[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2003 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 2003

To reform the budget process and enforce the bipartisan balanced budget 
                           agreement of 1997.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 20, 1997

 Mr. Barton of Texas (for himself, Mr. Minge, Mr. Stenholm, Mr. Wamp, 
   Mr. Andrews, Mr. Ballenger, Mr. Boyd, Mr. Castle, Mr. Tanner, Mr. 
   Tauscher, Mr. Visclosky, Mr. Condit, Mr. Luther, Ms. Sanchez, Mr. 
 Ramstad, Mr. Neumann, and Mr. Graham) introduced the following bill; 
 which was referred to the Committee on the Budget, and in addition to 
    the Committees on Rules, and Ways and Means, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL


 
To reform the budget process and enforce the bipartisan balanced budget 
                           agreement of 1997.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Budet Enforcement 
Act of 1997''.
    (b) Table of Contents.--

Sec. 1. Short title and table of contents.
Sec. 2. Definitions.
 TITLE I--ENSURE THAT THE BIPARTISAN BALANCED BUDGET AGREEMENT OF 1997 
                           ACHIEVES ITS GOAL

Sec. 101. Timetable.
Sec. 102. Procedures to avoid sequestration or delay of new revenue 
                            reductions.
Sec. 103. Effect on Presidents' budget submissions; point of order.
Sec. 104. Deficit and revenue targets.
Sec. 105. Direct spending caps.
Sec. 106. Economic assumptions.
Sec. 107. Revisions to the caps for entitlements and other spending and 
                            to the revenue and deficit targets in this 
                            Act.
                    TITLE II--ENFORCEMENT PROVISIONS

Sec. 201. Reporting excess spending.
Sec. 202. Enforcing direct spending caps.
Sec. 203. Sequestration rules.
Sec. 204. Revenue enforcement.
Sec. 205. Exempt programs and activities.
Sec. 206. Special rules.
Sec. 207. The current law baseline.
Sec. 208. Limitations on emergency spending.

SEC. 2. DEFINITIONS.

    For purposes of this Act:
            (1) Eligible population.--The term ``eligible population'' 
        shall mean those individuals to whom the United States is 
        obligated to make a payment under the provisions of a law 
        creating entitlement authority. Such term shall not include 
        States, localities, corporations or other nonliving entities.
            (2) Sequester and sequestration.--The terms ``sequester'' 
        and ``sequestration'' refer to or mean the cancellation of 
        budgetary resources provided by discretionary appropriations or 
        direct spending law.
            (3) Breach.--The term ``breach'' means, for any fiscal 
        year, the amount (if any) by which outlays for that year 
        (within a category of direct spending) is above that category's 
        direct spending cap for that year.
            (4) Baseline.--The term ``baseline'' means the projection 
        (described in section 207) of current levels of new budget 
        authority, outlays, receipts, and the surplus or deficit into 
        the budget year and the outyears.
            (5) Budgetary resources.--The term ``budgetary resources'' 
        means new budget authority, unobligated balances, direct 
        spending authority, and obligation limitations.
            (6) Discretionary appropriations.--The term ``discretionary 
        appropriations'' means budgetary resources (except to fund 
        direct spending programs) provided in appropriation Acts. If an 
        appropriation Act alters the level of direct spending or 
        offsetting collections, that effect shall be treated as direct 
        spending. Classifications of new accounts or activities and 
        changes in classifications shall be made in consultation with 
        the Committees on Appropriations and the Budget of the House of 
        Representatives and the Senate and with CBO and OMB.
            (7) Direct spending.--The term ``direct spending'' means--
                    (A) budget authority provided by law other than 
                appropriation Acts, including entitlement authority;
                    (B) entitlement authority; and
                    (C) the food stamp program.
        If a law other than an appropriation Act alters the level of 
        discretionary appropriations or offsetting collections, that 
        effect shall be treated as direct spending.
            (8) Entitlement authority.--The term ``entitlement 
        authority'' means authority (whether temporary or permanent) to 
        make payments (including loans and grants), the budget 
        authority for which is not provided for in advance by 
        appropriation Acts, to any person or government if, under the 
        provisions of the law containing such authority, the United 
        States is obligated to make such payments to persons or 
        governments who meet the requirements established by such law.
            (9) Current.--The term ``current'' means, with respect to 
        OMB estimates included with a budget submission under section 
        1105(a) of title 31 U.S.C., the estimates consistent with the 
        economic and technical assumptions underlying that budget.
            (10) Account.--The term ``account'' means an item for which 
        there is a designated budget account designation number in the 
        President's budget.
            (11) Budget year.--The term ``budget year'' means the 
        fiscal year of the Government that starts on the next October 
        1.
            (12) Current year.--The term ``current year'' means, with 
        respect to a budget year, the fiscal year that immediately 
        precedes that budget year.
            (13) Outyear.--The term ``outyear'' means, with respect to 
        a budget year, any of the fiscal years that follow the budget 
        year.
            (14) OMB.--The term ``OMB'' means the Director of the 
        Office of Management and Budget.
            (15) CBO.--The term ``CBO'' means the Director of the 
        Congressional Budget Office.
            (16) Budget outlays and outlays.--The terms ``budget 
        outlays'' and ``outlays'' mean, with respect to any fiscal 
        year, expenditures of funds under budget authority during such 
        year.
            (17) Budget authority and new budget authority.--The terms 
        ``budget authority'' and ``new budget authority'' have the 
        meanings given to them in section 3 of the Congressional Budget 
        and Impoundment Control Act of 1974.
            (18) Appropriation act.--The term ``appropriation Act'' 
        means an Act referred to in section 105 of title 1 of the 
        United States Code.
            (19) Consolidated deficit.--The term ``consolidated 
        deficit'' means, with respect to a fiscal year, the amount by 
        which total outlays exceed total receipts during that year.
            (20) Surplus.--The term ``surplus'' means, with respect to 
        a fiscal year, the amount by which total receipts exceed total 
        outlays during that year.
            (21) Direct spending caps.--The term ``direct spending 
        caps'' means the nominal dollar limits for entitlements and 
        other mandatory spending pursuant to section 105 (as modified 
        by any revisions provided for in this Act).

 TITLE I--ENSURE THAT THE BIPARTISAN BALANCED BUDGET AGREEMENT OF 1997 
                           ACHIEVES ITS GOAL

SEC. 101. TIMETABLE.

On or before:                       Action to be completed:
    January 15.....................
                                        CBO economic and budget update.
    First Monday in February.......
                                        President's budget update based 
                                                on new assumptions.
    August 1.......................
                                        CBO and OMB updates.
    August 15......................
                                        Preview report.
    Not later than November 1 (and 
        as soon as practical after 
        the end of the fiscal).
                                        OMB and CBO Analyses of 
                                                Deficits, Revenues and 
                                                Spending Levels and 
                                                Projections for the 
                                                Upcoming Year.
    November 1-December 15.........
                                        Congressional action to avoid 
                                                sequestration.
    December 15....................
                                        OMB issues final (look back) 
                                                report for prior year 
                                                and preview for current 
                                                year.
    December 15....................
                                        Presidential sequester order or 
                                                order delaying new/
                                                additional revenues 
                                                reductions scheduled to 
                                                take effect pursuant to 
                                                reconciliation 
                                                legislation enacted in 
                                                calendar year 1997.

SEC. 102. PROCEDURES TO AVOID SEQUESTRATION OR DELAY OF NEW REVENUE 
              REDUCTIONS.

    (a) Special Message.--If the OMB Analysis of Actual Spending Levels 
and Projections for the Upcoming Year indicates that--
            (1) deficits in the most recently completed fiscal year 
        exceeded, or the deficits in the budget year are projected to 
        exceed, the deficit targets in section 104;
            (2) revenues in the most recently completed fiscal year 
        were less than, or revenues in the current year are projected 
        to be less than, the revenue targets in section 104; or
            (3) outlays in the most recently completed fiscal year 
        exceeded, or outlays in the current year are projected to 
        exceed, the caps in section 104;
the President shall submit to Congress with the OMB Analysis of Actual 
Spending Levels and Projections for the Upcoming Year a special message 
that includes proposed legislative changes to--
            (A) offset the net deficit or outlay excess;
            (B) offset any revenue shortfall; or
            (C) revise the deficit or revenue targets or the outlay 
        caps contained in this Act;
through any combination of--
            (i) reductions in outlays;
            (ii) increases in revenues; or
            (iii) increases in the deficit targets or expenditure caps, 
        or reductions in the revenue targets, if the President submits 
        a written determination that, because of economic or 
        programmatic reasons, none of the variances from the balanced 
        budget plan should be offset.
    (b) Introduction of the President's Package.--Not later than 
November 15, the message from the President required pursuant to 
subsection (a) shall be introduced as a joint resolution in the House 
of Representatives or the Senate by the chairman of its Committee on 
the Budget. If the chairman fails to do so, after November 15, the 
joint resolution may be introduced by any Member of that House of 
Congress and shall be referred to the Committee on the Budget of that 
House.
    (c) House Budget Committee Action.--The Committee on the Budget of 
the House of Representatives shall, by November 15, report a joint 
resolution containing--
            (1) the recommendations in the President's message, or 
        different policies and proposed legislative changes than those 
        contained in the message of the President, to ameliorate or 
        eliminate any excess deficits or expenditures or any revenue 
        shortfalls, or
            (2) any changes to the deficit or revenue targets or 
        expenditure caps contained in this Act, except that any changes 
        to the deficit or revenue targets or expenditure caps cannot be 
        greater than the changes recommended in the message submitted 
        by the President.
    (d) Procedure if the Committees on the Budget of the House of 
Representatives or Senate Fails To Report Required Resolution.--
            (1) Automatic discharge of committees on the budget of the 
        house.--If the Committee on the Budget of the House of 
        Representatives fails, by November 20, to report a resolution 
        meeting the requirements of subsection (c), the committee shall 
        be automatically discharged from further consideration of the 
        joint resolution reflecting the President's recommendations 
        introduced pursuant to subsection (a), and the joint resolution 
        shall be placed on the appropriate calendar.
            (2) Consideration of discharge resolution in the house.--If 
        the Committee has been discharged under paragraph (1) above, 
        any Member may move that the House of Representatives consider 
        the resolution. Such motion shall be highly privileged and not 
        debatable. It shall not be in order to consider any amendment 
        to the resolution except amendments which are germane and which 
        do not change the net deficit impact of the resolution.
    (e) Consideration of Joint Resolution in the House.--Consideration 
of resolution reported pursuant to subsection (c) or (d) shall be 
pursuant to the procedures set forth in section 305 of the 
Congressional Budget Act of 1974 and subsection (d).
    (f) Transmittal to Senate.--If a joint resolution passes the House 
of Representatives pursuant to subsection (e), the Clerk of the House 
of Representatives shall cause the resolution to be engrossed, 
certified, and transmitted to the Senate within 1 calendar day of the 
day on which the resolution is passed. The resolution shall be referred 
to the Senate Committee on the Budget.
    (g) Requirements for Special Joint Resolution in the Senate.--The 
Committee on the Budget of the Senate shall report not later than 
December 1--
            (1) a joint resolution reflecting the message of the 
        President; or
            (2) the joint resolution passed by the House of 
        Representatives, with or without amendment; or
            (3) a joint resolution containing different policies and 
        proposed legislative changes than those contained in either the 
        message of the President or the resolution passed by the House 
        of Representatives, to eliminate all or part of any excess 
        deficits or expenditures or any revenue shortfalls, or
            (4) any changes to the deficit or revenue targets, or to 
        the expenditure caps, contained in this Act, except that any 
        changes to the deficit or revenue targets or expenditure caps 
        cannot be greater than the changes recommended in the message 
        submitted by the President.
    (h) Procedure if the Senate Budget Committee Fails To Report 
Required Resolution.--
            (1) Automatic discharge of senate budget committee.--In the 
        event that the Committee on the Budget of the Senate fails, by 
        December 1, to report a resolution meeting the requirements of 
        subsection (g), the committee shall be automatically discharged 
        from further consideration of the joint resolution reflecting 
        the President's recommendations introduced pursuant to 
        subsection (a) and of the resolution passed by the House of 
        Representatives, and both joint resolutions shall be placed on 
        the appropriate calendar.
            (2) Consideration of discharge resolution in the senate.--
        (A) If the Committee has been discharged under paragraph (1), 
        any member may move that the Senate consider the resolution. 
        Such motion shall be highly privileged and not debatable. It 
        shall not be in order to consider any amendment to the 
        resolution except amendments which are germane and which do not 
        change the net deficit impact of the resolution.
            (B) Consideration of resolutions reported pursuant to 
        subsections (c) or (d) shall be pursuant to the procedures set 
        forth in section 305 of the Congressional Budget Act of 1974 
        and subsection (d).
            (C) If the joint resolution reported by the Committees on 
        the Budget pursuant to subsection (c) or (g) or a joint 
        resolution discharged in the House of Representatives or the 
        Senate pursuant to subsection (d)(1) or (h)(1) would eliminate 
        less than--
                    (i) the entire amount by which actual or projected 
                deficits exceed, or revenues fall short of, the targets 
                in this Act; or
                    (ii) the entire amount by which actual or projected 
                outlays exceed the caps contained in this Act;
        then the Committee on the Budget of the Senate shall report a 
        joint resolution, raising the deficit targets or outlay caps, 
        or reducing the revenue targets for any year in which actual or 
        projected spending, revenues or deficits would not conform to 
        the deficit and revenue targets or expenditure caps in this 
        Act.
    (k)  Conference Reports Shall Fully Address Deficit Excess.--It 
shall not be in order in the House of Representatives or the Senate to 
consider a conference report on a joint resolution to eliminate all or 
part of any excess deficits or outlays or to eliminate all or part of 
any revenue shortfall compared to the deficit and revenue targets and 
the expenditure caps contained in this Act, unless--
            (1) the joint resolution offsets the entire amount of any 
        overage or shortfall; or
            (2) the House of Representatives and Senate both pass the 
        joint resolution reported pursuant to subsection (j)(2).
The vote on any resolution reported pursuant to subsection (j)(2) shall 
be solely on the subject of changing the deficit or revenue targets or 
the expenditure limits in this Act.

SEC. 103. EFFECT ON PRESIDENTS' BUDGET SUBMISSIONS; POINT OF ORDER.

    (a) Budget Submission.--Any budget submitted by the President 
pursuant to section 1105(a) of title 31, United States Code, for each 
of fiscal years 1998 through 2007 shall be consistent with the 
spending, revenue, and deficit levels established in sections 104 and 
105 or it shall recommend changes to those levels.
    (b) Point of Order.--It shall not be in order in the House of 
Representatives or the Senate to consider any concurrent resolution on 
the budget unless it is consistent with the spending, revenue, and 
deficit levels established in sections 104 and 105.

SEC. 104. DEFICIT AND REVENUE TARGETS.

    (a) Consolidated Deficit (or Surplus) Targets.--For purposes of 
sections 102 and 107, the consolidated deficit targets shall be--
            (1) for fiscal year 1998, $90,500,000,000;
            (2) for fiscal year 1999, $89,700,000,000;
            (3) for fiscal year 2000, $83,000,000,000;
            (4) for fiscal year 2001, $53,300,000,000; and
            (5) for fiscal year 2002, there shall be a surplus of not 
        less than $1,400,000,000.
    (b) Consolidated Revenue Targets.--For purposes of sections 102, 
107, 201, and 204, the consolidated revenue targets shall be--
            (1) for fiscal year 1998, $1,601,800,000,000;
            (2) for fiscal year 1999, $1,664,200,000,000;
            (3) for fiscal year 2000, $1,728,100,000,000;
            (4) for fiscal year 2001, $1,805,100,000,000; and
            (5) for fiscal year 2002, $1,890,400,000,000.

SEC. 105. DIRECT SPENDING CAPS.

    (a) In General.--Effective upon submission of the report by OMB 
pursuant to subsection (c), direct spending caps shall apply to all 
entitlement authority except for undistributed offsetting receipts and 
net interest outlays. For purposes of enforcing direct spending caps 
under this Act, each separate program shown in the table set forth in 
subsection (d) shall be deemed to be a category.
    (b) Budget Committee Reports.--Within 30 days after enactment of 
this Act, the Budget Committees of the House of Representatives and the 
Senate shall file with their respective Houses identical reports 
containing account numbers and spending levels for each specific 
category.
    (c) Report by OMB.--Within 30 days after enactment of this Act, OMB 
shall submit to the President and each House of Congress a report 
containing account numbers and spending limits for each specific 
category.
    (d) Contents of Reports.--All direct spending accounts not included 
in these reports under separate categories shall be included under the 
heading ``Other Entitlements and Mandatory Spending''. These reports 
may include adjustments among the caps set forth in this Act as 
required below, however the aggregate amount available under the 
``Total Entitlements and Other Mandatory Spending'' cap shall be 
identical in each such report and in this Act and shall be deemed to 
have been adopted as part of this Act. Each such report shall include 
the actual amounts of the caps for each year of fiscal years 1998 
through 2002 consistent with the concurrent resolution on the budget 
for FY 1998 for each of the following categories:
            Earned Income Tax Credit,
            Family Support,
            Federal retirement:
                    Civilian/other,
                    Military,
            Medicaid,
            Medicare,
            Social security,
            Supplemental security income,
            Unemployment compensation,
            Veterans' benefits,
            Medicare,
            Other entitlements and mandatory spending, and
            Aggregate entitlements and other mandatory spending.
(e) Additional Spending Limits.--Legislation enacted subsequent to this 
Act may include additional caps to limit spending for specific 
programs, activities, or accounts with these categories. Those 
additional caps (if any) shall be enforced in the same manner as the 
limits set forth in such joint explanatory statement.

SEC. 106. ECONOMIC ASSUMPTIONS.

    Subject to periodic reestimation based on changed economic 
conditions or changes in eligible population, determinations of the 
direct spending caps under section 105, any breaches of such caps, and 
actions necessary to remedy such breaches shall be based upon the 
economic assumptions set forth in the joint explanatory statement of 
managers accompanying the concurrent resolution on the budget for 
fiscal year 1998 (House Concurrent Resolution 84, 105th Congress).

SEC. 107. REVISIONS TO DEFICIT AND REVENUE TARGETS AND TO THE CAPS FOR 
              ENTITLEMENTS AND OTHER MANDATORY SPENDING.

    (a) Automatic Adjustments to Deficit and Revenue Targets and to 
Caps for Entitlements and Other Mandatory Spending.--When the President 
submits the budget under section 1105(a) of title 31, United States 
Code, for any year, OMB shall calculate (in the order set forth below), 
and the budget and reports shall include, adjustments to the deficit 
and revenue targets, and to the direct spending caps (and those limits 
as cumulatively adjusted) for the current year, the budget year, and 
each outyear, to reflect the following:
            (1) Changes to revenue targets.--
                    (A) Changes in growth.--For Federal revenues and 
                deficits under laws and policies enacted or effective 
                before July 1, 1997, growth adjustment factors shall 
                equal the ratio between the level of year-over-year 
                growth measured for the fiscal year most recently 
                completed and the applicable estimated level for that 
                year as described in section 105.
                    (B) Changes in inflation.--For Federal revenues and 
                deficits under laws and policies enacted or effective 
                before July 1, 1997, inflation adjustment factors shall 
                equal the ratio between the level of year-over-year 
                growth measured for the fiscal year most recently 
                completed and the applicable estimated level for that 
                year as described in section 105.
            (2) Adjustments to direct spending caps.--
                    (A) Changes in concepts and definitions.--The 
                adjustments produced by changes in concepts and 
                definitions shall equal the baseline levels of new 
                budget authority and outlays using up-to-date concepts 
                and definitions minus those levels using the concepts 
                and definitions in effect before such changes. Such 
                changes in concepts and definitions may only be made in 
                consultation with the Committees on Appropriations, the 
                Budget, and Government Reform and Oversight and 
                Governmental Affairs of the House of Representatives 
                and the Senate.
                    (B) Changes in net outlays.--Changes in net outlays 
                for all programs and activities exempt from 
                sequestration under section 204.
                    (C) Changes in inflation.--For direct spending 
                under laws and policies enacted or effective on or 
                before July 1, 1997, inflation adjustment factors shall 
                equal the ratio between the level of year-over-year 
                inflation measured for the fiscal year most recently 
                completed and the applicable estimated level for that 
                years as described in section 105 (relating to economic 
                assumptions). For direct spending under laws and 
                policies enacted or effective after July 1, 1997, there 
                shall be no adjustment to the direct spending caps (for 
                changes in economic conditions including inflation, nor 
                for changes in numbers of eligible beneficiaries) 
                unless--
                          (i) the Act or the joint explanatory 
                        statement of managers accompanying such Act 
                        providing new direct spending includes economic 
                        projections and projections of numbers of 
                        beneficiaries; and
                            (ii) such Act specifically provides for 
                        automatic adjustments to the direct spending 
                        caps in section 105 based on those projections.
                    (D) Changes in eligible populations.--For direct 
                spending under laws and policies enacted or effective 
                on or before July 1, 1997, the basis for adjustments 
                under this section shall be the same as the projections 
                underlying Table A-4, CBO Baseline Projections 
of  Mandatory Spending, Including Deposit Insurance (by fiscal year, in 
billions of dollars), published in An Analysis of the President's 
Budgetary Proposals for Fiscal Year 1998, March 1997, page 53. For 
direct spending under laws and policies enacted or effective after July 
1, 1997, there shall be no adjustment to the direct spending caps for 
changes in numbers of eligible beneficiaries unless--
                            (i) the Act or the joint explanatory 
                        statement of managers accompanying such Act 
                        providing new direct spending includes economic 
                        projections and projections of numbers of 
                        beneficiaries; and
                            (ii) such Act specifically provides for 
                        automatic adjustments to the direct spending 
                        caps in section 105 based on those projections.
                    (E) Intra-budgetary payments.--From discretionary 
                accounts to mandatory accounts. The baseline and the 
                discretionary spending caps shall be adjusted to 
                reflect those changes.
    (c) Changes to Deficit Targets.--The deficit targets in section 104 
shall be adjusted to reflect changes to the revenue targets or changes 
to the caps for entitlements and other mandatory spending pursuant to 
subsection (a).
    (d) Permissible Revisions to Deficit and Revenue Targets and Direct 
Spending Caps.--Deficit and revenue targets and direct spending caps as 
enacted pursuant to sections 104 and 105 may be revised as follows: 
Except as required pursuant to section 105(a), direct spending caps may 
only be amended by recorded vote. It shall be a matter of highest 
privilege in the House of Representatives and the Senate for a Member 
of the House of Representatives or the Senate to insist on a recorded 
vote solely on the question of amending such caps. It shall not be in 
order for the Committee on Rules of the House of Representatives to 
report a resolution waiving the provisions of this subsection. This 
subsection may be waived in the Senate only by an affirmative vote of 
three-fifths of the Members duly chosen and sworn.

                    TITLE II--ENFORCEMENT PROVISIONS

SEC. 201. REPORTING EXCESS SPENDING.

    (a) Analysis of Actual Deficit, Revenue, and Spending Levels.--As 
soon as practicable after any fiscal year, OMB shall compile a 
statement of actual deficits, revenues, and direct spending for that 
year. The statement shall identify such spending by categories 
contained in section 105.
    (b) Estimate of Necessary Spending Reduction.--Based on the 
statement provided under subsection (a), the OMB shall issue a report 
to the President and the Congress on December 15 of any year in which 
such statement identifies actual or projected deficits, revenues, or 
spending in the current or immediately preceding fiscal years in 
violation of the revenue targets or direct spending caps in section 104 
or 105, by more than one percent of the applicable total revenues or 
direct spending for such year. The report shall include:
            (1) All instances in which actual direct spending has 
        exceeded the applicable direct spending cap.
            (2) The difference between the amount of spending available 
        under the direct spending caps for the current year and 
        estimated actual spending for the categories associated with 
        such caps.
            (3) The amounts by which direct spending shall be reduced 
        in the current fiscal year so that total actual and estimated 
        direct spending for all cap categories for the current and 
        immediately preceding fiscal years shall not exceed the amounts 
        available under the direct spending caps for such fiscal years.
            (4) The amount of excess spending attributable solely to 
        changes in inflation or eligible populations.

SEC. 202. ENFORCING DIRECT SPENDING CAPS.

    (a) Purpose.--This title provides enforcement of the direct 
spending caps on categories of spending established pursuant to section 
105. This section shall apply for any fiscal year in which direct 
spending exceeds the applicable direct spending cap.
    (b) General Rules.--
            (1) Eliminating a breach.--Each non-exempt account within a 
        category shall be reduced by a dollar amount calculated by 
        multiplying the baseline level of sequestrable budgetary 
        resources in that account at that time by the uniform 
        percentage necessary to eliminate a breach within that 
        category.
            (2) Programs, projects, or activities.--Except as otherwise 
        provided, the same percentage sequestration shall apply to all 
        programs, projects and activities within a budget account.
            (3) Indefinite authority.--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 fiscal years are 
        reduced, from the level that would actually have occurred, 
by the applicable sequestration percentage or percentages.
            (4) Cancellation of budgetary resources.--Budgetary 
        resources sequestered from any account other than an trust, 
        special or revolving fund shall revert to the Treasury and be 
        permanently canceled.
            (5) Implementing regulations.--Notwithstanding any other 
        provision of law, administrative rules or similar actions 
        implementing any sequestration shall take effect within 30 days 
        after that sequestration.

SEC. 203. SEQUESTRATION RULES.

    (a) General Rules.--For programs subject to direct spending caps:
            (1) Triggering of sequestration.--Sequestration is 
        triggered if total direct spending subject to the caps exceeds 
        or is projected to exceed the aggregate cap for direct spending 
        for the current or immediately preceding fiscal year.
            (2) Calculation of reductions.--Sequestration shall reduce 
        spending under each separate direct spending cap in proportion 
        to the amounts each category of direct spending exceeded the 
        applicable cap.
            (3) Uniform percentages.--In calculating the uniform 
        percentage applicable to the sequestration of all spending 
        programs or activities within each category, or the uniform 
        percentage applicable to the sequestration of nonexempt direct 
        spending programs or activities, the sequestrable base for 
        direct spending programs and activities is the total level of 
        outlays for the fiscal year for those programs or activities in 
        the current law baseline.
            (4) Permanent sequestration of direct spending.--
        Obligations in sequestered direct spending accounts shall be 
        reduced in the fiscal year in which a sequestration occurs and 
        in all succeeding fiscal years. Notwithstanding any other 
        provision of this section, after the first direct spending 
        sequestration, any later sequestration shall reduce direct 
        spending by an amount in addition to, rather than in lieu of, 
        the reduction in direct spending in place under the existing 
        sequestration or sequestrations.
            (5) Special rule.--For any direct spending program in 
        which--
                    (A) outlays pay for entitlement benefits;
                    (B) a current-year sequestration takes effect after 
                the 1st day of the budget year;
                    (C) that delay reduces the amount of entitlement 
                authority that is subject to sequestration in the 
                budget; and
                    (D) the uniform percentage otherwise applicable to 
                the budget-year sequestration of a program or activity 
                is increased due to the delay;
        then the uniform percentage shall revert to the uniform 
        percentage calculated under paragraph (3) when the budget year 
        is completed.
            (6) Indexed benefit payments.--If, under any entitlement 
        program--
                    (A) benefit payments are made to persons or 
                governments more frequently than once a year; and
                    (B) the amount of entitlement authority is 
                periodically adjusted under existing law to reflect 
                changes in a price index (commonly called ``cost of 
                living adjustments'');
        sequestration shall first be applied to the cost of living 
        adjustment before reductions are made to the base benefit. For 
        the first fiscal year to which a sequestration applies, the 
        benefit payment reductions in such programs accomplished by the 
        order shall take effect starting with the payment made at the 
        beginning of January following a final sequester. For the 
        purposes of this subsection, veterans' compensation shall be 
        considered a program that meets the conditions of the preceding 
        sentence.
            (7) Loan programs.--For all loans made, extended, or 
        otherwise modified on or after any sequestration under loan 
        programs subject to direct spending caps--
                    (A) the sequestrable base shall be total fees 
                associated with all loans made extended or otherwise 
                modified on or after the date of sequestration; and
                    (B) the fees paid by borrowers shall be increased 
                by a uniform percentage sufficient to produce the 
                dollar savings in such loan programs for the fiscal 
                year or years of the sequestrations required by this 
                section.
        Notwithstanding any other provision of law, in any year in 
        which a sequestration is in effect, all subsequent fees shall 
        be increased by the uniform percentage and all proceeds from 
        such fees shall be paid into the general fund of the Treasury.
            (8) Insurance programs.--Any sequestration of a Federal 
        program that sells insurance contracts to the public (including 
        the Federal Crop Insurance Fund, the National Insurance 
Development Fund, the National Flood Insurance fund, insurance 
activities of the Overseas Private Insurance Corporation, and Veterans' 
Life insurance programs) shall be accomplished by increasing premiums 
on contracts entered into extended or otherwise modified, after the 
date a sequestration order takes effect by the uniform sequestration 
percentage. Notwithstanding any other provision of law, for any year in 
which a sequestration affecting such programs is in effect, subsequent 
premiums shall be increased by the uniform percentage and all proceeds 
from the premium increase shall be paid from the insurance fund or 
account to the general fund of the Treasury.
            (9) State grant formulas.--For all State grant programs 
        subject to direct spending caps--
                    (A) the total amount of funds available for all 
                States shall be reduced by the amount required to be 
                sequestered; and
                    (B) if States are projected to receive increased 
                funding in the budget year compared to the immediately 
                preceding fiscal year, sequestration shall first be 
                applied to the estimated increases before reductions 
                are made compared to actual payments to States in the 
                previous year--
                            (i) the reductions shall be applied first 
                        to the total estimated increases for all 
                        States; then
                            (ii) the uniform reduction shall be made 
                        from each State's grant; and
                            (iii) the uniform reduction shall apply to 
                        the base funding levels available to states in 
                        the immediately preceding fiscal year only to 
                        the extent necessary to eliminate any remaining 
                        excess over the applicable direct spending cap.
                    (10) Special rule for certain programs.--Except 
                matters exempted under section 204 and programs subject 
                to special rules set forth under section 205 and 
                notwithstanding any other provisions of law, any 
                sequestration required under this Act shall reduce 
                benefit levels by an amount sufficient to eliminate all 
                excess spending identified in the report issued 
                pursuant to section 201, while maintaining the same 
                uniform percentage reduction in the monetary value of 
                benefits subject to reduction under this subsection.
    (b) Within-Session Sequester.--If a bill or resolution providing 
direct spending for the current year is enacted before July 1 of that 
fiscal year and causes a breach within any direct spending cap for that 
fiscal year, 15 days later there shall be a sequestration to eliminate 
that breach within that cap.

SEC. 204. ENFORCING REVENUE TARGETS.

    (a) Purpose.--This section enforces the revenue targets established 
pursuant to section 104. This section shall apply for any year in which 
actual revenues were less than the applicable revenue target in the 
preceding fiscal year or are projected to be less than the applicable 
revenue target in the current year.
    (b) Estimate of Necessity To Suspend New Revenue Reductions.--Based 
on the statement provided under section 201(a), OMB shall issue a 
report to the President and the Congress on December 15 of any year in 
which such statement identifies actual or projected revenues in the 
current or immediately preceding fiscal years lower than the applicable 
revenue target in section 104, as adjusted pursuant to section 106, by 
more than 1 percent of the applicable total revenue target for such 
year. The report shall include--
            (1) all existing laws and policies enacted as part of any 
        reconciliation legislation in calendar 1997 which would cause 
        revenues to decline in the calendar year which begins January 
        1, compared to laws and policies in effect on December 15;
            (2) the amounts by which revenues would be reduced by 
        implementation of the provisions of law described in paragraph 
        (1) compared to provisions of law in effect on December 15; and
            (3) whether delaying implementation of the provisions of 
        law described in paragraph (1) would cause the total for 
        revenues in the projected revenues in the current fiscal year 
        and actual revenues in the immediately preceding fiscal year to 
        equal or exceed the total of the targets for the applicable 
        years.
    (c) General Rules.--
            (1) Delayed phase-in of new tax cuts.--No provision of the 
        Revenue Reconciliation Act of 1997--
                    (A) establishing or increasing any credit, 
                deduction, exclusion or eligibility limit; or
                    (B) reducing any rate
        shall first take effect in the calendar year following a year 
        in which actual revenues were less than the applicable revenue 
        target or revenues in the current year are projected to be less 
than the applicable target.
            (2) Suspension of indexation.--No new adjustment for 
        inflation shall be made to any credit, deduction, or exclusion 
        enacted as part of the Revenue Reconciliation Act of 1997 if 
        revenues in the preceding year were below the applicable 
        revenue target or revenues in the current year are projected to 
        be less than the applicable target.
    (d) Special Rules.--(1) All provisions of law included in the 
report pursuant to subsection (b)(1) shall be suspended until such time 
as the total of projected revenues in the current fiscal year and 
actual revenues in the immediately preceding fiscal year is equal to or 
greater than the relevant revenue targets in section 104; and
    (2) If subsection (c) would cause the total of projected revenues 
in the current year and actual revenues in the preceding fiscal year to 
exceed the relevant revenue targets in section 104, new policies to 
reduce revenues shall be modified sufficiently to raise revenues to the 
level of the targets for the relevant years.

SEC. 205. EXEMPT PROGRAMS AND ACTIVITIES.

    The following budget accounts, activities within accounts, or 
income shall be exempt from sequestration--
            (1) net interest;
            (2) all payments to trust funds from excise taxes or other 
        receipts or collections properly creditable to those trust 
        funds;
            (3) offsetting receipts and collections;
            (4) all payments from one Federal direct spending budget 
        account to another Federal budget account;
            (5) all intragovernmental funds including those from which 
        funding is derived primarily from other Government accounts;
            (6) expenses to the extent they result from private 
        donations, bequests, or voluntary contributions to the 
        Government;
            (7) nonbudgetary activities, including but not limited to--
                    (A) credit liquidating and financing accounts;
                    (B) the Pension Benefit Guarantee Corporation Trust 
                Funds;
                    (C) the Thrift Savings Fund;
                    (D) the Federal Reserve System; and
                    (E) appropriations for the District of Columbia to 
                the extent they are appropriations of locally raised 
                funds;
            (8) payments resulting from Government insurance, 
        Government 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;
            (9) the following accounts, which largely fulfill 
        requirements of the Constitution or otherwise make payments to 
        which the Government is committed--
                    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 permanent 
                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);
                    Payments of Vietnam and USS Pueblo prisoner-of-war 
                claims (15-0104-0-1-153):
                    Payments to copyright owners (03-5175-0-2-376);
                    Salaries of Article III judges (not including cost 
                of living adjustments);
                    Soldier's and Airman's Home, payment of claims (84-
                8930-0-7-705);
                    Washington Metropolitan Area Transit Authority, 
                interest payments (46-0300-0-1-401);
            (10) the following noncredit special, revolving, or trust-
        revolving funds--
                    Exchange Stabilization Fund (20-4444-0-3-155); and
                    Foreign Military Sales trust fund (11-82232-0-7-
                155).
    (j) Optional Exemption of Military Personnel.--
            (1) The President may, with respect to any military 
        personnel account, exempt that account from sequestration or 
provide for a lower uniform percentage reduction that would otherwise 
apply.
            (2) The President may not use the authority provided by 
        paragraph (1) unless he notifies the Congress of the manner in 
        which such authority will be exercised on or before the initial 
        snapshot date for the budget year.

SEC. 206. SPECIAL RULES.

    (a) Child Support Enforcement Program.--Any sequestration order 
shall accomplish the full amount of any required reduction in payments 
under sections 455 and 458 of the Social Security Act by reducing the 
Federal matching rate for State administrative costs under the program, 
as specified (for the fiscal year involved) in section 455(a) of such 
Act, to the extent necessary to reduce such expenditures by that 
amount.
    (b) Commodity Credit Corporation.--
            (1) Effective date.--For the Commodity Credit Corporation, 
        the date on which a sequestration order takes effect in a 
        fiscal year shall vary for each crop of a commodity. In 
        general, the sequestration order shall take effect when issued, 
        but for each crop of a commodity for which 1-year contracts are 
        issued as an entitlement, the sequestration order shall take 
        effect with the start of the sign-up period for that crop that 
        begins after the sequestration order is issued. Payments for 
        each contract in such a crop shall be reduced under the same 
        terms and conditions.
            (2) Dairy program.--
                    (A) As the sole means of achieving any reduction in 
                outlays under the milk price-support program, the 
                Secretary of Agriculture shall provide for a reduction 
                to be made in the price received by producers for all 
                milk in the United States and marketed by producers for 
                commercial use.
                    (B) That price reduction (measured in cents per 
                hundred-weight of milk marketed) shall occur under 
                subparagraph (A) of section 201(d)(2) of the 
                Agricultural Act of 1949 (7 U.S.C. 1446(d)(2)(A)), 
                shall begin on the day any sequestration order is 
                issued, and shall not exceed the aggregate amount of 
                the reduction in outlays under the milk price-support 
                program, that otherwise would have been achieved by 
                reducing payments made for the purchase of milk or the 
                products of milk under this subsection during that 
                fiscal year.
            (3) Effect of delay.--For purposes of subsection (b)(1), 
        the sequestrable base for Commodity Credit Corporation is the 
        current-year level of gross outlays resulting from new budget 
        authority that is subject to reduction under paragraphs (1) and 
        (2).
            (4) Certain authority not to be limited.--Nothing in this 
        Act shall restrict the Corporation in the discharge of its 
        authority and responsibility as a corporation to buy and sell 
        commodities in world trade, or limit or reduce in any way any 
        appropriation that provides the Corporation with funds to cover 
        its realized losses.
    (c) Earned Income Tax Credit.--
            (1) The sequestrable base for earned income tax credit 
        program is the dollar value of all current year benefits to the 
        entire eligible population.
            (2) In the event sequestration is triggered to reduce 
        earned income tax credits, all earned income tax credits shall 
        be reduced, whether or not such credits otherwise would result 
        in cash payments to beneficiaries, by a uniform percentage 
        sufficient to produce the dollar savings required by the 
        sequestration.
    (d) Regular and Extended Unemployment Compensation.--
            (1) A State may reduce each weekly benefit payment made 
        under the regular and extended unemployment benefit programs 
        for any week of unemployment occurring during any period with 
        respect to which payments are reduced under any sequestration 
        order by a percentage not to exceed the percentage by which the 
        Federal payment to the State is to be reduced for such week as 
        a result of such order.
            (2) A reduction by a State in accordance with paragraph (1) 
        shall not be considered as a failure to fulfill the 
        requirements of section 3304(a)(11) of the Internal Revenue 
        Code of 1986.
    (e) Federal Employees Health Benefits Fund.-- For the Federal 
Employees Health Benefits Fund, a sequestration order shall take effect 
with the next open season. The sequestration shall be accomplished by 
annual payments from that Fund to the General Fund of the Treasury. 
Those annual payments shall be financed solely by charging higher 
premiums. The sequestrable base for the Fund is the current-year level 
of gross outlays resulting from claims paid after the sequestration 
order takes effect.
    (f) Federal Housing Finance Board.-- Any sequestration of the 
Federal Housing Board shall be accomplished by annual payments (by the 
end of each fiscal year) from that Board to the general fund of the 
Treasury, in amounts equal to the uniform sequestration percentage for 
that year times the gross obligations of the Board in that year.
    (g) Federal Pay.--
            (1) In general.-- New budget authority to pay Federal 
        personnel from direct spending accounts shall be reduced by the 
        uniform percentage calculated under section 203(c)(3), as 
        applicable, but no sequestration order may reduce or have the 
        effect of reducing the rate of pay to which any individual is 
        entitled under any statutory pay system (as increased by any 
        amount payable under section 5304 of title 5, United States 
        Code, or any increase in rates of pay which is scheduled to 
        take effect under section 5303 of title 5, United States Code, 
        section 1109 of title 37, United States Code, or any other 
        provision of law.
            (2) Definitions.--For purposes of this subsection--
                    (A) the term ``statutory pay system'' shall have 
                the meaning given that term in section 5302(1) of title 
                5, United States Code;
                    (B) the term ``elements of military pay'' means--
                            (i) the elements of compensation of members 
                        of the uniformed services specified in section 
                        1009 of title 37, United States Code;
                            (ii) allowances provided members of the 
                        uniformed services under sections 403(a) and 
                        405 of such title; and
                            (iii) cadet pay and midshipman pay under 
                        section 203(c) of such title; and
                    (C) the term ``uniformed services'' shall have the 
                same meaning given that term in section 101(3) of title 
                37, United States Code.
    (h) Medicare.--
            (1) Timing of application of reductions.--
                    (A) In general.--Except as provided in subparagraph 
                (B), if a reduction is made in payment amounts pursuant 
                to sequestration order, the reduction shall be applied 
                to payment for services furnished after the effective 
                date of the order. For purposes of the previous 
                sentence, in the case of inpatient services 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 in payment amounts pursuant to a sequestration 
                order, the reduction shall be applied to payment for 
                costs for such services incurred at any time during 
                each cost reporting period of the provider any part of 
                which occurs after the effective date of order, but 
                only (for each such cost reporting period) in the same 
                proportion as the fraction of the cost reporting period 
                that occurs after the effective date of the order.
            (2) No increase in beneficiary charges in assignment-
        related cases.--If a reduction in payment amounts is made 
        pursuant to a sequestration order for services for which 
        payment under part B of title XVIII of the Social Security Act 
        is made on the basis of an assignment described in section 
        1842(b)(3)(B)(ii), in accordance with section 1842(b)(6)(B), or 
        under the procedure described in section 1870(f)(1) of such 
        Act, the person furnishing the services shall be considered to 
        have accepted payment of the reasonable charge for the 
        services, less any reduction in payment amount made pursuant to 
        a sequestration order, as payment in full.
            (3) Part b premiums.--In computing the amount and method of 
        sequestration from part B of title XVIII of the Social Security 
        Act--
                    (A) the amount of sequestration shall be calculated 
                by multiplying the total amount by which Medicare 
                spending exceeds the appropriate spending cap by a 
                percentage that reflects the ratio of total spending 
                under Part B to total Medicare spending; and
                    (B) sequestration in the Part B program shall be 
                accomplished by increasing premiums to beneficiaries.
            (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 Security Act, the Secretary of Health 
        and Human Services shall not take into account any reductions 
        in payment amounts which have been or may be effected under 
        this part.
    (i) Postal Service Fund.-- Any sequestration of the Postal Service 
Fund shall be accomplished by annual payments from that Fund to the 
General Fund of the Treasury, and the Postmaster General of the United 
States and shall have the duty to make those payments during the first 
fiscal year to which the sequestration order applies and each 
succeeding fiscal year. The amount of each annual payment shall be--
            (1) the uniform sequestration percentage, times
            (2) the estimated gross obligations of the Postal Service 
        Fund in that year other than those obligations financed with an 
        appropriation for revenue forgone that year.
Any such payment for a fiscal year shall be made as soon as possible 
during the fiscal year, except that it may be made in installments 
within that year if the payment schedule is approved by the Secretary 
of the Treasury. Within 30 days after the sequestration order is 
issued, the Postmaster General shall submit to the Postal Rate 
Commission a plan for financing the annual payment for that fiscal year 
and publish that plan in the Federal Register. The plan may assume 
efficiencies in the operation of the Postal Service, reductions in 
capital expenditures, increases in the prices of services, or any 
combination, but may not assume a lower Fund surplus or higher Fund 
deficit and shall follow the requirements of existing law governing the 
Postal Service in all other respects. Within 30 days of the receipt of 
that plan, the Postal Rate Commission shall approve the plan or modify 
it in the manner that modifications are allowed under current law. If 
the Postal Rate Commission does not respond to the plan within 30 days, 
the plan submitted by the Postmaster General shall go into effect. Any 
plan may be later revised by the submission of a new plan to the Postal 
Rate Commission, which may approve or modify it.
    (j) Power Marketing Administrations and T.V.A.-- Any sequestration 
of the Department of Energy power marketing administration funds or the 
Tennessee Valley Authority fund shall be accomplished by annual 
payments from those funds to the General Fund of the Treasury, and the 
administrators of those funds shall have the duty to make those 
payments during the fiscal year to which the sequestration order 
applies and each succeeding fiscal year. The amount of each payment by 
a fund shall be--
            (1) the direct spending uniform sequestration percentage, 
        times
            (2) the estimated gross obligations of the fund in that 
        year other than those obligations financed from discretionary 
        appropriations for that year.
Any such payment for a fiscal year shall be made as soon as possible 
during the fiscal year, except that it may be made in installments 
within that year if the payment schedule is approved by the Secretary 
of the Treasury. Annual payments by a fund may be financed by 
reductions in costs required to produce the pre-sequester amount of 
power (but those reductions shall not include reductions in the amount 
of power supplied by the fund), by reductions in capital expenditures, 
by increases in tax rates, or by any combination, but may not be 
financed by a lower fund surplus, a higher fund deficit, additional 
borrowing, delay in repayment of principal on outstanding debt and 
shall follow the requirements of existing law governing the fund in all 
other respects. The administrator of a fund or the TVA Board is 
authorized to take the actions specified in this subsection in order to 
make the annual payments to the Treasury.
    (k) Business-Like Transactions.--Notwithstanding any other 
provision of law, for programs which provide a business-like service in 
exchange for a fee, sequestration shall be accomplished through a 
uniform increase in fees (sufficient to produce the dollar savings in 
such programs for the fiscal year of the sequestration required by 
section 201(a)(2), all subsequent fees shall be increased by the same 
percentage, and all proceeds from such fees shall be paid into the 
general fund of the Treasury, in any year for which a sequester 
affecting such programs are in effect.

SEC. 207. THE CURRENT LAW BASELINE.

    (a) Submission of Reports.--CBO and OMB shall submit to the 
President and the Congress reports setting forth the budget baselines 
for the budget year and the next nine fiscal years. The CBO report 
shall be submitted on or before January 15. The OMB report shall 
accompany the President's budget.
    (b) Determination of the Budget Baseline.--(1) The budget baseline 
shall be based on the common economic assumptions set forth in section 
106, adjusted to reflect revisions pursuant to subsection (c).
            (2) The budget baseline shall consist of a projection of 
        current year levels of budget authority, outlays, revenues and 
        the surplus or deficit into the budget year and the relevant 
        outyears based on current enacted laws as of the date of the 
        projection.
            (3) For discretionary spending items, the baseline shall be 
        the spending caps in effect pursuant to section 601(a)(2) of 
        the Congressional Budget Act of 1974. For years for which there 
        are no caps, the baseline for discretionary spending shall be 
        the same as the last year for which there were statutory caps.
            (4) For all other expenditures and for revenues, the 
        baseline shall be adjusted by comparing unemployment, 
        inflation, interest rates, growth and other economic 
        indicators-and changes ineligible population-for the most 
        recent period for which actual data are available, compared to 
        the assumptions contained in section 106.
    (c) Revisions to the Baseline.--The baseline shall be adjusted for 
up-to-date economic assumptions when CBO submits its Economic and 
Budget Update and when OMB submits its budget update, and by August 1 
each year, when CBO and OBM submit their midyear reviews.

SEC. 208. LIMITATIONS ON EMERGENCY SPENDING.

    (a) In General.--(1) Within the discretionary caps for each fiscal 
year contained in this Act, an amount shall be withheld from allocation 
to the appropriate committees of the House of Representatives and of 
the Senate and reserved for natural disasters and other emergency 
purposes.
    (2) Such amount for each such fiscal year shall not be less than 1 
percent of total budget authority and outlays available within those 
caps for that fiscal year.
    (3) The amounts reserved pursuant to this subsection shall be made 
available for allocation to such committees only if--
            (A) the President has made a request for such disaster 
        funds;
            (B) the programs to be funded are included in such request; 
        and
            (C) the projected obligations for unforeseen emergency 
        needs exceed the 10-year rolling average annual expenditures 
        for existing programs included in the Presidential request for 
        the applicable fiscal year.
    (4) Notwithstanding any other provision of law--
            (A) States and localities shall be required to maintain 
        effort and ensure that Federal assistance payments do not 
        replace, subvert or otherwise have the effect of reducing 
        regularly budgeted State and local expenditures for law 
        enforcement, refighting, road construction and maintenance, 
        building construction and maintenance or any other category of 
        regular government expenditure (to ensure that Federal disaster 
        payments are made only for incremental costs directly 
        attributable to unforeseen disasters, and do not replace or 
        reduce regular State and local expenditures for the same 
        purposes);
            (B) the President may not take administrative action to 
        waive any requirement for States or localities to make minimum 
        matching payments as a condition or receiving Federal disaster 
        assistance and prohibit the President from taking 
        administrative action to waive all or part of any repayment of 
        Federal loans for the State or local matching share required as 
        a condition of receiving Federal disaster assistance, and this 
        clause shall apply to all matching share requirements and loans 
        to meet matching share requirements under the Robert T. 
        Stafford Disaster Relief and Emergency Assistance Act (42 
        U.S.C. 5121 et seq.) and any other Acts pursuant to which the 
        President may declare a disaster or disasters and States and 
        localities otherwise qualify for Federal disaster assistance; 
        and
            (C) a two-thirds vote in each House of Congress shall be 
        required for each emergency to reduce or waive the State 
        matching requirement of to forgive all or part of loans for the 
        State matching share as required under the Robert T. Stafford 
        Disaster Relief and Emergency Assistance Act.
    (b) Effect Budget Resolutions.--(1) All concurrent resolutions on 
the budget (including revisions) shall specify the amount of new budget 
authority and outlays within the discretionary spending cap that shall 
be withheld from allocation to the committees and reserved for natural 
disasters, and a procedure for releasing such funds for allocation to 
the appropriate committee. The amount withheld shall be equal to 1 
percent of the total discretionary spending cap for fiscal year covered 
by the resolution, unless additional amounts are specified.
    (2) The procedure for allocation of the amounts pursuant to 
paragraph (1) shall ensure that the funds are released for allocation 
only pursuant to the conditions contained in subsection (a)(3)(A) 
through (C).
    (c) Restriction on Use of Funds.--Notwithstanding any other 
provision of law, the amount reserved pursuant to subsection (a) shall 
not be available for other than emergency funding requirements for 
particular natural disasters or national security emergencies so 
designated by Acts of Congress.
    (d) New Point of Order.--(1) Title IV of the Congressional Budget 
Act of 1974 is amended by adding at the end the following new section:

                 ``point of order regarding emergencies

    ``Sec. 408. It shall not be in order in the House of 
Representatives or the Senate to consider any bill or joint resolution, 
or amendment thereto or conference report thereon, containing an 
emergency designation for purposes of section 251(b)(2)(D) or 252(e) of 
the Balanced Budget and Emergency Deficit Control Act of 1985 or of 
section 207 of the Balanced Budget Assurance Act of 1997 if it also 
provides an appropriation or direct spending for any other item or 
contains any other matter, but that bill or joint resolution, 
amendment, or conference report may contain rescissions of budget 
authority or reductions of direct spending, or that amendment may 
reduce amounts for that emergency.''.
    (2) The table of contents set forth in section 1(b) of the 
Congressional Budget and Impoundment Control Act of 1974 is amended by 
inserting after the item relating to section 407 the following new 
item:

``Sec. 408. Point of order regarding emergencies.''.
                                 <all>