thereon, that provides advance discretionary new budget 
authority that first becomes available for any fiscal year 
after the budget year at an amount for any program, 
project, or activity above the amount of appropriations for 
fiscal year 2004 for such program, project, or activity.’’.
SEC. 202. ESTABLISHMENT OF FAMILY BUDGET PROTEC-
TION DISCRETIONARY ACCOUNT. 
The Rules of the House of Representatives are 
amended by redesignating rule XXVIII as rule XXX and 
by inserting after rule XXVII the following new rule: 
‘‘RULE XXVIII 
‘‘FAMILY BUDGET PROTECTION DISCRETIONARY 
ACCOUNT. 
‘‘1. (a) The chairman of the Committee on the Budg-
et shall maintain an account to be known as the ‘Family 
Budget Protection Discretionary Account’. The Account 
shall be divided into entries corresponding to the sub-
committees of the Committee on Appropriations and each 
entry shall consist of the ‘Family Budget Protection Bal-
ance’. 
‘‘(b) Each entry shall consist only of amounts cred-
ited to it under paragraph (c). No entry of a negative 
amount shall be made. 
‘‘(c) Whenever a Member offers an amendment to an 
appropriation bill to reduce new budget authority in any
account, that Member may state the portion of such reduc-
tion that shall be—
‘‘(1) credited to the Family Budget Protection 
Balance; 
‘‘(2) used to offset an increase in new budget 
authority in any other account; or 
‘‘(3) allowed to remain within the applicable 
section 302(b) suballocation. 
If no such statement is made, the amount of reduction 
in new budget authority resulting from the amendment 
shall be credited to the Family Budget Protection Bal-
ance, as applicable, if the amendment is agreed to. 
‘‘2. (a) Except as provided by paragraph (b), the 
chairman of the Committee on the Budget shall, upon the 
engrossment of any appropriation bill by the House of 
Representatives, credit to the entry balance amounts of 
new budget authority and outlays equal to the net 
amounts of reductions in new budget authority and in out-
lays resulting from amendments agreed to by the House 
to that bill. 
‘‘(b) When computing the net amounts of reductions 
in new budget authority and in outlays resulting from 
amendments agreed to by the House to an appropriation 
bill, the chairman of the Committee on the Budget shall 
only count those portions of such amendments agreed to
that were so designated by the Members offering such 
amendments as amounts to be credited to the Family 
Budget Protection Balance, or that fall within the last 
sentence of clause 1. 
‘‘3. The chairman of the Committee on the Budget 
shall maintain a running tally of the amendments adopted 
reflecting increases and decreases of budget authority in 
the bill as reported. This tally shall be available to Mem-
bers during consideration of any appropriation bill by the 
House. 
‘‘4. (a) For purposes of enforcing section 302(a) of 
the Congressional Budget Act of 1974, upon the engross-
ment of any appropriation bill by the House, the amount 
of budget authority and outlays calculated pursuant to 
clause 2(b) shall be counted against the 302(a) allocation 
provided to the Committee on Appropriations as if the 
amount calculated pursuant to such clause was included 
in the bill just engrossed. 
‘‘(b) For purposes of enforcing section 302(b) of the 
Congressional Budget Act of 1974, upon the engrossment 
of any appropriation bill by the House, the 302(b) alloca-
tion provided to the subcommittee for the bill just en-
grossed shall be deemed to have been reduced by the 
amount of budget authority and outlays calculated, pursu-
ant to clause 2(b).
‘‘5. As used in this rule, the term ‘appropriation bill’ 
means any general or special appropriation bill, and any 
bill or joint resolution making supplemental, deficiency, or 
continuing appropriations through the end of fiscal year 
2005 or any subsequent fiscal year or biennium, as the 
case may be.’’.
TITLE III—SPENDING CAPS ON 
THE GROWTH OF ENTITLE-
MENTS AND MANDATORIES 
SEC. 301. SPENDING CAPS ON GROWTH OF ENTITLEMENTS 
AND MANDATORIES. 
(a) 
CONTROL
OF
ENTITLEMENTS
AND 
MANDATORIES.—The Balanced Budget and Emergency 
Deficit Control Act of 1985 is amended by adding after 
section 252 the following new section: 
‘‘SEC. 252A. ENFORCING CONTROLS ON DIRECT SPENDING. 
‘‘(a) CAP ON GROWTH OF ENTITLEMENTS.—Effec-
tive for fiscal year 2005 and for each ensuing fiscal year, 
the total level of direct spending for all direct spending 
programs, projects, and activities (excluding social secu-
rity) for any such fiscal year shall not exceed the total 
level of spending for all such programs, projects, and ac-
tivities for the previous fiscal year after the direct spend-
ing for each such program, project, or activity is increased 
by the inflator (if any) applicable to that program, project,
or activity and the growth in eligible population for such, 
project, or activity. 
‘‘(b) SEQUESTRATION.—Within 15 days after Con-
gress adjourns to end a session (other than of the first 
session of the One Hundred Eighth Congress), and on the 
same day as a sequestration (if any) under section 251 
and section 253, there shall be a sequestration to reduce 
the amount of direct spending for the fiscal year beginning 
in the year the Congress adjourns by any amount nec-
essary to reduce such spending to the level set forth in 
subsection (a) unless that amount is less than 
$250,000,000. 
‘‘(c) UNIFORM
REDUCTIONS; LIMITATIONS.—The 
amount required to be sequestered for the fiscal year 
under subsection (a) shall be obtained from nonexempt di-
rect spending accounts by actions taken in the following 
order: 
‘‘(1) FIRST.—The reductions in the programs 
specified in section 256(a) (National Wool Act and 
special milk), section 256(b) (guaranteed student 
loans), and section 256(c) (foster care and adoption 
assistance) shall be made. 
‘‘(2) SECOND.—Any additional reductions that 
may be required shall be achieved by reducing each 
remaining nonexempt direct spending account by the
uniform percentage necessary to achieve those addi-
tional reductions, except that—
‘‘(A) the low-income programs specified in 
section 256(d) shall not be reduced by more 
than 2 percent;
‘‘(B) the retirement and veterans benefits 
specified in sections 256(f), (g), and (h) shall 
not be reduced by more than 2 percent in the 
manner specified in that section; and 
‘‘(C) the medicare programs shall not be 
reduced by more than 2 percent in the manner 
specified in section 256(i). 
The limitations set forth in subparagraphs (A), (B), 
and (C) shall be applied iteratively, and after each 
iteration the uniform percentage applicable to all 
other programs under this paragraph shall be in-
creased (if necessary) to a level sufficient to achieve 
the reductions required by this paragraph.’’. 
(b) TABLE OF CONTENTS AMENDMENT.—The table 
of contents set forth in 250(c) of the Balanced Budget 
and Emergency Deficit Control Act of 1985 is amended 
by adding after the item relating to section 252 the fol-
lowing new item:
‘‘Sec. 252A. Enforcing controls on direct spending.’’.
SEC. 302. EXEMPT PROGRAMS AND ACTIVITIES. 
Section 255 of the Balanced Budget and Emergency 
Deficit Control Act of 1985 is amended to read as follows: 
‘‘SEC. 255. EXEMPT PROGRAMS AND ACTIVITIES. 
‘‘(a) SOCIAL SECURITY BENEFITS AND TIER I RAIL-
ROAD RETIREMENT BENEFITS.—Benefits payable under 
the old-age, survivors, and disability insurance program 
established under title II of the Social Security Act, and 
benefits payable under section 3(a), 3(f)(3), 4(a), or 4(f) 
of the Railroad Retirement Act of 1974, shall be exempt 
from reduction under any order issued under this part. 
‘‘(b) DESCRIPTIONS
AND
LISTS.—The following 
budget accounts or activities shall be exempt from seques-
tration: 
‘‘(1) net interest; 
‘‘(2) all payments to trust funds from excise 
taxes or other receipts or collections properly cred-
itable to those trust funds; 
‘‘(3) all payments from one Federal direct 
spending budget account to another Federal budget 
account; and 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 appropria-
tions for the fiscal year for which the order is in ef-
fect;
‘‘(4) activities resulting from private donations, 
bequests, or voluntary contributions to the Govern-
ment; 
‘‘(5) payments from any revolving fund or 
trust-revolving fund (or similar activity) that pro-
vides deposit insurance or other 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; 
‘‘(6) credit liquidating and financing accounts; 
‘‘(7) 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); 
‘‘Armed Forces Retirement Home Trust 
Fund, payment of claims (84–8930–0–7–705); 
‘‘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 
assistance pursuant to Public Law 99–658 (14–
0415–0–1–806); 
‘‘Compensation of the President (11–
0001–0–1–802); 
‘‘Customs Service, miscellaneous perma-
nent 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 terri-
tories, fiscal assistance (14–0418–0–1–801);
‘‘Payments to widows and heirs of de-
ceased Members of Congress (00–0215–0–1–
801); 
‘‘Salaries of Article III judges; 
‘‘Washington Metropolitan Area Transit 
Authority, interest payments (46–0300–0–1–
401); 
‘‘(8) the following noncredit special, revolving, 
or trust-revolving funds: 
‘‘Coinage profit fund (20–5811–0–2–803); 
‘‘Comptroller of the Currency; 
‘‘Director of the Office of Thrift Super-
vision; 
‘‘Exchange Stabilization Fund (20–4444–
0–3–155); 
‘‘Federal Housing Finance Board; 
‘‘Foreign Military Sales trust fund (11–
82232–0–7–155); 
‘‘(9) Thrift Savings Fund; 
‘‘(10) appropriations for the District of Colum-
bia to the extent they are appropriations of locally 
raised funds; 
‘‘(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 
Federal unemployment account (established by sec-
tion 904(g) of such Act) under title XII of such Act 
and any advance appropriated to the Federal unem-
ployment 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. 
‘‘(c) FEDERAL RETIREMENT AND DISABILITY AC-
COUNTS.—The following Federal retirement and disability 
accounts shall be exempt from reduction under any order 
issued under this part: Civil service retirement and dis-
ability fund (24–8135–0–7–602). 
‘‘(d) FEDERAL ADMINISTRATIVE EXPENSES.—
‘‘(1) Notwithstanding any provision of law 
other than paragraph (3), administrative expenses 
incurred 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 any exemp-
tion, exception, limitation, or special rule otherwise 
applicable with respect to such program, project, ac-
tivity, or account, and regardless of whether the pro-
gram, project, activity, or account is self-supporting 
and does not receive appropriations. 
‘‘(2) Payments made by the Federal Govern-
ment to reimburse or match administrative costs in-
curred by a State or political subdivision under or in 
connection 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 
programs shall be exempt from sequestration: 
‘‘(A) Comptroller of the Currency. 
‘‘(B) Federal Deposit Insurance Corpora-
tion. 
‘‘(C) Office of Thrift Supervision. 
‘‘(D) National Credit Union Administra-
tion. 
‘‘(E) National Credit Union Administra-
tion, central liquidity facility. 
‘‘(F) Federal Retirement Thrift Invest-
ment Board. 
‘‘(G) Resolution Funding Corporation. 
‘‘(H) Resolution Trust Corporation. 
‘‘(I) Board of Governors of the Federal 
Reserve System. 
‘‘(e) OPTIONAL
EXEMPTION
OF
DEFENSE
AND 
HOMELAND SECURITY ACCOUNTS.—
‘‘(1) IN GENERAL.—The President may, with 
respect to any defense or homeland security account, 
exempt that account from sequestration or provide
for a lower uniform percentage reduction than would 
otherwise apply. 
‘‘(2) LIMITATION.—The President may not use 
the authority provided by paragraph (1) unless the 
President notifies the Congress of the manner in 
which such authority will be exercised on or before 
the date specified in section 254(a) for the budget 
year.’’. 
SEC. 303. EXCEPTIONS, LIMITATIONS, AND SPECIAL RULES. 
(a) IN GENERAL.—Section 256 of the Balanced 
Budget and Emergency Deficit Control Act of 1985 is 
amended to read as follows: 
‘‘SEC. 
256. 
EXCEPTIONS, 
LIMITATIONS, 
AND 
SPECIAL 
RULES. 
‘‘(a) NATIONAL WOOL ACT AND THE SPECIAL MILK 
PROGRAM.—Automatic spending increases are increases 
in outlays due to changes in indexes in the following pro-
grams: 
‘‘(1) National Wool Act; and 
‘‘(2) Special milk program. 
In those programs all amounts other than the automatic 
spending increases shall be exempt from reduction under 
any sequestration order.
‘‘(b) THE
GUARANTEED
STUDENT
LOAN
PRO-
GRAM.—(1) Any reductions which are required to be
achieved from the student loan programs operated pursu-
ant to part B of title IV of the Higher Education Act of 
1965 under any sequestration order shall be achieved only 
from loans described in paragraphs (2) and (3) by the ap-
plication of the measures described in such paragraphs. 
‘‘(2) For any loan made during the period beginning 
on the date that a sequestration order takes effect with 
respect to a fiscal year, the rate used in computing the 
special 
allowance 
payment 
pursuant 
to 
section 
438(b)(2)(A)(iii) of such Act for each of the first four spe-
cial allowance payments for such loan shall be adjusted 
by reducing such rate by the lesser of—
‘‘(A) 0.40 percent, or 
‘‘(B) the percentage by which the rate specified 
in such section exceeds 3 percent. 
‘‘(3) For any loan made during the period beginning 
on the date that a sequestration order takes effect with 
respect to a fiscal year, the origination fee which is author-
ized to be collected pursuant to section 438(c)(2) of such 
Act shall be increased by 0.50 percent. 
‘‘(c) FOSTER CARE
AND ADOPTION ASSISTANCE 
PROGRAMS.—Any sequestration order shall make the re-
duction otherwise required under the foster care and adop-
tion assistance programs (established by part E of title 
IV of the Social Security Act) only with respect to pay-
ments and expenditures made by States in which increases 
in foster care maintenance payment rates or adoption as-
sistance payment rates (or both) are to take effect during 
the fiscal year involved, and only to the extent that the 
required reduction can be accomplished by applying a uni-
form percentage reduction to the Federal matching pay-
ments that each such State would otherwise receive under 
section 474 of that Act (for such fiscal year) for that por-
tion of the State’s payments attributable to the increases 
taking effect during that year. No State’s matching pay-
ments from the Federal Government for foster care main-
tenance payments or for adoption assistance maintenance 
payments may be reduced by a percentage exceeding the
applicable domestic sequestration percentage. No State 
may, after the date of the enactment of this Act, make 
any change in the timetable for making payments under 
a State plan approved under part E of title IV of the So-
cial Security Act which has the effect of changing the fis-
cal year in which expenditures under such part are made. 
‘‘(d) LOW-INCOME PROGRAMS.—(1) Benefit pay-
ments or payments to States or other entities for the pro-
grams listed in paragraph (2) shall not be reduced by 
more than 2 percent under any sequestration order. When 
reduced under an end-of-session sequestration order, those 
benefit reductions shall occur starting with the payment
made at the start of January. When reduced under a with-
in-session sequestration order, those benefit reductions 
shall occur starting with the next periodic payment. 
‘‘(2) The programs referred to in paragraph (1) are 
the following: 
‘‘Child nutrition (12–3539–0–1–605); 
‘‘Food stamp programs (12–3505–0–1–605) 
and (12–3550–0–1–605); 
‘‘Grants to States for medicaid (75–0512–0–1–
551); 
‘‘State Children’s Health Insurance Fund (75–
0515–0–1–551); 
‘‘Supplemental security income program (75–
0406–0–1–609); and 
‘‘Temporary assistance for needy families (75–
1552–0–1–609); 
‘‘(e) VETERANS’ MEDICAL CARE.—The maximum 
permissible reduction in budget authority for Veterans’ 
medical care (36–0160–0–1–703) for any fiscal year, pur-
suant to an order issued under section 254, shall be 2 
percent. 
‘‘(f) FEDERAL RETIREMENT PROGRAMS.—
‘‘(1) For each of the programs listed in para-
graph (2) and except as provided in paragraph (3), 
monthly (or other periodic) benefit payments shall
be reduced by the uniform percentage applicable to 
direct spending sequestrations for such programs, 
which shall in no case exceed 2 percent under any 
sequestration order. When reduced under an end-of-
session sequestration order, those benefit reductions 
shall occur starting with the payment made at the 
start of January or 7 weeks after the order is 
issued, whichever is later. When reduced under a 
within-session sequestration order, those benefit re-
ductions shall occur starting with the next periodic 
payment. 
‘‘(2) The programs subject to paragraph (1) 
are: 
‘‘Black lung benefits (20–8144–0–7–601); 
‘‘Central Intelligence Agency retirement 
and disability system fund (56–3400–0–1–054); 
‘‘Comptrollers general retirement system 
(05–0107–0–1–801); 
‘‘Foreign service retirement and disability 
fund (19–8186–0–7–602); 
‘‘Judicial survivors’ annuities fund (10–
8110–0–7–602); 
‘‘Judicial Officers’ Retirement Fund (10–
8122–0–7–602);
‘‘Claims Judges’ Retirement Fund (10–
8124–0–7–602); 
‘‘Longshoremen’s and harborworkers’ com-
pensation benefits (16–9971–0–7–601); 
‘‘National Oceanic and Atmospheric Ad-
ministration retirement (13–1450–0–1–306); 
‘‘Pensions for former Presidents (47–
0105–0–1–802); 
‘‘Railroad Industry Pension Fund (60–
8011–0–7–601); 
‘‘Railroad retirement tier II (60–8011–0–
7–601); 
‘‘Railroad supplemental annuity pension 
fund (60–8012–0–7–602); 
‘‘Retired pay, Coast Guard (69–0241–0–1–
403); 
‘‘Retirement pay and medical benefits for 
commissioned officers, Public Health Service 
(75–0379–0–1–551); 
‘‘Special 
benefits, 
Federal 
Employees’ 
Compensation Act (16–1521–0–1–600); 
‘‘Special benefits for disabled coal miners 
(75–0409–0–1–601); and 
‘‘Tax Court judges survivors annuity fund 
(23–8115–0–7–602);
‘‘(g) VETERANS PROGRAMS.—To achieve the total 
percentage reduction required by any order issued under 
this part, the percentage reduction that shall apply to pay-
ments under the following programs shall in no event ex-
ceed 2 percent: 
‘‘National Service Life Insurance Fund (36–
8132–0–7–701); 
‘‘Service-Disabled Veterans Insurance Fund 
(36–4012–0–3–701); 
‘‘Veterans Special Life Insurance Fund (36–
8455–0–8–701); 
‘‘Veterans Reopened Insurance Fund (36–
4010–0–3–701); 
‘‘United States Government Life Insurance 
Fund (36–8150–0–7–701); 
‘‘Veterans Insurance and Indemnities (36–
0120–0–1–701); 
‘‘Special Therapeutic and Rehabilitation Activi-
ties Fund (36–4048–0–3–703); 
‘‘Canteen Service Revolving Fund (36–4014–0–
3–705); 
‘‘Benefits under chapter 21 of title 38, United 
States Code, relating to specially adapted housing 
and mortgage-protection life insurance for certain
veterans with service-connected disabilities (36–
0120–0–1–701); 
‘‘Benefits under section 907 of title 38, United 
States Code, relating to burial benefits for veterans 
who die as a result of service-connected disability 
(36–0155–0–1–701); 
‘‘Benefits under chapter 39 of title 38, United 
States Code, relating to automobiles and adaptive 
equipment for certain disabled veterans and mem-
bers of the Armed Forces (36–0137–0–1–702); 
‘‘Compensation (36–0153–0–1–701); 
‘‘Pensions (36–0154–0–1–701);
‘‘Benefits under chapter 35 of title 38, United 
States Code, related to educational assistance for 
survivors and dependents of certain veterans with 
service-connected disabilities (36–0137–0–1–702); 
‘‘Assistance and services under chapter 31 of 
title 38, United States Code, relating to training and 
rehabilitation for certain veterans with service-con-
nected disabilities (36–0137–0–1–702); 
‘‘Benefits under subchapters I, II, and III of 
chapter 37 of title 38, United States Code, relating 
to housing loans for certain veterans and for the 
spouses and surviving spouses of certain veterans
Guaranty and Indemnity Program Account (36–
1119–0–1–704); 
‘‘Loan Guaranty Program Account (36–1025–
0–1–704); and 
‘‘Direct Loan Program Account (36–1024–0–1–
704). 
‘‘(h) MILITARY RETIREMENT.—To achieve the total 
percentage reduction in military retirement required by 
any order issued under this part, the percentage reduction 
that shall apply to payments under the Military retirement 
fund (97–8097–0–7–602) shall in no event exceed 2 per-
cent. 
‘‘(i) MEDICARE PROGRAM.—
‘‘(1) CALCULATION
OF
REDUCTION
IN
INDI-
VIDUAL PAYMENT AMOUNTS.—To achieve the total 
percentage reduction in those programs required by 
any order issued under this part, the percentage re-
duction that shall apply to payments under the 
health insurance programs under title XVIII of the 
Social Security Act for services furnished after any 
sequestration order is issued shall be such that the 
reduction made in payments under that order shall 
achieve the required total percentage reduction in 
those payments for that fiscal year as determined on 
a 12-month basis. However, the total reduction
under any such program shall in no case exceed 2 
percent under any sequestration order. 
‘‘(2) TIMING
OF
APPLICATION
OF
REDUC-
TIONS.—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), if a reduction is made under 
paragraph (1) in payment amounts pursuant to 
a sequestration order, the reduction shall be ap-
plied to payment for services furnished after the 
effective date of the order. For purposes of the 
previous sentence, in the case of inpatient serv-
ices furnished for an individual, the services 
shall be considered to be furnished on the date 
of the individual’s discharge from the inpatient 
facility. 
‘‘(B) PAYMENT ON THE BASIS OF COST 
REPORTING
PERIODS.—In the case in which 
payment 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 
under paragraph (1) in payment amounts pur-
suant 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 provider any part of 
which occurs after the effective date of the 
order, but only (for each such cost reporting pe-
riod) 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 under paragraph (1) 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) 
NO
EFFECT
ON
COMPUTATION
OF 
AAPCC.—In computing the adjusted average per cap-
ita cost for purposes of section 1876(a)(4) of the So-
cial Security Act, the Secretary of Health and 
Human Services shall not take into account any re-
ductions in payment amounts which have been or 
may be effected under this subtitle. 
‘‘(j) FEDERAL PAY.—
‘‘(1) IN GENERAL.—For purposes of any order 
issued under section 254, new budget authority to 
pay Federal personnel shall be reduced by the appli-
cable uniform percentage, 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 section 302 of the Federal Employees Pay 
Comparability Act of 1990) or the rate of any ele-
ment of military pay to which any individual is enti-
tled under title 37, United States Code, or any in-
crease in rates of pay which is scheduled to take ef-
fect under section 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.
‘‘(k) CHILD SUPPORT ENFORCEMENT PROGRAM.—
Any sequestration order shall accomplish the full amount 
of any required reduction in expenditures under sections 
455 and 458 of the Social Security Act by reducing the 
Federal matching rate for State administrative costs 
under such program, as specified (for the fiscal year in-
volved) in section 455(a) of such Act, to the extent nec-
essary to reduce such expenditures by that amount. 
‘‘(l) 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 an order issued under this title by a 
percentage not to exceed the percentage by which the Fed-
eral payment 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 1954. 
‘‘(m) COMMODITY CREDIT CORPORATION.—
‘‘(1) POWERS AND AUTHORITIES OF THE COM-
MODITY CREDIT CORPORATION.—This title shall not 
restrict the Commodity Credit Corporation in the 
discharge of its authority and responsibility as a cor-
poration to buy and sell commodities in world trade, 
to use the proceeds as a revolving fund to meet 
other obligations and otherwise operate as a corpora-
tion, the purpose for which it was created. 
‘‘(2) REDUCTION IN PAYMENTS MADE UNDER 
CONTRACTS.—(A) Payments and loan eligibility 
under any contract entered into with a person by the 
Commodity Credit Corporation prior to the time any 
sequestration order has been issued shall not be re-
duced by an order subsequently issued. Subject to
subparagraph (B), after any sequestration order is 
issued for a fiscal year, any cash payments made by 
the Commodity Credit Corporation—
‘‘(i) under the terms of any one-year con-
tract entered into in or after such fiscal year 
and after the issuance of the order; and 
‘‘(ii) out of an entitlement account, 
to any person (including any producer, lender, or 
guarantee entity) shall be subject to reduction under 
the order. 
‘‘(B) Each contract entered into with producers 
or producer cooperatives with respect to a particular 
crop of a commodity and subject to reduction under 
subparagraph (A) shall be reduced in accordance 
with the same terms and conditions. If some, but 
not all, contracts applicable to a crop of a com-
modity have been entered into prior to the issuance 
of any sequestration order, the order shall provide 
that the necessary reduction in payments under con-
tracts applicable to the commodity be uniformly ap-
plied to all contracts for succeeding crops of the 
commodity, under the authority provided in para-
graph (3). 
‘‘(3) DELAYED REDUCTION IN OUTLAYS PER-
MISSIBLE.—Notwithstanding any other provision of
this title, if any sequestration order is issued with 
respect to a fiscal year, any reduction under the 
order applicable to contracts described in paragraph 
(2) may provide for reductions in outlays for the ac-
count involved to occur in the fiscal years following 
the fiscal year to which the order applies. 
‘‘(4) UNIFORM PERCENTAGE RATE OF REDUC-
TION AND OTHER LIMITATIONS.—All reductions de-
scribed in paragraph (2) that are required to be 
made in connection with any sequestration order 
with respect to a fiscal year—
‘‘(A) shall be made so as to ensure that 
outlays for each program, project, activity, or 
account involved are reduced by a percentage 
rate that is uniform for all such programs, 
projects, activities, and accounts, and may not 
be made so as to achieve a percentage rate of 
reduction in any such item exceeding the rate 
specified in the order; and 
‘‘(B) with respect to commodity price sup-
port and income protection programs, shall be 
made in such manner and under such proce-
dures as will attempt to ensure that—
‘‘(i) uncertainty as to the scope of 
benefits under any such program is mini-
mized; 
‘‘(ii) any instability in market prices 
for agricultural commodities resulting from 
the reduction is minimized; and 
‘‘(iii) normal production and mar-
keting relationships among agricultural 
commodities (including both contract and 
non-contract commodities) are not dis-
torted. 
In meeting the criterion set out in clause (iii) 
of subparagraph (B) of the preceding sentence, 
the President shall take into consideration that 
reductions under an order may apply to pro-
grams for two or more agricultural commodities 
that use the same type of production or mar-
keting resources or that are alternative com-
modities among which a producer could choose 
in making annual production decisions. 
‘‘(5) CERTAIN
AUTHORITY
NOT
TO
BE
LIM-
ITED.—Nothing in this title shall limit or reduce in 
any way any appropriation that provides the Com-
modity Credit Corporation with funds to cover the 
Corporation’s net realized losses.
‘‘(n) POSTAL SERVICE FUND.—Notwithstanding any 
other provision of law, any sequestration of the Postal 
Service Fund shall be accomplished by a payment from 
that Fund to the General Fund of the Treasury, and the 
Postmaster General of the United States shall make the 
full amount of that payment during the fiscal year to 
which the presidential sequestration order applies. 
‘‘(o) EFFECTS OF SEQUESTRATION.—The effects of 
sequestration shall be as follows: 
‘‘(1) Budgetary resources sequestered from any 
account other than an entitlement trust, special, or 
revolving fund account shall revert to the Treasury 
and be permanently canceled. 
‘‘(2) Except as otherwise provided, the same 
percentage sequestration shall apply to all programs, 
projects, and activities within a budget account (with
programs, projects, and activities as delineated in 
the appropriation Act or accompanying report for 
the relevant fiscal year covering that account, or for 
accounts not included in appropriation Acts, as de-
lineated in the most recently submitted President’s 
budget). 
‘‘(3) Administrative regulations or similar ac-
tions implementing a sequestration shall be made 
within 120 days of the sequestration order. To the
extent that formula allocations differ at different 
levels of budgetary resources within an account, pro-
gram, project, or activity, the sequestration shall be 
interpreted as producing a lower total appropriation, 
with that lower appropriation being obligated as 
though it had been the pre-sequestration appropria-
tion and no sequestration had occurred. 
‘‘(4) Except as otherwise provided, obligations 
in sequestered direct spending accounts shall be re-
duced in the fiscal year in which a sequestration oc-
curs and in all succeeding fiscal years. 
‘‘(5) If an automatic spending increase is se-
questered, the increase (in the applicable index) that 
was disregarded as a result of that sequestration 
shall not be taken into account in any subsequent 
fiscal year. 
‘‘(6) Except as otherwise provided, sequestra-
tion in accounts for which obligations are indefinite 
shall be taken in a manner to ensure that obliga-
tions in the fiscal year of a sequestration and suc-
ceeding fiscal years are reduced, from the level that 
would actually have occurred, by the applicable se-
questration percentage.’’. 
(b) CONFORMING AMENDMENT.—The table of con-
tents set forth in 250(c) of the Balanced Budget and
Emergency Deficit Control Act of 1985 is amended by 
amending the item relating to section 256 to read as fol-
lows:
‘‘Sec. 256. Exceptions, limitations, and special rules.’’.
SEC. 304. POINT OF ORDER. 
(a) ENTITLEMENT POINT OF ORDER.—Section 312 
of the Congressional Budget Act of 1974 (as amended by 
sections 102 and 201(d)) is further amended by adding 
at the end the following new subsection: 
‘‘(j) ENTITLEMENT POINT OF ORDER.—It shall not 
be in order in the House of Representatives or the Senate 
to consider any bill, joint resolution, amendment, or con-
ference report that—
‘‘(1) increases aggregate level of direct spending 
for any ensuing fiscal year or 
‘‘(2) includes any provision that has the effect 
of modifying the application of section 252A of the 
Balanced Budget and Emergency Deficit Control 
Act of 1985 to any entitlement program subject to 
sequestration or exempt from sequestration under 
such Act.’’. 
SEC. 305. TECHNICAL AND CONFORMING AMENDMENTS. 
The Balanced Budget and Emergency Deficit Control 
Act of 1985 is amended as follows: 
(1) Section 251(a)(1) is amended by inserting 
‘‘, section 252A,’’ after ‘‘section 252’’.
(2) Section 254(c)(4)(B) is amended by insert-
ing ‘‘or section 252A’’after ‘‘section 252’’. 
(3) Section 254(c) is amended by redesignating 
paragraph (5) as paragraph (6) and by inserting 
after paragraph (4) the following new paragraph: 
‘‘(5) DIRECT SPENDING CONTROL SEQUESTRA-
TION REPORTS.—The preview reports shall set forth, 
for the current year and the budget year, estimates 
for each of the following: 
‘‘(A) The total level of direct spending for 
all programs, projects, and activities (excluding 
social security). 
‘‘(B) The sequestration percentage or (if 
the required sequestration percentage is greater 
than the maximum allowable percentage for 
medicare) percentages necessary to comply with 
section 252A.’’. 
(4) Section 254(f) is amended by redesignating 
paragraphs (4) and (5) as paragraphs (5) and (6) 
and by inserting after paragraph (3) the following 
new paragraph: 
‘‘(4) DIRECT SPENDING CONTROL SEQUESTRA-
TION REPORTS.—The final reports shall contain all 
the information required in the direct spending con-
trol sequestration preview reports. In addition, these
reports shall contain, for the budget year, for each 
account to be sequestered, estimates of the baseline 
level of sequesterable budgetary resources and re-
sulting outlays and the amount of budgetary re-
sources to be sequestered and resulting outlay reduc-
tions. The reports shall also contain estimates of the 
effects on outlays of the sequestration in each out-
year for direct spending programs.’’. 
(5) Section 258C(a)(1) is amended by inserting 
‘‘, 252A,’’ after ‘‘section 252’’. 
SEC. 306. ESTABLISHMENT OF FAMILY BUDGET PROTEC-
TION MANDATORY ACCOUNT. 
The Rules of the House of Representatives (as 
amended by section 202) are further amended by inserting 
after rule XXVIII the following new rule: 
‘‘RULE XXIX 
‘‘FAMILY BUDGET PROTECTION MANDATORY ACCOUNT. 
‘‘1. (a) The chairman of the Committee on the Budg-
et shall maintain an account to be known as the ‘Family 
Budget Protection Mandatory Account’. The Account 
shall be divided into entries corresponding to the House 
committees that received allocations under section 302(a) 
of the Congressional Budget Act of 1974 in the most re-
cently adopted concurrent resolution on the budget, except 
that it shall not include the Committee on Appropriations
and each entry shall consist of the ‘First Year Family 
Budget Protection Balance’ and the ‘Five Year Family 
Budget Protection Balance’. 
‘‘(b) Each entry shall consist only of amounts cred-
ited to it under paragraph (c). No entry of a negative 
amount shall be made. 
‘‘(c) Whenever a Member offers an amendment to a 
bill that reduces the amount of mandatory budget author-
ity provided either under current law or proposed to be 
provided by the bill under consideration, that Member may 
state the portion of such reduction achieved in the first 
year covered by the most recently adopted concurrent reso-
lution on the budget and in addition the portion of such 
reduction achieved in the first five years covered by the
most recently adopted concurrent resolution on the budget 
that shall be—
‘‘(1) credited to the First Year Family Budget 
Protection Balance and the Five Year Family Budg-
et Protection Balance; 
‘‘(2) used to offset an increase in other new 
budget authority; or
‘‘(3) allowed to remain within the applicable 
section 302(a) allocation. 
If no such statement is made, the amount of reduction 
in new budget authority resulting from the amendment
shall be credited to the First Year Family Budget Protec-
tion Balance and the Five Year Family Budget Protection 
Balance, as applicable, if the amendment is agreed to. 
‘‘2. (a) Except as provided by paragraph (b), the 
chairman of the Committee on the Budget shall, upon the 
engrossment of any bill, other than an appropriation bill, 
by the House, credit to the applicable entry balances 
amounts of new budget authority and outlays equal to the 
net amounts of reductions in budget authority and in out-
lays resulting from amendments agreed to by the House 
to that bill. 
‘‘(b) When computing the net amounts of reductions 
in budget authority and in outlays resulting from amend-
ments agreed to by the House to a bill, the chairman of 
the Committee on the Budget shall only count those por-
tions of such amendments agreed to that were so des-
ignated by the Members offering such amendments as 
amounts to be credited to the First Year Family Budget 
Protection Balance and the Five Year Family Budget Pro-
tection Balance, or that fall within the last sentence of 
clause 1. 
‘‘3. The chairman of the Committee on the Budget 
shall maintain a running tally of the amendments adopted 
reflecting increases and decreases of budget authority in
the bill as reported. This tally shall be available to Mem-
bers during consideration of any bill by the House. 
‘‘4. For the purposes of enforcing section 302(a) of 
the Congressional Budget Act of 1974, upon the engross-
ment of any bill, other than an appropriation bill, by the 
House, the amount of budget authority and outlays cal-
culated pursuant to paragraph 2(b) shall be counted 
against the 302(a) allocation provided to the applicable 
committee or committees which reported the bill as if the 
amount calculated pursuant to clause 2(b) was included 
in the bill just engrossed. 
‘‘5. As used in this rule, the term ‘appropriation bill’ 
means any general or special appropriation bill, and any 
bill or joint resolution making supplemental, deficiency, or 
continuing appropriations through the end of fiscal year 
2005 or any subsequent fiscal year, as the case may be.’’. 
TITLE IV—COMBATING WASTE, 
FRAUD, 
AND 
ABUSE 
THROUGH SUNSETTING 
SEC. 401. REAUTHORIZATION OF DISCRETIONARY PRO-
GRAMS AND UNEARNED ENTITLEMENTS. 
(a) FISCAL YEAR 2006.—Effective October 1, 2005, 
spending authority for each unearned entitlement and 
high-cost discretionary spending program is frozen at then
current levels unless such spending authority is reauthor-
ized after the date of enactment of this Act. 
(b) FISCAL YEAR 2007.—(1) Effective October 1, 
2006, spending authority for each authorized discre-
tionary spending program (not including high-cost discre-
tionary spending programs) is frozen at then current levels 
unless such spending authority is reauthorized after the 
date of enactment of this Act. 
(2) Effective October 1, 2006, spending authority for 
each unauthorized discretionary spending program (not 
including high-cost discretionary spending programs) is 
terminated unless such spending authority is reauthorized 
after the date of enactment of this Act. 
(c) DEFINITIONS.—For purposes of this title—
(1) the term ‘‘unearned entitlement’’ means an 
entitlement not earned by service or paid for in total 
or in part by assessments or contributions such as 
Social Security, veterans’ benefits, retirement pro-
grams, and medicare; and 
(2) the term ‘‘high-cost discretionary program’’ 
means the most expensive one-third of discretionary 
program within each budget function account. 
SEC. 402. POINT OF ORDER. 
(a) IN GENERAL.—It shall not be in order in the 
House of Representatives or the Senate to consider any