, and the Deficit Elimination Act of
1997 are modified as follows:
(i) the subsequent issuance of any se-
questration report or any sequestration
order is precluded;
(ii) sections 302(f), 310(d), and 311
of the Congressional Budget Act of 1974
are suspended; and
(iii) sections 1105(f) and 1103 of title
31, United States Code, are suspended.
The provisions of this joint resolution shall
cease to be effective with respect to the first fis-
cal year beginning at least 12 months after its
enactment.’’.
(B) The title of the joint resolution shall
be ‘‘Joint resolution modifying certain provi-
sions of law pursuant to section 118(c) of the
Deficit Elimination Act of 1997.’’; and the joint
resolution shall not contain any preamble.
(3) COMMITTEE ACTION.—Each joint resolution
introduced pursuant to paragraph (1) shall be re-
ferred to the Committees on Rules, Government Op-
erations, and Budget of the House of Representa-
tives or to the Committee on the Budget of the Sen-
ate, as the case may be.
(4) SENATE
BUDGET
COMITTEE
CONSIDER-
ATION.—The Committee on the Budget of the Sen-
ate shall report the joint resolution with or without
amendment on or before the 20th day after the date
on which the joint resolution is introduced. If any
committee fails to report the joint resolution within
that 20-day period, it shall be automatically dis-
charged from further consideration of the joint reso-
lution, and the joint resolution shall be placed on the
appropriate calendar.
(5) COMMITTEE
AMENDMENTS.—Amendments
reported by any committee under paragraph (3)
shall only strike the second and third sentences of
the joint resolution as introduced and insert matter
providing—
(A) changes to the budget targets or dates
under sections 101 through 104 to allow higher
discretionary funding limits or lower direct
spending and receipts deficit reduction require-
ments for any fiscal year or years;
(B) conforming amendments that may be
needed to chapter 11 of title 31, United States
Code; and
(C) conforming amendments that may be
needed to the Congressional Budget Act of
1974 or the rules of the House of Representa-
tives or the Senate.
(6) CONSIDERATION OF JOINT RESOLUTION.—
(A) A vote on final passage of a joint reso-
lution reported to the Senate or discharged pur-
suant to paragraph (3) shall be taken on or be-
fore the close of the 10th calendar day of ses-
sion after the date on which the joint resolution
is reported or after the Committee has been dis-
charged from further consideration of the joint
resolution.
(B)(i) In the Senate, a joint resolution
under this paragraph shall be privileged. It
shall not be in order to move to reconsider the
vote by which the motion is agreed to or dis-
agreed to.
(ii) Debate in the Senate on a joint resolu-
tion under this paragraph, and all debatable
motions and appeals in connection therewith,
shall be limited to not more than five hours.
The time shall be equally divided between, and
controlled by, the majority leader and the mi-
nority leader or their designees.
(iii) Debate in the Senate on any debatable
motion or appeal in connection with a joint res-
olution under this paragraph shall be limited to
not more than one hour, to be equally divided
between, and controlled by, the mover and the
manager of the joint resolution, except that in
the event the manager of the joint resolution
is in favor of any such motion or appeal, the
time in opposition thereto shall be controlled by
the minority leader or his designee.
(iv) A motion in the Senate to further limit
debate on a joint resolution under this para-
graph is not debatable. A motion to table or to
recommit a joint resolution under this para-
graph is not in order.
(C) If, after a joint resolution has been re-
ported to one House and prior to its passage by
that House, an identical joint resolution is re-
ceived from the other House, then—
(i) the procedure in that House shall
be the same as if no such joint resolution
had been received from the other House,
but
(ii) the vote on final passage shall be
on the joint resolution of the other House,
and
when the joint resolution is agreed to, the Clerk
of the House of Representatives (in the case of
a House joint resolution agreed to in the House
of Representatives) or the Secretary of the Sen-
ate (in the case of a Senate joint resolution
agreed to in the Senate) shall cause the joint
resolution to be engrossed, certified, and trans-
mitted to the other House of the Congress as
soon as practicable.
(D) Amendments to a joint resolution con-
sidered under this paragraph shall be in order
in the Senate only if germane to that resolution
in the form in which it was reported or dis-
charged.
(7) CONSIDERATION
OF
A
CONFERENCE
RE-
PORT.—Consideration of a conference report on a
joint resolution under this subsection shall be gov-
erned by the Standing Rules of the Senate, and by
provisions of paragraph (5)(a) and (B) as if those
provisions applied to conference reports.
SEC. 119. BOARD OF ESTIMATES.
(a) ESTABLISHMENT.—There is established a Board
of Estimates.
(b) DUTIES OF THE BOARD.—(1) On the dates speci-
fied in section 114, the Board shall issue a report to the
President and the Congress which states whether it has
chosen (with no modification)—
(A) the sequestration preview report for the
budget year submitted by OMB under section
114(d) or the report for that year submitted by
CBO under section 114(d); and
(B) the final sequestration report for the budg-
et year submitted by OMB under section 114(h) or
the report for that year submitted by CBO under
section 114(h);
that shall be used for purposes of this Act, chapter 11
of title 31, United States Code, and section 403 of the
Congressional Budget Act of 1974. In making its choice,
the Board shall choose the report that, in its opinion, is
the more accurate.
(2) At any time the Board may change the list of
major estimating assumptions to be used by OMB and
CBO in preparing their sequestration preview reports.
(3) At any time the Board may approve a revision
to the list of the direct spending jurisdiction of the stand-
ing committees of the House of Representatives to be used
for implementing targeted sequestration under section
108. Each such revision must be requested in writing by
the Speaker of the House of Representatives and may be
approved or disapproved, but may not be modified.
(c) MEMBERSHIP.—
(1) NUMBER AND APPOINTMENT.—The Board
shall be composed of 5 members, the chairman of
the Board of Governors of the Federal Reserve Sys-
tem and 4 other members to be appointed by the
President as follows:
(A) One from a list of at least 5 individ-
uals nominated for such appointment by the
Speaker of the House of Representatives.
(B) One from a list of at least 5 individ-
uals nominated for such appointment by the
majority leader of the Senate.
(C) One from a list of at least 5 individ-
uals nominated for such appointment by the mi-
nority leader of the House of Representatives.
(D) One from a list of at least 5 individ-
uals nominated for such appointment by the mi-
nority leader of the Senate.
No member appointed by the President may be an
officer or employee of any government. A vacancy in
the Board shall be filled in the manner in which the
original appointment was made.
(2) CONTINUATION OF MEMBERSHIP.—If any
member of the Board appointed by the President be-
comes an officer or employee of a government, he
may continue as a member of the Board for not
longer than the 30-day period beginning on the date
he becomes such an officer or employee.
(3) TERMS.—(A) Members shall be appointed
for terms of 4 years.
(B) Any member appointed to fill a vacancy oc-
curring before the expiration of the term for which
his predecessor was appointed shall be appointed
only for the remainder of such term. A member may
serve after the expiration of his term until his suc-
cessor has taken office.
(4) BASIC PAY.—Members of the Board shall
serve without pay.
(5) QUORUM.—Three members of the Board
shall constitute a quorum but a lesser number may
hold hearings.
(6) CHAIRMAN.—The Chairman of the Board
shall be chosen annually by its members.
(7) MEETINGS.—The Board shall meet at the
call of the Chairman or a majority of its members.
(d) DIRECTOR AND STAFF.—
(1) APPOINTMENT.—The Board shall have a
Director who shall be appointed by the members of
the Board. Subject to such rules as may be pre-
scribed by the Board, the Director may appoint and
fix the pay of such personnel as the Director consid-
ers appropriate.
(2) APPLICABILITY OF CERTAIN CIVIL SERVICE
LAWS.—The Director and staff of the Board may be
appointed without regard to the provisions of title 5,
United States Code, governing appointments in the
competitive service, and may be paid without regard
to the provisions of chapter 51 and subchapter III
of chapter 53 of such title relating to classification
and General Schedule pay rates, except that no indi-
vidual so appointed may receive pay in excess of the
annual rate of basic pay payable for GS–18 of the
General Schedule.
(3) STAFF OF FEDERAL AGENCIES.—Upon re-
quest of the Board, the head of any Federal agency
is authorized to detail, on a reimbursable basis, any
of the personnel of such agency to the Board to as-
sist the Board in carrying out its duties, notwith-
standing section 202(a) of the Legislative Reorga-
nization Act of 1946 (2 U.S.C. 72a(a)).
(e) POWERS.—
(1) HEARINGS
AND
SESSIONS.—The Board
may, for the purpose of carrying out its duties, hold
such hearings, sit and act at such times and places,
take such testimony, and receive such evidence, as
it considers appropriate.
(2) OBTAINING
OFFICIAL
DATA.—The Board
may secure directly from any department or agency
of the United States information necessary to enable
it to carry out its duties. Upon request of the Chair-
man of the Board, the head of such department or
agency shall furnish such information to the Board.
(3) ADMINISTRATIVE SUPPORT SERVICES.—The
Administrator of General Services shall provide to
the Board on a reimbursable basis such administra-
tive support services as the Board may request.
SEC. 120. JUDICIAL REVIEW.
(a) EXPEDITED REVIEW.—
(1) Any Member of Congress may bring an ac-
tion, in the United States District Court for the Dis-
trict of Columbia, for declaratory judgment and in-
junctive relief on the ground that any order that
might be issued pursuant to section 114 violates the
Constitution.
(2) Any Member of Congress, or any other per-
son adversely affected by any action taken under
this title, may bring an action, in the United States
District Court for the District of Columbia, for de-
claratory judgment and injunctive relief concerning
the constitutionality of this title.
(3) Any Member of Congress may bring an ac-
tion, in the United States District Court for the Dis-
trict of Columbia, for declaratory and injunctive re-
lief on the ground that the terms of an order issued
under section 114 do not comply with the require-
ments of this title.
(4) A copy of any complaint in an action
brought under paragraph (1), (2), or (3) shall be
promptly delivered to the Secretary of the Senate
and the Clerk of the House of Representatives, and
each House of Congress shall have the right to inter-
vene in such action.
(5) Any action brought under paragraph (1),
(2), or (3) shall be heard and determined by a three-
judge court in accordance with section 2284 of title
28, United States Code.
Nothing in this section or in any other law shall infringe
upon the right of the House of Representatives to inter-
vene in an action brought under paragraph (1), (2), or
(3) without the necessity of adopting a resolution to au-
thorize such intervention.
(b) APPEAL TO SUPREME COURT.—Notwithstanding
any other provision of law, any order of the United States
District Court for the District of Columbia which is issued
pursuant to an action brought under paragraph (1), (2),
or (3) of subsection (a) shall be reviewable by appeal di-
rectly to the Supreme Court of the United States. Any
such appeal shall be taken by a notice of appeal filed with-
in 10 days after such order is entered; and the jurisdic-
tional statement shall be filed within 30 days after such
order is entered. No stay of an order issued pursuant to
an action brought under paragraph (1), (2), or (3) of sub-
section (a) shall be issued by a single Justice of the Su-
preme Court.
(c) EXPEDITED CONSIDERATION.—It shall be the
duty of the District Court for the District of Columbia
and the Supreme Court of the United States to advance
on the docket and to expedite to the greatest possible ex-
tent the disposition of any matter brought under sub-
section (a).
(d) NONCOMPLIANCE WITH SEQUESTRATION PROCE-
DURES.—
(1) If it is finally determined by a court of com-
petent jurisdiction that an order issued by the Presi-
dent under section 114 for any fiscal year does not
fully implement without change all sequestrations re-
quired by the appropriate Office of Management and
Budget or Congressional Budget Office report cho-
sen by the Board to be the basis for the order, the
President shall, within 20 days after such deter-
mination is made, revise the order in accordance
with such determination.
(2) If the order issued by the President under
section 114 for any fiscal year does not fully imple-
ment without change all sequestrations required by
the appropriate OMB or CBO report chosen by the
Board to be the basis for the order on the claim or
defense that the constitutional powers of the Presi-
dent prevent such sequestration or reduction or per-
mit the avoidance of such sequestration or reduction,
and such claim or defense is finally determined by
the Supreme Court of the United States to be valid,
then the entire order issued pursuant to section 114
for such fiscal year shall be null and void.
(e) TIMING
OF RELIEF.—No order of any court
granting declaratory or injunctive relief from the order of
the President issued under section 114, including relief
permitting or requiring the expenditure of funds seques-
tered by such order, shall take effect during the pendency
of the action before such court, during the time appeal
may be taken, or, if appeal is taken, during the period
before the court to which such appeal is taken has entered
its final order disposing of such action.
(f) ALTERNATIVE PROCEDURES.—(1) If any order is
invalidated because of the manner of appointment of mem-
bers of the Board, then section 120(c)(1) is amended to
read as follows:
‘‘(1) NUMBER AND APPOINTMENT.—The Board
shall be composed of 5 members, the Chairman of
the Board of Governors of the Federal Reserve Sys-
tem and 4 other members to be appointed by the
President. No member appointed by the President
may be an officer or employee of any government.’’;
and any reports upon which such order was based shall
be transmitted to the newly constituted Board.
(2) No later than 5 days after the receipt of the re-
ports, the Board shall choose the report upon which the
order is to be based.
(3) This report shall be deemed to be the report re-
ceived by the President under section 114.
(g) PRESERVATION OF OTHER RIGHTS.—The rights
created by this section are in addition to the rights of any
person under law, subject to subsection (e).
(h) ECONOMIC DATA, ASSUMPTIONS, AND METH-
ODOLOGIES.—The economic data and economic and tech-
nical assumptions and estimation of methodologies used
by OMB or CBO in preparing any report issued under
section 114 shall not be subject to review in any judicial
or administrative proceeding, and any choice made by the
Board under section 114 shall not be subject to any such
review.
TITLE II—TECHNICAL AND
CONFORMING AMENDMENTS
SEC. 201. AMENDMENTS TO THE CONGRESSIONAL BUDGET
AND IMPOUNDMENT CONTROL ACT OF 1974.
(a) REPEALER.—Paragraph (2) of section 3 of the
Congressional Budget and Impoundment Control Act of
1974, the first time it appears, is repealed.
(b) DEFINITION
OF BUDGET AUTHORITY.—Para-
graph (2) of section 3 of the Congressional Budget and
Impoundment Control Act of 1974, the second time it ap-
pears, is amended by inserting ‘‘in any form’’ after ‘‘prom-
issory notes’’, by inserting at the end of subparagraph (A)
the following new sentence: ‘‘Such term excludes trans-
actions classified as means of financing.’’, and by striking
‘‘With respect to’’ and all that follows through ‘‘retirement
account, any’’ and inserting ‘‘Any’’, by inserting after sub-
paragraph (B) the following:
‘‘(C) RELATIONSHIP TO ENTITLEMENT AU-
THORITY.—For purposes of titles III and IV,
all references to budget authority shall be con-
sidered to include the amount of budget author-
ity estimated to be needed to fund entitlement
provisions under existing or proposed law, and
all legislation increasing (or decreasing) the
level of entitlement authority under existing law
shall be considered to provide (or decrease) new
budget authority in that amount.’’,
and by redesignating the next subparagraph accordingly.
(c) DEFINITION
OF ENTITLEMENT AUTHORITY.—
Paragraph (9) of section 3 of the Congressional Budget
and Impoundment Control Act of 1974 is amended by
striking 
‘‘spending 
authority 
described 
by 
section
401(c)(2)(C)’’ and inserting the following: ‘‘, and the term
‘entitlement program’ refers to, any provision of law that
has the effect of requiring the Government to make net
payments (including intragovernmental payments) regard-
less of the amount of budget authority that may be avail-
able to make those payments. Those terms shall include
amounts estimated to be required under provisions of law
that depend on the fulfillment of non-legislative conditions
or are indefinite as to amount or timing. Except as pro-
vided in the next sentence, if a provision of law that other-
wise requires the Government to make net payments is
directly or indirectly limited by any other provision of law
to an amount of available budget authority, then entitle-
ment authority does not exist. Subchapter II of chapter
13 of title 31, United States Code, and the sequestration
provisions of the Deficit Elimination Act of 1997 shall not
be considered provisions of law that limit entitlement au-
thority to the amount of available budget authority.’’
(d) DEFINITION OF MEANS OF FINANCING.—Section
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 ‘means of financing’ means the
financial transactions of the Government that con-
sist of exchanges of money or monetary proxies of
equal value and therefore are not counted as obliga-
tions, outlays, or revenues, such as net Federal bor-
rowing from the public in any form, debt redemp-
tion, seignorage on coins and profits from the sale
of gold, and changes in outstanding check or other
monetary credits, including write-offs.’’.
(e) CBO STUDIES.—Section 202(h) of the Congres-
sional Budget Act of 1974 is amended by striking ‘‘out-
lays, credit authority,’’ and inserting ‘‘outlays’’.
(f) TIMETABLE.—Section 300 of the Congressional
Budget Act of 1974 is amended by striking ‘‘February
25’’ and inserting ‘‘Six weeks after the President’s budget
submission’’.
(g) REQUIRED CONTENTS
OF BUDGET RESOLU-
TION.—Section 301(a) of the Congressional Budget Act
of 1974 is amended by striking ‘‘planning levels’’, by strik-
ing ‘‘two’’ and inserting ‘‘four’’, by striking ‘‘, budget out-
lays, direct loan obligations, and primary loan guarantee
commitments’’ both places it appears and inserting ‘‘and
outlays’’, by striking paragraphs (5), (6) and (7), by strik-
ing the semicolon at the end of paragraph (4) and insert-
ing a period, by inserting ‘‘and’’ after the semicolon at
the end of paragraph (3), and by striking the last sen-
tence.
(h) DELAYED ENROLLMENT.—Section 301(b)(3) of
the Congressional Budget Act of 1974 is amended by
striking ‘‘or new entitlement authority’’.
(i) SPIN-OFF BILL.—(1) Paragraphs (5), (6), (7),
and (8) of section 301(b) of the Congressional Budget Act
of 1974 are amended to read as follows:
‘‘(5) set forth in a separate section—
‘‘(A) the appropriate level of the debt held
by the public;
‘‘(B) the discretionary funding limit for
the fiscal year, but only if and to the extent re-
quired by section 103 or 104 of the Deficit
Elimination Act of 1997;
‘‘(C) the amount of direct spending change
required of or allowed by each committee of the
House of Representatives in laws within that
committee’s jurisdiction and the amount of re-
ceipts change required of or allowed by the
Committee on Ways and Means of the House of
Representatives in laws within that committee’s
jurisdiction, but only to the extent specified in
section 105 of that Act; and
‘‘(D) the amount, if any, to be withdrawn
from the Stabilization Reserve Fund and paid
to the General Fund of the Treasury during the
fiscal year under section 117 of that Act.’’.
(2) Paragraph (4) of section 301(b) of the Congres-
sional Budget Act of 1974 is amended by inserting ‘‘and’’
after the semicolon.
(j) TECHNICAL CORRECTION TO SECTION 301(e).—
Section 301(e) of the Congressional Budget Act of 1974
is amended by inserting ‘‘new’’ before ‘‘budget authority’’
in the second sentence.
(k) SECTION 301(i) POINT
OF ORDER.—Section
301(i) of the Congressional Budget Act of 1974 is amend-
ed to read as follows:
‘‘(i) It shall not be in order in the House of Rep-
resentatives or the Senate to consider any concurrent reso-
lution on the budget for a fiscal year beginning on October
1 of the year in which the resolution is considered (or
amendment to, motion regarding, or conference report on
such a resolution) unless—
‘‘(1) it does not exceed the discretionary fund-
ing limit, and
‘‘(2) it fully meets the direct spending and re-
ceipts deficit reduction requirement,
for that fiscal year under sections 101 through 104 of the
Deficit Elimination Act of 1997, using estimates of that
limit and that requirement chosen by the Board of Esti-
mates.’’.
(l) 
COMMITTEE
ALLOCATIONS
AND
SUBALLO-
CATIONS.—Section 602 of the Congressional Budget Act
of 1974 is amended—
(1) by striking ‘‘of—’’ and all that follows
through ‘‘outlays;’’ both places it appears and insert-
ing ‘‘of total new budget authority and outlays’’;
(2) in subsection (a)(1)(B), by striking ‘‘com-
mittee.’’ and inserting ‘‘committee, except that new
budget authority and outlays for entitlement pro-
grams funded through annual appropriations shall
be allocated and scored both to the Committee on
Appropriations and to the committee that authorized
such programs.’’; and
(3) in subsection (a)(3), by striking ‘‘, entitle-
ment authority,’’ both times it appears and by strik-
ing ‘‘, outlays, or social security outlays’’ both times
it appears and inserting ‘‘or outlays’’.
(m) REDESIGNATION
OF
COMMITTEE
ALLOCA-
TIONS.—Subsections (a) and (b) of section 302 of the
Congressional Budget Act of 1974 are repealed and sub-
sections (a) and (b) of section 602 of that Act (as amend-
ed by subsection (g)) are redesignated as subsections (a)
and (b) of section 302, respectively.
(n) CONSIDERATION OF APPROPRIATION BILLS.—
Section 302(c) of the Congressional Budget Act of 1974
is amended by striking ‘‘—(1)’’ and everything that fol-
lows through ‘‘401(c)(2) for a fiscal year;’’ and inserting
‘‘new budget authority for a fiscal year’’.
(o) POINTS OF ORDER UNDER SECTION 302(f).—(1)
Section 302(f)(1) of the Congressional Budget Act of
1974 is amended to read as follows:
‘‘(1) IN THE HOUSE OF REPRESENTATIVES.—It
shall not be in order in the House of Representatives
to consider any bill, joint resolution, or amendment
providing new budget authority, or any conference
report on any such bill or joint resolution, if—
‘‘(A) the enactment of the bill or resolution
as reported or in the form recommended in the
conference report, or
‘‘(B) the adoption of the amendment,
when added to existing levels of new budget author-
ity, would cause the level of new budget authority
for the fiscal year starting in the year in which the
most recent concurrent resolution on the budget was
agreed to, or for the sum of that fiscal year and the
next 4 fiscal years, to exceed an allocation to a com-
mittee made under subsection (a) for either period,
or to exceed a suballocation made under subsection
(b) for that fiscal year.’’.
(2) Section 302(f)(2) of that Act is amended—
(A) in the first sentence, by striking ‘‘for budg-
et outlays,’’, by striking ‘‘new budget authority, or
new spending authority (as defined in section
401(c)(2))’’ and inserting ‘‘new budget authority’’,
by striking ‘‘outlays or’’ both places it appears, and
by striking ‘‘or provides for social security outlays in
excess of the appropriate allocation of social security
outlays under subsection (a)’’; and
(B) by striking the third sentence.
(3) Section 302(g) of that Act is amended by striking
‘‘budget authority’’ and all that follows through ‘‘credit
authority’’ and inserting ‘‘budget authority and outlays’’.
(p) SECTION 303.—Section 303 of the Congressional
Budget Act of 1974 is amended—
(1) in its title by striking ‘‘, New Spending Au-
thority, New Credit Authority,’’;
(2) in subsection (a) by striking ‘‘either the
House of Representatives or’’, by inserting ‘‘or’’ at
the end of paragraph (2), by striking ‘‘paragraphs
(4), (5), and (6), and after paragraph (6) by strik-
ing ‘‘for’’ and inserting ‘‘covering’’ and by striking
‘‘(or, in the Senate, a concurrent resolution on the
budget covering such fiscal year)’’;
(3) in subsection (b) by repealing paragraph (1)
and by striking ‘‘(2)’’; and
(4) by adding at the end the following new sub-
section:
‘‘(d) POINT OF ORDER IN THE HOUSE OF REP-
RESENTATIVES.—It shall not be in order in the House of
Representatives to consider any bill, joint resolution,
amendment, or conference report if that legislation, as re-
ported, includes any provision—
‘‘(1) providing new budget authority;
‘‘(2) reducing the level of revenues; or
‘‘(3) altering the limit on the debt held by the
public;
that is first effective in the last fiscal year covered by the
most recently agreed to concurrent resolution on the budg-
et or any subsequent fiscal year.’’.
(q) CONSIDERATION OF SPIN-OFF LEGISLATION.—
Section 305 of the Congressional Budget Act of 1974 is
amended by adding at the end the following new sub-
section:
‘‘(e) CONFERENCE REPORTS.—Conference reports on
concurrent resolutions on the budget that contain addi-
tional matter under section 301(b)(5) shall be considered
first in the House of Representatives.’’.
(r) COST
ESTIMATES
AND
SCOREKEEPING
RE-
PORTS.—Section 308 of the Congressional Budget Act of
1974 is amended—
(1) in its title, by striking ‘‘, NEW SPENDING
AUTHORITY, OR NEW CREDIT AUTHORITY,’’;
(2) by striking ‘‘, new spending authority de-
scribed in section 401(c)(2), or new credit author-
ity,’’ the 3 times it appears;
(3) in subsection (a), by striking ‘‘in the reports
submitted’’, 
by 
inserting 
‘‘302(a) 
or’’ 
before
‘‘302(b)’’, in paragraph (1)(B) by striking ‘‘spending
authority’’ and everything that follows through
‘‘401(c)(2) which is’’ and inserting ‘‘budget author-
ity’’ and by striking ‘‘annual appropriations’’ and in-
serting ‘‘annual discretionary appropriations’’, and
in paragraph (1)(C) by striking ‘‘such budget au-
thority’’ and all that follows through ‘‘loan guaran-
tee commitments’’ and inserting ‘‘new budget au-
thority, outlays, or revenues’’; and
(4) in subsection (c), by adding ‘‘and’’ at the
end of paragraph (1), by striking ‘‘period;’’ and in-
serting ‘‘period.’’ at the end of paragraph (2), and
by striking paragraphs (3), (4), and (5).
(s) RECONCILIATION.—Section 310 of the Congres-
sional Budget Act of 1974 is amended—
(1) in subsection (a), by striking ‘‘which—(A)’’
and all that follows through ‘‘fiscal year, contained
in’’ and inserting the following: ‘‘which outlays re-
sulting from’’ and by striking ‘‘jurisdiction of a com-
mittee is’’ and inserting ‘‘jurisdiction of a committee
other than the Committee on Appropriations of ei-
ther House are’’;
100
(2) by repealing subsection (c) and inserting
the following new subsection:
‘‘(c) INCLUSION OF SPIN-OFF BILL IN RECONCILI-
ATION LEGISLATION.—Reconciliation legislation may in-
clude a separate title to be inserted by the Committee on
the Budget consisting of a spin-off bill (containing the
matter described in section 301(b)(5)), if such bill has not
been enacted for the first fiscal year covered by that legis-
lation. The targets for each category contained in this title
shall be identical to the reconciliation directive contained
in the most recently agreed to concurrent resolution on
the budget.’’;
(3) in subsection (d)(1), by striking ‘‘or new en-
titlement authority’’; and
(4) by repealing subsection (g).
(t) REVISION OF SECTION 311.—(1) Section 311 of
the Congressional Budget Act of 1974 is amended to read
as follows:
‘‘ENFORCING THE REVENUE FLOOR
‘‘SEC. 311. (a) POINT OF ORDER.—It shall not be
in order in either the House of Representatives or the Sen-
ate to consider any bill, joint resolution, amendment, mo-
tion, or conference report if, as proposed to be adopted
and when added to existing revenue levels, it would cause
the level of revenues for the fiscal year starting in the year
in which the most recent concurrent resolution on the
101
budget was agreed to, or for the sum of that fiscal year
and the 4 succeeding fiscal years, to be lower than the
appropriate level of revenues for either period set forth
in that concurrent resolution.
‘‘(b) DETERMINATION OF REVENUE LEVELS.—For
purposes of this section, the levels of revenues for a fiscal
year shall be determined on the basis of estimates made
by the Committee on the Budget of the House of Rep-
resentatives or of the Senate, as the case may be.’’.
(2) CONFORMING AMENDMENT.—The item relating
to section 311 in the table of contents set forth in section
1(b) is amended to read as follows:
‘‘SEC. 311. Enforcing the revenue floor.’’.
(u) TECHNICAL CORRECTION TO SECTION 312.—
Section 312 of the Congressional Budget Act of 1974 is
amended by inserting ‘‘(a)’’ after ‘‘312.’’.
(v) CONSIDERATION
OF LEGISLATION THAT HAS
NOT BEEN REPORTED.—Section 312 of the Congres-
sional Budget Act of 1974 is amended by inserting at the
end the following:
‘‘(c) CONSIDERATION OF LEGISLATION THAT HAS
NOT BEEN REPORTED.—In the House of Representatives,
any point of order under title III or IV that would lie
against consideration of a bill or joint resolution as re-
ported by a committee shall also lie against a motion to
102
consider legislation respecting which no report has been
filed.’’
(w) CONFORMING AMENDMENTS TO SECTION 313.—
Section 313 of the Congressional Budget Act of 1974 is
amended by striking ‘‘or section 258C’’ and everything
that follows through ‘‘Deficit Control Act of 1985’’, by
striking ‘‘; and (F)’’ and everything that follows through
‘‘310(g)’’, by redesignating the second subsection (c) and
subsection (d) as subsections (d) and (e), respectively, and
by striking ‘‘or (b)(1)(F),’’.
(x) BORROWING AND CONTRACT AUTHORITY.—Sec-
tion 401 of the Congressional Budget Act of 1974 is
amended—
(1) in subsection (a), by striking ‘‘new spending
authority described in subsection (c)(2)(A) or (B)’’
both times it appears and inserting ‘‘borrowing au-
thority or contract authority’’;
(2) by repealing subsections (b) and (c) and by
redesignating subsection (d) as subsection (b); and
(3) in subsection (b) (as redesignated), by strik-
ing ‘‘Subsections (a) and (b)’’ and inserting ‘‘Sub-
section (a)’’, by inserting ‘‘non-interest’’ before ‘‘re-
ceipts’’ in paragraph (1)(B), by repealing paragraph
(2), and by redesignating paragraph (3) as para-
graph (2).
103
(y) CREDIT AUTHORITY.—Section 402(a) of the Con-
gressional Budget Act of 1974 is amended by inserting
before the period the following: ‘‘, except that this provi-
sion shall not apply with respect to programs that, as of
August 15, 1992, provide credit authority as an entitle-
ment’’.
(z) COSTS OF FEDERAL MANDATES; CONFORMING
CHANGE TO SECTION 403.—Section 403 of the Congres-
sional Budget Act of 1974 is amended—
(1) by adding at the end the following new sub-
section:
‘‘(d) In fulfilling the requirements of subsection
(a)(2), the Director shall place special emphasis on costs
imposed on State or local governments by the enactment
or expansion of Federal mandates, and shall estimate both
the costs of those mandates and the degree, if any, to
which Federal financing is provided to State or local gov-
ernments to cover those costs.’’; and
(2) in subsection (a), by striking ‘‘of a public
character’’.
(aa) CONFORMING CHANGE TO SECTION 405.—Sec-
tion 405 of the Congressional Budget Act of 1974 is
amended by striking ‘‘spending authority’’ and all that fol-
lows through ‘‘permanent appropriations’’ and inserting
104
‘‘new budget authority (other than through appropriations
Acts) or entitlement authority’’.
(bb) OFF-BUDGET AGENCIES.—Section 406(a) of the
Congressional Budget Act of 1974 is amended by striking
‘‘credit authority, and estimates of outlays’’ and inserting
‘‘outlays,’’, by striking ‘‘the date of enactment’’ and all
that follows through ‘‘Trust Funds,’’ and inserting ‘‘Au-
gust 15, 1992,’’, and by striking ‘‘, outlays, and spending
authority’’ and inserting ‘‘and outlays’’.
(cc) REPEAL OF TITLE VI.—Title VI of the Congres-
sional Budget Act of 1974 is repealed.
SEC. 202. AMENDMENTS TO THE FEDERAL CREDIT REFORM
ACT OF 1990.
(a) DEFERRED COST SHARING.—The second sen-
tence of section 502(1) of the Congressional Budget Act
of 1974 is amended by inserting before the period the fol-
lowing: ‘‘, and Federal payments for the construction of
a Federal project to the extent those payments must, by
law or contract, be repaid to the Government’’.
(b) LOAN MODIFICATIONS.—Section 502(5) of the
Congressional Budget Act of 1974 is amended—
(1) in subparagraph (A), by inserting ‘‘or a
modification thereof’’ after ‘‘guarantee’’;
(2) in subparagraph (B), by striking ‘‘recover-
ies.’’ and inserting ‘‘recoveries, and routine work-
105
outs of loans in imminent danger of default when
those work-outs are to maximize repayments to the
Government.’’;
(3) in subparagraph (C), by striking ‘‘and’’ at
the end of clause (i), by striking the period at the
end of clause (ii) and inserting a comma, and by
adding at the end the following:
‘‘(iii) routine work-outs of loans in immi-
nent danger of default when those work-outs
are to minimize claims against the Govern-
ment.’’; and
(4) by striking subparagraph (D) and inserting
the following new subparagraph:
‘‘(D) The cost of a modification of a direct
loan, a direct loan obligation, a loan guarantee, or
a loan guarantee commitment shall be the net
present value, at the time of the modification, of the
change in cash flows estimated to occur as a result
of that modification. OMB shall measure that
change in relation to the current policy baseline in
the most recent budget under section 1105(a) of
title 31, United States Code. A modification may re-
sult either from the enactment of legislation that di-
rectly or indirectly alters the expected cash flows, or
from the exercise of administrative discretion under
106
existing law, and includes the sale (with or without
recourse) of loan assets by the Government. Modi-
fications do not include changes in loan terms result-
ing from the exercise by the borrower of an option
included in the loan contract.’’.
(c) CREDIT REFORM ACT CLARIFICATION.—Section
504 of the Congressional Budget Act of 1974 is amend-
ed—
(1) in subsection (b)(1), by striking ‘‘appropria-
tions of’’ and inserting ‘‘new’’, by striking ‘‘are
made’’ and inserting ‘‘is provided’’, and by inserting
‘‘in appropriation Acts’’ before the semicolon;
(2) in subsection (b)(2), by striking ‘‘enacted’’
and inserting ‘‘provided in an appropriation Act’’;
(3) in subsection (d)(1) by striking ‘‘costs of
outstanding direct loans and loan guarantees’’ and
inserting ‘‘costs of outstanding direct loans (or di-
rect loan obligations) or loan guarantees (or loan
guarantee commitments)’’; and
(4) in subsection (e), by striking ‘‘A direct
loan’’ and all that follows through ‘‘comitment’’ and
inserting ‘‘An outstanding direct loan (or direct loan
obligation) or loan guarantee (or loan guarantee
commitment)’’.
107
(d) CREDIT REFORM ACT CORRECTION.—(1) Section
506 of the Congressional Budget Act of 1974 is repealed.
(2) Section 507 of the Congressional Budget Act of
1974 is redesignated as section 506, and the table of con-
tents in section 1(b) of the Congressional Budget and Im-
poundment Control Act of 1974 is amended by striking
the item relating to section 506 and striking ‘‘SEC. 507.’’
and inserting ‘‘SEC. 506.’’.
(e) EXISTING RIGHTS NOT IMPAIRED.—Section 506
of the Congressional Budget Act of 1974 (as redesignated)
is amended by striking ‘‘title. Nothing’’ and inserting
‘‘title, except that nothing’’ and by inserting after ‘‘con-
strued’’ the following ‘‘(1) to alter the terms or conditions
authorized to be included in loan or guarantee contracts
or the rights and responsibilities of the government and
the recipients of loans or guarantees under those contracts
or the laws that authorize them, or (2)’’.
(f) CREDIT REFORM LIQUIDATING ACCOUNTS.—(1)
Section 502(8) of the Congressional Budget Act of 1974
is amended by striking ‘‘budget account’’ and inserting
‘‘nonbudget account’’ and by striking the last sentence
and inserting ‘‘Transactions between the Treasury or the
Federal Financing Bank and any liquidating account shall
be considered non-budgetary.’’.
108
(2) Section 505(d) of the Congressional Budget Act
of 1974 is amended by striking ‘‘If funds’’ and all that
follows through ‘‘accounts, there’’ and inserting ‘‘There’’
and by striking ‘‘such obligations and commitments’’ and
inserting ‘‘the obligations and commitments of liquidating
accounts’’.
(3) Section 506(b) of the Congressional Budget Act
of 1974 (as redesignated) is amended by striking ‘‘be
available, to’’ and all that follows through the end of that
section, and inserting ‘‘immediately be transferred to the
Federal Financing Bank to repay those debt obligations
held by the Bank that were created to finance the loan
being repaid, and all amounts not transferred to the Bank
shall immediately be paid to the general fund of the Treas-
ury. All debt owed to the Treasury as a result of agency
borrowing authority used before October 1, 1991, for
loans or guarantees is hereby cancelled. The provisions of
this subsection shall not diminish any rights or respon-
sibilities guaranteed by subsection (a).’’.
SEC. 203. AMENDMENTS TO THE RULES OF THE HOUSE OF
REPRESENTATIVES.
(a) BUDGET
COMMITTEE
JURISDICTION.—Clause
1(e)(2) of rule X of the Rules of the House of Representa-
tives is amended by inserting ‘‘(A)’’ after ‘‘(2)’’ and by
inserting at the end the following:
109
‘‘(B) Budget targets contained in any joint resolution
described in section 118 of the Deficit Elimination Act of
1997 (relating to low growth).’’.
(b) MISCELLANEOUS CONFORMING AMENDMENTS.—
Clause 4 of rule X of the Rules of the House of Represent-
atives is amended—
(1) by repealing subparagraph (2) of paragraph
(a) and by redesignating subparagraph (3) as sub-
paragraph (2);
(2) in paragraph (g), by striking ‘‘February 25
of each year’’ and inserting ‘‘within 6 weeks after
the President’s budget submission’’; and
(3) in paragraph (h), by striking ‘‘or section
602 (in the case of fiscal years 1991 through
1995)’’.
(c) EMERGENCY DESIGNATIONS.—Clause 2(b) of rule
XXI of the Rules of the House of Representatives is
amended by striking ‘‘and’’ and by inserting before the
period the following: ‘‘, and except emergency designations
under section 102(b)(4) of the Deficit Elimination Act of
1997’’.
(d) REPEALER.—Clause 8 of rule XXI of the Rules
of the House of Representatives is repealed.
(e) SPIN-OFF LEGISLATION.—Rule XLIX of the
Rules of the House of Representatives is amended—
110
(1) by changing the name of that rule to ‘‘En-
actment of Spin-Off Legislation under the Congres-
sional Budget Act’’;
(2) in clause 2 by striking ‘‘section 301, 304,
or 310’’ and inserting ‘‘section 301 or 304’’;
(3) in clause 1 by striking ‘‘adoption by the
Congress’’ and all that follows through ‘‘for such pe-
riod’’ and inserting ‘‘passage by the House of Rep-
resentatives (under section 301 or 304 of the Con-
gressional Budget Act of 1974) of a conference re-
port or final agreement on any concurrent resolution
on the budget containing any matter under section
301(b)(5) of that Act’’;
(4) in clause 1 by striking ‘‘, increasing or de-
creasing the statutory limit on the public debt’’;
(5) in the last sentence of clause 1 by inserting
‘‘at the same time the engrossed copy of the concur-
rent resolution on the budget is transmitted to the
Senate’’ after ‘‘transmitted to the Senate for further
legislative action’’;
(6) in the first sentence of clause 2 by striking
‘‘be as follows’’ and all that follows through the pe-
riod and inserting the following: ‘‘be the text of the
section in the concurrent resolution on the budget
111
included under section 301(b)(5) of the Congres-
sional Budget Act of 1974, without change.’’, and in
the second sentence by striking ‘‘budget;’’ and all
that follows through the period and inserting ‘‘budg-
et.’’; and
(7) in clause 3 by striking ‘‘301(d)’’ and insert-
ing ‘‘301(e)’’, and by striking ‘‘upon the statutory
limit on the public debt’’.
SEC. 204. AMENDMENTS TO THE STANDING RULES OF THE
SENATE.
The Standing Rules of the Senate are amended by
adding at the end the following:
‘‘Rule ——
‘‘SPIN-OFF LEGISLATION
‘‘Upon passage of a conference report on any concur-
rent resolution on the budget containing additional matter
under section 301(b)(5) of the Congressional Budget Act
of 1974, the joint resolution passed by the House of Rep-
resentatives under rule XLIX of the Rules of the House
of Representatives shall be deemed to have been passed
by the Senate, and shall be prepared for transmittal to
the President under the applicable rules of the Senate and
the House of Representatives. The vote by which the con-
ference report on the concurrent resolution on the budget
was agreed to in the Senate shall be deemed to have been
112
a vote in favor of such joint resolution upon final passage
in the Senate.’’.
SEC. 205. PRESIDENT’S BUDGET AND SUPPLEMENTAL
BUDGET ESTIMATES.
(a) DEFINITIONS.—Section 1101 of title 31, United
States Code, is amended by adding at the end the follow-
ing:
‘‘(3) ‘Expenditures’ has the same meaning as
the term ‘outlays’ in the Deficit Elimination Act of
1997.
‘‘(4) All other terms used herein or in the docu-
ments prepared hereunder shall have the meanings
set forth in the Deficit Elimination Act of 1997.’’.
(b) BYRD AMENDMENT.—Section 1103 of title 31,
United States Code, is amended by striking ‘‘commitment
that budget’’ and inserting ‘‘commitment that, starting
with fiscal year 2002,’’.
(c) PRESIDENT’S
BUDGET
SUBMISSION.—Section
1105(a) of title 31, United States Code, is amended—
(1) in the first sentence by striking ‘‘On or
after the first Monday in January but not later than
the first Monday in February of each year’’ and in-
serting ‘‘On or before the first Monday in February
or the 21st calendar day beginning after the date
113
the Board of Estimates issues a report to the Presi-
dent under section 114 of the Deficit Elimination
Act of 1997’’;
(2) in paragraph (15) by striking ‘‘section
301(a)(1)–(5)’’ and inserting ‘‘section 301(a)(1)–
(4);
(3) in paragraph (16) by striking ‘‘section
3(a)(3)’’ and inserting ‘‘section 3(3)’’; and
(4) by adding at the end the following new
paragraph:
‘‘(32) an analysis of the financial condition of
Government-sponsored enterprises and the financial
exposure of the Government, if any, posed by
them.’’.
(d) USE OF OFFICIAL ESTIMATES.—Section 1105(f)
of title 31, United States Code, is amended by striking
‘‘Balanced Budget and Emergency Deficit Control Act of
1985’’ and inserting ‘‘Deficit Elimination Act of 1997’’
and by inserting at the end the following new sentence:
‘‘That budget shall be consistent with the discretionary
funding limit and the direct spending and receipts deficit
reduction requirement for that year chosen by the Board
of Estimates and shall be based upon the major estimating
assumptions chosen by that Board.’’.
114
(e) MIDSESSION REVIEW.—Section 1106(a) of title
31, United States Code, is amended by striking ‘‘July 16
of each year’’ and inserting ‘‘August 30 of each year’’ and
by striking ‘‘submitted before July 16’’.
(f) CURRENT POLICY BASELINE.—(1) The first sen-
tence of section 1109 of title 31, United States Code, is
amended to read as follows: ‘‘In the budget submitted
under section 1105(a) or 1106(a), the President shall in-
clude a current policy baseline (as defined in section 116
of the Deficit Elimination Act of 1997) for the current
year, the budget year, and the outyears, including a de-
tailed comparison of that baseline with his proposed budg-
et for those years.’’.
(2) Subsection (b) of that section 1109 is amended
to read as follows:
‘‘(b) The baseline referred to in subsection (a) shall
be calculated using the major estimating assumptions cho-
sen by the Board of Estimates under section 114 of the
Deficit Elimination Act of 1997.’’.
(g) GLOSSARY OF TERMS.—Section 1112(c) of title
31, United States Code, is amended by striking ‘‘The
Comptroller General—’’ and inserting ‘‘The Directors of
CBO and OMB, jointly—’’.
115
SEC. 206. AMENDMENTS TO OTHER LAWS.
(a) REPEALERS.—The following provisions of law are
repealed:
(1) Section 710 of the Social Security Act.
(2) Section 201 (relating to 2-year appropria-
tions) of Public Law 100–119 (2 U.S.C. 621 note).
(3) Section 203 (relating to financial manage-
ment reform) of Public Law 100–119 (2 U.S.C. 621
note).
(4) The first subparagraph (F) of section
201(d)(2) of the Agricultural Act of 1949 (7 U.S.C.
1446(d)(2)(F)).
(b) ANTIDEFICIENCY ACT.—Section 1341(a)(1) of
title 31, United States Code, is amended by striking ‘‘sec-
tion 252 of the Balanced Budget and Emergency Deficit
Control Act of 1985’’ both times it appears and inserting
‘‘the Deficit Elimination Act of 1997’’.
(c) DEBT HELD BY THE PUBLIC.—(1) Section 3101
of title 31, United States Code, is amended to read as
follows:
‘‘SEC. 3101. PUBLIC DEBT LIMIT.
‘‘(a) The amount of public debt obligations issued
under this chapter, and the amount of debt issued by
agencies other than the Treasury under separate statutory
authority, may be not more than $5,500,000,000,000 out-
standing at one time, subject to changes periodically made
116
in that amount as provided by law through the congres-
sional budget process described in rule XLIX of the Rules
of the House of Representatives or otherwise.
‘‘(b) Debt issued to United States Government trust
funds or to other agencies or accounts of the United
States Government (except the Federal Reserve System)
shall be excluded from the amount of debt taken into ac-
count in deciding whether the limit of subsection (a) has
been exceeded.
‘‘(c) The limit in subsection (a) shall be applied to
the face amount of securities except for securities issued
on a discount basis:
‘‘(1) Securities issued on a discount basis that
are redeemable before maturity at the option of their
holders shall be included in the total subject to sub-
section (a) at their current redemption values.
‘‘(2) Securities issued on a discount basis that
are not redeemable before maturity at the option of
their holders shall be included in the total subject to
subsection (a) in an amount equal to the sum of—
‘‘(A) the original purchase price of the ob-
ligation, plus
‘‘(B) the portion of the discount on the ob-
ligation attributable to periods before the begin-
ning of such month (as determined under the
117
principles of section 1272(a) of the Internal
Revenue Code of 1986 without regard to any
exceptions contained in paragraph (2) of such
section).’’.
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