[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6426 Introduced in House (IH)]

  2d Session
                                H. R. 6426

To amend the Balanced Budget and Emergency Deficit Control Act of 1985 
 to provide for a sequestration on December 31, 2009, to eliminate the 
  actual budget deficit for fiscal year 2009, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            December 8, 2006

    Mr. Barton of Texas (for himself and Mr. Terry) introduced the 
   following bill; which was referred to the Committee on the Budget

_______________________________________________________________________

                                 A BILL



To amend the Balanced Budget and Emergency Deficit Control Act of 1985 
 to provide for a sequestration on December 31, 2009, to eliminate the 
  actual budget deficit for fiscal year 2009, and for other purposes.

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

SECTION 1. SEQUESTRATION OF FEDERAL SPENDING TO ELIMINATE THE FY2009 
              BUDGET DEFICIT.

    (a) Sequestration To Reduce the Public Debt.--Part C of the 
Balanced Budget and Emergency Deficit Control Act of 1985 is amended by 
adding after section 253 the following new sections:

``SEC. 253A. SEQUESTRATION TO ELIMINATE THE FY2009 BUDGET DEFICIT.

    ``(a) Sequestration.--On December 31, 2009, there shall be a 
sequestration of an amount equivalent to the actual amount of the 
deficit (if any) for fiscal year 2009, as determined by OMB. OMB shall 
submit its deficit report to the House of Representatives, the Senate, 
and the President not later than December 15, 2009. On the following 
day a notice of the report shall be printed in the Federal Register.
    ``(b) Applicability.--Except as provided by sections 253B and 253C, 
each account of the United States shall be reduced by a dollar amount 
calculated by multiplying the level of budgetary resources in that 
account at that time by the uniform percentage necessary to carry out 
subsection (a). All obligational authority reduced under this section 
shall be done in a manner that makes such reductions permanent.
    ``(c) Final Sequestration Report.--
            ``(1) Reporting requirement.--On the date specified in 
        subsection (a), OMB shall issue a final sequestration report, 
        updated to reflect laws enacted through that date.
            ``(2) Content.--The final report shall set forth estimates 
        for each of the following:
                    ``(A) For each category for which a sequestration 
                is required, the sequestration percentages necessary to 
                achieve the required reduction.
                    ``(B) For the budget year, for each account to be 
                sequestered, estimates of the baseline level of 
                sequesterable budgetary resources and resulting outlays 
                and the amount of budgetary resources to be sequestered 
                and resulting outlay reductions.
                    ``(C) The effects on outlays of the sequestration 
                in each outyear for direct spending programs.
    ``(d) Presidential Order.--On the date specified in subsection (a), 
if in its final sequestration report OMB estimates that any 
sequestration is required, the President shall issue an order fully 
implementing without change all sequestrations required by the OMB 
calculations set forth in that report. This order shall be effective on 
issuance.''.

SEC. 253B. EXEMPT ACCOUNTS.

    ``(a) Social Security Benefits; Tier I Railroad Retirement 
Benefits; and Medicare Benefits.--(1) Benefits payable under the old-
age, survivors, and disability insurance program established under 
title II of the Social Security Act, and benefits payable under section 
3(a), 3(f)(3), 4(a), or 4(f) of the Railroad Retirement Act of 1974, 
shall be exempt from reduction under the order issued under section 
253A.
    ``(2) Payments made under title XVIII of the Social Security Act 
shall be exempt from reduction under the order issued under section 
253A.
    ``(b) Descriptions and Lists.--The following budget accounts or 
activities shall be exempt from sequestration under section 253A:
            ``(1) net interest;
            ``(2) all payments to trust funds from excise taxes or 
        other receipts or collections properly creditable to those 
        trust funds;
            ``(3) all payments from one Federal direct spending budget 
        account to another Federal budget account; and all 
        intragovernmental funds including those from which funding is 
        derived primarily from other Government accounts, except to the 
        extent that such funds are augmented by direct appropriations 
        for the fiscal year for which the order is in effect;
            ``(4) activities resulting from private donations, 
        bequests, or voluntary contributions to the Government;
            ``(5) payments from any revolving fund or trust-revolving 
        fund (or similar activity) that provides deposit insurance or 
        other 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;
            ``(6) credit liquidating and financing accounts;
            ``(7) the following accounts, which largely fulfill 
        requirements of the Constitution or otherwise make payments to 
        which the Government is committed:
                    ``Administration of Territories, Northern Mariana 
                Islands Covenant grants (14-0412-0-1-806);
                    ``Armed Forces Retirement Home Trust Fund, payment 
                of claims (84-8930-0-7-705);
                    ``Bureau of Indian Affairs, miscellaneous payments 
                to Indians (14-2303-0-1-452);
                    ``Bureau of Indian Affairs, miscellaneous trust 
                funds, tribal trust funds (14-9973-0-7-999);
                    ``Claims, defense;
                    ``Claims, judgments, and relief act (20-1895-0-1-
                806);
                    ``Compact of Free Association, economic assistance 
                pursuant to Public Law 99-658 (14-0415-0-1-806);
                    ``Compensation of the President (11-0001-0-1-802);
                    ``Customs Service, miscellaneous permanent 
                appropriations (20-9992-0-2-852);
                    ``Eastern Indian land claims settlement fund (14-
                2202-0-1-806);
                    ``Farm Credit Administration, Limitation on 
                Administration Expenses (78-4131-0-3-351);
                    ``Farm Credit System Financial Assistance 
                Corporation, interest payments (20-1850-0-1-351);
                    ``Internal Revenue collections of Puerto Rico (20-
                5737-0-2-852);
                    ``Panama Canal Commission, operating expenses and 
                capital outlay (95-5190-0-2-403);
                    ``Payments of Vietnam and USS Pueblo prisoner-of-
                war claims (15-0104-0-1-153);
                    ``Payments to copyright owners (03-5175-0-2-376);
                    ``Payments to health care trust funds (75-0580-0-1-
                571);
                    ``Payments to social security trust funds (75-0404-
                0-1-651);
                    ``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);
                    ``Pension Benefit Guaranty Corporation Fund (16-
                4204-0-3-601);
                    ``Salaries of Article III judges;
                    ``Washington Metropolitan Area Transit Authority, 
                interest payments (46-0300-0-1-401);
            ``(8) the following noncredit special, revolving, or trust-
        revolving funds:
                    ``Coinage profit fund (20-5811-0-2-803);
                    ``Comptroller of the Currency;
                    ``Director of the Office of Thrift Supervision;
                    ``Exchange Stabilization Fund (20-4444-0-3-155);
                    ``Federal Housing Finance Board;
                    ``Foreign Military Sales trust fund (11-82232-0-7-
                155);
                    ``National Credit Union Administration, central 
                liquidating facility (25-4470-0-3-373);
                    ``National Credit Union Administration, credit 
                union insurance fund (25-4468-0-3-373); and
                    ``National Credit Union Administration operating 
                fund (25-4056-0-3-373);
            ``(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 unemployment 
        compensation by a State from its account in the Unemployment 
        Trust Fund (established by section 904(a) of the Social 
        Security Act);
            ``(B) any advance made to a State from the Federal 
        unemployment account (established by section 904(g) of such 
        Act) under title XII of such Act and any advance appropriated 
        to the Federal unemployment account pursuant to section 1203 of 
        such Act; and
            ``(C) any payment made from the Federal Employees 
        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; and
            ``(12)(A) FDIC, Bank Insurance Fund (51-4064-0-3-373);
            ``(B) FDIC, FSLIC Resolution Fund (51-4065-0-3-373); and
            ``(C) FDIC, Savings Association Insurance Fund (51-4066-0-
        3-373).
    ``(c) Federal Retirement and Disability Accounts.--The following 
Federal retirement and disability accounts shall be exempt from 
reduction under the order issued under section 253A:
            ``Civil service retirement and disability fund (24-8135-0-
        7-602).
            ``Black Lung Disability Trust Fund (20-8144-0-7-601).
            ``Foreign Service Retirement and Disability Fund (19-8186-
        0-7-602).
            ``District of Columbia Judicial Retirement and Survivors 
        Annuity Fund (20-8212-0-7-602).
            ``Judicial Survivors' Annuities Fund (10-8110-0-7-602).
            ``Payments to the Railroad Retirement Accounts (60-0113-0-
        1-601).
            ``Tax Court Judges Survivors Annuity Fund (23-8115-0-7-
        602).
            ``Employees Life Insurance Fund (24-8424-0-8-602).
    ``(d) Federal Administrative Expenses.--
            ``(1) Notwithstanding any provision of law other than 
        paragraph (3), administrative expenses incurred by the 
        departments and agencies, including independent agencies, of 
        the Government in connection with any program, project, 
        activity, or account shall be subject to reduction pursuant to 
        any sequestration order, without regard to any exemption, 
        exception, limitation, or special rule otherwise applicable 
        with respect to such program, project, activity, or account, 
        and regardless of whether the program, project, activity, or 
        account is self-supporting and does not receive appropriations.
            ``(2) Payments made by the Government to reimburse or match 
        administrative costs incurred by a State or political 
        subdivision under or in connection with any program, project, 
        activity, or account shall not be considered administrative 
        expenses of the Government for purposes of this section, and 
        shall be subject to sequestration to the extent (and only to 
        the extent) that other payments made by the Government under or 
        in connection with that program, project, activity, or account 
        are subject to that reduction or sequestration; except that 
        Federal payments made to a State as reimbursement of 
        administrative costs incurred by that State under or in 
        connection with the unemployment compensation programs 
        specified in subsection (a)(11) shall be subject to reduction 
        or sequestration under section 253A notwithstanding the 
        exemption otherwise granted to such programs under that 
        subsection.
            ``(3) Notwithstanding any other provision of law, the 
        administrative expenses of the following programs shall be 
        exempt from sequestration:
                    ``(A) Comptroller of the Currency.
                    ``(B) Federal Deposit Insurance Corporation.
                    ``(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 Reserve 
                System.
    ``(e) Veterans' Programs.--The following programs shall be exempt 
from reduction under the order issued under section 253A:
            ``General Post Funds (36-8180-0-7-705).
            ``Veterans Insurance and Indemnities (36-0120-0-1-701).
            ``Service-Disabled Veterans Insurance Funds (36-4012-0-3-
        701).
            ``Veterans Reopened Insurance Fund (36-4010-0-3-701).
            ``Servicemembers' Group Life Insurance Fund (36-4009-0-3-
        701).
            ``Post-Vietnam Era Veterans Education Account (36-8133-0-7-
        702).
            ``National Service Life Insurance Fund (36-8132-0-7-701).
            ``United States Government Life Insurance Fund (36-8150-0-
        7-701).
            ``Veterans Special Life Insurance Fund (36-8455-0-8-701).

``SEC. 253C. 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 programs:
            ``(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) Foster Care and Adoption Assistance Programs.--Any 
sequestration order shall make the reduction 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 reduction can be accomplished by applying 
a uniform percentage 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 effect during that year. No 
State's matching payments from the Government for foster care 
maintenance payments or for adoption assistance maintenance payments 
may be reduced by a percentage exceeding the applicable domestic 
sequestration percentage. No State may, after the date of the enactment 
of this Act, make any change in the timetable for making payments under 
a State plan approved under part E of title IV of the Social Security 
Act which has the effect of changing the fiscal year in which 
expenditures under such part are made.
    ``(c) Veterans' Medical Care.--The maximum permissible reduction in 
budget authority for Veterans' medical care (36-0160-0-1-703) for any 
fiscal year, pursuant to an order issued under section 253A, shall be 2 
percent.
    ``(d) Federal Retirement Programs.--
            ``(1) For each of the programs listed in paragraph (2) and 
        except as provided in paragraph (3), monthly (or other 
        periodic) benefit payments shall be reduced by the uniform 
        percentage applicable to direct spending sequestrations for 
        such programs, which shall in no case exceed 2 percent under 
        any sequestration order. When reduced under an end-of-session 
        sequestration order, those benefit reductions shall occur 
        starting with the payment made at the start of January or 7 
        weeks after the order is issued, whichever is later. When 
        reduced under a within-session sequestration order, those 
        benefit reductions shall occur starting with the next periodic 
        payment.
            ``(2) The programs subject to paragraph (1) are:
                    ``Central Intelligence Agency Retirement and 
                Disability Fund (56-3400-0-1-054).
                    ``Comptrollers General Retirement System (05-0107-
                0-1-801)Payments to the Foreign Service Retirement and 
                Disability Fund (72-1036-0-1-153).
                    ``Judicial Officer' Retirement Fund (10-8122-0-7-
                602).
                    ``Claims Judges' Retirement Fund (10-8124-0-7-602).
                    ``Pensions for former Presidents (47-0105-0-1-802).
                    ``National Oceanic and Atmospheric Administration 
                Retirement (13-1450-0-1-306).
                    ``Railroad Industry Pension Fund (60-8011-0-7-601).
                    ``Retired pay, Coast Guard (70-0602-0-1-403).
                    ``Retirement pay and medical benefits for 
                commissioned officers, Public Health Service (75-0379-
                0-1-551).
                    ``Payments to Civil Service Retirement and 
                Disability Fund (24-0200-0-1-805).
                    ``Payments to the Foreign Service Retirement and 
                Disability Fund (72-1036-0-1-153)
                    ``Payments to Judiciary Trust Funds (10-0941-0-1-
                752).
    ``(e) Veterans Programs.--To achieve the total percentage reduction 
required by the order issued under section 253A, the percentage 
reduction that shall apply to payments under the following programs 
shall in no event exceed 2 percent:
            ``Canteen Service Revolving Fund (36-4014-0-3-705).
            ``Medical Center Research Organizations (36-4026-0-3-703).
            ``Disability Compensation Benefits (36-0102-0-1-701).
            ``Education Benefits (36-0137-0-1-702).
            ``Vocational Rehabilitation and Employment Benefits (36-
        0135-0-1-702).
            ``Pensions Benefits (36-0154-0-1-701).
            ``Burial Benefits (36-0139-0-1-701).
            ``Guaranteed Transitional Housing Loans For Homeless 
        Veterans Program Account (36-1119-0-1-704).
            ``Housing Direct Loan Financing Account (36-4127-0-1-704).
            ``Housing Guaranteed Loan Financing Account (36-4129-0-3-
        704).
            ``Vocational Rehabilitation and Education Direct Loan 
        Financing Account (36-4259-0-3-702).
    ``(f) Military Health and Retirement.--To achieve the total 
percentage reduction in military retirement required by the order 
issued under section 253A, the percentage reduction that shall apply to 
payments under the Military retirement fund (97-8097-0-7-602), payments 
to the military retirement fund (97-0040-0-1-054), and the Defense 
Health Program (97-0130-0-1-051) shall in no event exceed 2 percent.
    ``(g) Federal Pay.--
            ``(1) In general.--For purposes of the order issued under 
        section 253A, new budget authority to pay Federal personnel 
        shall be reduced by the applicable uniform percentage, but no 
        sequestration order may reduce or have the effect of reducing 
        the rate of pay to which any individual is entitled under any 
        statutory pay system (as increased by any amount payable under 
        section 5304 of title 5, United States Code, or section 302 of 
        the Federal Employees Pay Comparability Act of 1990) or the 
        rate of any element of military pay to which any individual is 
        entitled under title 37, 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 1009 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 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 involved) in section 
455(a) of such Act, to the extent necessary 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 Compensation Act of 1970 for any week of unemployment 
occurring during any period with respect to which payments are reduced 
under an order issued under this title by a percentage not to exceed 
the percentage by which the 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 subparagraph (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 commodity credit 
        corporation.--This title 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 
        reduced 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 contract 
                entered into in or after such fiscal year and after the 
                issuance of the order; and
                    ``(ii) out of an entitlement account,
        to any person (including any producer, lender, or guarantee 
        entity) shall be subject to reduction under the order.
            ``(B) Each contract entered into with producers or producer 
        cooperatives with respect to a particular crop of a commodity 
        and subject to reduction under subparagraph (A) shall be 
        reduced in accordance with the same terms and conditions. If 
        some, but not all, contracts applicable to a crop of a 
        commodity have been entered into prior to the issuance of any 
        sequestration order, the order shall provide that the necessary 
        reduction in payments under contracts applicable to the 
        commodity be uniformly applied to all contracts for succeeding 
        crops of the commodity, under the authority provided in 
        paragraph (3).
            ``(3) Delayed reduction in outlays permissible.--
        Notwithstanding any other provision of this title, if any 
        sequestration order is issued with respect to a fiscal year, 
        any reduction under the order applicable to contracts described 
        in paragraph (2) may provide for reductions in outlays for the 
        account involved to occur in the fiscal years following the 
        fiscal year to which the order applies.
            ``(4) Uniform percentage rate of reduction and other 
        limitations.--All reductions described in paragraph (2) that 
        are required to be made in connection with any sequestration 
        order with respect to a fiscal year--
                    ``(A) shall be made so as to ensure that outlays 
                for each program, project, activity, or account 
                involved are reduced by a percentage rate that is 
                uniform for all such programs, projects, activities, 
                and accounts, and may not be made so as to achieve a 
                percentage rate of reduction in any such item exceeding 
                the rate specified in the order; and
                    ``(B) with respect to commodity price support and 
                income protection programs, shall be made in such 
                manner and under such procedures as will attempt to 
                ensure that--
                            ``(i) uncertainty as to the scope of 
                        benefits under any such program is minimized;
                            ``(ii) any instability in market prices for 
                        agricultural commodities resulting from the 
                        reduction is minimized; and
                            ``(iii) normal production and marketing 
                        relationships among agricultural commodities 
                        (including both contract and non-contract 
                        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 programs for two or more 
                agricultural commodities that use the same type of 
                production or marketing resources or that are 
                alternative commodities among which a producer could 
                choose in making annual production decisions.
            ``(5) Certain authority not to be limited.--Nothing in this 
        title 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) 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.
    ``(l) Effects of Sequestration.--The effects of sequestration shall 
be as follows:
            ``(1) Budgetary resources sequestered from any account 
        other than an entitlement trust, special, or revolving fund 
        account shall revert to the Treasury and be permanently 
        canceled.
            ``(2) Except as otherwise provided, the same percentage 
        sequestration shall apply to all programs, projects, and 
        activities within a budget account (with programs, projects, 
        and activities as delineated in the appropriation Act or 
        accompanying report for the relevant fiscal year covering that 
        account, or for accounts not included in appropriation Acts, as 
        delineated in the most recently submitted President's budget).
            ``(3) Administrative regulations or similar actions 
        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, program, 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 appropriation and no sequestration had 
        occurred.
            ``(4) Except as otherwise provided, obligations in 
        sequestered direct spending accounts shall be reduced in the 
        fiscal year in which a sequestration occurs and in all 
        succeeding fiscal years.
            ``(5) If an automatic spending increase is sequestered, 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 fiscal years are reduced, from the 
        level that would actually have occurred, by the applicable 
        sequestration percentage.''.

SEC. 2. EFFECTIVE DATE.

    Notwithstanding section 275(b) of the Balanced Budget and Emergency 
Deficit Control Act of 1985, the expiration date set forth in that 
section shall not apply to the amendment made by section 1. The 
amendments made by section 1 shall cease to have any effect immediately 
after the sequestration required by the amendment made by section 1 is 
effectuated.
                                 <all>