I
103D CONGRESS
2D SESSION
H. R. 4585
To promote freedom, fairness, and economic opportunity for families by
reducing the power and reach of the Federal establishment.
IN THE HOUSE OF REPRESENTATIVES
JUNE 16, 1994
Mr. ARMEY introduced the following bill; which was referred jointly to the
Committees on Ways and Means, Government Operations, and Rules
AUGUST 4, 1994
Additional sponsors: Mr. SMITH of Michigan, Mr. LINDER, Mr. YOUNG of
Alaska, Mr. BARTLETT of Maryland, Mr. DOOLITTLE, Mr. ROTH, Mr.
BURTON of Indiana, Mr. RAVENEL, and Mr. KLUG
A BILL
To promote freedom, fairness, and economic opportunity for
families by reducing the power and reach of the Federal
establishment.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Freedom and Fairness
Restoration Act of 1994’’.
TITLE I—TAX REDUCTION AND
SIMPLIFICATION
SEC. 101. INDIVIDUALS TAXED ONLY ON EARNED INCOME.
(a) IN GENERAL.—Section 1 of the Internal Revenue
Code of 1986 is amended to read as follows:
‘‘SECTION 1. TAX IMPOSED.
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed
on the income of every individual a tax equal to 20 percent
(17 percent in the case of taxable years beginning after
December 31, 1996) of the excess (if any) of—
‘‘(1) the taxable earned income received or ac-
crued during the taxable year, over
‘‘(2) the standard deduction (as defined in sec-
tion 63) for such taxable year.
‘‘(b) TAXABLE EARNED INCOME.—For purposes of
this section, the term ‘taxable earned income’ means the
excess (if any) of earned income (as defined in section
911(d)(2)) over the foreign earned income (as defined in
section 911(b)(1)).’’
(b) INCREASE IN STANDARD DEDUCTION.—Section
63 of such Code is amended to read as follows:
‘‘SEC. 63. STANDARD DEDUCTION.
‘‘(a) IN GENERAL.—For purposes of this subtitle, the
term ‘standard deduction’ means the sum of—
‘‘(1) the basic standard deduction, plus
‘‘(2) the additional standard deduction.
‘‘(b) BASIC STANDARD DEDUCTION.—For purposes
of subsection (a), the basic standard deduction is—
‘‘(1) $24,700 in the case of—
‘‘(A) a joint return, and
‘‘(B) a surviving spouse (as defined in sec-
tion 2(a)),
‘‘(2) $16,200 in the case of a head of household
(as defined in section 2(b)), and
‘‘(3) $12,350 in the case of an individual—
‘‘(A) who is not married and who is not a
surviving spouse or head of household, or
‘‘(B) who is a married individual filing a
separate return.
‘‘(c) ADDITIONAL STANDARD DEDUCTION.—For pur-
poses of subsection (a), the additional standard deduction
is $5,000 for each dependent (as defined in section 152)
described in section 151(c)(1) for the taxable year.
‘‘(d) INFLATION ADJUSTMENT.—
‘‘(1) IN GENERAL.—In the case of any taxable
year beginning in a calendar year after 1995, each
dollar amount contained in subsections (b) and (c)
shall be increased by an amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘business taxable income’ means gross
active income reduced by the deductions specified in
subsection (d).
‘‘(2) GROSS ACTIVE INCOME.—For purposes of
paragraph (1), the term ‘gross active income’ means
gross income other than investment income.
‘‘(d) DEDUCTIONS.—
‘‘(1) IN GENERAL.—The deductions specified in
this subsection are—
‘‘(A) the cost of business inputs for the
business activity,
‘‘(B) the compensation (including contribu-
tions to qualified retirement plans but not in-
cluding other fringe benefits) paid for employ-
ees performing services in such activity, and
‘‘(C) the cost of tangible personal and real
property used in such activity.
‘‘(2) BUSINESS INPUTS.—For purposes of sub-
paragraph (A), the term ‘cost of business inputs’
means—
‘‘(A) the actual amount paid for goods,
services, and materials, whether or not resold
during the taxable year,
‘‘(B) the fair market value of business in-
puts brought into the United States, and
‘‘(C) the actual cost, if reasonable, of trav-
el and entertainment expenses for business pur-
poses.
Such term shall not include purchases of goods and
services provided to employees or owners.
‘‘(e) CARRYOVER OF EXCESS DEDUCTIONS.—
‘‘(1) IN GENERAL.—If the aggregate deductions
for any taxable year exceed the gross active income
for such taxable year, the amount of the deductions
specified in subsection (d) for the succeeding taxable
year (determined without regard to this subsection)
shall be increased by the sum of—
‘‘(A) such excess, plus
‘‘(B) the product of such excess and the 3-
month Treasury rate for the last month of such
taxable year.
‘‘(2) 3-MONTH TREASURY RATE.—For purposes
of paragraph (1), the 3-month Treasury rate is the
rate determined by the Secretary based on the aver-
age market yield (during any 1-month period se-
lected by the Secretary and ending in the calendar
month in which the determination is made) on out-
standing marketable obligations of the United States
with remaining periods to maturity of 3 months or
less.’’
SEC. 103. REPEAL OF INCOME TAX WITHHOLDING.
Section 3402 of the Internal Revenue Code of 1986
(relating to collection of income tax at source on wages)
is amended by adding at the end the following new sub-
section:
‘‘(t) TERMINATION.—This section shall not apply to
wages paid after December 31, 1994.’’
SEC. 104. EFFECTIVE DATE.
The amendments made by sections 101 and 102 shall
apply to taxable years beginning after December 31, 1994.
TITLE II—SPENDING RESTRAINT
AND BUDGET PROCESS REFORM
Subtitle A—Joint Budget
Resolution
SEC. 201. JOINT BUDGET RESOLUTION.
(a) DEFINITIONS.—Paragraph (4) of section 3 of the
Congressional Budget Act of 1974 is amended to read as
follows:
‘‘(4) the term ‘joint resolution on the budget’
means—
‘‘(A) a joint resolution setting forth the
congressional budget for the United States Gov-
ernment for a fiscal year as provided in section
301; and
‘‘(B) any other joint resolution revising the
congressional budget for the United States Gov-
ernment for a fiscal year as described in section
304.’’.
(b) JOINT RESOLUTION ON THE BUDGET.—(1) Sec-
tion 300 is amended by striking ‘‘concurrent resolution’’
each place it appears and inserting ‘‘joint resolution’’.
(2) Section 301(a) of the Congressional Budget Act
of 1974 is amended by striking ‘‘concurrent resolution’’
each place it appears including in the caption and insert-
ing ‘‘joint resolution’’.
(3) Section 301(b) is amended by striking ‘‘concur-
rent resolution’’ each place it appears including in the cap-
tion and inserting ‘‘joint resolution’’.
(4) Section 301(c) is amended by striking ‘‘concur-
rent resolution’’ each place it appears and inserting ‘‘joint
resolution’’.
(5) Section 301(e) is amended by striking ‘‘concur-
rent resolution’’ each place it appears and inserting ‘‘joint
resolution’’.
(6) Section 301(f) is amended by striking ‘‘concur-
rent resolution’’ each place it appears and inserting ‘‘joint
resolution’’.
(7) Section 301(g) is amended by striking ‘‘concur-
rent resolution’’ each place it appears and inserting ‘‘joint
resolution’’.
(8) Section 301(h) is amended by striking ‘‘concur-
rent resolution’’ and inserting ‘‘joint resolution’’.
(9) Section 301(i) is amended by striking ‘‘concur-
rent resolution’’ each place it appears and inserting ‘‘joint
resolution’’.
(10) The section heading of section 301 is amended
by striking ‘‘ANNUAL ADOPTION OF CONCURRENT’’
and inserting ‘‘ANNUAL ADOPTION OF JOINT’’.
(11) The table of contents set forth in section 1(b)
of the Congressional Budget and Impoundment Control
Act of 1974 is amended by striking ‘‘Annual adoption of
the concurrent’’ in the item relating to section 301 and
inserting ‘‘Annual adoption of the joint’’.
(12) Section 302 is amended by striking ‘‘concurrent
resolution’’ each place it appears and inserting ‘‘joint reso-
lution’’.
(13) Section 303, including the heading, is amended
by striking ‘‘concurrent resolution’’ each place it appears
and inserting ‘‘joint resolution’’.
(14) The table of contents set forth in section 1(b)
of the Congressional Budget and Impoundment Control
Act of 1974 is amended by striking ‘‘Concurrent’’ in the
item relating to section 303 and inserting ‘‘Joint’’.
(15) Section 304 is amended by striking ‘‘concurrent
resolution’’, including in the heading, each place it appears
and inserting ‘‘joint resolution’’.
(16) The table of contents set forth in section 1(b)
of the Congressional Budget and Impoundment Control
Act of 1974 is amended by striking ‘‘Concurrent’’ in the
item relating to section 304 and inserting ‘‘Joint’’.
(17) Section 305 is amended by striking ‘‘concurrent
resolution’’, including in the heading, each place it appears
and inserting ‘‘joint resolution’’.
(18) Section 308 is amended by striking ‘‘concurrent
resolution’’ each place it appears and inserting ‘‘joint reso-
lution’’.
(19) Section 310 is amended by striking ‘‘concurrent
resolution’’ each place it appears and inserting ‘‘joint reso-
lution’’.
(20) Section 311 is amended by striking ‘‘concurrent
resolution’’ each place it appears and inserting ‘‘joint reso-
lution’’.
Subtitle B—Zero Based Budgeting
and Decennial Sunsetting
SEC. 211. REAUTHORIZATION OF DISCRETIONARY PRO-
GRAMS AND UNEARNED ENTITLEMENTS.
(a) FISCAL YEAR 1995.—Effective October 1, 1994,
spending authority for each unearned entitlement and
high-cost discretionary spending program is terminated
unless such spending authority is reauthorized after the
date of enactment of this Act.
(b) FISCAL YEAR 1996.—Effective October 1, 1995,
spending authority for each discretionary spending pro-
gram (not including high-cost discretionary spending pro-
grams) is terminated unless such spending authority is re-
authorized after the date of enactment of this Act.
(c) DEFINITIONS.—For purposes of this subtitle—
(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. 212. POINT OF ORDER.
(a) IN GENERAL.—It shall not be in order in the
House of Representatives or the Senate to consider any
bill, joint resolution, amendment, or conference report that
includes any provision that appropriates funds unless such
appropriation has been previously authorized by law.
(b) WAIVER OR SUSPENSION.—This section may be
waived or suspended in the House of Representatives or
the Senate only by the affirmative vote of three-fifths of
the Members, duly chosen and sworn.
SEC. 213. DECENNIAL SUNSETTING.
(a) FIRST DECENNIAL CENSUS YEAR.—Effective on
the first day of the fiscal year beginning in the first decen-
nial census year after the year 2000 and each 10 years
thereafter, the spending authority described in section
211(a) is terminated unless such spending authority is re-
authorized after the last date the spending authority was
required to be reauthorized under this subtitle.
(b) FIRST DECENNIAL CENSUS YEAR.—Effective on
the first day of the fiscal year beginning in the year after
the first decennial census year after the year 2000 and
each 10 years thereafter, the spending authority described
in section 211(b) is terminated unless such spending au-
thority is reauthorized after the last date the spending au-
thority was required to be reauthorized under this subtitle.
Subtitle C—Spending Caps on the
Growth of Entitlements for Fis-
cal Years 1995 Through 2000
SEC. 221. SPENDING CAPS ON GROWTH OF ENTITLEMENTS
AND MANDATORIES.
(a) CAP ON GROWTH OF ENTITLEMENTS.—Effective
for each of the fiscal years 1995 through 2000, the total
level of entitlement and mandatory spending, excluding
Social Security, shall not exceed the total level for the pre-
vious fiscal year increased by the consumer price index,
and the growth in eligible population.
(b) SEQUESTRATION.—Within 15 days after Con-
gress adjourns to end a session, and on the same day as
a sequestration (if any) under section 253 of the Balanced
Budget and Emergency Deficit Control Act of 1985, there
shall be a sequestration to reduce the amount of entitle-
ment and mandatory spending for the fiscal year begin-
ning in the year the Congress adjourns by any amount
necessary 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 223(a) (National Wool Act and
special milk), section 223(b) (guaranteed student
loans), and section 223(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 223(d) shall not be reduced by more
than 1 percent;
(B) the retirement and veterans benefits
specified in section 223(e) shall not be reduced
by more than 2 percent in the manner specified
in that section; and
(C) the medicare programs shall not be re-
duced by more than 4 percent in the manner
specified in section 223(f).
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.
SEC. 222. EXEMPT PROGRAMS AND ACTIVITIES.
(a) DESCRIPTIONS AND LISTS.—Except as provided
in subsection (b), the following budget accounts or activi-
ties shall be exempt from sequestration—
(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 spend-
ing budget account to another Federal budget ac-
count; 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 provides de-
posit insurance or other Government insurance, Gov-
ernment guarantees, or any other form of contingent
liability, to the extent those payments result from
contractual or other legally binding commitments of
the Government at the time of any sequestration;
(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 Mari-
ana Islands Covenant grants (14–0412–0–1–806);
Bureau of Indian Affairs, miscellaneous pay-
ments 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 assist-
ance pursuant to Public Law 99–658 (14–0415–0–
1–806);
Compensation of the President (11–0001–0–1–
802);
Customs Service, miscellaneous permanent ap-
propriations (20–9992–0–2–852);
Eastern Indian land claims settlement fund
(14–2202–0–1–806);
Farm Credit System Financial Assistance Cor-
poration, interest payments (20–1850–0–1–351);
Internal Revenue collections of Puerto Rico
(20–5737–0–2–852);
Panama Canal Commission, operating expenses
and capital outlay (95–5190–0–2–403);
Payments of Vietnam and USS Pueblo pris-
oner-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);
Payments to widows and heirs of deceased
Members of Congress (00–0215–0–1–801);
Salaries of Article III judges;
Soldier’s and Airmen’s Home, payment of
claims (84–8930–0–7–705);
Washington Metropolitan Area Transit Author-
ity, 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 Supervision;
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 Columbia
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 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) 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 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 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) Comptroller of the Currency.
(B) Federal Deposit Insurance Corpora-
tion.
(C) Office of Thrift Supervision.
(D) National Credit Union Administration.
(E) National Credit Union Administration,
central liquidity facility.
(F) Federal Retirement Thrift Investment
Board.
(G) Resolution Funding Corporation.
(H) Resolution Trust Corporation.
(I) Board of Governors of the Federal Re-
serve System.
SEC. 223. 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 PROGRAM.—
(1) Any reductions which are required to be achieved from
the student loan programs operated pursuant 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 application 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 PRO-
GRAMS.—Any sequestration order shall make the reduc-
tion otherwise required under the foster care and adoption
assistance programs (established by part E of title IV of
the Social Security Act) only with respect to payments and
expenditures made by States in which increases in foster
care maintenance payment rates or adoption assistance
payment rates (or both) are to take effect during the fiscal
year involved, and only to the extent that the required re-
duction can be accomplished by applying a uniform per-
centage reduction to the Federal matching payments that
each such State would otherwise receive under section 474
of that Act (for such fiscal year) for that portion of the
State’s payments attributable to the increases taking ef-
fect during that year. No State’s matching payments from
the Federal Government for foster care maintenance pay-
ments 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 Social Security
Act which has the effect of changing the fiscal year in
which expenditures under such part are made.
(d) LOW-INCOME ENTITLEMENTS.—(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 1 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:
Aid to families with dependent children (75–
0412–0–1–609);
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); and
Supplemental security income program (75–
0406–0–1–609).
(e) FEDERAL RETIREMENT AND VETERANS’ PRO-
GRAMS.—
(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
under section 221(c)(2), which shall in no case ex-
ceed 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 reductions shall occur starting with the
next periodic payment.
(2) The programs subject to paragraph (1) are:
Benefits payable under sections 3(a),
3(f)(3), 4(a), or 4(f) of the Railroad Retirement
Act of 1974;
Veterans’ pensions (36–0154–0–1–701).
(f) MEDICARE PROGRAM.—
(1) CALCULATION OF REDUCTION IN INDIVID-
UAL PAYMENT AMOUNTS.—To achieve the total per-
centage reduction in those programs required by sec-
tion 221, the percentage reduction that shall apply
to payments under the health insurance programs
under title XVIII of the Social Security Act for serv-
ices furnished after any sequestration order is issued
shall be such that the reduction made in payments
under that order shall achieve the required total per-
centage reduction in those payments for that fiscal
year as determined on a 12-month basis.
(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 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
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 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 subtitle.
(g) FEDERAL PAY.—
(1) IN GENERAL.—Except as provided in sec-
tion 222(b)(3), new budget authority to pay Federal
personnel shall be reduced by the uniform percent-
age calculated under section 221(c), but no seques-
tration order may reduce or have the effect of reduc-
ing the rate of pay to which any individual is enti-
tled 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 element of military pay to which any in-
dividual is entitled under title 37, United States
Code, or any increase in rates of pay which is sched-
uled to take effect 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.
(h) 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.
(i) 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 subtitle by
a percentage not to exceed the percentage by which the
Federal 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.
(j) COMMODITY CREDIT CORPORATION.—
(1) POWERS AND AUTHORITIES OF THE COM-
MODITY CREDIT CORPORATION.—This subtitle shall
not restrict the Commodity Credit Corporation in
the discharge of its authority and responsibility as a
corporation 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
corporation, 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
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 ben-
efits 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 marketing
relationships among agricultural commod-
ities (including both contract and non-con-
tract commodities) are not distorted.
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 market-
ing resources or that are alternative commod-
ities among which a producer could choose in
making annual production decisions.
(5) CERTAIN
AUTHORITY
NOT
TO
BE
LIM-
ITED.—Nothing in this subtitle shall limit or reduce
in any way any appropriation that provides the
Commodity Credit Corporation with funds to cover
the Corporation’s net realized losses.
(k) THE JOBS PORTION OF AFDC.—
(1) FULL
AMOUNT
OF
SEQUESTRATION
RE-
QUIRED.—Any sequestration order shall accomplish
the full amount of any required reduction of the job
opportunities and basic skills training program
under section 402(a)(19), and part F of title VI, of
the Social Security Act, in the manner specified in
this subsection. Such an order may not reduce any
Federal matching rate pursuant to section 403(l) of
the Social Security Act.
(2) NEW ALLOTMENT FORMULA.—
(A) 
GENERAL
RULE.—Notwithstanding
section 403(k) of the Social Security Act, each
State’s percentage share of the amount avail-
able after sequestration for direct spending pur-
suant to section 403(l) of such Act shall be
equal to that percentage of the total amount
paid to the States pursuant to such section
403(l) for the prior fiscal year that is rep-
resented by the amount paid to such State pur-
suant to such section 403(l) for the prior fiscal
year, except that a State may not be allotted an
amount under this subparagraph that exceeds
the amount that would have been allotted to
such State pursuant to such section 403(k) had
the sequestration not been in effect.
(B) REALLOTMENT OF AMOUNTS REMAIN-
ING UNALLOTTED AFTER APPLICATION OF GEN-
ERAL RULE.—Any amount made available after
sequestration for direct spending pursuant to
section 403(l) of the Social Security Act that
remains unallotted as a result of subparagraph
(A) of this paragraph shall be allotted among
the States in proportion to the absolute dif-
ference between the amount allotted, respec-
tively, to each State as a result of such sub-
paragraph and the amount that would have
been allotted to such State pursuant to section
403(k) of such Act had the sequestration not
been in effect, except that a State may not be
allotted an amount under this subparagraph
that results in a total allotment to the State
under this paragraph of more than the amount
that would have been allotted to such State
pursuant to such section 403(k) had the seques-
tration not been in effect.
(l) 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.
(m) 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 per-
centage 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 seques-
tered, 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, sequestration
in accounts for which obligations are indefinite shall
be taken in a manner to ensure that obligations in
the fiscal year of a sequestration and succeeding fis-
cal years are reduced, from the level that would ac-
tually have occurred, by the applicable sequestration
percentage.
SEC. 224. POINT OF ORDER.
(a) IN GENERAL.—It shall not be in order in the
House of Representatives or the Senate to consider any
bill, joint resolution, amendment, or conference report that
includes any provision that has the effect of modifying the
application of this subtitle to any entitlement program
subject to sequestration or exempt from sequestration
under this subtitle.
(b) WAIVER OR SUSPENSION.—This section may be
waived or suspended in the House of Representatives or
the Senate only by the affirmative vote of three-fifths of
the Members, duly chosen and sworn.
Subtitle D—Balanced Budget by
Fiscal Year 2000
SEC. 231. MAXIMUM SPENDING AMOUNTS.
Section 601(a)(1) of the Congressional Budget Act
of 1974 is amended to read as follows:
‘‘(1) MAXIMUM SPENDING AMOUNT.—The term
‘maximum spending amount’ means—
‘‘(A) with respect to fiscal year 1995,
$1,474,000,000,000 in outlays;
SEC. 233. TOTAL SPENDING POINT OF ORDER.
(a) TOTAL SPENDING POINT OF ORDER.—Section
605(b) of the Congressional Budget Act of 1974 is amend-
ed to read as follows:
‘‘(b) TOTAL SPENDING POINT OF ORDER.—
‘‘(1) IN GENERAL.—It shall not be in order in
the House of Representatives or the Senate to con-
sider any bill, joint resolution, amendment, or con-
ference report that includes any provision that would
result in total spending for a fiscal year that exceeds
the maximum permissible total spending amount for
such fiscal year as set forth in section 601(a)(1).
‘‘(2) WAIVER OR SUSPENSION.—This subsection
may be waived or suspended in the House of Rep-
resentatives or the Senate only by the affirmative
vote of three-fifths of its Members, duly chosen and
sworn.’’.
TITLE III—REGULATORY RELIEF
Subtitle 
A—Private 
Property
Rights 
Protection 
and 
Com-
pensation
SEC. 311. COMPENSATION FOR TAKING OF PRIVATE PROP-
ERTY.
(a) ELIGIBILITY.—
(1) IN GENERAL.—A private property owner is
entitled to receive compensation in accordance with
this section for any reduction in the value of prop-
erty owned by the private property owner, that—
(A) is a consequence of a limitation on an
otherwise lawful use of the property imposed by
a final agency action; and
(B) is measurable and not negligible.
(2) REDUCTIONS DEEMED NOT NEGLIGIBLE.—
For purposes of paragraph (1)(B), a reduction in
the value of property of 10 percent or more is
deemed not negligible.
(b) REQUEST FOR COMPENSATION.—Within 90 days
after receipt of notice of a final agency action with respect
to which compensation is required under subsection (a),
a private property owner may submit to the head of the
agency a request in writing for compensation under this
section.
(c) AGENCY OFFER.—Within 180 days after the re-
ceipt of a request for compensation submitted in accord-
ance with subsection (b) with respect to an agency action,
the head of the agency shall stay the agency action and
provide to the private property owner an offer to com-
pensate the private property owner for the difference be-
tween—
(1) the fair market value of the property deter-
mined based on the value of the property if the
agency action were not implemented; minus
(2) the fair market value of the property deter-
mined based on the value of the property if the
agency action were implemented.
(d) PRIVATE PROPERTY OWNERS’ RESPONSE.—A
private property owner shall have 60 days after the date
of receipt of an offer under subsection (c) to accept or
to reject the offer.
(e) ARBITRATION.—If a private property owner re-
jects the offer under subsection (c), the private property
owner may submit the matter for arbitration to an arbitra-
tor appointed by the head of the agency from a list of
arbitrators submitted by the American Arbitration Asso-
ciation. The arbitrator shall determine the amount of com-
pensation to which the property owner is entitled under
this section, in accordance with subsection (c) (1) and (2).
The arbitration shall be conducted in accordance with the
real estate valuation arbitration rules of that association.
For purposes of this section, an arbitration is binding on
the head of an agency and the private property owner as
to the amount, if any, of compensation owed to the private
property owner under this section.
(f) PAYMENT.—The head of an agency shall pay a
private property owner any compensation required under
the terms of an offer of the agency head that is accepted
by the private property owner in accordance with sub-
section (d), or under a decision of an arbiter under sub-
section (e), by not later than 60 days after the date of
the acceptance or the date of the issuance of the decision,
respectively.
SEC. 312. DEFINITIONS.
In this subtitle:
(1) The term ‘‘private property owner’’ means
a non-Federal person (other than an officer, em-
ployee, agent, department, or instrumentality of a
State, municipality, or political subdivision of a
State, or a State, municipality, or subdivision of a
State) that—
(A) owns property referred to in paragraph
(2) (A) or (B); or
(B) holds property referred to in para-
graph (2)(C).
(2) The term ‘‘property’’ means—
(A) land;
(B) any interest in land; and
(C) any proprietary water right.
(3) The term ‘‘agency action’’ has the meaning
given that term in section 551(13) of title 5, United
States Code.
Subtitle B—Measuring Costs of
Federal Regulations
SEC. 321. OMB AND CBO PROJECTIONS OF COSTS OF COM-
PLYING WITH FEDERAL MANDATES.
(a) OMB REPORT.—Not later than December 31 of
each year, the Director of the Office of Management and
Budget shall submit to the President a report containing
the following information:
(1) A projection of the aggregate direct costs
that will be incurred in the next full fiscal year by
State and local governments in complying with all
mandates established by any Federal statutes and
regulations.
(2) A projection of the aggregate direct costs
that will be incurred in the next full fiscal year by
the private sector in complying with those mandates.
(3) A projection of the costs determined under
each of paragraphs (1) and (2) as a percentage of
the projected gross domestic product of the United
States for the next full fiscal year.
(b) CBO REPORT.—Not later than the date each year
by which the President is required to submit a budget to
the Congress under section 1105 of title 31, United States
Code, the Director of the Congressional Budget Office
shall submit to the Congress a report containing the infor-
mation described in paragraphs (1), (2), and (3) of sub-
section (a).
SEC. 322. PRESIDENT’S RECOMMENDATIONS FOR FREEZ-
ING COSTS OF COMPLYING WITH FEDERAL
MANDATES.
The President shall submit to the Congress each year
with the budget submitted under section 1105 of title 31,
United States Code—
(1) the most recent report of the Director of
the Office of Management and Budget under sub-
section (a);
(2) any comments of the President with respect
to that report; and
(3) recommendations of such changes in Fed-
eral laws and regulations as are necessary and ap-
propriate to ensure that during the fiscal year cov-
ered by the budget, the costs referred to in each of
paragraphs (1), (2), and (3) of subsection (a) do not
exceed the corresponding baseline costs.
SEC. 323. DEFINITIONS.
In this subtitle:
(1) BASELINE
COSTS.—The term ‘‘baseline
costs’’ means the projection of costs referred to in
each of paragraphs (1), (2), and (3) of section
321(a) that is included in the first report of the Di-
rector of the Office of Management and Budget
under that subsection.
(2) DIRECT COSTS.—The term ‘‘direct costs’’
means all expenditures occurring as a direct result
of complying with a mandate established by a Fed-
eral statute or regulation.
Subtitle C—Risk Assessment and
Cost/Benefit Analyses and Reports
SEC. 331. ANALYSES AND REPORTS REQUIRED FOR PRO-
POSED LEGISLATION.
Section 403 of the Congressional Budget Act of 1974
is amended—
(1) by redesignating paragraphs (3) and (4) as
paragraphs (6) and (7), respectively, and by adding
after paragraph (2) the following new paragraphs:
‘‘(3) an estimate of the costs which would be in-
curred by the private sector in carrying out or com-
plying with any significant bill or resolution in the
fiscal year in which it is to become effective and in
each of the 4 fiscal years following such fiscal year;
‘‘(4) an estimate of the risks to the public
health and safety which would result from any sig-
nificant bill or resolution;
‘‘(5) an estimate of the effects of any signifi-
cant bill or resolution on the economy, including the
rate of gross domestic product growth, job loss, and
price stability;’’;
(2) in paragraph (6) (as redesignated), by strik-
ing ‘‘(1) and (2)’’ and inserting ‘‘(1), (2), and (3)’’.
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