in OMB’s final sequestration report for that 
prior year; and 
‘‘(C) any net deficit increase or decrease in 
the current year resulting from all OMB esti-
mates for the current year of direct spending 
legislation transmitted under subsection (d) of 
this section that were not reflected in the final 
OMB sequestration report for the current year. 
‘‘(D) for fiscal year 2005, before making 
the calculations required in subparagraphs (A) 
through (C), OMB shall assume an automatic 
deficit increase of $8,400,000,000. 
‘‘(c) ELIMINATING A DEFICIT INCREASE.—(1) The 
amount required to be sequestered in a fiscal year under 
subsection (b) shall be obtained from non-exempt direct 
spending accounts from actions taken in the following 
order: 
‘‘(A) FIRST.—All reductions in automatic 
spending increases specified in section 256(a) 
shall be made. 
‘‘(B) SECOND.—If additional reductions in 
direct spending accounts are required to be 
made, the maximum reductions permissible 
under sections 256(b) (guaranteed and direct
student loans) and 256(c) (foster care and 
adoption assistance) shall be made. 
‘‘(C) THIRD.—(i) If additional reductions 
in direct spending accounts are required to be 
made, each remaining non-exempt direct spend-
ing account shall be reduced by the uniform 
percentage necessary to make the reductions in 
direct spending required by paragraph (1); ex-
cept that the medicare programs specified in 
section 256(d) shall not be reduced by more 
than 4 percent and the uniform percentage ap-
plicable to all other direct spending programs 
under this paragraph shall be increased (if nec-
essary) to a level sufficient to achieve the re-
quired reduction in direct spending. 
‘‘(ii) For purposes of determining reduc-
tions under clause (i), outlay reductions (as a 
result of sequestration of Commodity Credit 
Corporation commodity price support contracts 
in the fiscal year of a sequestration) that would 
occur in the following fiscal year shall be cred-
ited as outlay reductions in the fiscal year of 
the sequestration. 
‘‘(2) For purposes of this subsection, accounts 
shall be assumed to be at the level in the baseline
for fiscal year 2006 and for fiscal years 2007 
through 2010 at the baseline after adjusting for any 
sequester in fiscal year 2005. 
‘‘(d) ESTIMATES.—
‘‘(1) CBO ESTIMATES.—As soon as practicable 
after Congress completes action on any direct spend-
ing, CBO shall provide an estimate to OMB of that 
legislation. 
‘‘(2) OMB ESTIMATES.—Not later than 7 cal-
endar days (excluding Saturdays, Sundays, and legal 
holidays) after the date of enactment of any direct 
spending, OMB shall transmit a report to the House 
of Representatives and to the Senate containing—
‘‘(A) the CBO estimate of that legislation; 
‘‘(B) an OMB estimate of that legislation 
using current economic and technical assump-
tions; and 
‘‘(C) an explanation of any difference be-
tween the 2 estimates. 
‘‘(3) SIGNIFICANT
DIFFERENCES.—If during 
the preparation of the report under paragraph (2) 
OMB determines that there is a significant dif-
ference between the OMB and CBO estimates, OMB 
shall consult with the Committees on the Budget of 
the House of Representatives and the Senate regard-