produce the dollar savings required by the sequestra-
tion.
(d) REGULAR
AND
EXTENDED
UNEMPLOYMENT
COMPENSATION.—
(1) A State may reduce each weekly benefit
payment made under the regular and extended un-
employment benefit programs for any week of unem-
ployment occurring during any period with respect
to which payments are reduced under any sequestra-
tion order by a percentage not to exceed the percent-
age by which the Federal payment to the State is to
be reduced for such week as a result of such order.
(2) A reduction by a State in accordance with
paragraph (1) shall not be considered as a failure to
fulfill the requirements of section 3304(a)(11) of the
Internal Revenue Code of 1986.
(e) 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. The sequestrable base
for the Fund is the current-year level of gross outlays re-
sulting from claims paid after the sequestration order
takes effect.
(f) FEDERAL HOUSING FINANCE BOARD.— Any se-
questration of the Federal Housing Board shall be accom-
plished 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.
(g) FEDERAL PAY.—
(1) IN GENERAL.— New budget authority to
pay Federal personnel from direct spending accounts
shall be reduced by the uniform percentage cal-
culated under section 203(c)(3), 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 in-
creased by any amount payable under section 5304
of title 5, United States Code, or any increase in
rates of pay which is scheduled to take effect under
section 5303 of title 5, United States Code, section
1109 of title 37, United States Code, or any other
provision of law.
(2) 
DEFINITIONS.—For 
purposes 
of 
this
subsection—
(A) the term ‘‘statutory pay system’’ shall
have the meaning given that term in section
5302(1) of title 5, United States Code;
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
403(a) and 405 of such title; and
(iii) cadet pay and midshipman pay
under section 203(c) of such title; and
(C) the term ‘‘uniformed services’’ shall
have the same meaning given that term in sec-
tion 101(3) of title 37, United States Code.
(h) MEDICARE.—
(1) IN GENERAL.—Any sequestration shall ac-
complish 90 percent of the required reduction by re-
ductions in payments for services under title XVIII
of the Social Security Act and 10 percent of the re-
quired reduction through increases in beneficiary
premiums under part B of title XVIII of the Social
Security Act.
(2) 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 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 order, but only (for each such cost
reporting period) in the same proportion as the
fraction of the cost reporting period that occurs
after the effective date of the order.
(3) 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.
(4) PART
B
PREMIUMS.—In computing the
amount and method, part B premiums shall be in-
creased by a percentage to be determined by dividing
10 percent of the amount that medicare spending
exceeds the applicable cap by the total amount of all
premium collections. All beneficiary premiums shall
be increased by the percentage calculated pursuant
to the preceding sentence, except that no increase in
the premium shall result in a reduction in social se-
curity benefit payments to any beneficiary.
(5) 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.
(i) 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 and shall have the duty to make those payments
during the first fiscal year to which the sequestration
order applies and each succeeding fiscal year. The amount
of each annual 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 for-
gone 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 shall 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.
(j) POWER
MARKETING
ADMINISTRATIONS
AND
T.V.A.—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 suc-
ceeding fiscal year. The amount of each 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 pre-sequester 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 tax rates, or
by any combination, but may not be financed by a lower
fund surplus, a higher fund deficit, additional borrowing,
delay in repayment of principal on outstanding debt and
shall follow the requirements 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 speci-
fied in this subsection in order to make the annual pay-
ments to the Treasury.
(k) 
BUSINESS-LIKE
TRANSACTIONS.—Notwith-
standing any other provision of law, for programs which
provide a business-like service in exchange for a fee, se-
questration shall be accomplished through a uniform in-
crease in fees (sufficient to produce the dollar savings in
such programs for the fiscal year of the sequestration re-
quired by section 201(a)(2), all subsequent fees shall be
increased by the same percentage, and all proceeds from
such fees shall be paid into the general fund of the Treas-
ury, in any year for which a sequester affecting such pro-
grams are in effect.
SEC. 206. THE CURRENT LAW BASELINE.
(a) SUBMISSION OF REPORTS.—CBO and OMB shall
submit to the President and the Congress reports setting
forth the budget baselines for the budget year and the next
nine fiscal years. The CBO report shall be submitted on
or before January 15. The OMB report shall accompany
the President’s budget.
(b) DETERMINATION OF THE BUDGET BASELINE.—
(1) The budget baseline shall be based on the common
economic assumptions set forth in section 111, adjusted
to reflect revisions pursuant to subsection (c).
(2) The budget baseline shall consist of a projection
of current year levels of budget authority, outlays, reve-
nues and the surplus or deficit into the budget year and
the relevant outyears based on current enacted laws as
of the date of the projection.
(3) For discretionary spending items, the baseline
shall be the spending caps in effect pursuant to section
251(c) of the Balanced Budget and Emergency Deficit
Control Act of 1985. For years for which there are no
caps, the baseline for discretionary spending shall be the
same as the last year for which there were statutory caps.
(4) For all other expenditures and for revenues, the
baseline shall be adjusted by comparing unemployment,
inflation, interest rates, growth and eligible population for
the most recent period for which actual data are available,
compared to the assumptions contained in section 113.
(c) REVISIONS
TO
THE BASELINE.—The baseline
shall be adjusted for up-to-date economic assumptions for
all reports issued pursuant to section 112 of this Act and
section 254 of the Balanced Budget and Emergency Def-
icit Control Act of 1985.
SEC. 207. LIMITATIONS ON EMERGENCY SPENDING.
(a) IN GENERAL.—(1) Within the discretionary caps
for each fiscal year contained in this Act, an amount shall
be withheld from allocation to the appropriate committees
of the House of Representatives and of the Senate and
reserved for natural disasters and other emergency pur-
poses.
(2) Such amount for each such fiscal year shall not
be less than 1 percent of total budget authority and out-
lays available within those caps for that fiscal year.
(3) No adjustments shall be made to the discre-
tionary spending limits under section 251(b)(2)(A) of the
Balanced Budget and Emergency Deficit Control Act of
1985 unless the amount appropriated for discretionary ac-
counts that have been designated as emergency require-
ments exceed the amount reserved pursuant to paragraph
(1). Any adjustment shall be limited to the amount that
total appropriations designated as emergency require-
ments for the fiscal year exceeds the amount reserved pur-
suant to paragraph (1).
(4) The amounts reserved pursuant to this subsection
shall be made available for allocation to such committees
only if—
(A) the President has made a request for such
disaster funds;
(B) the programs to be funded are included in
such request; and
(C) the projected obligations for unforeseen
emergency needs exceed the 10-year rolling average
annual expenditures for existing programs included
in the Presidential request for the applicable fiscal
year.
(5) Notwithstanding any other provision of law—
(A) States and localities shall be required to
maintain effort and ensure that Federal assistance
payments do not replace, subvert or otherwise have
the effect of reducing regularly budgeted State and
local expenditures for law enforcement, firefighting,
road construction and maintenance, building con-
struction and maintenance or any other category of
regular government expenditure (to ensure that Fed-
eral disaster payments are made only for incre-
mental costs directly attributable to unforeseen dis-
asters, and do not replace or reduce regular State
and local expenditures for the same purposes);
(B) the President may not take administrative
action to waive any requirement for States or local-
ities to make minimum matching payments as a con-
dition or receiving Federal disaster assistance or
take administrative action to waive all or part of any
repayment of Federal loans for the State or local
matching share required as a condition of receiving
Federal disaster assistance. This clause shall apply
to all matching share requirements and loans to
meet matching share requirements under the Robert
T. Stafford Disaster Relief and Emergency Assist-
ance Act (42 U.S.C. 5121 et seq.) and any other
Acts pursuant to which the President may declare
a disaster or disasters and States and localities oth-
erwise qualify for Federal disaster assistance; and
(C) a two-thirds vote in each House of Congress
shall be required for each emergency to reduce or
waive the State matching requirement or to forgive
all or part of loans for the State matching share as
required under the Robert T. Stafford Disaster Re-
lief and Emergency Assistance Act.
(b) EFFECT
ON BUDGET RESOLUTIONS.—(1) All
concurrent resolutions on the budget (including revisions)
shall specify the amount of new budget authority and out-
lays within the discretionary spending cap that shall be
withheld from allocation to the committees and reserved
for natural disasters, and a procedure for releasing such
funds for allocation to the appropriate committee. The
amount withheld shall be equal to 1 percent of the total
discretionary spending cap for fiscal year covered by the
resolution, unless additional amounts are specified.
(2) The procedure for allocation of the amounts pur-
suant to paragraph (1) shall ensure that the funds are
released for allocation only pursuant to the conditions con-
tained in subsection (a)(3)(A) through (C).
(c) RESTRICTION
ON USE
OF FUNDS.—Notwith-
standing any other provision of law, the amount reserved
pursuant to subsection (a) shall not be available for other
than emergency funding requirements for particular nat-
ural disasters or national security emergencies so des-
ignated by Acts of Congress.
(d) NEW POINT OF ORDER.—(1) Title IV of the Con-
gressional Budget Act of 1974 is amended by adding at
the end the following new section:
‘‘POINT OF ORDER REGARDING EMERGENCIES
‘‘SEC. 408. It shall not be in order in the House of
Representatives or the Senate to consider any bill or joint
resolution, or amendment thereto or conference report
thereon, containing an emergency designation for purposes
of section 251(b)(2)(A) or 252(e) of the Balanced Budget
and Emergency Deficit Control Act of 1985 or of section
207 of the Budget Enforcement Act of 1999 if it also pro-
vides an appropriation or direct spending for any other
item or contains any other matter, but that bill or joint
resolution, amendment, or conference report may contain
rescissions of budget authority or reductions of direct
spending, or that amendment may reduce amounts for
that emergency.’’.
(2) The table of contents set forth in section 1(b) of
the Congressional Budget and Impoundment Control Act
of 1974 is amended by inserting after the item relating
to section 407 the following new item:
‘‘Sec. 408. Point of order regarding emergencies.’’.
SEC. 208. TEN-YEAR CONGRESSIONAL REVIEW REQUIRE-
MENT OF PERMANENT BUDGET AUTHORITY.
(a) TIMETABLE
FOR REVIEW.—Clause 2(d)(1) of
rule X of the Rules of the House of Representatives is
amended by striking subdivisions (B) and (C) and insert-
ing the following new subdivision:
‘‘(B) provide in its plans a specific timetable for
its review of those laws, programs, or agencies with-
in its jurisdiction, including those that operate under
permanent budget authority or permanent statutory
authority.’’.
(b) REVIEW OF PERMANENT BUDGET AUTHORITY
BY THE COMMITTEE ON APPROPRIATIONS.—Clause 4(a)
of rule X of the Rules of the House of Representatives
is amended—
(1) by striking subparagraph (2); and
(2) by redesignating subparagraph (3) as sub-
paragraph (2) and by striking ‘‘from time to time’’
and inserting ‘‘at least once each Congress’’ in sub-
paragraph (2) (as redesignated).
(c) CONFORMING AMENDMENT.—Clause 4(e)(2) of
rule X of the Rules of the House of Representatives is
amended by striking ‘‘from time to time’’ and inserting
‘‘at least once every ten years’’.
Æ