The determination under this paragraph shall be
made as of the most recent valuation date of the
plan preceding the qualified transfer.
‘‘(2) COORDINATION
WITH
SECTION
412.—In
the case of a qualified transfer—
‘‘(A) any assets transferred in a plan year
on or before the valuation date for such year
(and any income allocable thereto) shall, for
purposes of section 412, be treated as assets in
the plan as of the valuation date for such year,
and
‘‘(B) the plan shall be treated as having a
net 
experience 
loss 
under 
section
412(b)(2)(B)(iv) in an amount equal to the
amount of such transfer and for which amorti-
zation charges begin for the first plan year
after the plan year in which such transfer oc-
curs, except that such section shall be applied
to such amount by substituting ‘10 plan years’
for ‘5 plan years’.’’
SEC. 104. REPEAL OF ALTERNATIVE MINIMUM TAX.
Part VI of subchapter A of chapter 1 of the Internal
Revenue Code of 1986 is hereby repealed.
SEC. 105. REPEAL OF CREDITS.
Part IV of subchapter A of chapter 1 of the Internal
Revenue Code of 1986 is hereby repealed.
SEC. 106. REPEAL OF ESTATE AND GIFT TAXES AND OBSO-
LETE INCOME TAX PROVISIONS.
(a) REPEAL OF ESTATE AND GIFT TAXES.—
(1) IN GENERAL.—Subtitle B of the Internal
Revenue Code of 1986 is hereby repealed.
(2) EFFECTIVE
DATE.—The repeal made by
paragraph (1) shall apply to the estates of decedents
dying, and gifts and generation-skipping transfers
made, after December 31, 1996.
(b) REPEAL
OF OBSOLETE INCOME TAX PROVI-
SIONS.—
(1) IN GENERAL.—Except as provided in para-
graph (2), chapter 1 of the Internal Revenue Code
of 1986 is hereby repealed.
(2) EXCEPTIONS.—Paragraph (1) shall not
apply to—
(A) sections 1, 11, and 63 of such Code,
as amended by this Act,
(B) those provisions of chapter 1 of such
Code which are necessary for determining
whether or not—
(i) retirement distributions are includ-
ible in the gross income of employees, or
(ii) an organization is exempt from
tax under such chapter, and
(C) subchapter D of such chapter 1 (relat-
ing to deferred compensation).
SEC. 107. EFFECTIVE DATE.
Except as otherwise provided in this subtitle, the
amendments made by this subtitle shall apply to taxable
years beginning after December 31, 1996.
Subtitle B—Supermajority
Required for Tax Changes
SEC. 111. SUPERMAJORITY REQUIRED.
(a) IN GENERAL.—It shall not be in order in the
House of Representatives or the Senate to consider any
bill, joint resolution, amendment thereto, or conference re-
port thereon that includes any provision that—
(1) increases any Federal income tax rate,
(2) creates any additional Federal income tax
rate,
(3) reduces the standard deduction, or
(4) provides any exclusion, deduction, credit or
other benefit which results in a reduction in Federal
revenues.
(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.
TITLE II—SPENDING RESTRAINT
AND BUDGET PROCESS REFORM
Subtitle A—Balanced Budget by
Fiscal Year 2002
SEC. 201. 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 1998,
$1,653,000,000,000 in outlays;
‘‘(B) with respect to fiscal year 1999,
$1,687,000,000,000 in outlays;
‘‘(C) with respect to fiscal year 2000,
$1,748,000,000,000 in outlays;
‘‘(D) with respect to fiscal year 2001,
$1,799,000,000,000 in outlays; and
‘‘(E) with respect to fiscal year 2002,
$1,851,000,000,000 in outlays.’’.
SEC. 202. ENFORCING MAXIMUM SPENDING SEQUESTRA-
TION.
(a) SEQUESTRATION.—Section 253(a) of the Bal-
anced Budget and Emergency Deficit Control Act of 1985
is amended to read as follows:
‘‘(a) SEQUESTRATION.—Within 15 days after Con-
gress adjourns to end a session (other than the One Hun-
dred Third Congress), and on the same day as sequestra-
tion (if any) under sections 251 and 252, but after any
sequestration required by those sections, there shall be a
sequestration (if necessary) to reduce total Federal spend-
ing to the maximum permissible level as set forth in sec-
tion 601(a)(1) of the Congressional Budget Act of 1974.’’.
(b) CONFORMING AMENDMENT TO HEADING.—The
section heading of section 253 of the Balanced Budget and
Emergency Deficit Control Act of 1985 is amended to
read as follows:
‘‘SEC. 253. ENFORCING MAXIMUM SPENDING LIMITS.’’.
(c) ADDITIONAL CONFORMING AMENDMENTS.—Sec-
tion 253 of the Balanced Budget and Emergency Deficit
Control Act of 1985 is amended—
(1) by repealing subsections (b), (g), and (h),
and by redesignating subsections (c), (d), (e), and
(f), as subsections (b), (c), (d), and (e), respectively;
(2) in subsection (b) (as redesignated), by
amending the first sentence to read as follows: ‘‘To
reduce total Federal spending to the maximum per-
missible level for a budget year, 20 percent of the
required outlay reductions shall be obtained from
non-exempt defense accounts (accounts designated
as function 050 in the President’s fiscal year 1998
budget submission) and 80 percent from non-ex-
empt, non-defense accounts (all other non-exempt
accounts).’’;
(3) in subsection (c) (as redesignated), by strik-
ing ‘‘subsection (c)’’ and inserting ‘‘subsection (b)’’;
and
(4) in subsection (e) (as redesignated), by strik-
ing ‘‘(b), (c), (d), and (e)’’ and inserting ‘‘(b), (c),
and (d)’’ and by striking ‘‘(d) or (e)’’ and inserting
‘‘(c) or ‘‘(d)’’.
(d) LOOK-BACK SEQUESTER.—Section 253 of the
Balanced Budget and Emergency Deficit Control Act of
1985 is amended by adding at the end the following new
subsection:
‘‘(f) LOOK-BACK SEQUESTER.—
‘‘(1) IN GENERAL.—On July 1 of each fiscal
year, the Director of OMB shall determine if laws
effective during the current fiscal year will cause
spending to exceed the maximum spending amount
for such fiscal year. If the limit is exceeded, there
shall be a preliminary sequester on July 1 to elimi-
nate the excess.
‘‘(2) PERMANENT
SEQUESTER.—Budget au-
thority sequestered on July 1 pursuant to paragraph
(1) shall be permanently canceled on July 15.
‘‘(3) NO MARGIN.—The margin for determining
a sequester under this subsection shall be zero.
‘‘(4) SEQUESTRATION PROCEDURES.—The pro-
vision of subsections (b), (c), and (d) of this section
shall apply to a sequester under this subsection.’’.
(e) REPORTS.—Section 254 of the Balanced Budget
and Emergency Deficit Control Act of 1985 is amended—
(1) by striking subsection (c);
(2) in subsection (d)(1), by striking ‘‘deficit se-
questration’’ and inserting ‘‘total spending seques-
tration’’;
(3) in subsection (d) by repealing paragraph (4)
and inserting the following new paragraph:
‘‘(4) TOTAL
SPENDING
SEQUESTRATION
RE-
PORTS.—The preview reports shall set forth for the
budget year estimates for each of the following:
‘‘(A) The amount of reductions required
from defense accounts and the reductions re-
quired from non-defense accounts.
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.’’.
Subtitle B—Zero Based Budgeting
and Decennial Sunsetting
SEC. 211. REAUTHORIZATION OF DISCRETIONARY PRO-
GRAMS AND UNEARNED ENTITLEMENTS.
(a) FISCAL YEAR 1998.—Effective October 1, 1997,
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 1999.—Effective October 1, 1998,
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 2001 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) SECOND 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 2001
and each 10 years thereafter, the spending authority de-
scribed in section 211(b) is terminated unless such spend-
ing authority is reauthorized after the last date the spend-
ing authority was required to be reauthorized under this
subtitle.
Æ