[Congressional Record Volume 140, Number 96 (Thursday, July 21, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: July 21, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                       BUDGET CONTROL ACT OF 1994

  The SPEAKER pro tempore. Pursuant to House Resolution 484 and rule 
XXIII, the Chair declares the House in the Committee of the Whole House 
on the State of the Union for the consideration of the bill, H.R. 4604.

                              {time}  1239


                     in the committee of the whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the State of the Union for the consideration of the bill 
(H.R. 4604) to establish direct spending targets, and for other 
purposes, with Mr. Visclosky in the chair.

                              {time}  1240

  The Clerk read the title of the bill.
  The CHAIRMAN. Pursuant to the rule, the bill is considered as having 
been read the first time.
  The gentleman from South Carolina [Mr. Derrick] will be recognized 
for 15 minutes; the gentleman from Florida [Mr. Goss] will be 
recognized for 15 minutes; the gentleman from Michigan [Mr. Conyers] 
will be recognized for 15 minutes, and the gentleman from Pennsylvania 
[Mr. Clinger] will be recognized for 15 minutes.
  The chair recognizes the gentleman from South Carolina [Mr. Derrick].
  Mr. DERRICK. Mr. Chairman, I yield myself 6 minutes.
  I am delighted today to bring to the floor H.R. 4604, the Budget 
Control Act of 1994.
  Last year the Congress passed a landmark 5-year deficit-reduction 
program. That act was designed to reduce the Federal deficit by $500 
billion over 5 years through a combination of revenue increases, 
entitlement cuts, and a freeze on discretionary spending.
  Mr. Chairman, the 1993 Deficit-Reduction Act is working and working 
well. The deficit is on a downward path after rising steadily, year 
after year, since fiscal 1989. Some private economists and the 
Congressional Budget Office expect the budget deficit to fall to $200 
billion or less in the current fiscal year. That figure is down from 
the record $290 billion in 1992, and down from $255 billion in 1993.
  The 1993 deficit-reduction law included provisions reducing 
entitlement spending in future years. Obviously those provisions were 
based on certain assumptions about economic conditions and the 
resulting levels of entitlement spending that would occur in the 
future. Economic conditions can change very quickly driving entitlement 
spending--and the deficit--up sharply in a relatively brief period of 
time.
  Mr. Chairman, the Budget Control Act of 1994 will establish a 
mechanism to safeguard the deficit reduction achieved in last year's 
reconciliation act.
  H.R. 4604 will create a process whereby the President and Congress 
will review annually through fiscal 1997 the entitlement portion of the 
Federal budget, except for Social Security, net interest, and deposit 
insurance. This review will compare spending on entitlements in the 
previous year, the budget year, and the 4 succeeding years, to targets 
established pursuant to the bill.
  The targets would be set by the Office of Management and Budget 
within 30 days of enactment and would be based on spending resulting 
from laws enacted as of 5 days before OMB set the targets. To set the 
targets OMB would use the assumptions underlying last year's budget 
resolution to the extent feasible.
  OMB would adjust the targets each year to reflect changes in 
beneficiary populations, legislated net revenue increases, and spending 
resulting from legislation designated as emergency under the Budget 
Enforcement Act.
  If the annual review reveals that entitlement spending exceeded or 
will exceed the target in any year by more than one-half of 1 percent, 
then the President would have to include in his budget recommendations 
for addressing the overage. To eliminate the overage, the President 
could recommend any combination of cuts in entitlements, reductions in 
discretionary appropriations, or revenue increases.
  In the event the President finds an overage, the House Budget 
Committee must include in a separate section of the budget resolution 
provisions instructing the appropriate committees to report legislation 
cutting spending or increasing revenues. These instructions must call 
for savings equal to or exceeding the total recommended by the 
President for action, up to the full amount of the overage. In the 
event the Budget Committee failed to report a budget resolution 
addressing overages, then the President's recommendations could be 
brought directly to the floor for a vote.
  If a budget resolution proposes to offset less than the full overage 
found by the President, the Budget Committee must report a resolution 
directing the Government Operations Committee to report legislation 
increasing the targets by the amount of the overage not offset. This 
mechanism is intended to create an opportunity for a separate vote on 
raising the targets if the Budget Committee does not fully address an 
overage.
  Mr. Chairman, the bill contains enforcement measures to prevent 
Congress from circumventing its obligations. First, it would not be in 
order to consider a budget resolution addressing less than the full 
overage until the separate vote on raising the targets had occurred. 
Second, a budget resolution conference report must fully address any 
overage found by the President either through spending cuts, revenue 
increases or target increases, or be subject to a point of order. 
Third, it would not be in order to consider any appropriations bills in 
the House until a budget resolution fully addressing any overages had 
been agreed to.
  Mr. Chairman, H.R. 4604 resembles provisions included in the House 
version of last year's reconciliation bill. However, parliamentary 
constraints in the Senate prevented the provisions from appearing in 
final version. So the President imposed the requirements on himself by 
executive order, and the House adopted House Resolution 235, which 
imposed procedural requirements on us similar to those contemplated by 
the bill.
  The President's fiscal 1995 budget submission included the review 
required under the President's executive order. For the Member's 
information, the review indicated that entitlement spending is well 
within the level assumed last year. In fact, if all goes well, 
entitlement spending will be $82.5 billion under the applicable target 
during the 1994-97 timeframe. That is good news for the American 
people; the 5-year deficit-reduction train is firmly on track.
  Mr. Chairman, the bill before the committee today would codify the 
process created last year by the President and improve it in one 
important way. It would exclude the Social Security program from the 
entitlement review and exclude benefit cuts from consideration as a 
recommended solution to an overage.
  Given the large balances in the trust funds, Social Security could 
not cause an overage. Since Social Security could not cause the 
problem, it ought not be part of the solution. Including Social 
Security in this process would frighten our senior citizens 
unnecessarily.
  Mr. Chairman, the committee bill represents an improvement over the 
current situation, and it will give the Senate an opportunity to add 
its own procedures to the mix. I urge all Members to support the 
legislation and reserve the balance of my time.
  Mr. Chairman, I reserve the balance of my time.
  Mr. GOSS. Mr. Chairman, I yield myself 7 minutes.
  (Mr. GOSS asked and was given permission to revise and extend his 
remarks.)
  Mr. GOSS. Mr. Chairman, we have already discussed the various 
problems with the consideration of this bill from a procedural 
standpoint. Now I would like to point out the major substantive 
problems with the Spratt bill H.R. 4604, namely that it is ineffective, 
unwieldy, and it contains hidden pitfalls.
  Our primary difficulty with the so-called Budget Control Act of 1994 
is that control seems to be the one thing that is missing. As you can 
see from the charts next to me, the procedures established under this 
bill would likely never come into play. This first graph shows how the 
mandatory spending targets set by the administration are never exceeded 
by the steep growth in entitlement spending. In other words, this is a 
floating target. The second chart gives a more complete picture: We see 
that in August 1993, the first time mandatory spending targets were 
set, there was no discrepancy between the targets and the expected 
outlays. But 6 months later, we find that the targets, inexplicably, 
are raised while the expected outlays have dropped. Six months after 
that, we see more of the same.
  Mr. Chairman, in August 1993, the mandatory spending target for this 
year is $746 billion; yet today this target has been increased by 
nearly $7 billion, while the expected outlays have actually decreased 
by $19 billion. In other words, the administration has created a $25 
billion cushion out of thin air. Again, looking at 1997, the target has 
been revised upward by some $18.5 billion, while the expected outlays 
are actually down by $0.9 billion.
  What these numbers clearly demonstrate is that the so-called budget 
process reforms in H.R. 4604 are meaningless--the cushion--now $80.2 
billion and growing--between targets and outlays insures that the cuts 
will never be triggered.
  Even in the unlikely event that the procedures under this bill are 
triggered, we can expect sound and fury--but little else, unless you 
can jump through meaningless hoops.
  According to H.R. 4604, if the spending targets are breached, the 
President is expected to get the ball rolling by including 
recommendations in his budget message. These recommendations, which 
would carry little weight to begin with, do not even have to contain 
solutions. The President can recommend that we address the problem, 
address part of the problem, or do not address the problem at all.
  It gets worse. The complex parliamentary procedures that the Spratt 
bill sets in motion via the President's recommendations would make a 
mockery of an already problematic budget process. In the end, the only 
teeth in the Spratt bill are a few points of order against the budget 
resolution and some appropriations bills if Congress chooses to ignore 
the requirements of the act. Since the House routinely waives all 
points of order against such bills anyway, we can see that these so-
called teeth have no bite.
  And one final note: The Spratt bill, even as modified, would throw 
Social Security back into the reconciliation mix. Even though Mr. 
Spratt said he fixed the Social Security problem--the fix itself is a 
big problem. In the unlikely event that we ever took action under this 
bill, we could be faced with the prospect of raising Social Security 
payroll taxes to pay for other entitlements. Given the efforts we have 
taken to separate the Social Security budget and make it selffinancing, 
I do not think that this is an area into which we want to be venturing 
blindly.
  A more responsible approach is the Kasich-McMillan-Kolbe substitute. 
It would increase Congress' level of accountability for the entitlement 
budget, while avoiding the problems associated with arbitrary spending 
caps. And it ensures the independence and integrity of the Social 
Security system.
  As a member of the bipartisan Commission on Entitlement and Tax 
Reform, I recognize the real threat uncontrolled entitlement spending 
poses to our future generations. We are working on constructive, 
responsible solutions to this dilemma. The Spratt bill, H.R. 4604, is 
neither constructive nor responsible, and I urge Members to think twice 
before giving it their vote.

             MANDATORY SPENDING TARGETS AND OUTLAYS, 1994-97            
                        [In billions of dollars]                        
------------------------------------------------------------------------
     Month of estimate         1994     1995     1996     1997   1994-97
------------------------------------------------------------------------
August 1993:                                                            
    Target.................    746.4    784.7    823.7    887.7  .......
    Outlays................    746.4    784.7    823.7    887.7  .......
    Difference.............      0.0      0.0      0.0      0.0      0.0
January 1994:                                                           
    Target.................    752.0    792.7    833.7    901.7  .......
    Outlays................    734.6    774.7    826.3    887.6  .......
    Difference.............    -17.4    -18.0     -7.4    -14.1    -56.9
July 1994:                                                              
    Target.................    753.1    794.6    837.2    906.2  .......
    Outlays................    727.7    769.7    826.0    886.8  .......
    Difference.............    -25.4    -24.3    -11.2    -19.3    -80.2
------------------------------------------------------------------------
Source: OMB.                                                            

                              {time}  1250

  Mr. Chairman, I reserve the balance of my time.
  Mr. DERRICK. Mr. Chairman, I yield 2 minutes to the gentleman from 
South Carolina [Mr. Spratt].
  Mr. SPRATT. Mr. Chairman, I want to pose a question to the gentleman 
from Florida [Mr. Goss], if he would respond, since he raised what I 
would regard as a red herring and the all-time improbability, the use 
of payroll taxes, social security taxes, to fund some other program.
  Mr. Chairman, I would ask the gentleman if he can recall any time, 
1977, 1978, or 1983, when payroll taxes have been raised except when 
there was a deficiency in existing or projected social security 
benefits and they had to be raised in order to make the program sound 
and solid again.
  Mr. GOSS. Will the gentleman yield, Mr. Chairman?
  Mr. SPRATT. I yield to the gentleman from Florida.
  Mr. GOSS. Mr. Chairman, I was not here at those times, and was not a 
Member of this distinguished body. I think it is important we be 
prospective in this rather than retrospective in it, or retroactive. I 
realize that they sometimes like to use retroactivity with taxation, 
but we do not like to do that, and we want to be prospective.
  The fix the gentleman talked about talks about reducing benefits, 
protection against reducing benefits, and we say thank you for doing 
that after we pointed that out, because I think that is good news, 
because they have made that fix, but I think they did not make the 
whole fix. The whole fix goes to the rest of the question of not 
raising taxes.
  Mr. SPRATT. Mr. Chairman, I would also ask the gentleman, since he 
talked about runaway entitlement spending, if he is aware of the extent 
to which entitlements have been tracked in the last fiscal year, the 
budget that was laid out for them, the base line amount that was 
projected for them in the Clinton reconciliation bill which we passed 
last night.
  Is the gentleman aware of the fact that entitlement spending is 
actually below what was projected at that point in time?
  Mr. GOSS. If the gentleman will yield further, I am very much aware 
of that, which is why I am so puzzled about why the targets keep going 
up. I recognize once we get to the turn of the century, or at least 
after 1996, that everything falls off the chart or climbs off the chart 
when we come to entitlement spending, because we are using all of the 
benefits to keep it under control now, and I admit that the plan has 
tried to keep that under control, and we are using those benefits well. 
We are basically burning out our brakes now.
  I have to say, Mr. Chairman, why have the outlays gone up?
  Mr. SPRATT. The point simply is that entitlements are below what was 
projected to be. So far the Clinton budget has worked in keeping them 
in tow.
  Mr. CONYERS. Mr. Chairman, I yield myself 5 minutes.
  (Mr. CONYERS asked and was given permission to revise and extend his 
remarks.)
  Mr. CONYERS. Mr. Chairman, we are once again in the Spratt-Kasich-
Stenholm mode. What we have got to do is sort out these very ambitious 
proposals and determine which way we are going in budgetary reform. The 
complaint is generally there is not enough bite. We really want to tear 
into this entitlement subject and really do something about it, but 
wait, the General Accounting Office has now put out a study, within the 
last few days, in which they have identified some characteristics that 
suggest that there may be more difficulty in implementing alternative 
plans to that of the gentleman from South Carolina [Mr. Spratt].

                              {time}  1300

  What about the difficulty caused by fluctuations in program 
eligibility?
  For entitlement programs, predicting eligibility, such as the number 
of beneficiaries and the amount of services is frequently very 
difficult, especially where entitlement programs involve health, 
disability and other services are involved.
  What about benefits that are noncash in form? For example, there are 
Federal payments to States and private social service agencies, who 
then distribute vital health and social services. The distribution of 
these benefits are frequently uneven, varying with each individual's 
need for the particular service at specific times. A person might even 
experience massive health expenses under a Federal health care program 
in a short period of time or a person might remain healthy with no 
bills for years. You cannot take that into consideration with caps.
  Another problem is program implementation, or financing shared with 
other entities such as the States. Listen to what the president of the 
American Federation of State, County and Municipal Employees says about 
this kind of proposal: ``It would put Texas in a straitjacket when it 
comes to Medicaid claims. They could face $8 billion of additional 
costs over 8 years,'' according to the president, Gerry McEntee, of 
AFSCME.
  We have another problem. Do these entitlement programs interact with 
other entitlement programs? What I am saying is that may entitlement 
programs target similar populations and address similar areas of need. 
The use of one program may increase if another program is reduced or 
removed from service.
  So the programs which are the most difficult to cap and generate 
savings are also the programs experiencing the largest overage and 
posing the greatest budgetary risk. By contract, the programs which 
would be the easiest to cap and generate savings are the ones 
experiencing the smallest overage and pose the least budgetary risk.
  That brings me to the Spratt proposal, which indeed makes a lot of 
good sense.
  I would like to just cite the New York Times and the Washington Post 
editorials. They point out the Spratt proposal requires the President 
to propose a solution to Congress if total entitlement spending were to 
rise above target. Then Congress would have to vote on the President's 
proposal. It would force Congress to face up to the problem, but unlike 
any other plans, it would allow Congress a full menu of responses, 
including tax hikes and cuts in discretionary spending. The Washington 
Post also observes: ``Health care costs have risen from a bare footnote 
in the budget to more than one-sixth of all spending and are still 
rising.''
  The answer to that is not caps on entitlements but to enact health 
care reform that is meaningful. It is time that we get to the true 
problem and deal with health care reform instead of these artificial 
proposals that are, I say regretfully, incorporated in both the 
Stenholm and the Kasich proposals.
  Support Spratt and the bill before the committee at this time.
  Mr. CLINGER. Mr. Chairman, I yield myself 3\1/2\ minutes.
  Mr. Chairman, I would like to begin by expressing my appreciation to 
our Colleagues, the gentleman from South Carolina [Mr. Spratt], the 
gentleman from Ohio [Mr. Kasich], and the gentleman from Texas [Mr. 
Stenholm] for the extraordinary time, thought, and effort they have put 
into in addressing one of the clearly most pressing problems 
confronting the Nation today. That is, the need for serious and 
substantive entitlement spending reform. We all know that entitlements 
are the root cause of the burgeoning deficit problem that we are 
dealing with and have been dealing with year in and year out.
  According to the Bipartisan Commission on Entitlement and Tax Reform, 
in 1990 the net national debt was about $10,000 for every American man, 
woman, and child in the country. Today it is over $17,000, and the 
Bipartisan Commission projects that if tax and spending policies do not 
change, that debt will amount to $64,000 per American by the year 2030. 
Unfortunately, there are no easy answers to how we break this ever-
escalating number.
  Last week this body, the House, took an important first step toward 
addressing spending reform when it passed the Stenholm-enhanced 
rescission bill. That legislation is going to permit Congress and the 
President to strike wasteful spending and unfair tax benefits from the 
massive appropriations and tax bills which we regularly pass in this 
Chamber. I sincerely hope that it will be enacted and signed into law. 
However, discretionary spending restraints alone clearly are not going 
to be enough to solve our fiscal crisis. It is again the entitlement 
programs which are driving the deficit.
  Last year all discretionary spending combined equaled less than 40 
percent of total Federal outlays. We could eliminate every single 
dollar for every discretionary program in this country, including Head 
Start, environmental cleanup, job retraining, and even zero out the 
entire Department of Defense and still not come close to eliminating 
our national debt. To resolve our financial mess, we have to also 
address this extraordinary growth of entitlement spending.
  Unfortunately, while very well intentioned, H.R. 4604, the bill of 
the gentleman from South Carolina [Mr. Spratt], fails to provide the 
controls needed to contain runaway entitlements. The Spratt targets are 
designed to exceed expected spending and therefore impose on true 
restraints. Yet, assuming a target ever were to be triggered, the bill 
provides no reliable mechanism for enforcing reconciliation. It is well 
meaning, but H.R. 4604 is not enough.
  The Stenholm approach sets real targets to controlling entitlement 
growth, but similar to H.R. 4604, the Stenholm plan lacks a genuine 
enforcement mechanism. Without that, I think anything we do here is 
going to be unavailing.
  Finally, both approaches mistakenly bring Social Security back on 
line and open that trust fund to potential raids, a frightening 
prospect for America's seniors.
  Of the three plans before us, Mr. Chairman, the Kasich amendment 
alone maintains the integrity and separateness of the Social Security 
trust fund, provides for yearly cap readjustments to realistically 
address entitlement spending constraints and offers a strong 
enforceable mechanism for encouraging Congress to meet its spending 
targets.
  Because it alone sets the stage for substantive spending restraint, 
which we urgently need, I would urge my colleagues to support the 
Kasich substitute and cast their votes in favor of true entitlement 
reform.
  Mr. Chairman, I reserve the balance of my time.
  Mr. CONYERS. Mr. Chairman, I yield 6 minutes to the distinguished 
gentleman from South Carolina [Mr. Spratt], the author of the measure 
before us.
  Mr. SPRATT. Mr. Chairman, I thank the gentleman for yielding me the 
time.
  (Mr. SPRATT asked and was given permission to revise and extend his 
remarks.)
  Mr. SPRATT. Mr. Chairman, I rise in support of H.R. 4604. This is a 
bill that has passed the House twice already. It first passed as part 
of the reconciliation bill on May 28, 1993. Unfortunately, there is 
something called the Byrd rule and as a consequence of the Byrd rule, 
it was stripped out of the reconciliation bill in the Senate. So we 
passed it as part of another self-executing rule when it was brought up 
in the budget conference report and made it a rule of the House. The 
President accepted the provisions. He finally agreed that they would be 
part of the budget process, and he imposed them on the executive branch 
by taking those parts that apply to the Presidency and executive branch 
and imposed them by Executive order. So in effect most of this bill is 
in place now but it does not apply to the Senate and it needs to be in 
statutory law.
  This time the bill before us has one slight change. It would exclude 
Social Security benefits from direct spending adjustments. Otherwise it 
is the same bill we had before. In my opinion this bill adds an 
important procedure to the budget process. Almost all of the growth in 
Federal spending as every speaker here has acknowledged, has occurred 
in the entitlement programs and mainly in the health care entitlements, 
Medicare and Medicaid.
  Discretionary spending, the money that we appropriate and spend so 
much time out here on the floor upon, 13 different bills, has been 
capped since 1991, it has hardly increased; it is unlikely to increase 
in the next several years because we have extended those caps on 
discretionary spending, freezing discretionary spending just above $540 
billion for the next 4 fiscal years. That alone precludes more than 
$100 billion of spending increases that might otherwise occur just to 
keep pace with current services. But we have never capped the overall 
sum committed to entitlements until the past fiscal year. Actual 
entitlement costs as a consequence have overshot projected costs by a 
wide margin.

                              {time}  1310

  Last year, the good news is, as I noted earlier, entitlement spending 
is down. It is below what we projected to the extent of about $24 
billion.
  This bill would codify the entitlement spending targets for fiscal 
1994, 1995, 1996, and 1997, and if actual or projected spending in any 
of these years exceeds the targets, this baseline that we are 
codifying, this bill would force the President and the Congress to 
address the problem, the overage, by adjusting direct spending.
  Here is basically how the bill works:
  First, it requires the Office of Management and Budget to establish a 
baseline budget for entitlement spending based upon the reconciliation 
bill we adopted last year, but updated in the light of economic events 
that have occurred since then.
  It then requires the President each year in the budget process in the 
executive branch to track that baseline, and when there are overages, 
when we exceed the baseline, to deal with the problem, to confront the 
problem squarely in his annual budget that he sends to the Congress.
  It gives the President three options. He can recoup all of the 
coverage or eliminate it. He can recoup or eliminate some of the 
overage or he can just say that in these circumstances and for these 
reasons, thus we should not deal with it at all. They can be recouped 
by spending cuts in discretionary spending, spending cuts in 
entitlement spending, or they can be recouped by tax increases. I think 
it is extremely unlikely that we would ever turn to payroll tax 
increases. I think this is a chimerical argument.

  The president can decline to recoup the entire overage, as I said, 
and so can the Congress. But if we do so, first of all the President 
has to make the case for not addressing the problem. He has to make the 
explicit case in his budget message, and we have to vote upon it, 
because the process next requires that the budget committee, whenever 
it reports a budget resolution, as a first title in it, to address any 
reported overage in entitlement spending as reported to us by the 
President. The resolution itself has to recoup or eliminate at least 
some or part, or we can waive, we can punt, but we have to vote upon 
it.
  So it adds to the budget process two things. Number one is 
visibility. It brings entitlement spending to the front burner, off the 
back burner. As all of us know who participate in the process we mainly 
deal with discretionary spending and we leave the entitlement spending 
on automatic pilot. This brings it up to the front burner and says as a 
first step in the budget process you have to deal with it. By dealing 
with it we have to vote on it, we have to be held to account. That is 
the other feature it adds to the process, as the gentlemen from Florida 
[Mr. Goss] says. And I agree, there are various ways to get around 
these things, but it would take many cynical manipulations to pass a 
law like this and then to waive its application, particularly on 
something this critically important where we say we are going to deal 
with it and we are going to have a record vote upon it.
  What we proposed in this bill brings to entitlement spending these 
two things, visibility and accountability.
  For that reason I think, Mr. Chairman, this is an important addition 
to the budget process.
  Mr. Chairman, I would like to address the argument quickly that those 
have made who say it does not have teeth, it just has hoops and loops 
to jump through.
  If this bill had been in effect after the Budget Enforcement Act of 
1990 was adopted, then it would have had a decided effect on 1991, 
1992, and 1993, because in that particular case the technical 
assumptions for the cost of Medicare and Medicaid were off over 1991 
through 1995 to the tune of $163 billion. Other major benefit programs 
were off by $99 billion. On technical assumptions alone, this bill 
would have required that each year before we did anything else in the 
budget process we deal with these overages in these two programs, and 
if we had been forced to confront them squarely, the budget projections 
made in 1990 were not realistic and this would have held us to a more 
realistic budget path. And we would have less of a deficit problem to 
deal with now.
  Mr. Chairman, this is a good bill, and I urge support for it.
  Mr. GOSS. Mr. Chairman, I yield such time as he may consume to the 
distinguished gentleman from Glenn Falls, NY [Mr. Solomon], the ranking 
member of the Committee on Rules.
  Mr. SOLOMON. Mr. Chairman, I would say to the former speaker, if he 
wants to talk about cynical manipulations, I have here a record of all 
of the restricted rules that waive the budget act time after time after 
time. That is cynical manipulation.
  Mr. Chairman, to call this bill the Budget Control Act of 1994 is 
misleading at best and counterproductive at worst.
  I do not for a moment question the motives or sincerity of the author 
of this bill, Mr. Spratt, for whom I have the greatest respect. I know 
he is genuine in his desire to get a better handle on the growth in 
entitlement spending.
  But this bill is not the answer to that problem. Nor am I confident 
that any process will provide a ``magic bullet'' or shortcut to curbing 
entitlement growth other than the old-fashioned legislative process.
  That old-fashioned process consists of having the committees of 
jurisdiction look at these programs one-by-one, on a periodic basis, 
and recommend legislation changes when the program is costing too much, 
or not working properly.
  The reason I think this particular process may be counterproductive 
is because the floating targets allowed under this bill will never be 
breached during the 5 years it is in effect.
  Consequently, congressional action to address entitlement growth will 
never be triggered under the terms of this act.
  The fact is, Mr. Chairman, the process called for under this bill has 
been in effect since last August under Executive Order 12857 and House 
Resolution 235. The targets have already been set and adjusted in the 
President's January budget.
  And guess what? According to this month's mid-session economic 
review, for the 4-year period covered by this bill, projected 
entitlement spending is $80 billion under the targets. We do not breach 
the target in any of the covered years.
  So, all this bill does is to lull us into a false sense of budgetary 
control, when in fact it will do nothing to restrain entitlement 
spending.
  But we can claim, as soon as we pass this bill, that we have 
magically saved $80 billion in mandatory spending over 4 years.
  Now you know I know that is inside-the-beltway, baseline budget-
speak. What is really happening over that 4-year period is that 
entitlement spending is increasing by $160 billion--a 22 percent 
increase.
  The President's January budget estimates that entitlement spending 
will grow 34 percent or roughly 7 percent a year between fiscal 1995 
and 1999 under current law. It will grow from $764 billion in 1995 to 
$1.02 trillion in 1999.
  So Members, do not try to kid yourselves or anyone else that this 
passive process or any other process that has floating targets and 
rubber triggers will save us a dime.
  In conclusion, Mr. Chairman, this is another one of those warm and 
fuzzy, feel-good but phony budget process fixes that does not fix a 
thing. It only gives us political cover to avoid making the real, hard 
choices of cutting spending until tomorrow--and, of course, tomorrow 
never comes.
  Mr. Chairman, I yield back the balance of my time.
  Mr. DERRICK. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from Utah [Mr. Orton].
  (Mr. ORTON asked and was given permission to revise and extend his 
remarks.)
  Mr. ORTON. Mr. Chairman, I thank the gentleman for yielding me this 
time.
  Mr. Chairman, I rise in general support of the bill. I will support 
one or more of the amendments to the bill today. But let us not lose 
focus in this debate. Today we are debating entitlement reform to lower 
the deficit.
  I would ask my colleagues and the public to do the math on the 
budget. Without entitlement reform or tax increases, in order to 
balance the budget in 1999 we would have to cut $206 billion out of 
$290 billion of discretionary spending. That cannot be done.
  Today's debate has to do with the process reform that is needed to 
actually accomplish that goal. The only real thing that has worked to 
lower spending in this decade has been spending caps. The problem is 
those spending caps have only been applied to discretionary spending.
  This debate is whether to extend those caps to mandatory entitlement 
spending.
  I think the House has shown in two votes its will to extend these 
caps to entitlement spending. Today's debate on the amendments will be 
how to set those caps and how to enforce those caps.
  I believe to accomplish these goals the law that we enact today or 
the bill that we pass today should exempt nothing, should prohibit no 
action in the future, should bring the administration and Congress 
together to come to a solution that will work and must be enforceable.

                              {time}  1320

  Our shared goal has to be to take entitlements off autopilot and to 
give us the mechanisms to actually bring spending under control.
  Mr. CLINGER. Mr. Chairman, I yield such tie as he may consume to the 
gentleman from California [Mr. McCandless], the ranking member on the 
subcommittee.
  Mr. McCANDLESS. Mr. Chairman, I rise in opposition to H.R. 4604, and 
in support of the Kasich substitute to control entitlement spending.
  As we begin to debate this legislation, I urge my colleagues to 
consider the seriousness of our current fiscal situation and the 
pressing need for true entitlement reform. Keep in mind that total 
entitlement spending will equal $727 billion this year--over 47 percent 
of our Federal tax dollars. Consider that according to the Congress' 
own Bipartisan Commission on Entitlement and Tax Reform, entitlement 
spending and interest of the national debt will exceed 70 percent of 
all Federal spending by the year 2003. Recall the Bipatisan 
Commission's further projection that, if left unchecked, Medicare, 
Medicaid, Social Security, and Federal employee retirement programs 
will consume all Federal revenues by the year 2030. Consider the just 
released findings of the Bipartisan Commission that,

       If action is not soon taken, America will be forced to 
     choose between doubling every federal tax or cutting more 
     than half of every federal program and entitlement to balance 
     total federal outlays and revenues.

  With a warning that clear, I have to believe we will take heed and 
pass the most realistic, responsible and enforceable entitlement 
control plan before us; I have to believe we will pass the Kasich 
substitute.
  Certainly Congressmen Spratt and Stenholm are to be commended for the 
considerable work they have put into their proposals. Both have done 
yeoman's work in bringing this issue before the House. However, despite 
their best efforts, their bills are flawed.
  H.R. 4604, the Spratt bill, imposes no new restrictions or 
requirements on entitlement spending. H.R. 4604 merely codifies an 
existing Presidential Executive order and current House rules which 
provide a process for dealing with floating and generous entitlement 
targets. And however unlikely a breach might be, given the liberalness 
of the targets proposed, if a target were to be violated, H.R. 4604 
would provide little enforcement. The bill merely directs the Budget 
Committee to direct the Committee on Government Operations to report 
out correcting legislation. Neither H.R. 4604 nor existing rules 
actually require Government Operations to act, and any violation of 
House rules could be easily waived. While well meaning and hopeful, 
H.R. 4604 would do little to reduce entitlement spending.
  The Stenholm amendment, while offering much tighter caps, makes the 
mistake of including Social Security in the sequestration basket. 
Having spent many years protecting this privately funded trust fund 
from congressional raiding, I cannot support legislation to once again 
open it to congressional shenanigans.
  The Kasich amendment alone establishes overall caps as part of our 
yearly budget resolution and provides for the suballocation necessary 
to encourage responsible planning. It recognizes and maintains the 
separateness of Social Security, and it imposes a real sequestration 
enforcement mechanism. It is a serious and honest approach to 
entitlement spending control, and I urge its adoption.
  Mr. DERRICK. Mr. Chairman, I yield 4 minutes to the distinguished 
gentleman from Texas [Mr. Stenholm].
  (Mr. STENHOLM asked and was given permission to revise and extend his 
remarks.)
  Mr. STENHOLM. Mr. Chairman, I come to the floor today pleased with 
the opportunity to discuss a critical issue not only for those of us 
who worry about today's deficits, and today's recipient of current 
entitlements but for also those who care about tomorrow's children and 
grandchildren and their ability to enjoy a standard of living which we 
have enjoyed.
  Clearly, if we are to balance the budget, we must control all 
Government expenditures, including entitlement spending. Past deficit 
reduction efforts have not succeeded as we hoped because entitlements 
grew faster than expected and Congress did not respond with policy 
changes which would result in spending reductions. Experience has 
taught us that Congress takes action to reduce entitlement spending 
only under extraordinary circumstances.
  While these increases in entitlement spending are explained as 
technical changes over which Congress has no control, this argument 
does not hold much weight with the public. The deficit is blind; 
increases in the deficit for technical reasons are just as harmful to 
the economy and the future of our children as increases caused by 
policy changes. Congress and the President should take greater 
responsibility for entitlement spending instead of blaming ballooning 
entitlement spending on technical corrections.
  Since 1978, spending on entitlements has increased 286 percent, more 
than 1\1/2\ times the rate of inflation. Since the 1990 budget 
agreement, entitlement spending has increased $115 billion beyond 
projections--$18 billion in 1991, $43 billion in 1992 and $54 billions 
in 1993. Slightly more than half of the increase was in Medicare and 
Medicaid--$63 billion. Other major increases were in unemployment 
insurance--$30 billion; food stamps--$9 billion; student loans--$7 
billion; and supplemental security income--$5 billion.
  Entitlement spending is projected to be $270 billion higher in 1998 
than it was in 1993--a 35.8-percent increase. Under current policies, 
entitlement spending will be $1.035 trillion by 1998 and nearly $1.5 
trillion by 2003.
  Because of my concern about the continued growth of entitlement 
spending, I was extremely disappointed the budget resolution we passed 
earlier this year did not call for a reconciliation bill which would 
make additional reductions in entitlement spending. While it is true 
that the deficit is projected to take a slight downturn over the next 
few years, we remain convinced that sustained deficits of $200 billion 
a year present a great economic hazard to our Nation's future.
  I was pleased, however, that we were able to attach sense-of-the-
Congress language to the budget resolution which called for the 
enactment of enforceable entitlement spending limits as well as other 
budget process reforms. I was also pleased that there was an agreement 
for the consideration of further budget process votes within the House 
of Representatives.
  As a result of the commitment to allow the House to debate and vote 
on legislation to control the growth of entitlement spending, I began 
to study past legislation dealing with the growth of entitlement 
spending and canvass my colleagues regarding this issue. The 
legislation we are voting on today is a product of this effort.
  I have never claimed that an entitlement cap is a replacement for the 
tough choices and specific policy decisions that we need to make. Next 
month, we will have an opportunity to make some of those tough choices 
when Mr. Orton and others offer amendments to cut entitlement spending. 
That notwithstanding, I have concluded that we will not enact the 
policy choices necessary to control the growth of entitlement spending 
unless we have the hammer of an entitlement cap forcing us to do so. 
One of the tough decisions people are talking about today concerns 
social security.
  You will hear some claims that my amendment will require draconian 
cuts. That simply is not the case. My amendment would require extremely 
modest reductions in entitlement spending in the initial years, none in 
fiscal year 1995 and $3.3 billion in fiscal year 1996, to allow for a 
gradual reduction in the growth of entitlement spending. Even when the 
cap begins to take effect in later years, the amendment allows for 
considerable growth in entitlement spending. Entitlement spending would 
be allowed to grow by 6.3 percent in fiscal year 1997, 6.0 percent in 
fiscal year 1998 and 5.1 percent in fiscal year 1999. The reductions 
required from 1996 through 1999 represent just slightly more than 2 
percent of the amount we are projected to spend on entitlement programs 
over that period.
  The reductions from CBO baseline required by this amendment are 
significantly lower than the entitlement reductions that would have 
been required by the Balanced Budget Enforcement Act introduced by 
then-Budget Committee Chairman Leon Panetta in 1992, even when the 
deficit reduction of the 1993 reconciliation bill is taken into 
account. The Panetta Balanced Budget Enforcement Act would have 
required $88.1 billion in entitlement savings beyond the cuts in last 
years budget from fiscal year 1994 to fiscal year 1998. Over the same 
period, the Entitlement Control Act would require just $39.3 billion in 
savings.
  My amendment which will be voted on later today is the only amendment 
that places real, enforceable limits on spending. I commend our 
leadership for bringing us the opportunity for these votes today and I 
encourage my colleagues to support the Stenholm-Penny-Orton-LaRocco 
amendment if you truly want to take control of uncontrollable spending.
  Mr. GOSS. Mr. Chairman, I yield 3 minutes to the distinguished 
gentleman from North Carolina [Mr. McMillan].

                              {time}  1330

  Mr. McMILLAN. I thank the gentleman for yielding this time to me.
  Mr. Chairman, we have three approaches to getting a rein on 
entitlement spending at issue today, all of which are important. It is 
highly unlikely that any of them will pass. But there is wide agreement 
that something must be done about entitlements and solid support among 
those here today as to essentially how. There is more agreement here 
than disagreement.
  I would prefer those of us in agreement would be in unity today in 
offering amendments instead of offering separate amendments. But that 
is not the case. While the Stenholm and Kasich-McMillan-Kolbe bills 
disagree in some respects, I intend to vote for both of them because I 
think they are similar on the most important points. I would prefer 
both of them would be stronger in terms of the setting of caps, but I 
think that is beyond the realm of possibility. Why?
  Both of these bills agree that to control mandatory entitlement 
spending, which constitutes 60 percent of the budget if you include 
interest, it is absolutely necessary to set a target spending level 
each year.
  We are going to have to vote on it each year. So it does not make any 
difference to me whether it is 5 years or 1 year in the budget 
resolution. We already do that on discretionary accounts; why not 
entitlements? In fact, entitlements are even more important because 
that is where the problem is. So if we simply extend what we are doing 
on discretionary spending to entitlements, we will be making headway.
  I do not accept the argument that entitlements are unpredictable. 
That is a copout. They are predictable. We just do not want to do it.
  We should demand that authorization of entitlements, prospective and 
already enacted, be specific. Then we would get to dealing with the 
problem.
  Second, both amendments agree that the budget resolutions on spending 
limits for mandatory as well as discretionary spending must be 
reconciled in the authorizing committees. That is the key. We do not do 
that now except on discretionary. Both involve the President in 
different ways. If Congress and the President, under both, fail to meet 
those targets, however, sequestration will do it for them. We can argue 
about the amounts, but both agree on a change in the process that could 
put a stop to runaway entitlement costs by forcing the Congress in its 
budget resolution, and the authorizing committees in reconciliation, to 
make specific decisions instead of authorizations of ``such sums as 
necessary.'' Those are really a recipe for financial disaster, and have 
been.
  This is not a copout, as some editors suggest. To do nothing is a 
copout. It is simply setting up a rational process, extending caps to 
all of the budget that now already apply on discretionary spending. It 
is what we would have to do if we had a balanced budget amendment, for 
those who would like to use that as an excuse--and I think it is a good 
one.
  This, my colleagues, is no radical proposal; it is simply good common 
sense, and I urge you to take them seriously.
  Mr. CONYERS. Mr. Chairman, I reserve the right to close.
  Mr. CLINGER. Mr. Chairman, I have no further requests for time, and I 
yield back the balance of my time.
  Mr. GOSS. Mr. Chairman, I have no further requests. I yield myself my 
remaining minute in order to say that we have heard a lot of statements 
about whether this process is going to work or not and whether it is 
going to have the desired goals, the impact to achieve the goals we all 
agree on to get entitlements under some kind of control before they eat 
us alive, which they are in the process of doing.
  This is not a process where we have any heroes. The gentleman from 
South Carolina [Mr. Spratt] has talked about the need for visibility. I 
agree with him; we do need visibility, but as we raise expectations we 
need to make sure that we can deliver achievements, not just more 
disappointments and broken promises, because our track record on 
entitlements, frankly, when you go back to the beginning of 
entitlements--and the gentleman is the one who started the historical 
trend here--has not been good. They have grown like topsy, and it looks 
like they will continue to grow like topsy.
  I agree the gentleman has used the words that we could abide by this 
process were it not for such things as cynical manipulation. I guess in 
our business the usual term, this is called end run, end running the 
regulations. In my view, this process, even the slowest running among 
us would be able to end run this process very easily. And that is my 
major concern with it.
  Mr. Chairman, I yield back the balance of our time.
  Mr. CONYERS. Mr. Chairman, I am proud to yield the balance of our 
time to the distinguished chairman of the Committee on the Budget, the 
gentleman from Minnesota [Mr. Sabo].
  Mr. SABO. I thank the chairman for yielding this time to me.
  Mr. Chairman and Members of the House, let me commend the chairman of 
the Committee on Government Operations, the gentleman from Michigan 
[Mr. Conyers], and the gentleman from South Carolina [Mr. Spratt], for 
their work on the base bill that we have before us, and many others who 
participated in that process as we passed the basic form of this bill 
in the House Rules and, in part, by executive order last year.
  It is a good bill. It does some things which I think are very helpful 
and very useful in the budget process.
  What it does is require us each year to come back and look at 
entitlements and to see if they are staying within estimates that have 
been made of those programs. It deals with real dollars. It requires us 
to look back in the last year to see what has actually happened. It 
forces us to look at the estimates for the current year and for the 
future years.
  It is a process that deals with the reality of what is happening. If 
we then discover that entitlements are exceeding those estimates, it 
requires the President and the Congress to deal with that issue. It 
does not attempt to prescribe by formula what we have to do. It leaves 
legislators to be legislators and policymakers, and the President to be 
President. But it forces us to regularly come back and look at problems 
that are emerging. My observation has been that historically the 
Congress will ignore problems for a period of time and then as they 
grow and grow, we finally get to them. This bill and this process force 
us to come and examine the problems as they are emerging on an annual 
basis.
  I think that is a very substantial step forward. We will debate other 
formulas later, and other proposals. This proposal does not turn 
Government over to simply a series of formulas, or another proposal 
that is before us today, which is very complex which I think 
accomplishes nothing on substance but simply makes the process much, 
much more complicated, in the proposal offered by my good friend, the 
gentleman from Ohio [Mr. Kasich].
  So I commend the gentlemen; they have a very good basic proposal 
before us, and I would urge the House to adopt it.
  Mr. LEWIS of Florida. Mr. Chairman, I believe we must get all Federal 
spending under control, including entitlements. However, none of the 
alternatives offered today to address entitlement spending is ideal. 
Although I voted for the Kasich substitute, I did so with grave 
misgivings about its exemption of Social Security from the entitlement 
review process. Exempting Social Security protects most retirees from 
cuts, but leaves Federal and military retirees vulnerable to 
sequestration and direct cuts. Social Security expenditures this year 
are estimated at $325 billion. It is unfair to leave such a large piece 
of the budget out of the review process, while subjecting Federal and 
military retirees' pensions to budgetary scrutiny. It is my hope that 
future attempts to address entitlement spending will treat all retirees 
equally, whether they receive Social Security or some form of Federal 
pension.
  Mrs. LLOYD. Mr. Chairman, I rise in support of the Entitlement 
Control Act of 1994. This act is long overdue. We have taken major 
steps in the 103d Congress to control the escalating budget deficit. 
The 1994 deficit will be $55 million lower than last year's and $90 
billion below the deficit just 2 years ago. From 1992 through 1996, 
deficits are projected to decline 4 years in a row. This is a positive 
start toward deficit reduction, however, we cannot rest on our laurels.
  The deficit problem is not over and it is expected to increase to 3 
percent of the gross domestic product [GDP] by the next decade if we do 
not address the root of the problem--entitlement spending. Entitlement 
spending consumes approximately half of all Federal outlays. About 16 
percent of the budget is allocated toward paying the interest on 
programs such as Medicare and Medicaid. According to Congressional 
Budget Office [CBO] estimates, Medicare and Medicaid are not only 
expected to triple in size in dollar terms, but each will double as a 
percentage of GDP over the period.
  Passage of an effective health care reform package will help curtail 
Medicare and Medicaid expenditures in the long run. However, outlays 
for all other mandatory programs are expected to increase at an average 
annual rate of 6.5 percent between 1994 and 1999, with discretionary 
programs accounting only for a 0.8-percent increase. The Stenholm 
substitute is inclusive and weighs all entitlement programs on a cost-
benefit basis.
  There is no question that entitlements are the main culprit for our 
national debt. The only way to contain unacceptably high budget 
deficits and decrease the national debt is by enacting a strong 
entitlement control process.
  Mr. Chairman, the bill we have before us takes a major step in 
reviewing entitlement programs and setting spending Federal priorities. 
The bill creates an entitlement control mechanism to monitor the total 
costs of direct spending and sets caps on the entitlement spending. It 
would require cuts in spending of $150 billion over the next 5 years. 
Should these caps be exceeded the bill would require an automatic, 
across-the-board cuts for all entitlement programs.
  This bill forces the Congress to make tough decisions on spending 
programs, but it is carefully crafted to adapt to health reform changes 
and at the same time restrain the growth of entitlement spending. The 
Stenholm substitute specifically provides for an adjustment in the caps 
to accommodate health care reform legislation. I urge my colleagues to 
support the Stenholm substitute.
  The CHAIRMAN. All time for general debate has expired.
  Pursuant to the rule, the amendment in the nature of a substitute, 
consisting of the text of the bill, modified by the amendment printed 
in part 1 of House Report 103-614, is considered as an original bill 
for the purpose of amendment and is considered as read.
  The text of the amendment in the nature of a substitute, as modified, 
is as follows:

                               H.R. 4604

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

     SECTION 1. SHORT TITLE; PURPOSE.

       (a) Short Title.--This Act may be cited as the ``Budget 
     Control Act of 1994''.
       (b) Purpose.--The purpose of this Act is to create a 
     mechanism to monitor total costs of direct spending programs, 
     and, in the event that actual or projected costs exceed 
     targeted levels, to require the President and Congress to 
     address adjustments in direct spending.

     SEC. 2. ESTABLISHMENT OF DIRECT SPENDING TARGETS.

       (a) In General.--The initial direct spending targets for 
     each of fiscal years 1994 through 1997 shall equal total 
     outlays for all direct spending except net interest and 
     deposit insurance as determined by the Director of the Office 
     of Management and Budget (hereinafter referred to in this Act 
     as the ``Director'') under subsection (b).
       (b) Initial Report by Director.--
       (1) Not later than 30 days after the date of enactment of 
     this Act, the Director shall submit a report to Congress 
     setting forth projected direct spending targets for each of 
     fiscal years 1994 through 1997.
       (2) The Director's projections shall be based on 
     legislation enacted as of 5 days before the report is 
     submitted under paragraph (1). To the extent feasible, the 
     Director shall use the same economic and technical 
     assumptions used in preparing the concurrent resolution on 
     the budget for fiscal year 1994 (H. Con. Res. 64, One Hundred 
     Third Congress).
       (c) Adjustments.--Direct spending targets shall be 
     subsequently adjusted by the Director under section 6.

     SEC. 3. ANNUAL REVIEW OF DIRECT SPENDING AND RECEIPTS BY 
                   PRESIDENT.

       As part of each budget submitted under section 1105(a) of 
     title 31, United States Code, the President shall provide an 
     annual review of direct spending and receipts, which shall 
     include (1) information supporting the adjustment of direct 
     spending targets pursuant to section 6, (2) information on 
     total outlays for programs covered by the direct spending 
     targets, including actual outlays for the prior fiscal year 
     and projected outlays for the current fiscal year and the 5 
     succeeding fiscal years, and (3) information on the major 
     categories of Federal receipts, including a comparison 
     between the levels of those receipts and the levels projected 
     as of the date of enactment of this Act.

     SEC. 4. SPECIAL DIRECT SPENDING MESSAGE BY PRESIDENT.

       (a) Trigger.--In the event that the information submitted 
     by the President under section 3 indicates--
       (1) that actual outlays for direct spending in the prior 
     fiscal year exceeded the applicable direct spending target, 
     or
       (2) that outlays for direct spending for the current or 
     budget year are projected to exceed the applicable direct 
     spending targets,

     the President shall include in his budget a special direct 
     spending message meeting the requirements of subsection (b).
       (b) Contents.--(1) The special direct spending message 
     shall include:
       (A) An explanation of any adjustments to the direct 
     spending targets pursuant to section 6.
       (B) An analysis of the variance in direct spending over the 
     adjusted direct spending targets.
       (C) The President's recommendations for addressing the 
     direct spending overages, if any, in the prior, current, or 
     budget year.
       (2) The President's recommendations may consist of any of 
     the following:
       (A) Proposed legislative changes to reduce outlays, 
     increase revenues, or both, in order to recoup or eliminate 
     the overage for the prior, current, and budget years in the 
     current year, the budget year, and the 4 outyears.
       (B) Proposed legislative changes to reduce outlays, 
     increase revenues, or both, in order to recoup or eliminate 
     part of the overage for the prior, current, and budget year 
     in the current year, the budget year, and the 4 outyears, 
     accompanied by a finding by the President that, because of 
     economic conditions or for other specified reasons, only some 
     of the overage should be recouped or eliminated by outlay 
     reductions or revenue increases, or both.
       (C) A proposal to make no legislative changes to recoup or 
     eliminate any overage, accompanied by a finding by the 
     President that, because of economic conditions or for other 
     specified reasons, no legislative changes are warranted.
       (3) Except as provided by paragraph (4) any proposed 
     legislative change under paragraph (2) to reduce outlays may 
     include reductions in direct spending or in the discretionary 
     spending limits under section 601 of the Congressional Budget 
     Act of 1974.
       (4) The President's recommendations may not consist of any 
     proposed legislative changes to reduce benefits under the 
     old-age, survivors, and disability insurance program 
     established under title II of the Social Security Act.
       (c) Proposed Special Direct Spending Resolution.--
       (1) President's recommendations to be submitted as draft 
     resolution.--If the President recommends reductions 
     consistent with subsection (b)(2)(A) or (B), the special 
     direct spending message shall include the text of a special 
     direct spending resolution implementing the President's 
     recommendations through reconciliation directives instructing 
     the appropriate committees of the House of Representatives 
     and Senate to determine and recommend changes in laws within 
     their jurisdictions to reduce outlays or increase revenues by 
     specified amounts. If the President recommends no reductions 
     pursuant to (b)(2)(C), the special direct spending message 
     shall include the text of a special resolution concurring in 
     the President's recommendation of no legislative action.
       (2) Resolution to be introduced in house.--Within 10 days 
     after the President's special direct spending message is 
     submitted, the text required by paragraph (1) shall be 
     introduced as a concurrent resolution in the House of 
     Representatives by the chairman of the Committee on the 
     Budget of the House of Representatives without substantive 
     revision. If the chairman fails to do so, after the tenth day 
     the resolution may be introduced by any Member of the House 
     of Representatives. A concurrent resolution introduced under 
     this paragraph shall be referred to the Committee on the 
     Budget.

     SEC. 5. REQUIRED RESPONSE BY CONGRESS.

       (a) Requirement for Special Direct Spending Resolution.--
     Whenever the President submits a special direct spending 
     message under section 4, the Committee on the Budget of the 
     House of Representatives shall report, not later than April 
     15, the concurrent resolution on the budget and include in it 
     a separate title that meets the requirements of subsections 
     (b) and (c).
       (b) Contents of Separate Title.--The separate title of the 
     concurrent resolution on the budget shall contain 
     reconciliation directives to the appropriate committees of 
     the House of Representatives and Senate to determine and 
     recommend changes in laws within their jurisdictions to 
     reduce outlays or increase revenues by specified amounts 
     (which in total equal or exceed the reductions recommended by 
     the President, up to the amount of the overage). If this 
     separate title recommends that no legislative changes be made 
     to recoup or eliminate an overage, then a statement to that 
     effect shall be set forth in that title.
       (c) Requirement for Separate Vote To Increase Targets.--If 
     the separate title of a concurrent resolution on the budget 
     proposes to recoup or eliminate less than the entire overage 
     for the prior, current, and budget years, then the Committee 
     on the Budget of the House of Representatives shall report a 
     resolution directing the Committee on Government Operations 
     to report legislation increasing the direct spending targets 
     for each applicable year by the full amount of the overage 
     not recouped or eliminated. It shall not be in order in the 
     House of Representatives to consider that concurrent 
     resolution on the budget until the House of Representatives 
     has agreed to the resolution directing the increase in direct 
     spending targets.
       (d) Conference Reports Must Fully Address Overage.--It 
     shall not be in order in the House of Representatives to 
     consider a conference report on a concurrent resolution on 
     the budget unless that conference report fully addresses the 
     entirety of any overage contained in the applicable report of 
     the President under section 4 through reconciliation 
     directives requiring spending reductions, revenue increases, 
     or changes in the direct spending targets.
       (e) Procedure If House Budget Committee Fails To Report 
     Required Resolution.--
       (1) Automatic discharge of house budget committee.--If a 
     special direct spending resolution is required and the 
     Committee on the Budget of the House of Representatives fails 
     to report a resolution meeting the requirements of 
     subsections (b) and (c) by April 15, then the committee shall 
     be automatically discharged from further consideration of the 
     concurrent resolution reflecting the President's 
     recommendations introduced pursuant to section 4(c)(2) and 
     the concurrent resolution shall be placed on the appropriate 
     calendar.
       (2) Consideration by house.--Ten days after the Committee 
     on the Budget of the House of Representatives has been 
     discharged under paragraph (1), any Member may move that the 
     House proceed to consider the resolution. Such motion shall 
     be highly privileged and not debatable.
       (f) Application of Congressional Budget Act.--To the extent 
     that they are relevant and not inconsistent with this Act, 
     the provisions of title III of the Congressional Budget Act 
     of 1974 shall apply in the House of Representatives and the 
     Senate to special direct spending resolutions, resolutions 
     increasing targets under subsection (c), and reconciliation 
     legislation reported pursuant to directives contained in 
     those resolutions.
       (g) Limitation on Changes to the Social Security Act.--
     Notwithstanding any other provision of law, it shall not be 
     in order in the Senate or the House of Representatives to 
     consider any reconciliation bill reported pursuant to a 
     concurrent resolution on the budget agreed to under section 
     301 or 304 or reconciliation legislation reported pursuant to 
     directives contained in any special direct spending 
     resolution, or any amendment thereto or conference report 
     thereon, that contains recommendations to reduce benefits 
     under the old-age, survivors, and disability insurance 
     program established under title II of the Social Security 
     Act.

     SEC. 6. ADJUSTMENTS TO DIRECT SPENDING TARGETS.

       (a) Required Annual Adjustments.--Prior to the submission 
     of the President's budget for each of fiscal years 1994 
     through 1997, the Director shall adjust the direct spending 
     targets in accordance with this section. Any such adjustments 
     shall be reflected in the targets used in the President's 
     report under section 3 and message (if any) under section 4.
       (b) Adjustment for Increases in Beneficiaries.--(1) The 
     Director shall adjust the direct spending targets for 
     increases (if any) in actual or projected numbers of 
     beneficiaries under direct spending programs for which the 
     number of beneficiaries is a variable in determining costs.
       (2) The adjustment shall be made by--
       (A) computing, for each program under paragraph (1), the 
     percentage change between (i) the annual average number of 
     beneficiaries under that program (including actual numbers of 
     beneficiaries for the prior fiscal year and projections for 
     the budget and subsequent fiscal years) to be used in the 
     President's budget with which the adjustments will be 
     submitted, and (ii) the annual average number of 
     beneficiaries used in the adjustments made by the Director in 
     the previous year (or, in the case of adjustments made in 
     1994, the annual average number of beneficiaries used in the 
     Director's initial report under section 2(b));
       (B) applying the percentage computed under subparagraph (A) 
     to the projected levels of outlays for each program 
     consistent with the direct spending targets in effect 
     immediately prior to the adjustment; and
       (C) adding the results of the calculations required by 
     subparagraph (B) to the direct spending targets in effect 
     immediately prior to the adjustment.
       (3) No adjustment shall be made for any program for a 
     fiscal year in which the percentage increase computed under 
     paragraph (2)(A) is less than or equal to zero.
       (c) Adjustments for Revenue Legislation.--(1) The Director 
     shall adjust the targets as follows:--
       (A) they shall be increased by the amount of any increase 
     in receipts; or
       (B) they shall be decreased by the amount of any decrease 
     in receipts,

     resulting from receipts legislation enacted after the date of 
     enactment of this Act, except legislation enacted under 
     section 5.
       (d) Adjustments To Reflect Congressional Decisions.--Upon 
     enactment of a reconciliation bill pursuant to instructions 
     under section 5, the Director shall adjust direct spending 
     targets for the current year, the budget year, and each 
     outyear through 1997 by--
       (1) increasing the target for the current year and the 
     budget year by the amount stated for that year in the 
     reconciliation bill (but if a separate vote was required by 
     section 5(c), only if that vote has occurred); and
       (2) decreasing the target for the current, budget, and 
     outyears through 1997 by the amount of reductions in direct 
     spending enacted in that reconciliation bill.
       (e) Designated Emergencies.--The Director shall adjust the 
     targets to reflect the costs of legislation that is 
     designated as an emergency by Congress and the President 
     under section 252(b) of the Balanced Budget and Emergency 
     Deficit Control Act of 1985.

     SEC. 7. RELATIONSHIP TO BALANCED BUDGET AND EMERGENCY DEFICIT 
                   CONTROL ACT.

       Reductions in outlays or increases in receipts resulting 
     from legislation reported pursuant to section 5 shall not be 
     taken into account for purposes of any budget enforcement 
     procedures under the Balanced Budget and Emergency Deficit 
     Control Act of 1985.

     SEC. 8. ESTIMATING MARGIN.

       For any fiscal year for which the overage is less than one-
     half of 1 percent of the direct spending target for that 
     year, the procedures set forth in sections 4 and 5 shall not 
     apply.

     SEC. 9. CONSIDERATION OF APPROPRIATION BILLS.

       (a) Point of Order.--It shall not be in order in the House 
     of Representatives to consider any general appropriation bill 
     if the President has submitted a direct spending message 
     under section 4 until Congress has adopted a concurrent 
     resolution on the budget for the budget year that meets the 
     requirements of section 5.
       (b) Waiver.--The point of order established by subsection 
     (a) may only be waived for all general appropriation bills 
     for that budget year through the adoption of one resolution 
     waiving that point of order.

     SEC. 10. MEANS-TESTED PROGRAMS.

       In making recommendations under sections 4 and 5, the 
     President and the Congress should seriously consider all 
     other alternatives before proposing reductions in means-
     tested programs.

     SEC. 11. EFFECTIVE DATE.

       This Act shall apply to direct spending targets for fiscal 
     years 1994 through 1997 and shall expire at the end of fiscal 
     year 1997.

  The CHAIRMAN. No other amendment to the bill is in order except the 
amendments printed in part 2 of the report. Each amendment may be 
offered only in the order printed in the report, may be offered only by 
a Member designated in the report, is considered as read, shall be 
debatable under the terms specified in the report, shall not be subject 
to amendment except as specified in the report, and shall not be 
subject to a demand for division of the question.
  If more than one of the amendments printed in part 2 of the report is 
adopted, only the last to be adopted shall be considered as finally 
adopted and reported to the House.
  It is now in order to consider amendment No. 1, printed in House 
Report 103-614.


     amendment in the nature of a substitute offered by mr. kasich

  Mr. KASICH. Mr. Chairman, pursuant to the rule, I offer an amendment 
in the nature of a substitute.
  The CHAIRMAN. The Clerk will designate the amendment in the nature of 
a substitute.
  The text of the amendment in the nature of a substitute is as 
follows:

       Amendment in the nature of a substitute offered by Mr. 
     Kasich:
       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Mandatory Spending Control 
     Act of 1994''.

     SEC. 2. ESTABLISHMENT AND ENFORCEMENT OF MANDATORY SPENDING 
                   LIMITS.

       (a) Definitions.--Section 250(c) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended--
       (1) in paragraph (3), by inserting ``(A)'' after ``(3)'' 
     and by adding at the end the following new subparagraph:
       ``(B) The term `mandatory spending breach' means, for any 
     fiscal year, the amount (if any) by which estimated outlays 
     for that year for mandatory spending exceed the mandatory 
     spending limit for that year set forth in the most recently 
     adopted joint resolution on the budget.''; and
       (2) by adding at the end the following new paragraph:
       ``(22) The term `mandatory spending' means direct spending 
     excluding--
       ``(A) social security;
       ``(B) net interest;
       ``(C) deposit insurance;
       ``(D) any program with projected annual spending of less 
     than $50 million in outlays for the budget year;
       ``(E) payments from one direct spending account to another;
       ``(F) offsetting receipts and collections; or
       ``(G) other non-budgetary activities and prior legal 
     obligations set forth in section 252B(u).''.
       (b) Mandatory Spending Limits.--(1) Part C of the Balanced 
     Budget and Emergency Deficit Control Act of 1985 is amended 
     by adding after section 252 the following new sections:

     ``SEC. 252A. ENFORCING MANDATORY SPENDING LIMITS.

       ``(a) Fiscal Years 1996-1998 Enforcement.--
       ``(1) Sequestration.--Within 15 calendar days after 
     Congress adjourns to end a session and on the same day as a 
     sequestration (if any) under sections 251, 252, and 253, but 
     after such sequestrations, there shall be a sequestration to 
     eliminate a budget-year mandatory spending breach, if any, of 
     the mandatory spending limit. OMB shall use current economic 
     and technical estimates to carry out this section and in 
     making its estimates of mandatory spending shall take into 
     account any enacted legislation and any savings resulting 
     from a section 252 sequestration.
       ``(2) Eliminating a mandatory spending breach.--Each 
     mandatory spending program (or accounts comprising a program) 
     that exceeds its mandatory spending program cap established 
     by law under section 310 of the Congressional Budget Act of 
     1974 for the budget year shall be reduced by the amount by 
     which estimated outlays for that program exceeds its 
     mandatory spending program cap. If that sequestration is 
     insufficient to eliminate the mandatory spending breach, then 
     each mandatory spending account for which no mandatory 
     spending program cap was established by law under section 310 
     of the Congressional Budget Act of 1974 for the budget year 
     shall be reduced by the uniform percentage necessary to 
     eliminate the remaining budget-year mandatory spending breach 
     of the mandatory spending limit.
       ``(3) Look-back.--If legislation is enacted providing 
     mandatory spending that causes a mandatory spending breach 
     for the current year that was not included in the final 
     sequester report for that year, the mandatory spending limit 
     for the next fiscal year shall be reduced by the amount of 
     that breach.
       ``(b) Scorekeeping and Adjustments for Emergencies.--
       ``(1) Scorekeeping.--OMB and CBO shall prepare estimates 
     under this subsection in conformance with scorekeeping 
     guidelines determined after consultation among the House and 
     Senate Committees on the Budget, CBO, and OMB.
       ``(2) Treatment of emergencies.--When OMB submits a 
     sequestration report under section 254(g), the sequestration 
     report shall exclude any provision of mandatory spending 
     legislation that is enacted and that the President designates 
     as emergency requirements and the Congress so designates in 
     statute as an emergency.

     ``SEC. 252B. GENERAL AND SPECIAL SEQUESTRATION RULES.

       ``(a) Permanent Sequestration of Mandatory Spending.--
       ``(1) The rules set forth in this section apply only to 
     sequestrations that occur under section 252A.
       ``(2) Obligations in sequestered mandatory 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 mandatory spending sequestration, any later 
     sequestration shall reduce mandatory spending by an amount in 
     addition to, rather than in lieu of, the reduction in 
     mandatory spending in place under the existing sequestration 
     or sequestrations.
       ``(b) Uniform Percentages.--
       ``(1) In the case of a program for which a mandatory 
     spending program cap has been established under section 310 
     of the Congressional Budget Act of 1974, the uniform 
     percentage is the percentage reduction in spending required 
     to reduce spending for that program to its cap level. In the 
     case of a program for which no mandatory spending program cap 
     has been established under that section, the uniform 
     percentage is the percentage reduction in spending required 
     to eliminate the remaining budget-year breach of the 
     mandatory spending limit.
       ``(2) The sequestrable base for mandatory spending rules 
     and activities is the total budget-year level of outlays for 
     those programs or activities in the current policy baseline 
     minus--
       ``(A) those budget-year outlays resulting from obligations 
     incurred in the current or prior fiscal years, and
       ``(B) those budget-year outlays resulting from exemptions.
       ``(3) For any direct spending program in which--
       ``(A) outlays pay for entitlement benefits,
       ``(B) a budget-year sequestration takes effect after the 
     1st day of the budget year, and
       ``(C) that delay reduces the amount of entitlement 
     authority that is subject to sequestration in the budget 
     year,

     the uniform percentage otherwise applicable to the 
     sequestration of that program in the budget year shall be 
     increased as necessary to achieve the same budget-year outlay 
     reduction in that program as would have been achieved had 
     there been no delay.
       ``(4) If the uniform percentage otherwise applicable to the 
     budget-year sequestration of a program or activity is 
     increased under paragraph (3), then it shall revert to the 
     uniform percentage calculated under paragraph (2) when the 
     budget year is completed.
       ``(c) General Rules for Sequestration.--
       ``(1) 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.
       ``(2) Cancellation of budgetary resources.--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 or 
     repealed.
       ``(3) 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,
     then for the first fiscal year to which a sequestration order 
     applies, the benefit reductions in that program accomplished 
     by the order shall take effect starting with the payment made 
     at the beginning of January or 7 weeks after the order is 
     issued, whichever is later. For the purposes of this 
     subsection, Veterans Compensation shall be considered a 
     program that meets the conditions of the preceding sentence.
       ``(4) Programs, projects, or activities.--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).
       ``(5) Implementing regulations.--Administrative regulations 
     or similar actions implementing the sequestration of a 
     program or activity shall be made within 120 days of the 
     effective date of the sequestration of that program or 
     activity.
       ``(6) Distribution formulas.--To the extent that 
     distribution or allocation formulas differ at different 
     levels of budgetary resources within an account, program, 
     project, or activity, a 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.
       ``(7) Contingent fees.--In any account for which fees 
     charged to the public are legally determined by the level of 
     appropriations, fees shall be charged on the basis of the 
     presequestration level of appropriations.
       ``(d) Non-JOBS Portion of AFDC.--Any sequestration order 
     shall accomplish the full amount of any required reduction in 
     payments for the non-jobs portion of the aid to families with 
     dependent children program under the Social Security Act by 
     reducing the Federal reimbursement percentage (for the fiscal 
     year involved) by multiplying that reimbursement percentage, 
     on a State-by-State basis, by the uniform percentage 
     applicable to the sequestration of nonexempt direct spending 
     programs or activities.
       ``(e) JOBS Portion of AFDC.--
       ``(1) Full amount of sequestration required.--Any 
     sequestration order shall accomplish the full amount of any 
     required reduction of the job opportunities and basic skills 
     training program under section 402(a)(19), and part F of 
     title VI, of the Social Security Act, in the manner specified 
     in this subsection. Such an order may not reduce any Federal 
     matching rate pursuant to section 403(l) of the Social 
     Security Act.
       ``(2) New allotment formula.--
       ``(A) General rule.--Notwithstanding section 403(k) of the 
     Social Security Act, each State's percentage share of the 
     amount available after sequestration for direct spending 
     pursuant to section 403(l) of such Act shall be equal to that 
     percentage of the total amount paid to the States pursuant to 
     such section 403(l) for the prior fiscal year that is 
     represented by the amount paid to such State pursuant to such 
     section 403(l) for the prior fiscal year, except that a State 
     may not be allotted an amount under this subparagraph that 
     exceeds the amount that would have been allotted to such 
     State pursuant to such section 403(k) had the sequestration 
     not been in effect.
       ``(B) Reallotment of amounts remaining unallotted after 
     application of general rule.--Any amount made available after 
     sequestration for direct spending pursuant to section 403(l) 
     of the Social Security Act that remains unallotted as a 
     result of subparagraph (A) of this paragraph shall be 
     allotted among the States in proportion to the absolute 
     difference between the amount allotted, respectively, to each 
     State as a result of such subparagraph and the amount that 
     would have been allotted to such State pursuant to section 
     403(k) of such Act had the sequestration not been in effect, 
     except that a State may not be allotted an amount under this 
     subparagraph that results in a total allotment to the State 
     under this paragraph of more than the amount that would have 
     been allotted to such State pursuant to such section 403(k) 
     had the sequestration not been in effect.
       ``(f) 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.
       ``(g) 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 produced in the United States and marketed by 
     producers for commercial use. That price reduction (measured 
     in cents per hundredweight 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 the Commodity Credit Corporation is 
     the budget-year level of gross outlays resulting from new 
     budget authority that is subject to reduction under 
     paragraphs (1) and (2), and subsection (b)(2) shall not 
     apply.
       ``(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 net realized losses.
       ``(h) Conservation Reserve Program.--Multiyear contracts 
     under the conservation reserve program shall be considered 
     binding and not subject to sequestration, but any contract 
     entered into after a sequestration applicable to that program 
     takes effect shall provide for payments reduced by the 
     uniform percentage or percentages applicable to that 
     sequestration.
       ``(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 any sequestration order 
     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 1986.
       ``(j) 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. For purposes of subsection (b)(1), the sequestrable 
     base for the Fund is the budget-year level of gross outlays 
     resulting from claims paid after the sequestration order 
     takes effect, and subsection (b)(2) shall not apply.

     The premium increases under paragraph (2) shall begin with 
     the open season that occurs nearest to September 30 of the 
     fiscal year to which the sequestration first applies. If 
     those premium increases take effect in the first fiscal year 
     of a sequestration, the amount collected by the Fund in that 
     fiscal year as a result shall be used to partially finance 
     the payment to the Treasury required in that year, and the 
     amount of the recall under paragraph (1) shall be diminished 
     accordingly.
       ``(k) Federal Housing Finance Board.--Any sequestration of 
     the Federal Housing Finance 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.
       ``(l) Federal Pay.--
       ``(1) In general.--Except as provided in section 111(b)(3), 
     new budget authority to pay Federal personnel shall be 
     reduced by the uniform percentage calculated under section 
     252A, 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.
       ``(m) Guaranteed Student Loans.--(A) For all loans under 
     part B and part D of title IV of the Higher Education Act of 
     1965 made on or after the date of a sequestration, the 
     origination fees shall be increased by a uniform percentage 
     sufficient to produce the dollar savings in student loan 
     programs for the fiscal year of the sequestration required by 
     section 252A, and all subsequent origination fees shall be 
     increased by the same percentage, notwithstanding any other 
     provision of law.
       ``(B) The origination fees to which paragraph (A) applies 
     are those specified in sections 455(c) and 438(c) of that 
     Act.
       ``(n) Insurance Programs.--Any sequestration in 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 annual payments from the insurance fund or 
     account to the general fund of the Treasury. The amount of 
     each annual payment by each such fund or account shall be the 
     amount received by the fund or account by increasing premiums 
     on contracts entered into after the date a sequestration 
     order takes effect by the uniform sequestration percentage, 
     and premiums shall be increased accordingly.
       ``(o) Medicaid.--The November 15th estimate of medicaid 
     spending by States shall be the base estimate from which the 
     uniform percentage reduction under any sequestration, applied 
     across-the-board by State, shall be made. Succeeding Federal 
     payments to States shall reflect that reduction. The Health 
     Care Financing Administration shall reconcile actual medicaid 
     spending for each fiscal year with the base estimate as 
     reduced by the uniform percentage, and adjust each State's 
     grants as soon as practicable, but no later than 100 days 
     after the end of the fiscal year to which the base estimate 
     applied, to comply with the sequestration order.
       ``(p) 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 a 
     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 the 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) 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.
       ``(q) 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 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 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 foregone 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. 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 must 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.
       ``(r) 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 annual 
     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 presequester 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 rates, or by any combination, 
     but may not be financed by a lower fund surplus or a higher 
     fund deficit and must 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 above in order to make the annual payments to the 
     Treasury.
       ``(s) Uranium Enrichment.--Any sequestration of the uranium 
     enrichment program shall be accomplished through annual 
     payments from that program to the general fund of the 
     Treasury, and the program administrator shall have the duty 
     to make those payments during the fiscal year to which the 
     sequestration order applies and each succeeding fiscal year. 
     The Secretary of Energy has the authority to reduce costs or 
     increase receipts, or a combination, as necessary to finance 
     those annual payments.
       ``(t) Veterans' Housing Loans.--(1) For all housing loans 
     guaranteed, insured, or made under chapter 37 of title 38, 
     United States Code, on or after the date of a sequestration, 
     the origination fees shall be increased by a uniform 
     percentage sufficient to produce the dollar savings in 
     veterans' housing programs for the fiscal year of the 
     sequestration required by section 252A, and all subsequent 
     origination fees shall be increased by the same percentage, 
     notwithstanding any other provision of law.
       ``(2) The origination fees to which paragraph (1) applies 
     are those referred to in section 3729 of title 38, United 
     States Code.
       ``(u) As used in section 250(c)(22), other non-budgetary 
     activities and prior legal obligations mean the following:
       (1) expenses to the extent they result from private 
     donations, bequests, or voluntary contributions to the 
     Government;
       (2) 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;
       (3) 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;
       (4) 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);
       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 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 the United States territories, fiscal 
     assistance (14-0418-0-1-801);
       Salaries of Article III judges;
       Soldier's and Airmen's Home, payment of claims (84-8930-0-
     7-705);
       Washington Metropolitan Area Transit Authority, interest 
     payments (46-0300-0-1-401).
       (5) the following noncredit special, revolving, or trust-
     revolving funds--
       Coinage profit fund (20-5811-0-2-803);
       Exchange Stabilization Fund (20-4444-0-3-155);
       Foreign Military Sales trust fund (11-82232-0-7-155);
       (6)(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;
       (7) the earned income tax credit (payments to individuals 
     pursuant to section 32 of the Internal Revenue Code of 
     1986).''.
       (2) The table of contents set forth in section 250(a) of 
     the Balanced Budget and Emergency Deficit Control Act of 1985 
     is amended by inserting after the item relating to section 
     252 the following new items:

``Sec. 252A. Enforcing mandatory spending limits.
``Sec. 252B. General and special sequestration rules.''.

     SEC. 3. PRESIDENT'S BUDGET.

       When the President submits the budget under section 1105(a) 
     of title 31, United States Code, for fiscal year 1996, 1997, 
     or 1998, the estimated actual mandatory spending set forth in 
     that budget may not exceed a direct spending limit which 
     shall also be set forth in that budget submission.

     SEC. 4. CROSS-REFERENCE LIST OF MANDATORY SPENDING PROGRAMS 
                   AND ACCOUNTS.

       Up-to-Date List of Programs and Accounts.--After 
     consultation with the Directors of the Office of Management 
     and Budget and of the Congressional Budget Office, when the 
     President submits the budget under section 1105(a) of title 
     31, United States Code, beginning with fiscal year 1996, the 
     budget submission shall contain a list of programs and 
     corresponding budget accounts for purposes of establishing 
     mandatory spending program caps under section 252A of the 
     Balanced Budget and Emergency Deficit Control Act of 1985.
       (b) Mandatory Spending Limit, Allocations of Mandatory 
     Spending, and Program Spending Caps Based Upon President's 
     List.--The mandatory spending limit established under section 
     301(a)(6) of the Congressional Budget Act of 1974, 
     allocations of total mandatory spending made pursuant to 
     section 602(a) of that Act, and the mandatory spending 
     program caps under section 252A of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 shall be predicated 
     upon the most recent list submitted by the President under 
     subsection (a).

     SEC. 5. CONGRESSIONAL BUDGET.

       (a) Joint Resolutions on the Budget.--(1) Sections 3, 300, 
     301, 302, 303, 304, 305, 308, 310, and 311 of the 
     Congressional Budget and Impoundment Control Act of 1974 are 
     amended by striking ``concurrent resolution'' each place it 
     appears and by inserting ``joint resolution''.
       (2) The table of contents set forth in section 1(b) of the 
     Congressional Budget and Impoundment Control Act of 1974 is 
     amended by striking ``Concurrent'' in the items relating to 
     sections 301, 303, and 304 and inserting ``Joint''.
       (3) Clauses 4(a)(2), 4(b)(2), 4(g), and 4(h) of rule X, 
     clause 8 of rule XXIII, and rule XLIX of the Rules of the 
     House of Representatives are amended by striking 
     ``concurrent'' each place it occurs and inserting ``joint''.
       (4) Section 258C(b)(1) of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 is amended by striking 
     ``concurrent'' and by inserting ``joint''.
       (b) Definition of Mandatory Spending.--Section 3 of the 
     Congressional Budget and Impoundment Control Act of 1974 is 
     amended by adding at the end the following new paragraph:
       ``(11) The term `mandatory spending' means direct spending 
     excluding social security, net interest, and deposit 
     insurance.''.
       (c) Section 602 Allocations.--Section 602(a) of the 
     Congressional Budget Act of 1974 is amended--
       (1)(A) in paragraph (1)(A), by striking ``and'' at the end 
     of clause (ii), by striking the semicolon and inserting ``, 
     and'' at the end of clause (iii), and by inserting after 
     clause (iii) the following new clause:
       ``(iv) total mandatory spending;''; and
       (2) in paragraph (2), by striking ``and'' at the end of 
     subparagraph (B), by inserting ``; and'' at the end of 
     subparagraph (C), and by inserting after subparagraph (C) the 
     following new subparagraph:
       ``(D) total mandatory spending;''.
       (d) Content of Joint Resolution on the Budget.--Section 
     301(a) of the Congressional Budget Act of 1974 is amended by 
     redesignating paragraphs (6) and (7) as paragraphs (7) and 
     (8), respectively, and by inserting after paragraph (5), the 
     following new paragraph:
       ``(6) the total mandatory spending limit;''.
       (e) Reconciliation Directives.--Section 310(a)(1) of the 
     Congressional Budget Act of 1974 is amended by striking 
     ``and'' at the end of subparagraph (C), by striking the comma 
     and inserting ``; and'' at the end of subparagraph (D), and 
     by inserting after subparagraph (D) the following new 
     subparagraph:
       ``(E) mandatory spending for such fiscal year for each 
     mandatory spending program subject to section 252A and 
     consistent with section 602(a) allocations;''.
       (f) Establishment of Mandatory Spending Program Caps.--
     Section 310 of the Congressional Budget Act of 1974 is 
     amended by adding at the end the following new subsection:
       ``(h) Establishment of Mandatory Spending Program Caps.--
       ``(1) Each committee of the House of Representatives or 
     Senate that receives a mandatory spending allocation under 
     section 602(a) for a budget year for the most recently 
     enacted joint budget resolution shall propose a mandatory 
     spending cap for each mandatory spending program within its 
     jurisdiction for that year and include that as part of its 
     recommendations submitted to the Committee on the Budget of 
     its House for inclusion in the reconciliation bill or 
     resolution. The total of all mandatory spending program caps 
     within the jurisdiction of a committee for a budget year may 
     not exceed the total mandatory spending allocation made to 
     that committee for that year under section 602(a).
       ``(2) It shall not be in order in either the House of 
     Representatives or the Senate to consider any bill or 
     resolution, or amendment thereto or conference report 
     thereon, that establishes or increases a mandatory spending 
     program cap established under section 310 for a budget year 
     that, when combined with all other such caps for that year, 
     would cause a breach of the mandatory spending limit.''.
       (g) Compliance with Reconciliation Directions.--Section 
     310(c)(1) of the Congressional Budget and Impoundment Control 
     Act of 1974 is amended--
       (1) by inserting ``or of subsection (h)'' after ``of 
     subsection (a)''; and
       (2) in subparagraph (A), by adding at the end the following 
     new clause:
       ``(iii) if that committee fails to include mandatory 
     spending program caps for all mandatory spending programs 
     within its jurisdiction or if the sum of the mandatory 
     spending program caps for all mandatory spending programs 
     within its jurisdiction exceeds the total mandatory spending 
     allocation made to that committee for that fiscal year under 
     section 602(a); and''.
       (h) Conforming Changes in Scoring Conventions.--Section 310 
     of the Congressional Budget Act of 1974 (as amended by 
     subsection (f)) is amended by adding at the end the following 
     new subsection:
       ``(i) Conforming Changes in Scoring Conventions.--The 
     Committees on the Budget of the House or Representatives and 
     the Senate, in consultation with the Directors of the Office 
     of Management and Budget and of the Congressional Budget 
     Office, may make such changes in scoring procedures as are 
     necessary to ensure sufficient mathematical consistency 
     between section 602(a) allocations, reconciliation 
     directions, and the House and Senate-passed versions of any 
     reconciliation bill or resolution.''.
       (i) Conforming Change to Byrd Rule.--Section 313(b) of the 
     Congressional Budget Act of 1974 is amended by adding at the 
     end the following new paragraph:
       ``(4) A provision or a reconciliation bill or resolution 
     shall not be considered extraneous under this section if it 
     proposes a mandatory spending program cap for any program 
     pursuant to section 310(h).''.
       (j) Special Reconciliation Process.--Section 258C of the 
     Balanced Budget and Emergency Deficit Control Act of 1985 is 
     amended--
       (1) in subsection (a)(1), by inserting ``, 252A,'' after 
     ``section 252'';
       (2) by inserting ``or House of Representatives'' after 
     ``Senate'' each place it appears except for subsection 
     (b)(4);
       (3) in the second sentence of paragraph (3), by inserting 
     ``or in mandatory spending'' after ``deficit''
       (4) in the second sentence of paragraph (4), by inserting 
     ``or mandatory spending reduction, as the case may be,'' 
     after ``deficit reduction''; and
       (5) in paragraph (5), by inserting ``or amount of mandatory 
     spending'' after ``deficit for such fiscal year'' and by 
     inserting ``or mandatory spending limit, as the case may 
     be,'' after ``maximum deficit amount''.

     SEC. 6. ENFORCING DEFICIT TARGETS.

       Section 254 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 is amended--
       (1) in subsection (d)(1), by inserting ``mandatory 
     spending,'' before ``deficit'';
       (2) in subsection (d), by redesignating paragraphs (4) and 
     (5) as paragraphs (5) and (6), respectively, and by inserting 
     after paragraph (3) the following new paragraph:
       ``(4) Mandatory spending sequestration reports.--The 
     preview reports shall set forth, for the current year and the 
     budget year, estimates of the amount of reduction in 
     mandatory spending, if any, required under section 252A.''; 
     and
       (3) in subsection (g)(3), by inserting ``, mandatory 
     spending,'' before ``and'' in its side heading and by 
     inserting ``, mandatory spending, '' before ``pay-as-you-go'' 
     in the first sentence.

     SEC. 7. PROTECTION OF SOCIAL SECURITY.

       No reductions in benefits payable under the old-age, 
     survivors, and disability insurance program established under 
     title II of the Social Security Act shall be made as a 
     consequence of this Act.

     SEC. 8. EFFECTIVE DATE.

       (a) In General.--Notwithstanding section 275(b) of the 
     Balanced Budget and Emergency Deficit Control Act of 1985--
       (1) the expiration date set forth in that section shall not 
     apply to the amendments made by this Act to the Balanced 
     Budget and Emergency Deficit Control Act of 1985; and
       (2) and all sections of that Act, including sections 252 
     and 252A, necessary to carry out the amendments made by this 
     Act (but only for the purpose of carrying out those 
     amendments) shall remain in full force and effect.
       (b) Title VI of Congressional Budget Act of 1974.--Section 
     607 of the Congressional Budget Act of 1974 is repealed.

  The CHAIRMAN. Pursuant to the rule, the gentleman from Ohio [Mr. 
Kasich] will be recognized for 20 minutes, and a Member opposed will be 
recognized for 20 minutes.
  The Chair recognizes the gentleman from Ohio [Mr. Kasich].
  Mr. KASICH. Mr. Chairman, I yield myself 5 minutes.
  Mr. Chairman, I would like to, in a nutshell, describe what we are 
attempting to do with this proposal today. I believe that it is the 
realistic, first step in terms of establishing accountability when it 
comes to trying to deal with the growth of our entitlement programs.

                              {time}  1340

  Mr. Chairman, the chart that is placed next to me shows the two 
different kinds of spending that we have at the Federal level. One is 
the discretionary accounts, and the other one is the mandatory 
programs, and, as many colleagues can see, the discretionary accounts, 
since the period of 1962 all the way up to 1994, the amount of money 
that we are spending on discretionary programs has been consistently 
shrinking. Each and every one of these programs in the discretionary 
accounts go through a process of evaluation and appropriation on a year 
to year basis. The mandatory programs, which my colleagues can see are 
exploding, go through a process essentially; that means, it is nothing 
more than automatic pilot. We do not on a year to year basis 
reauthorize or reexamine these programs like we do the discretionary 
programs.
  Mr. Chairman, the proposal that I bring before us today that is 
designed to create the first step in creating accountability is to say 
that these mandatory programs ought to be taken off automatic pilot, 
and on a year to year basis they ought to be reviewed and reauthorized 
the same way that we review and authorize the discretionary programs. 
What we suggest in this proposal is, at the beginning of the year the 
Congress gets together and decides how much money we want to spend on 
the mandatory programs, and that amount of money that we decide that we 
want to spend on the mandatory programs would be divided within each of 
the authorizing committees that must review and run these programs, and 
what we are suggesting is, on the basis of that process, we will have 
greater accountability, and on a year to year basis the Congress of the 
United States will decide how much we want to spend on entitlement 
programs, the same way that a family at the beginning of the year makes 
a decision about how much income they are going to have, and then they 
set their family budget. That is precisely what we are suggesting in 
this proposal, and for the first time we would take these mandatory 
programs off automatic pilot.
  Now some will argue that this is not tough enough, that we do not 
have a cap on spending. Well, let me suggest to my colleagues that for 
a number of years we have gone back and forth in this Congress about 
the concept of caps. I have never been convinced that the caps are the 
way to go because it is an arbitrary ceiling that we place on these 
entitlement programs.
  Let us take Medicare. If Medicare is going to go up in a year 12 
percent, and we have a cap that permit it to only go up 6 percent, then 
somehow we have to find the magical route to cutting 6 percent because 
we did not get to our goal. My problem with that is that this has 
always eluded us. I want to see the road map before I am told where we 
want to go, and what I am suggesting is at the beginning of the year 
we, as a Congress, decide how many total dollars do we want to give to 
mandatory. We can give as much as last year; we can give more than last 
year; we can give less than last year. We would decide that as a 
Congress. We would decide what our family budget was, and then we would 
give it to the various authorizing committees, and they would then 
design the programs to fit the amount of money we allocated at the 
beginning of the year, eliminating the concept of pay as you go. We are 
not only doing that, but, in addition to that, Mr. Chairman, we are 
also saying that we are not going to put up artificial caps on which 
put as in a very difficult position of trying to determine how to reach 
those caps, particularly if those caps are, in effect, 2 or 3 or 4, 5 
years out.
  Now I respect the gentleman from Texas and his proposal. I think it 
is a legitimate position, and maybe at some point in this Congress we 
will feel we have no other way to go, but at this point in time, when 
we look at the explosion of health care costs, I cannot conceive of a 
plan, any plain that I have seen so far, that is going to be able to 
shove this spending and condense this spending in a rational way.
  Our proposal is a first step that Republicans and Democrats should 
support toward establishing accountability. We will decide at the 
beginning of the year how much we are going to spend. We will give 
those amounts to the various people who will decide what those programs 
look like and how they ought to be run. We will get these programs off 
automatic pilot, and we will be able to decide on a year-to-year basis 
precisely how much we want to spend. It brings accountability, it 
brings credibility, and it is the first step that has been proposed 
that I think realistically can find its way into law because it allows 
us to work together, creates a rational process and allows us to set 
our budget on a year-to-year basis on the basis of what we think in 
America we can afford.
  Mr. Chairman, I reserve the balance of my time.
  Mr. CONYERS. Mr. Chairman, I yield myself 3 minutes.
  Mr. Chairman, I rise today in opposition to the amendment offered by 
Representative Kasich. The amendment is unwise and just puts more 
roadblocks in the way of meaningful health care reform.
  Mr. Chairman, the amendment transforms the budget resolution from a 
congressional planning document into a joint resolution which must be 
signed by the President. This creates a powerful weapon for the 
executive branch which can be used, not for cutting the deficit, but to 
enforce the administration's policies against Congress. These battles 
do not have to be budget disputes and could include any policy 
difference, such as war and foreign affairs or defense spending. This 
proposal represents a dangerous power shift from Congress to the 
Presidency.
  Further, this rigid procedure could cause unintended consequences 
that lock in place precisely the wrong policies. For example, if the 
President vetoed a budget resolution, an entitlement cap written into 
the previous year's resolution would remain binding, backed by the 
threat of sequestration. This earlier resolution would reflect the 
prior year's economic and unemployment data. This amendment could 
trigger a sequester based on out-of-date, irrelevant economic 
assumptions, not the current economic needs. Congress would be fighting 
last year's war while neglecting the urgent problems of today.
  The amendment is also a prescription for the return of gridlock. The 
plan increases the political battle over the budget resolution, making 
it more contentions and drawn out. If Congress and the President 
differed, as during the 1980's and early 1990's, disagreement on the 
resolution could drag out for months and delay other critical issues.
  Finally, I am very troubled by this proposal which could lock in 
preferences for programs which favor the very wealthy and prevent them 
from bearing their fair share of deficit reduction. Tax expenditures, 
the Tax Code's many deductions, exclusions, and exemptions, are 
overwhelmingly claimed by the Nation's wealthy. By contrast 
entitlements target the poor and middle class. Shielding tax 
expenditures, by barring current law options which permit tax 
expenditure and entitlement cuts to be used to meet an entitlement 
target hurts the poor and middle class disproportionately.
  In summation, Mr. Chairman, this proposal is an unsound budget 
practice. This prescription will undermine both budget and health care 
reform. This is not what the doctor ordered.
  Mr. Chairman, I yield 3 minutes to the gentleman from Texas [Mr. 
Stenholm].
  (Mr. STENHOLM asked and was given permission to revise and extend his 
remarks.)

                              {time}  1350

  Mr. STENHOLM. Mr. Chairman, I regret that I must rise in opposition 
to the Kasich amendment. I do not do so lightly because I have a great 
deal of respect for the gentleman from Ohio and for his hard work and 
dedication in trying to deal with our budget problems. He and I have 
worked together on many efforts to bring fiscal responsibility to the 
Government. Once this debate is over, we will go back to work on 
building on our success last week in passing strong expedited 
rescission legislation by hopefully passing the remaining three 
proposals in the Stenholm-Penny-Kasich common cents bill. Today, 
however, we are on different sides of this issue.
  The Kasich amendment has added to the debate, but I cannot support it 
because it will not force us to reduce the growth of entitlement 
spending and, in fact, will make our job of passing legislation to 
significantly reduce the growth of entitlement spending more difficult.
  The Kasich amendment provides that Congress will establish 
entitlement caps each year as part of the budget resolution. In other 
words, Congress could continue to allow entitlement spending to grow as 
fast, or faster, than it is currently projected to grow. I would 
suggest that continued rapid growth of entitlement spending is not only 
a possible result, but is the most likely scenario. Congress would have 
every opportunity, if not incentive, to set the entitlement caps high 
enough so that it does not have to face the tough choices.
  Although Congress has shown the ability to take some action in 
reducing entitlement spending when we are prodded into doing so by 
Presidential leadership, financial crisis, or some other external 
pressure, we generally leave this spending on automatic pilot. The 
primary goal of the entitlement cap that I will offer is to provide a 
hammer to force Congress to take actions to control the growth of 
entitlement spending. Nothing in the Kasich amendment would change the 
status quo of allowing entitlement spending to continue to grow out of 
control until a crisis forces us to take some action.
  The Kasich amendment would require reductions in entitlement programs 
only if the budget resolution called for those reductions. Experience 
has shown that we generally achieve the reconciliation savings required 
by the process currently in place through the budget resolution. The 
problem is that too often the budget resolution does not call for 
entitlement reductions. My amendment would change that; the Kasich 
substitute would not.
  The ability of the Kasich substitute is limited in another way. All 
three of the proposals before us today are statutory proposals and can 
be changed at any time by subsequent legislation. However, both the 
base bill and the Stenholm substitute require a separate vote on 
legislation raising the caps. The Kasich amendment would allow Congress 
to increase the spending caps as part of an omnibus bill without a 
separate vote on increasing the caps.

  The primary reason that I oppose the Kasich amendment is that it 
takes the irresponsible step of exempting 40 percent of all entitlement 
spending from any review by excluding Social Security. I do not believe 
that we can honestly deal with our budget problem when be begin the 
business of exempting programs. We need only to look at the experience 
of Gramm-Rudman to see how providing special treatment to any program 
undercuts budget discipline.
  There is room for an honest discussion about the best way to protect 
the integrity of the Social Security Program--something which I believe 
every Member of Congress is committed to. I feel that keeping Social 
Security in the framework of budget enforcement will ensure that we 
take the actions we all know are necessary to deal with the unfunded 
liability in the trust fund and preserve the long-term soundness of 
Social Security.
  The Stenholm amendment maintains Congress' complete ability to 
protect Social Security. I have every expectation that the Social 
Security Program will continue to be a high priority not only for me 
but for all of my colleagues. Social Security will be treated 
accordingly when Congress sets budget priorities each year through 
spinoff legislation.
  Whenever I speak to groups in the 17th District of Texas, I find that 
folks are willing to make sacrifices for deficit reduction if they are 
not singled out to bear an unfair burden and everyone is treated 
fairly. On the other hand veterans, military and civilian retirees, and 
other groups affected by entitlement cuts, are justifiably upset that 
Social Security is given special treatment while they are asked to make 
sacrifices. By granting special treatment to one program, the Kasich 
amendment will undercut our ability to obtain public support for 
entitlement reductions and will lead to greater public cynicism about 
Government.
  I encourage my colleagues to vote against the Kasich amendment. But I 
would also say to my colleagues, regardless of how you vote on this 
amendment, all Members who believe that we need to control the growth 
of entitlement spending should vote for the Stenholm-Orton-Penny-
LaRocco spending cap amendment.
  Mr. KASICH. Mr. Chairman, I yield 2 minutes to the gentleman from 
Georgia [Mr. Gingrich], the distinguished whip.
  Mr. GINGRICH. Mr. Chairman, I appreciate very much my friend from 
Ohio yielding.
  Mr. Chairman, I want to say that I think there is a very fundamental 
difference between the Kasich approach and both the Stenholm substitute 
and the base bill as regards Social Security, and I think it is a 
debate that is worth engaging directly. I think it is a very fair 
debate, and I want to commend my friends who have the courage to take 
this on. I think it is a legitimate disagreement.
  But I want to make the argument that there is a huge difference 
between entitlements which are funded by the taxpayer on behalf of some 
small segment of society, many times a transfer payment from people who 
work to people who do not, many times an economic decision to subsidize 
a particular part of society. I think all of those are what I think of 
when I talk about reforming entitlements and Social Security.
  Let me explain the difference. Social Security is the one universal 
contract in this country which has almost overwhelming support and 
which has a virtually unanimous sense that it is attempting to do 
something legitimately for every American.
  Most Americans, when they are paying Social Security, believe they 
are engaged in a collective self-insurance toward old age, which is a 
contract which works for everyone.
  If you are young, it means your grandparents have a dignity and a 
freedom that you in fact are willing to pay for. If you are a senior 
citizen, having worked 30 or 40 years and paid into the Social Security 
trust fund, you have a sense that you have earned this benefit. This is 
not an entitlement given to you by others. This is something you have 
earned. That is part of a contract about how America deals with the 
question of aging.
  I think there are legitimate reforms to be looked at. I think as we 
grow to live longer and longer, decisions made about the retirement age 
have to be revisited.
  I strongly support the amendment of the gentleman from Illinois [Mr. 
Hastert] to eliminate the penalties for working after a certain age. We 
want to encourage people to stay active. So I am willing to revisit 
Social Security in its own right to make sure it continues to work. But 
I think to lump Social Security in with entitlement programs that are 
essentially transfer programs from those who work to those who do not, 
is a fundamental disservice to what has been consistently the most 
successful self-insurance program in this country.
  I think we should not mess with things that work, and that is why I 
urge a vote for Kasich.
  Mr. KASICH. Mr. Chairman, I yield 3 minutes to the gentleman from 
Illinois [Mr. Michel], the wise Republican leader.
  (Mr. MICHEL asked and was given permission to revise and extend his 
remarks.)
  Mr. MICHEL. Mr. Chairman, I rise in support of the Kasich-McMillan-
Kolbe amendment to H.R. 4604.
  This amendment sets an annual review process for the Congress to 
reexamine all entitlement spending except for the Social Security 
Program.
  Such programs now comprise about half of the entire Federal budget.
  These programs grow automatically and do not get the annual scrutiny 
that the discretionary programs receive through the annual 
appropriations process.
  I support the Kasich proposal over the Spratt and Stenholm proposals 
presented to us today for the following reasons:
  First, the Kasich proposal requires that Congress and the President 
agree on spending priorities in law at the beginning of the process.
  These priorities include levels for all programs, including 
entitlement and mandatory programs.
  The committees of jurisdiction would have to make program adjustments 
to meet the levels that have been agreed upon by law.
  We are not talking about arbitrary limits possibly enforced by 
across-the-board reductions.
  We are talking about Members of Congress setting Federal spending 
priorities and making actual programmatic changes to meet those 
priorities.
  Second, and more importantly, the Kasich amendment completely exempts 
the Social Security Program from the entitlement review process as the 
whip pointed out.
  The Stenholm amendment, on the other hand, includes the entire Social 
Security Program in the entitlement limit and the Spratt bill would 
still allow Social Security taxes to be raised.
  But, we have already voted to take the Social Security Program 
completely out of the Federal budget.
  Are we now retracting that promise to the American people? We all 
know that the Social Security Program is currently running surpluses in 
the range of $60 billion to $100 billion per year from 1994 through 
1999.
  It is self-financing and is not contributing to the problem of 
runaway spending.
  Therefore, neither Social Security benefits nor Social Security taxes 
should be part of any entitlement review process.
  I urge my colleagues to vote for the Kasich-McMillan-Kolbe proposal 
to require Congress to take an annual look at entitlement and mandatory 
programs, just as we do with all other programs.
  And let's leave alone the agreement we now have with the American 
people that the entire Social Security Program, both benefits and 
taxes, should be left outside of the Federal budget process.
  Mr. SPRATT. Mr. Chairman, I yield 2 minutes to the gentleman from 
California [Mr. Waxman].
  (Mr. WAXMAN asked and was given permission to revise and extend his 
remarks.)
  Mr. WAXMAN. Mr. Chairman, I must point out in opposition to the 
Kasich amendment that there is a disingenuousness when it comes to the 
argument that the elderly will be protected under the Kasich amendment 
because Social Security will not be affected. But what will be affected 
that the elderly are concerned about is the Medicare program. If there 
is a cap on Medicare, and that cap is too low, because health care 
spending is increasing in our country, then the Medicare program is 
going to get whacked.
  Now, we have cut back on Medicare. We have reformed and tightened 
down on payments to hospitals and insurance, which are now well below 
the rates that private insurance pays. We have raised the monthly 
premiums and cost sharing requirements for the program's 34 million 
elderly and disabled beneficiaries.
  Now, what are we going to do in addition?

                              {time}  1400

  If we have this automatic sequestration under Kasich, we will be 
forced to cut payments to teaching hospitals again. We will cut 
payments to rural hospitals again, and many of them will not survive. 
We will be cutting payments to physicians, and a lot of them will say 
they do not want to treat the elderly under Medicare because the 
reimbursement rates are too low, the deductibles, the coinsurance, if 
the elderly have to pay, that will be forced to go up under this Kasich 
amendment.
  Do not let the Republican argument that they are protecting the 
elderly fool anybody. They are going to hurt the elderly enormously 
with this Medicare cap under the Kasich amendment.
  Medicaid is also capped. And what will that mean? When the States 
cannot find enough Federal dollars, they are going to have to carry 
that burden. The Governors know this is really what amounts to the 
mother of all unfunded mandates. They are going to have to come up with 
an enormous amount of money and they will not be able to do it.
  Childrens hospitals around this country are going to not be able to 
stay open. Rural hospitals, public hospitals that serve the poor, they 
are not going to be able to make ends meet when the reimbursement rates 
are cut lower.
  There is an alternative. It is health reform. The Kasich amendment 
makes health reform impossible, and a real disservice to the elderly 
and the poor will be the result.
  I urge opposition to the Kasich amendment.
  Mr. KASICH. Mr. Chairman, I yield myself 1 minute and 30 seconds.
  That is to say that the statement that has just been made could not 
be further from the truth. What we do in our proposal is we say at the 
beginning of the year that Congress will decide how much we want to 
spend on mandatory programs. And I just think that statement is so far 
out of line and so far out of reality. That is precisely why we did not 
create a cap, because we would argue that we ought to do that at the 
beginning of the year. Just like a family decides how much they want to 
spend in their budget at the beginning of the year, that is the way the 
Congress ought to operate. I would say the gentleman knows better than 
to make those charges.
  Frankly, we could be increasing spending in some of those areas, 
decreasing them in others, or leaving them the same. That is going to 
be a decision for the Congress to make.
  What we are suggesting is that we take these spending programs off 
automatic pilot and when programs get in trouble, like SSI, where this 
Congress has agreed the program has been in trouble, we can make proper 
reforms. It will be up to us as a Congress to decide how much we want 
to spend in these areas.
  Mr. McMILLAN. Mr. Chairman, will the gentleman yield?
  Mr. KASICH. I yield to the gentleman from North Carolina.
  Mr. McMILLAN. Mr. Chairman, I just want to say to the gentleman from 
California who just spoke, the problem is that Medicare has increased 
at 12 percent a year. That is the problem. A lot of this is done under 
authorizing legislation that simply specifies such sums as necessary. 
We are simply saying, we need to set a target so that the gentleman and 
I, who serve on the Subcommittee on Health and the Environment, can 
exercise fiscal responsibility. Because increasing at 12 percent a 
year, the whole program is going to be threatened. It is forcing the 
gentleman's President, for example, to have to propose 124 billion 
dollars' worth of Medicare cuts in his health care reform proposal.
  How are we going to deal with that?
  Mr. SPRATT. Mr. Chairman, I yield 1 minute to the gentleman from 
California [Mr. Waxman].
  Mr. WAXMAN. I think that we are being misled in this argument. Unless 
we reform heath care spending overall, we are not going to get these 
programs under control.
  If we squeeze down on Medicare alone, there will be a cost shift to 
private payers.
  But more importantly, if we are going to deny home health care 
benefits under Medicare, because the cap forced cuts in that program, 
we are going to push the elderly into nursing homes. We are not making 
rational decisions and we are going to do a lot of harm to the elderly 
in this country.
  Do not make any mistake about it. We have to be thoughtful in health 
care reform and not arbitrary with the kinds of cuts that are going to 
be forced on the Medicare program, which will make that program unable 
to live up to the promises made to the elderly that they will have that 
security in their retirement years when they get sick and not forced to 
go to clinics that will have to stand them in line and not give them 
the services they need.
  Mr. SPRATT. Mr. Chairman, I yield 5 minutes to the chairman of the 
Committee on the Budget, the gentleman from Minnesota [Mr. Sabo].
  Mr. SABO. Mr. Chairman, I thank the gentleman for yielding time to 
me.
  I find the rhetoric on the Kasich amendment interesting. My good 
friend from Ohio described this amendment and describes the current 
reconciliation process and that is all. Because that is basically what 
the gentleman described, is what is potential for the Congress to do 
each year under reconciliation.
  Unfortunately, his amendment does things more than simply reaffirm 
the reconciliation process.
  I would argue that because it is a substitute and wipes out the base 
bill, it does less to require the Congress to examine entitlements 
every year than the base Spratt bill, because the very essence of the 
Spratt bill is that it does not deal with projections. It does deal 
with reality for the previous year and projections from the current 
year, to require the Congress and the President to reexamine 
entitlements, in fact, if they are exceeding estimates.
  It is my judgment, if we take on face value what the Kasich bill 
does, versus the basic underlying bill introduced by our friend, the 
gentleman from South Carolina [Mr. Spratt], it weakens the requirement 
on Congress to annually review what is happening with entitlements.
  Unfortunately, the Kasich bill does more than simply reaffirm the 
existing reconciliation bill as described.
  Let me speak to some red herrings and to some other complexities it 
does create.
  We have had a couple of speeches by the Republican leaders on Social 
Security. That is a red herring. That is not involved in the base 
Spratt bill. Because current budget rules say that we cannot deal with 
Social Security in reconciliation so that is not an issue.
  But it does do other things. It does increase the power of the 
President very substantially, as Congress tries to deal with the 
reconciliation in the budget process.
  Maybe I should be for it. It does in some fashion increase the power 
of the Committee on the Budget in relationship to authorizing 
committees. How does it do that?
  No. 1, Kasich changes the nature of the budget resolution from being 
a congressional budget resolution to being a joint resolution subject 
to Presidential veto. That fundamentally shifts the power away from 
Congress to the executive, as we deal with the budget.
  I would remind Members, particularly as it relates to discretionary 
spending, the history has been the Presidents, whether it be Republican 
or Democrats, have wanted to spend more on discretionary spending than 
the Congress.
  It also complicates how we deal with the specifics, if in the 
reconciliation process we decide to make budget cuts. And let me use 
Medicare as an example.
  My good friend from Ohio has been a strong advocate of increasing 
premiums, increasing copays and a variety of methods like that for 
meeting budget targets. Under his proposal, as I understand it, and 
frankly, I have had to have several explanations to begin to think that 
I understand it, because what it clearly does is add substantial 
complexity and not much substance to the process.
  If in the reconciliation process the budget resolution assumes 
certain savings to, let us take Ways and Means and Energy and Commerce, 
as it relates to Medicare programs, and we assume certain changes 
in expenditure levels and certain changes in premium payments, those 
committees could not increase the amount of premiums or copays above 
the level assumed in the Committee on the Budget.

  As I understand the resolution, that would be the case. That 
flexibility for the committee would disappear. It would generally apply 
to any other proposal for use such as fees. If the committee decided to 
do that beyond the level assumed by the Committee on the Budget in 
achieving their savings, they would not have that option of doing it.

                              {time}  1410

  So I would suggest to the Members that what the Kasich amendment does 
is, it takes power from the Congress, gives it to the President for no 
good reason. It increases substantially the complexity of the budget 
process, limits the ability of authorizing committees to meet the 
targets set in a budget resolution under reconciliation instructions, 
and when we are through all of this, it provides less automatic review 
of entitlement spending than the proposal by our good friend, the 
gentleman from South Carolina [Mr. Spratt].
  Mr. KASICH. Mr. Chairman, I yield 1 minute to the gentleman from 
Delaware [Mr. Castle], the former Governor of the State.
  Mr. CASTLE. Mr. Chairman, I thank the gentleman for yielding time to 
me.
  Mr. Chairman, I wonder how many of the people who are watching these 
deliberations today understand that 60 percent of the budget of the 
United States is automatic. Nothing that this body does changes that. 
Each year it increases. It is like the speeding bus which could not go 
below 50 miles an hour without blowing up. We cannot do the same thing 
with our budgeting here. It has to go up and up and up each year and 
every year.
  Mr. Chairman, we are in a tremendous problem. By the year 2012 we 
will have only enough revenues to pay these so-called entitlements, 
these automatic programs. We have no way of shutting off exactly what 
those expenditures are going to be, and we continue to suffer, for all 
those reasons, in our budgeting process. We do not give the President 
the right to be involved in the budget process. This does that.
  Mr. Chairman, I think we need to take that step as well. I support 
the Kasich amendment. It targets individual programs so that only 
individual programs suffer if our authorizing committees do not do 
their job properly. It does not rely on tax increases and it does 
protect Social Security.
  Mr. Chairman, this is the best of these programs. It is a finely 
crafted amendment which could make a difference as far as budgeting 
process is concerned in the United States of America. It is time for 
this Congress to stand up and say, ``We are going to start to do 
something about the budget deficit and protect not just our senior 
citizens, but all the citizens in this country, including our young 
people, who will one day inherit this budget.''
  Mr. KASICH. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from Illinois [Mr. Hyde].
  (Mr. HYDE asked and was given permission to revise and extend his 
remarks.)
  Mr. HYDE. Mr. Chairman, I think if we had a truth in labeling law for 
legislation that the Budget Control Act would fail the test. That is a 
misnomer, simply because the Budget Control Act does nothing to control 
entitlement spending. It does allow us to pretend that we have done 
that.
  Mr. Chairman, I think it is useless speculation as to why this bill 
is here. There are some who say its purpose is to present a fraction of 
the real reforms that are desperately needed in this House, and it also 
provides cover for people who do not want to get within 10 feet of the 
A to Z spending cuts, but as I say, that is a fruitless speculation.
  Mr. Chairman, this legislation, the Kasich-McMillan-Kolbe 
legislation, does something. It gives the budget resolutions the force 
of law. That is something new and interesting. It erects a process for 
setting annual spending for entitlements. Everyone agrees the 
entitlements are driving the problems we have with our economy. Also, 
it lets the authorizing committees limit the spending for their 
individual programs, sequestering only those programs which exceed 
their limits. It does not raise taxes to pay for higher spending, and 
it keeps Social Security out of it.
  It seems to me, Mr. Chairman, to make a lot more sense at this 
juncture than to write into law the year-by-year spending amounts for 
the rest of the century. Best of all, this approach could work. It 
would actually result in programmatic changes that can control runaway 
entitlements. That is the rub. The rub is, of course, there may be some 
in this House who do not really want to tackle the entitlement monster. 
They assume if we keep feeding it, it will eat us last, but it will 
not. It keeps getting hungrier.
  Most of us ran on a platform of cutting spending, controlling 
spending, but we have not done that. H.R. 4604 will not do that. It is 
beautifully complicated.
  It has targets and caps and triggers and reports and recommendations 
and bells and whistles, but it does not do anything. The Kasich-
McMillan-Kolbe substitute does. Therefore, it provides accountability 
on entitlements.
  Mr. Chairman, we have to address, we have to step up to the plate on 
entitlements. This does it in a thoughtful, effective, reasoned way, 
and it is by far superior to the other proposals. I certainly hope that 
it receives the support of this House.
  Mr. KASICH. Mr. Chairman, I yield 2 minutes to the gentlewoman from 
California [Ms. Harman].
  (Ms. HARMAN asked and was given permission to revise and extend her 
remarks.)
  Ms. HARMAN. Mr. Chairman, last fall I helped a bipartisan coalition 
design, and then I voted for, the Penny-Kasich amendment to cut an 
additional $90 billion from the budget. Today I do something harder.
  I stand as the only Democrat in the well of this House to speak for 
the Kasich substitute.
  Mr. Chairman, today we have a rare opportunity to enact real change 
in our budget process and the way we spend taxpayers' dollars. Not 
incremental change. Not the lesser of three evils. Not an empty 
promise. Not even, as somebody once described the Gramm-Rudman 
amendment, ``a bad idea whose time has come.''
  Too often in this body, we look at a flawed system and try to find 
modest repairs. That is the history of budget reform and deficit 
reduction: freeze this, study that, an automatic trigger here, a cap 
there. Some of these measures did help, and we have succeeded in 
cutting the deficit in fiscal year 1994 by $82 billion, with another 
$136 billion projected to be cut in fiscal year 1995. But we have gone 
as far as we can go with scissors and paste. The Kasich substitute does 
not try to repair a flawed system; it replaces it.
  It makes the budget resolution a real, enforceable agreement, not 
just a statement of principle. It makes the President a real player, 
not just a cheerleader. It allows us to make cuts throughout the 
budget, not just in the 35 percent of the budget covered by the 
appropriations process. And it recognizes the special character of 
Social Security, treating it as an inalienable contract between the 
people and their government.
  Mr. Chairman, too often we are forced to pick between bad 
alternatives. Today we have a chance to enact a truly good idea. Today 
we can make real change. I urge support for the Kasich substitute.
  Mr. SPRATT. Mr. Chairman, I yield 1 minute to the gentleman from 
Texas [Mr. Stenholm].
  Mr. STENHOLM. Mr. Chairman, I thank the gentleman for yielding time 
to me.
  Mr. Chairman, I must say, I am puzzled by particularly the statement 
of the gentleman from Georgia a moment ago. I am puzzled that it seems 
today that it is important that we take off of the table in the budget 
process the possibility that Ross Perot's or Charlie Stenholm's future 
cost-of-living adjustments might be reduced, that we take that off of 
the table and say that we are going to do that and put the poorest of 
the poor, the elderly, those who cannot help themselves, on the table 
at a greater risk. That is really and truly what we are voting on today 
if we accept that argument.
  Mr. Chairman, many have misconstrued our amendment, let me repeat, 
the amendment that we talk about versus the amendment of the gentleman 
from Ohio [Mr. Kasich]. We include full demographic changes. We include 
an additional growth cushion of 1 percent in 1996, 1997, and 1998. We 
include the full cost-of-living adjustment.
  Mr. Chairman, there is no way the Members can construe our amendment 
as being devastating to Social Security. It just will not float.
  Mr. KASICH. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Texas [Mr. Smith].
  (Mr. SMITH of Texas asked and was given permission to revise and 
extend his remarks.)
  Mr. SMITH of Texas. Mr. Chairman, I thank the gentleman for yielding 
time to me.
  Mr. Chairman, I rise today to express my strong support for the 
Kasich-McMillan-Kolbe amendment. This is a real step toward solving the 
greatest threat to our Nation's fiscal solvency.
  I am talking about entitlement spending, the Energizer bunny of the 
Federal budget, because it keeps going and going and growing and 
growing. This budgeting by autopilot cost America $770 billion in 1993 
or 65 cents of every dollar the Federal Government spent. And it will 
only get worse. Ten years from now entitlement spending will account 
for 74 cents of every Federal dollar.
  Even more insidious than the amount, entitlement spending simply 
passes through--without oversight and without foresight. Not only is it 
drowning us in a sea of red ink, but we are left with no inkling as to 
how to control it, what it will amount to, or any ability to redirect 
the Nation's resources to our Nation's priorities. Every year it 
further binds the arms of this Nation and this Congress to make 
reasoned decisions.
  This amendment would end the insidious insanity of blindfolded 
budgeting. This amendment does two things that no one should be opposed 
to. It would place a ceiling on all entitlement spending except Social 
Security and it would subject entitlement programs to an annual review.
  This amendment reserves the flexibility to adjust the cap as 
circumstances dictate but it firmly places on us a responsibility that 
has been too long shirked--the responsibility to set them. It also 
returns to us the responsibility to review these programs and insure 
that the money spent is going for what it should.
  This amendment puts an end to the big lie that has been too long 
perpetrated on America--that we can afford to spend without restraint 
and that it is somehow more compassionate to benefit recipients to 
pretend that we can. There are those making their living feeding off 
the fears of the vulnerable, who will call this an attack on 
entitlement programs. Nothing could be less true. The real attack on 
these and every single program the Federal Government runs, comes from 
an unrelenting deficit that cannot be taxed away.
  The deficit must be addressed now before it takes away our freedom to 
act tomorrow. This amendment will give us that freedom. It is a step we 
should have taken sooner, but one we must take now for the sake of 
tomorrow. I urge Members to join me in voting for this amendment.
  Mr. KASICH. Mr. Chairman, I yield 3 minutes to the very distinguished 
gentleman from Arizona [Mr. Kolbe], a member of the Committee on 
Appropriations.
  (Mr. KOLBE asked and was given permission to revise and extend his 
remarks.)
  Mr. KOLBE. Mr. Chairman, I am pleased to be here today and to offer 
this amendment on behalf of my colleagues, the gentleman from Ohio [Mr. 
Kasich] and the gentleman from North Carolina [Mr. McMillan].

                              {time}  1420

  They are known for their work in taking tough stands on the budget, 
tough stands on appropriation bills, tough stands on cutting 
entitlements and spending. For that reason alone, I would question the 
statement of the distinguished chairman of the Committee on the Budget 
when he says that this amendment would weaken the underlying Spratt 
bill, because it is just not believable that we would be seeking to 
weaken it.
  We seek rather to strengthen it, to put into place a system of 
accountability and controllability, in an area where our budget really 
has none today, that is, in the area of entitlements.
  I speak as a member of the Committee on Appropriations, because in 
the Committee on Appropriations every year the Committee on the Budget 
gives us allocations and we are forced to go through a process of 
dividing that up in 602(b) allocations between subcommittees. But that 
never happens with the entitlements. The problem is, the entitlements 
are where the growth in spending has been. Several speakers already 
have pointed out that over 60 cents of every dollar, 65 cents when we 
include interest on the national debt, and interest is an entitlement, 
a correct one, to those who own our national debt, 65 cents goes out in 
what we call uncontrolled or entitlement spending. We need to get some 
way of getting a handle on that. Right now these programs just grow and 
grow. There is no check except a blank check. There is no balance, 
except a balance with a huge cipher that is in front of that.
  We cannot be expected, the Congress, the President cannot be expected 
to get a handle on entitlements unless we change the system, unless we 
reform the way we do entitlements around here.
  I listened to the distinguished chairman of the Health Subcommittee 
talk about why this would be irresponsible, that it would lead to 
irresponsible cuts in Medicare and Medicaid. It is precisely for that 
reason that we need to get control up front. We need to have this cap 
on entitlement spending at the beginning of the process, so that we can 
make a rational decision about what kinds of changes we are going to 
make. That is exactly what this proposal would do. It would say we 
would treat the authorizing committees the same way the Committee on 
Appropriations gets treated.
  We would have a budget resolution and yes, a budget resolution that 
has the force of law, that is signed by the President. It gives it some 
real meaning. It has no meaning today when the President sends up a 
budget and we adopt something else and then we proceed to pay no 
attention whatsoever to that budget resolution. Let us get something 
that the executive and the legislative branch agree on. Once we have 
that agreement, we can stick with it, with this entitlement program.
  We need to have the same kind of restrictions, the same kind of way 
of deciding how we are going to limit the growth of entitlements in a 
rational way that we do with discretionary spending that the Committee 
on Appropriations has to deal with every year. That is precisely what 
this bill does and this amendment and that is precisely why the Kasich-
McMillan-Kolbe amendment should be supported.
  Mr. SPRATT. Mr. Chairman, I yield 2 minutes to the gentleman from 
Minnesota [Mr. Penny].
  (Mr. PENNY asked and was given permission to revise and extend his 
remarks.)
  Mr. PENNY. Mr. Chairman, I rise in reluctant opposition to the Kasich 
substitute. Reluctant, because I respect his leadership and his 
consistency on budget matters. The gentleman from Ohio [Mr. Kasich] 
fully understands that better than 50 percent of our Federal budget is 
now consumed by entitlement spending. It is for that reason that when 
he and I worked together to develop a major deficit reduction plan last 
fall, we included in that package significant spending restraint on 
entitlement programs totaling roughly 50 percent of our $90 billion 
spending cut package. So I know he understands that this is an area of 
spending that needs to be reined in. I oppose his amendment for two 
fundamental reasons.
  First, in my view, he perpetuates the myth that somehow Social 
Security can be left alone. The myth exists that this is an 
individualized retirement account in which one is only drawing back his 
or her own money and by its explicit exemption in his amendment, he 
perpetuates that myth. Put simply, this program pays out to current 
retirees money being paid in by current workers. If one retired in 
1980, within 4 years he or she got all their money back plus the 
interest earned. That payback will not be true for future generations. 
We are quickly sinking into bankruptcy in the Social Security system 
and we need to keep review of the Social Security program on the table 
as we address entitlements now and in the future.
  In addition, the Kasich plan, unfortunately, does not guarantee 
spending cuts in the entitlement area. Yes, there is an annual review, 
a year-by-year review, but you could argue that today we review 
entitlement programs every year and we do nothing to stop their growth. 
That is why we need real and enforceable spending caps on the 
entitlement agenda. The gentleman from Texas [Mr. Stenholm] and I and 
others will propose an amendment later today that has a serious cap, 
inflation plus demographics plus 1 percent. That is plenty generous, 
but it will force significant reductions in the amounts that are likely 
to be spent on entitlements over the next several years. That will 
force the Congress to come back year by year and to make changes in 
these entitlement programs.
  Mr. Chairman, this time the gentleman from Ohio [Mr. Kasich] falls 
short. Knowing him as I do, I doubt that it will ever happen again. I 
urge opposition to his amendment.
  Mr. KASICH. I yield myself the balance of my time.
  Mr. Chairman, I guess we have done something right. We have been 
accused in this debate of being both too weak and too strong. When we 
can get accused by the same side that is opposed to us, one side says 
we are too weak, the other side says we are too strong, it confuses 
everyone that is watching except us who know we must have gotten the 
formula correct.
  The bottom line is if we want to end automatic pilot on entitlements, 
which is the problem we currently have, and force a review on a year-
by-year basis, vote for this. If we want to begin to establish 
accountability, vote for it. If we want to treat entitlements like we 
do the way families put together budgets, vote for it. This is the 
first modest step in being able to do additional things down the road. 
Let no one question the ability of this side to put forward solid 
proposals to try to deal specifically with the problems of 
entitlements. This, however, is the best process step to be offered 
today.
  Mr. SPRATT. Mr. Chairman, I yield myself the balance of my time.
  Mr. Chairman, in closing, I think we are all agreed on this. We want 
to bring entitlements into the budget process. We want to increase the 
visibility of the entitlements problem because it is the biggest part 
of the problem when it comes to deficit reduction and we want more 
accountability because that is necessary in order to get discipline 
into entitlement spending. But I do not think the approach of the 
gentleman from Ohio [Mr. Kasich] is the best, or the most workable.
  First, for reasons unrelated to his objectives, the gentleman from 
Ohio [Mr. Kasich] takes the whole budget process and throws it into a 
cocked hat at the very outset by requiring the budget resolution to be 
a joint resolution and not a concurrent resolution. He ties it into a 
Gordian knot, and those of us who served here in the 1980's know how 
far we would have gotten along with the budget process if we would have 
had to have gone to the White House and get a joint resolution before 
we could begin our work.
  Second, the Kasich proposal, unlike mine and the proposal of the 
gentleman from Texas [Mr. Stenholm], for reasons unclear to me, he 
professes frustration with setting long-term targets, says we will not 
have a long-time target. We will just annual targets, we will just have 
annual caps and we will set them. He has an idea that has some merit, 
that is disaggregating the caps and taking them down to the microlevel, 
to the program level, but that radically restructures the relationship 
between the Committee on the Budget and the authorizing committees and 
is not well enough thought out or worked through in this particular 
bill. The far-reaching proposal has some merit but is not worked out in 
this bill. The idea of not having a long-term baseline is a bad idea 
and does not add discipline to the process. Then there are a couple of 
pseudostrengths in this bill that do not pan out when we look at them 
closely.
  Let me give an example. In order to reconcile any overage, the 
gentleman from Ohio [Mr. Kasich] would deny any of the authorizing 
committees the ability to raise taxes or to raise offsetting receipts 
or to raise fees, user fees.
  Let me give a good example. Penny-Kasich last year included an 
increase in the part B premium. Suppose we had a reconciliation 
requirement for the Committee on Ways and Means and Medicare. They 
could not turn to an increase in the part B premium for upper bracket 
taxpayers as a means of approaching that particular problem. He rules 
it out.
  Second pseudomeasure. Sequestration. If sequestration is such a great 
idea, why has it not worked since March 1, 1986, the last time we had 
an across-the-board sequestration? The reason, we have all kinds of 
avoidance mechanisms in this place. The gentleman has accused us of 
likely pulling out some avoidance mechanisms to avoid these points of 
order. We know from past history that once sequestration breathes down 
our necks, we will have an alternative to avoid it. It does not work. 
Sequestration will not happen.

                              {time}  1430

  Finally, knowing these weaknesses are in the bill, these deficiencies 
are there, I want to say that the gentleman has pulled out Social 
Security as a red herring in order to distract us from the real point 
in this debate. In order to keep us from looking too closely at this 
argument, he has introduced Social Security. It is not part of the 
problem. Social Security spending is predictable, and the gentleman 
knows that Democrats are not going to raise payroll taxes, the most 
regressive tax there is, in order to fund other programs.
  So, this is a bad proposal that has a camouflage over it to keep us 
from looking at it too closely. We should vote it down, vote it down 
thoroughly and move on to the other substitutes.
  The CHAIRMAN. The question is on the amendment in the nature of a 
substitute offered by the gentleman from Ohio [Mr. Kasich].
  The question was taken; and the Chairman announced that the ayes 
appeared to have it.


                             recorded vote

  Mr. SPRATT. Mr. Chairman, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 194, 
noes 233, not voting 12, as follows:

                             [Roll No. 343]

                               AYES--194

     Allard
     Andrews (NJ)
     Archer
     Armey
     Bachus (AL)
     Baker (CA)
     Baker (LA)
     Ballenger
     Barrett (NE)
     Bartlett
     Barton
     Bateman
     Bentley
     Bereuter
     Bilirakis
     Bliley
     Blute
     Boehlert
     Boehner
     Bunning
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Castle
     Clement
     Clinger
     Coble
     Collins (GA)
     Combest
     Condit
     Cooper
     Coppersmith
     Cox
     Crane
     Crapo
     Cunningham
     Deal
     DeLay
     Diaz-Balart
     Dickey
     Doolittle
     Dornan
     Dreier
     Duncan
     Dunn
     Ehlers
     Emerson
     Ewing
     Fawell
     Fields (TX)
     Fingerhut
     Fish
     Fowler
     Franks (CT)
     Franks (NJ)
     Gallegly
     Gekas
     Geren
     Gilchrest
     Gillmor
     Gilman
     Gingrich
     Goodlatte
     Goodling
     Gordon
     Goss
     Grams
     Greenwood
     Gunderson
     Hall (TX)
     Hancock
     Hansen
     Harman
     Hastert
     Hefley
     Herger
     Hoagland
     Hobson
     Hoekstra
     Hoke
     Horn
     Houghton
     Huffington
     Hunter
     Hutchinson
     Hyde
     Inglis
     Inhofe
     Inslee
     Istook
     Johnson (CT)
     Johnson, Sam
     Kasich
     Kim
     King
     Kingston
     Klug
     Knollenberg
     Kolbe
     Kreidler
     Kyl
     Lazio
     Leach
     Levy
     Lewis (FL)
     Lewis (KY)
     Lightfoot
     Linder
     Lipinski
     Livingston
     Lucas
     Machtley
     Mann
     Manzullo
     McCandless
     McCollum
     McCrery
     McCurdy
     McDade
     McHugh
     McInnis
     McKeon
     McMillan
     Meyers
     Mica
     Michel
     Miller (FL)
     Molinari
     Moorhead
     Morella
     Myers
     Nussle
     Oxley
     Packard
     Paxon
     Peterson (MN)
     Petri
     Pickett
     Pombo
     Porter
     Portman
     Poshard
     Pryce (OH)
     Quillen
     Quinn
     Ramstad
     Ravenel
     Regula
     Ridge
     Roberts
     Rogers
     Rohrabacher
     Roth
     Roukema
     Royce
     Santorum
     Saxton
     Schaefer
     Schenk
     Schiff
     Sensenbrenner
     Shaw
     Shays
     Shuster
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (OR)
     Smith (TX)
     Snowe
     Solomon
     Spence
     Stearns
     Stump
     Sundquist
     Swett
     Talent
     Tanner
     Taylor (MS)
     Taylor (NC)
     Thomas (CA)
     Thomas (WY)
     Torkildsen
     Upton
     Walker
     Walsh
     Weldon
     Wolf
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                               NOES--233

     Abercrombie
     Ackerman
     Andrews (ME)
     Andrews (TX)
     Applegate
     Bacchus (FL)
     Baesler
     Barca
     Barcia
     Barlow
     Barrett (WI)
     Becerra
     Beilenson
     Berman
     Bevill
     Bilbray
     Bishop
     Blackwell
     Bonilla
     Bonior
     Borski
     Boucher
     Brewster
     Brooks
     Browder
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Bryant
     Byrne
     Cantwell
     Cardin
     Chapman
     Clay
     Clayton
     Clyburn
     Coleman
     Collins (IL)
     Collins (MI)
     Conyers
     Costello
     Coyne
     Cramer
     Danner
     Darden
     de la Garza
     de Lugo (VI)
     DeFazio
     DeLauro
     Dellums
     Derrick
     Deutsch
     Dicks
     Dingell
     Dixon
     Dooley
     Durbin
     Edwards (CA)
     Edwards (TX)
     Engel
     English
     Eshoo
     Evans
     Farr
     Fazio
     Fields (LA)
     Filner
     Flake
     Foglietta
     Ford (TN)
     Frank (MA)
     Frost
     Furse
     Gejdenson
     Gephardt
     Gibbons
     Glickman
     Gonzalez
     Green
     Gutierrez
     Hall (OH)
     Hamburg
     Hamilton
     Hastings
     Hayes
     Hefner
     Hinchey
     Hochbrueckner
     Holden
     Hoyer
     Hughes
     Hutto
     Jacobs
     Jefferson
     Johnson (GA)
     Johnson (SD)
     Johnson, E. B.
     Johnston
     Kanjorski
     Kaptur
     Kennedy
     Kennelly
     Kildee
     Kleczka
     Klein
     Klink
     Kopetski
     LaFalce
     Lambert
     Lancaster
     Lantos
     LaRocco
     Laughlin
     Lehman
     Levin
     Lewis (CA)
     Lewis (GA)
     Lloyd
     Long
     Lowey
     Maloney
     Manton
     Margolies-Mezvinsky
     Markey
     Martinez
     Matsui
     Mazzoli
     McCloskey
     McDermott
     McHale
     McKinney
     McNulty
     Meehan
     Meek
     Menendez
     Mfume
     Miller (CA)
     Mineta
     Minge
     Mink
     Moakley
     Mollohan
     Montgomery
     Moran
     Murphy
     Murtha
     Nadler
     Neal (MA)
     Neal (NC)
     Norton (DC)
     Oberstar
     Obey
     Olver
     Ortiz
     Orton
     Owens
     Pallone
     Parker
     Pastor
     Payne (NJ)
     Payne (VA)
     Pelosi
     Penny
     Peterson (FL)
     Pickle
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reed
     Reynolds
     Richardson
     Roemer
     Romero-Barcelo (PR)
     Rose
     Rostenkowski
     Rowland
     Roybal-Allard
     Rush
     Sabo
     Sanders
     Sangmeister
     Sarpalius
     Sawyer
     Schroeder
     Schumer
     Scott
     Serrano
     Sharp
     Shepherd
     Sisisky
     Skaggs
     Skelton
     Slattery
     Slaughter
     Smith (IA)
     Spratt
     Stark
     Stenholm
     Stokes
     Strickland
     Studds
     Stupak
     Swift
     Synar
     Tauzin
     Tejeda
     Thompson
     Thornton
     Thurman
     Torres
     Torricelli
     Towns
     Traficant
     Unsoeld
     Valentine
     Vento
     Visclosky
     Volkmer
     Vucanovich
     Washington
     Waters
     Watt
     Waxman
     Wheat
     Whitten
     Williams
     Wilson
     Wise
     Woolsey
     Wyden
     Wynn
     Yates

                             NOT VOTING--12

     Burton
     Carr
     Everett
     Faleomavaega (AS)
     Ford (MI)
     Gallo
     Grandy
     Hilliard
     Ros-Lehtinen
     Tucker
     Underwood (GU)
     Velazquez

                              {time}  1450

  The Clerk announced the following pairs:
  On the vote:

       Mr. Burton of Indiana for, with Mr. Tucker against.
       Mr. Everett for, with Ms. Velazquez against.

  Mrs. VUCANOVICH and Mr. TAUZIN changed their vote from ``aye'' to 
``no.''
  Mr. DeLay changed his vote from ``no'' to ``aye.''
  So the amendment in the nature of a substitute was rejected.
  The result of the vote was announced as above recorded.
  The CHAIRMAN. It is now in order to consider amendment No. 2, printed 
in House Report 103-614.


    amendment in the nature of a substitute offered by mr. stenholm

  Mr. STENHOLM. Mr. Chairman, I offer an amendment in the nature of a 
substitute to H.R. 4604.
  The CHAIRMAN. The Clerk will designate the amendment in the nature of 
a substitute.
  The text of the amendment in the nature of a substitute is as 
follows:

       Amendment in the nature of a substitute offered by Mr. 
     Stenholm:
       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the 
     ``Entitlement Control Act of 1994''.
       (b) Table of Contents.--

Sec. 1. Short title; table of contents.
Sec. 2. Purpose.
Sec. 3. Definitions and treatments.
Sec. 4. Establishment of direct spending targets.
Sec. 5. Special direct spending message by President.
Sec. 6. Congressional action required.
Sec. 7. Spin-off law.
Sec. 8. Targeted sequestration.
Sec. 9. Comprehensive sequestration.
Sec. 10. Exempt programs and activities.
Sec. 11. General and special sequestration rules.
Sec. 12. Estimating assumptions, reports, and orders.
Sec. 13. The current policy baseline.
Sec. 14. Relationship to pay-as-you-go.
Sec. 15. Judicial review.
Sec. 16. Application.
Sec. 17. Effective date.

     SEC. 2. PURPOSE.

       The purpose of this Act is to create a mechanism to control 
     spending on mandatory programs and to increase accountability 
     for mandatory spending.

     SEC. 3. DEFINITIONS AND TREATMENTS.

       As used in this Act:
       (1) The terms ``budget authority'', ``new budget 
     authority'', ``entitlement authority'', ``outlays'', and 
     ``deficit'' have the meanings given to such terms in section 
     3 of the Congressional Budget and Impoundment Control Act of 
     1974.
       (2) The term ``account'' means an item for which there is a 
     designated budget account identification code number in the 
     President's budget.
       (3) The term ``budget year'' means, with respect to a 
     session of Congress, the fiscal year of the Government that 
     starts on October 1 of the calendar year in which that 
     session begins.
       (4) The term ``budget-year session'' means any session of 
     Congress that starts in the calendar year in which that 
     budget year starts.
       (5) The term ``CBO'' means the Director of the 
     Congressional Budget Office.
       (6) The term ``current policy baseline'' means the 
     projection (described in section 13) of current-year levels 
     of new budget authority and outlays into the budget year and 
     the outyears.
       (7) The term ``current year'' means the fiscal year that 
     immediately precedes a budget year.
       (8) The term ``deposit insurance'' refers to the expenses 
     of the Federal Deposit Insurance Corporation and the funds it 
     incorporates, the Resolution Trust Corporation, the National 
     Credit Union Administration and the funds it incorporates, 
     the Office of Thrift Supervision; the Comptroller of the 
     Currency Assessment Funds, the RTC Office of the Inspector 
     General, and the deposit insurance activities of the Federal 
     Reserve.
       (9) The term ``direct spending'' means--
       (A) budget authority provided by law other than 
     appropriation Acts;
       (B) entitlement authority; and
       (C) the food stamp program.

     If a law other than an appropriation Act alters the level of 
     discretionary appropriations, that effect shall be treated as 
     direct spending. If an appropriation Act alters the level of 
     direct spending, that effect shall be treated as direct 
     spending.
       (10) The term `legislative day' means, with respect to 
     either House of Congress, any day of session.
       (11) The term ``OMB'' means the Director of the Office of 
     Management and Budget.
       (12) The term ``outyear'' means any of the 4 fiscal years 
     that follow a budget year.
       (13) The terms ``sequester'' and ``sequestration'' mean the 
     cancellation under section 8 or 9 of direct spending 
     authority.

     SEC. 4. ESTABLISHMENT OF DIRECT SPENDING TARGETS.

       (a) Coverage.--The direct spending targets shall apply to 
     all direct spending programs within the Federal budget except 
     for net interest and deposit insurance.
       (b) Initial Report.--Not later than 30 days after the date 
     of enactment of this Act, OMB shall submit a report to 
     Congress setting forth the direct spending targets for each 
     of fiscal years 1995 through 2000 in accordance with this 
     section.
       (c) Determining Direct Spending Limits.--In calculating the 
     direct spending targets, OMB shall--
       (1) calculate the projected level of direct spending 
     outlays for fiscal year 1995;
       (2) calculate the increase in the direct spending targets 
     for each subsequent fiscal year through fiscal year 2000 to 
     allow growth in direct spending outlays to reflect--
       (A) changes in the Consumer Price Index;
       (B) changes in the number of beneficiaries under direct 
     spending programs for which the number of beneficiaries is a 
     variable in determining costs;
       (C) an additional growth allowance of--
       (i) 1 percent in 1996;
       (ii) 1 percent in 1997;
       (iii) 1 percent in 1998; and
       (D) for offsetting receipts, the calculation pursuant to 
     this subsection shall allow offsetting receipts to decrease 
     to reflect change in the Consumer Price Index.
       (d) Adjustment for Health Care Reform.--OMB shall calculate 
     adjustments to the direct spending targets to reflect any 
     increase in direct spending resulting from health care reform 
     legislation, enacted into law by December 31, 1994, if such 
     legislation would not increase the total deficit for the 
     period of fiscal years 1995 through 1999.
       (e) Annual Adjustments.--When the President submits a 
     budget under section 1105(a) of title 31, United States Code, 
     for a fiscal year, OMB shall calculate adjustments to the 
     direct spending targets to reflect the following:
       (1) Changes in inflation projections from the Director's 
     initial report under section 4(b).
       (2) Changes in projections of the number of beneficiaries 
     from the Director's initial report under section 4(b).
       (3) The costs of direct spending legislation to the extent 
     that it is offset by revenue increases or designated as an 
     emergency by Congress and the President under section 252 of 
     the Balanced Budget and Emergency Deficit Control Act of 
     1985.
       (4) Legislation reducing direct spending to to the extent 
     that it offsets the deficit impact of a tax cut under section 
     252 of the Balanced Budget and Emergency Deficit Control Act 
     of 1985.

     SEC. 5. SPECIAL DIRECT SPENDING MESSAGE BY PRESIDENT.

       (a) Special Message.--If the OMB sequestration preview 
     report submitted under section 12(e) indicates that direct 
     spending for the budget year or any outyear will exceed the 
     applicable direct spending target, the budget submitted under 
     section 1105(a) of title 31, United States Code, shall 
     include a special direct spending message that includes 
     proposed legislative changes to offset the net deficit impact 
     of the excess identified by that OMB sequestration preview 
     report for each such year through any combination of:
       (1) Reductions in direct spending outlays.
       (2) Increases in the direct spending targets, if the 
     President has submits a written determination that, because 
     of economic or programmatic reasons, only some or none of the 
     excess should be offset.
       (b) Introduction of President's Package.--Within 10 days 
     after the President submitted a special direct spending 
     message, the text referred to in subsection (a) shall be 
     introduced as a concurrent resolution in the House of 
     Representatives by the chairman of its Committee on the 
     Budget and in the Senate by the chairman of its Committee on 
     the Budget. If the chairman fails to do so, after the 10th 
     day the resolution may be introduced by any Member of the 
     House of Representatives or the Senate, as the case may be. A 
     concurrent resolution introduced under this subsection shall 
     be referred to the Committee on the Budget of the House of 
     Representatives or the Senate, as the case may be.

     SEC. 6. CONGRESSIONAL ACTION REQUIRED.

       (a) In General.--The requirements of this section shall be 
     in effect for any year in which the OMB sequestration preview 
     report submitted under section 12(e) indicates that direct 
     spending for the budget year or any outyear will exceed the 
     applicable direct spending target.
       (b) Requirements for Special Budget Resolution in the 
     House.--The Committee on the Budget in the House shall report 
     not later than March 15 a concurrent resolution, either as a 
     separate section of the concurrent resolution on the budget 
     reported pursuant to section 301 of the Congressional Budget 
     Act of 1974 or as a separate resolution, that includes 
     reconciliation instructions instructing the appropriate 
     committees of the House and Senate to report changes in laws 
     within their jurisdiction to offset any excess in direct 
     spending identified in the OMB sequestration preview report 
     submitted under section 12(e) as follows:
       (1) Reductions in direct spending programs.
       (2) Increases in the direct spending targets, except that 
     any increase in those targets may not be greater than the 
     increase included in the special reconciliation message 
     submitted by the President.
       (c) Procedure If House Budget Committee Fails to Report 
     Required Resolution.--
       (1) Automatic discharge of house budget committee.--In the 
     event that the House Committee on the Budget fails to report 
     a resolution meeting the requirements of subsection (b), the 
     committee shall be automatically discharged from further 
     consideration of the concurrent resolution reflecting the 
     President's recommendations introduced pursuant to section 
     5(b), and the concurrent resolution shall be placed on the 
     appropriate calendar.
       (2) Consideration by house of discharged resolution.--Ten 
     days after the House Committee on the Budget has been 
     discharged under paragraph (1), any member may move that the 
     House proceed to 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. Consideration of such 
     resolution shall be pursuant to the procedures set forth in 
     section 305 of the Congressional Budget Act of 1974 and 
     subsection (d).
       (d) Consideration by the House of Representatives.--(1) It 
     shall not be in order in the House of Representatives to 
     consider a concurrent resolution on the budget unless that 
     concurrent resolution fully addresses the entirety of any 
     excess of the direct spending targets as identified in the 
     OMB sequestration preview report submitted under section 
     12(e) through reconciliation instructions requiring spending 
     reductions, or changes in the direct spending targets.
       (2) If the concurrent resolution on the budget proposes to 
     eliminate or offset less than the entire excess for budget 
     year and any subsequent fiscal years, then the Committee on 
     the Budget shall report a separate resolution directing the 
     Committee on Government Operations to report legislation 
     increasing the direct spending targets for each applicable 
     year by the full amount of the excess not offset or 
     eliminated. It shall not be in order to consider any 
     concurrent resolution on the budget that does not offset the 
     full amount of the excess until the House of Representatives 
     has agreed to the resolution directing the increase in the 
     direct spending targets.
       (e) Transmittal to Senate.--If a concurrent resolution 
     passes the House pursuant to subsection (d), the Clerk of the 
     House of Representatives shall cause the resolution to be 
     engrossed, certified, and transmitted to the Senate within 
     one calendar day of the day on which the resolution is 
     passed. The resolution shall be referred to the Senate 
     Committee on the Budget.
       (f) Requirements for Special Budget Resolution in the 
     Senate.--The Committee on the Budget in the Senate shall 
     report not later than April 1 a concurrent resolution, either 
     as a separate section of a budget resolution reported 
     pursuant to section 301 of the Congressional Budget Act of 
     1974 or as a separate resolution, that shall include 
     reconciliation instructions instructing the appropriate 
     committees of the House and Senate to report changes in laws 
     within their jurisdiction to offset any excess through any 
     combination of:
       (1) Reductions in direct spending programs.
       (2) Increases in the direct spending targets, except that 
     any increase in those targets may not be greater than the 
     increase included in the special reconciliation message 
     submitted by the President.
       (g) Procedure if Senate Budget Committee Fails to Report 
     Required Resolution.--
       (1) Automatic discharge of senate budget committee.--In the 
     event that the Senate Committee on the Budget fails to report 
     a resolution meeting the requirements of subsection (f), the 
     committee shall be automatically discharged from further 
     consideration of the concurrent resolution reflecting the 
     President's recommendations introduced pursuant to section 
     5(b), and the concurrent resolution shall be placed on the 
     appropriate calendar.
       (2) Consideration by senate of discharged resolution.--Ten 
     days after the Senate Committee on the Budget has been 
     discharged under paragraph (1), any member may move that the 
     Senate proceed to consider the resolution. Such motion shall 
     be privileged and not debatable. Consideration of such 
     resolution shall be pursuant to the procedures set forth in 
     section 305 of the Congressional Budget Act of 1974 and 
     subsection (h).
       (h) Consideration by Senate.--(1) It shall not be in order 
     in the Senate to consider a concurrent resolution on the 
     budget unless that concurrent resolution fully addresses the 
     entirety of any excess of the direct spending targets as 
     identified in the OMB sequestration report submitted under 
     section 12(e) through reconciliation instructions requiring 
     direct spending reductions, or changes in the direct spending 
     targets.
       (2) If the concurrent resolution on the budget proposes to 
     eliminate or offset less than the entire overage of a budget 
     year, then the Committee on the Budget shall report a 
     resolution increasing the direct spending target by the full 
     amount of the overage not eliminated. It shall not be in 
     order to consider any concurrent resolution on the budget 
     that does not offset the entire amount of the overage until 
     the Senate has agreed to the resolution directing the 
     increase in the direct spending targets.
       (i) Conference Reports Must Fully Address Overage.--It 
     shall not be in order in the House of Representatives or the 
     Senate to consider a conference report on a concurrent 
     resolution on the budget unless that conference report fully 
     addresses the entirety of any excess identified by the OMB 
     sequestration preview report submitted pursuant to section 
     12(e) through reconciliation instructions requiring direct 
     spending reductions, or changes in the direct spending 
     targets.
       (j) Waivers.--The points of order established by subsection 
     (d)(1), (h)(1), or (i) may be waived or suspended--
       (1) in the House of Representatives only by a resolution 
     devoted solely to the subject of waiving that point of order, 
     or
       (2) in the Senate only by an affirmative vote of three-
     fifths of the Members duly chosen and sworn.

     SEC. 7. SPIN-OFF LEGISLATION.

       (a) Allocations of Direct Spending.--The joint explanatory 
     statement accompanying a conference report on a concurrent 
     resolution on the budget shall include an estimated 
     allocation based upon such concurrent resolution as 
     recommended in such conference report, of the appropriate 
     levels of direct spending budget authority and outlays for 
     each major functional category.
       (b) Introduction of Spin-Off Legislation.--On the third 
     legislative day after adoption of a concurrent resolution on 
     the budget, the chairman of the Committee on the Budget of 
     the House of Representatives or the Senate, as the case may 
     be, shall introduce legislation specifying the budget year 
     amount of direct spending allowed by budget functional 
     categories, based on the allocations set forth in the joint 
     explanatory statement accompanying the conference report on 
     such concurrent resolution. The total amount of direct 
     spending under such legislation may not exceed the target set 
     forth for that fiscal year by section 4 unless Congress has 
     adopted a resolution directing an increase in the direct 
     spending targets. Legislation introduced under this 
     subsection shall be referred to the Committee on the Budget.
       (c) Procedure in House of Representatives.--
       (1) Automatic discharge of house budget committee.--In the 
     event that the House Budget Committee fails to report 
     legislation introduced pursuant to subsection (b) within 7 
     legislative days of the introduction of the bill in the 
     House, the committee shall be automatically discharged from 
     further consideration of such legislation.
       (2) Consideration by house of spin-off legislation.--Three 
     legislative days after the House Budget Committee has 
     reported spin-off legislation described in subsection (c) or 
     has been discharged under paragraph (1), it shall be in order 
     to move that the House proceed to consider the resolution. 
     Such motion shall be highly privileged and not debatable.
       (3) Debate in house.--General debate on any spin-off 
     legislation in the House of Representatives shall be limited 
     to not more than 5 hours, which shall be divided equally 
     between the majority and minority parties. A motion to 
     further limit debate shall not be in order. It shall not be 
     in order to consider any amendments which would cause the 
     total amount of direct spending under the spin-off 
     legislation to exceed the target set forth for the fiscal 
     year under section 4.
       (4) House consideration of conference report.--Debate in 
     the House of Representatives on the conference report on 
     spin-off legislation shall be limited to not more than 1 
     hour, which shall be divided equally between the majority and 
     minority parties. A motion to further limit debate is not 
     debatable. A motion to recommit the conference report is not 
     in order, and it is not in order to move to reconsider the 
     vote by which the conference report is agreed to or disagreed 
     to.
       (d) Procedure in the Senate.--
       (1) Automatic discharge of senate budget committee.--In the 
     event that the Senate Budget Committee fails to report 
     legislation described in subsection (b), the committee shall 
     be automatically discharged from further consideration of 
     such legislation.
       (2) Consideration by senate of spin-off legislation.--Three 
     days after the Senate Budget Committee has reported spin-off 
     legislation described in subsection (b) or has been 
     discharged under paragraph (1), it shall be in order to move 
     that the Senate proceed to consider the legislation. Such 
     motion shall be privileged and not debatable.
       (3) Debate in senate.--Debate in the Senate on any spin-off 
     legislation, and all amendments thereto and debatable motions 
     and appeals in connection therewith, shall be limited to not 
     more than 25 hours. The time shall be equally divided 
     between, and controlled by, the majority leader and the 
     minority leader or their designees. It shall not be in order 
     to consider any amendments which would cause the total amount 
     of direct spending under the spin-off legislation to exceed 
     the target set forth for the fiscal year under section 4 or 
     includes provisions on a subject other than the levels of 
     budget year amount or direct spending allowed by budget 
     functional categories.
       (4) A motion to further limit debate is not debatable.--A 
     motion to recommit (except a motion to recommit with 
     instruction to report back within a specified number of days, 
     not to exceed 3, not counting any day on which the Senate is 
     not in session) is not in order. Debate on any such motion to 
     recommit shall be limited to 1 hour, to be equally divided 
     between, and controlled by, the mover and the manager of the 
     legislation.
       (5) Motion to proceed to conference in senate.--A motion to 
     proceed to the consideration of the conference report on any 
     spin-off legislation may be made even though a previous 
     motion to the same effect has been disagreed to.
       (6) Senate consideration of conference report.--Debate in 
     the Senate on a conference report on spin-off legislation 
     shall be limited to not more than 5 hours, which shall be 
     divided equally between the majority leader and minority 
     leader or their designees. A motion to further limit debate 
     is not debatable. Debate on any debatable motion or appeal 
     related to the conference report (or a message between House) 
     shall be limited to 1 hour, to be equally divided between, 
     and controlled by, the mover and the manager of the 
     conference report.
       (7) Request for new conference.--Should the conference 
     report be defeated, debate on any request for a new 
     conference and the appointment of conferees shall be limited 
     to 1 hour, to be equally divided between, and controlled by, 
     the manager of the conference report and the minority leader 
     or his designee, and should any motion be made to instruct 
     the conferees before the conferees are named, debate on such 
     motion shall be limited to one-half hour, to be equally 
     divided between, and controlled by, the mover and the manager 
     of the conference report. In all cases when the manager of 
     the conference report is in favor of any motion, appeal or 
     amendment, the time in opposition shall be under the control 
     of the minority leader or his designee.

     SEC. 8. TARGETED SEQUESTRATION.

       (a) Application.--This section shall apply for any budget 
     year only if a spin-off law as described in section 7 is in 
     effect for that year on the date of the final sequestration 
     report described in section 12.
       (b) Sequestration in Each Functional Category.--(1) The 
     purpose of this subsection is to ensure that total direct 
     spending for each functional category is no more than allowed 
     for the budget year.
       (2) The amount to be sequestered for the budget year from 
     direct spending programs in each functional category is the 
     amount by which direct spending during the budget year 
     results in a greater amount of direct spending than allowed 
     in that functional category in the spin-off law.
       (c) Sequestration.--Within 15 days after Congress adjourns 
     to end a session, there shall be a sequestration to reduce 
     the amount of direct spending in the current policy baseline 
     in any functional category by the amount specified in 
     subsection (b)(2). The amount required to be sequestered from 
     direct spending in a functional category shall be achieved by 
     reducing each non-exempt direct spending account (or activity 
     within an account) within that functional category by the 
     uniform percentage necessary to achieve that amount.

     SEC. 9. COMPREHENSIVE SEQUESTRATION.

       (a) Application.--This section shall apply for any budget 
     year unless a spin-off law as described in section 7 is in 
     effect for that year on the date of the final sequestration 
     report described in section 12.
       (b) Sequestration Based on Budget-Year Shortfall.--The 
     amount to be sequestered for the budget year is the amount 
     (if any) by which direct spending exceeds the cap for that 
     year under section 4.
       (c) Sequestration.--Within 15 days after Congress adjourns 
     to end a session, there shall be a sequestration to reduce 
     the amount of direct spending in the current policy baseline 
     by the amounts specified in subsection (b). The amount 
     required to be sequestered shall be achieved by reducing each 
     direct spending account (or activity within an account) by 
     the uniform percentage necessary to achieve that amount.

     SEC. 10. EXEMPT PROGRAMS AND ACTIVITIES.

       The following budget accounts, activities within accounts, 
     or income shall be exempt from sequestration--
       (1) net interest;
       (2) deposit insurance and pension benefit guarantees;
       (3) all payments to trust funds from excise taxes or other 
     receipts or collections properly creditable to those trust 
     funds;
       (4) offsetting receipts and collections;
       (5) all payments from one Federal direct spending budget 
     account to another Federal budget account; 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--
       Administration of Territories, Northern Mariana Islands 
     Covenant grants (14-0412-0-1-806);
       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 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 the United States territories, fiscal 
     assistance (14-0418-0-1-801);
       Salaries of Article III judges;
       Soldier's and Airmen's Home, payment of claims (84-8930-0-
     7-705);
       Washington Metropolitan Area Transit Authority, interest 
     payments (46-0300-0-1-401).
       (10) the following noncredit special, revolving, or trust-
     revolving funds--
       Coinage profit fund (20-5811-0-2-803);
       Exchange Stabilization Fund (20-4444-0-3-155);
       Foreign Military Sales trust fund (11-82232-0-7-155);
       (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;
       (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;
       (12) the earned income tax credit (payments to individuals 
     pursuant to section 32 of the Internal Revenue Code of 1986); 
     and
       (13) the uranium enrichment program.

     SEC. 11. GENERAL AND SPECIAL SEQUESTRATION RULES.

       (a) Permanent Sequestration of Direct Spending.--
       (1) The purpose of any direct spending or receipts 
     sequestration under this Act is to ensure deficit reduction 
     in the budget year and all subsequent fiscal years, so that 
     the budget-year direct spending cap in section 4 is not 
     exceeded.
       (2) 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.
       (b) Uniform Percentages.--
       (1) In calculating the uniform percentage applicable to the 
     sequestration of all direct spending programs or activities 
     under section 9, or the uniform percentage applicable to the 
     sequestration of nonexempt direct spending programs or 
     activities within a functional category under section 8, the 
     sequestrable base for direct spending programs and activities 
     is the total budget-year level of outlays for those programs 
     or activities in the current policy baseline minus--
       (A) those budget-year outlays resulting from obligations 
     incurred in the current or prior fiscal years, and
       (B) those budget-year outlays resulting from exemptions 
     under section 10.
       (2) For any direct spending program in which--
       (A) outlays pay for entitlement benefits,
       (B) a budget-year sequestration takes effect after the 1st 
     day of the budget year, and
       (C) that delay reduces the amount of entitlement authority 
     that is subject to sequestration in the budget year,

     the uniform percentage otherwise applicable to the 
     sequestration of that program in the budget year shall be 
     increased as necessary to achieve the same budget-year outlay 
     reduction in that program as would have been achieved had 
     there been no delay.
       (3) If the uniform percentage otherwise applicable to the 
     budget-year sequestration of a program or activity is 
     increased under paragraph (2), then it shall revert to the 
     uniform percentage calculated under paragraph (1) when the 
     budget year is completed.
       (c) General Rules for Sequestration.--
       (1) 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.
       (2) Cancellation of budgetary resources.--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 or 
     repealed.
       (3) 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,

     then for the first fiscal year to which a sequestration order 
     applies, the benefit reductions in that program accomplished 
     by the order shall take effect starting with the payment made 
     at the beginning of January or 7 weeks after the order is 
     issued, whichever is later. For the purposes of this 
     subsection, Veterans Compensation shall be considered a 
     program that meets the conditions of the preceding sentence.
       (4) Programs, projects, or activities.--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).
       (5) Implementing regulations.--Administrative regulations 
     or similar actions implementing the sequestration of a 
     program or activity shall be made within 120 days of the 
     effective date of the sequestration of that program or 
     activity.
       (6) Distribution formulas.--To the extent that distribution 
     or allocation formulas differ at different levels of 
     budgetary resources within an account, program, project, or 
     activity, a 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.
       (7) Contingent fees.--In any account for which fees charged 
     to the public are legally determined by the level of 
     appropriations, fees shall be charged on the basis of the 
     presequestration level of appropriations.
       (d) Non-JOBS Portion of AFDC.--Any sequestration order 
     shall accomplish the full amount of any required reduction in 
     payments for the non-jobs portion of the aid to families with 
     dependant children program under the Social Security Act by 
     reducing the Federal reimbursement percentage (for the fiscal 
     year involved) by multiplying that reimbursement percentage, 
     on a State-by-State basis, by the uniform percentage 
     applicable to the sequestration of nonexempt direct spending 
     programs or activities.
       (e) JOBS Portion of AFDC.--
       (1) Full amount of sequestration required.--Any 
     sequestration order shall accomplish the full amount of any 
     required reduction of the job opportunities and basic skills 
     training program under section 402(a)(19), and part F of 
     title VI, of the Social Security Act, in the manner specified 
     in this subsection. Such an order may not reduce any Federal 
     matching rate pursuant to section 403(l) of the Social 
     Security Act.
       (2) New allotment formula.--
       (A) General rule.--Notwithstanding section 403(k) of the 
     Social Security Act, each State's percentage share of the 
     amount available after sequestration for direct spending 
     pursuant to section 403(l) of such Act shall be equal to that 
     percentage of the total amount paid to the States pursuant to 
     such section 403(l) for the prior fiscal year that is 
     represented by the amount paid to such State pursuant to such 
     section 403(l) for the prior fiscal year, except that a State 
     may not be allotted an amount under this subparagraph that 
     exceeds the amount that would have been allotted to such 
     State pursuant to such section 403(k) had the sequestration 
     not been in effect.
       (B) Reallotment of amounts remaining unallotted after 
     application of general rule.--Any amount made available after 
     sequestration for direct spending pursuant to section 403(l) 
     of the Social Security Act that remains unallotted as a 
     result of subparagraph (A) of this paragraph shall be 
     allotted among the States in proportion to the absolute 
     difference between the amount allotted, respectively, to each 
     State as a result of such subparagraph and the amount that 
     would have been allotted to such State pursuant to section 
     403(k) of such Act had the sequestration not been in effect, 
     except that a State may not be allotted an amount under this 
     subparagraph that results in a total allotment to the State 
     under this paragraph of more than the amount that would have 
     been allotted to such State pursuant to such section 403(k) 
     had the sequestration not been in effect.
       (f) 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.
       (g) 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 
     produced in the United States and marketed by producers for 
     commercial use. That price reduction (measured in cents per 
     hundredweight 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 the Commodity Credit Corporation is 
     the budget-year level of gross outlays resulting from new 
     budget authority that is subject to reduction under 
     paragraphs (1) and (2), and subsection (b)(2) shall not 
     apply.
       (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 net realized losses.
       (h) 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 any sequestration order 
     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 1986.
       (i) 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. For purposes of subsection (b)(1), the sequestrable 
     base for the Fund is the budget-year level of gross outlays 
     resulting from claims paid after the sequestration order 
     takes effect, and subsection (b)(2) shall not apply.
       (j) Federal Housing Finance Board.--Any sequestration of 
     the Federal Housing Finance 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.
       (k) Federal Pay.--
       (1) In general.--Except as provided in section 10(b)(3), 
     new budget authority to pay Federal personnel from direct 
     spending accounts shall be reduced by the uniform percentage 
     calculated under section 8 or 9, 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 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.
       (l) Guaranteed Student Loans.--(A) For all student loans 
     under part B of title IV of the Higher Education Act of 1965 
     made on or after the date of a sequestration, the origination 
     fees shall be increased by a uniform percentage sufficient to 
     produce the dollar savings in student loan programs for the 
     fiscal year of the sequestration required by section 8 or 9, 
     and all subsequent origination fees shall be increased by the 
     same percentage, notwithstanding any other provision of law.
       (B) The origination fees to which paragraph (A) applies are 
     those specified in sections 428H(f)(1) and 438(c) of that 
     Act.
       (m) Insurance Programs.--Any sequestration in 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 annual payments from the insurance fund or 
     account to the general fund of the Treasury. The amount of 
     each annual payment by each such fund or account shall be the 
     amount received by the fund or account by increasing premiums 
     on contracts entered into after the date a sequestration 
     order takes effect by the uniform sequestration percentage, 
     and premiums shall be increased accordingly.
       (n) Medicaid.--The November 15th estimate of medicaid 
     spending by States shall be the base estimate from which the 
     uniform percentage reduction under any sequestration, applied 
     across-the-board by State, shall be made. Succeeding Federal 
     payments to States shall reflect that reduction. The Health 
     Care Financing Administration shall reconcile actual medicaid 
     spending for each fiscal year with the base estimate as 
     reduced by the uniform percentage, and adjust each State's 
     grants as soon as practicable, but no later than 100 days 
     after the end of the fiscal year to which the base estimate 
     applied, to comply with the sequestration order.
       (o) 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 a 
     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 the 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) 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.
       (p) 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 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 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 foregone 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. 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 must 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.
       (q) 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 annual 
     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 presequester 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 rates, or by any combination, 
     but may not be financed by a lower fund surplus or a higher 
     fund deficit and must 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 above in order to make the annual payments to the 
     Treasury.
       (r) Veterans' Housing Loans.--(1) For all housing loans 
     guaranteed, insured, or made under chapter 37 of title 38, 
     United States Code, on or after the date of a sequestration, 
     the origination fees shall be increased by a uniform 
     percentage sufficient to produce the dollar savings in 
     veterans' housing programs for the fiscal year of the 
     sequestration required by section 8 or 9, and all subsequent 
     origination fees shall be increased by the same percentage, 
     notwithstanding any other provision of law.
       (2) The origination fees to which paragraph (1) applies are 
     those referred to in section 3729 of title 38, United States 
     Code.

     SEC. 12. ESTIMATING ASSUMPTIONS, REPORTS, AND ORDERS.

       (a) Timetable.--The timetable with respect to this part for 
     any budget year is as follows:

Action to be completed:
OMB publishes sequestration preview report.............................
OMB and CBO issue final budget year sequestration reports..............
President issues sequestration order...................................

       (b) Submission and Availability of Reports.--Each report 
     required by this section shall be submitted, in the case of 
     CBO, to the House of Representatives, the Senate, and OMB, 
     and, in the case of OMB, to the House of Representatives, the 
     Senate, and the President on the day it is issued. On the 
     following day a notice of the report shall be printed in the 
     Federal Register.
       (c) Exchange of Preliminary Current Policy Baselines.--On 
     January 15, OMB and CBO shall exchange their preliminary 
     current policy baselines for the budget-year session starting 
     in January.
       (d) Sequestration Preview Reports.--
       (1) Reporting requirement.--On January 31, whichever is 
     later, OMB and CBO shall each submit a sequestration preview 
     report.
       (2) Contents.--Each preview report shall set forth the 
     following:
       (A) Major estimating assumptions.--The major estimating 
     assumptions for the current year, the budget year, and the 
     outyears, and an explanation of them.
       (B) Current policy baseline.--A detailed display of the 
     current policy baseline for the current year, the budget 
     year, and the outyears, with an explanation of changes in the 
     baseline since it was last issued that includes the effect of 
     policy decisions made during the intervening period and an 
     explanation of the differences between OMB and CBO for each 
     item set forth in the report.
       (C) Adjusting direct spending targets.--A determination of 
     any adjustments to the direct spending targets under section 
     4 and an explanation of any adjustments.
       (D) Requirements for direct spending.--An estimate of the 
     reductions in direct spending to be achieved for the budget 
     year necessary to comply with the direct spending targets.
       (E) Direct spending sequestration.-- Estimates of the 
     uniform percentage and the amount of comprehensive 
     sequestration of direct spending programs that will be 
     necessary under section 9.
       (e) Official Sequestration Preview Report.--The OMB 
     sequestration preview report shall be the official report for 
     purposes of this Act. That report shall be set forth, without 
     change, in the budget submitted by the President under 
     section 1105(a) of title 31, United States Code, for the 
     budget year.
       (f) Final Sequestration Reports.--
       (1) Reporting requirement.--Not later than 10 days 
     following the end of a budget-year session, OMB and CBO shall 
     each submit a final sequestration report.
       (2) Contents.--That report shall be based upon laws enacted 
     through the date of the report and shall set forth all the 
     information and estimates required of a sequestration preview 
     report required by subsections (d)(2)(C) through (E). In 
     addition, that report shall include for each account to be 
     sequestered, the baseline level of sequestrable budgetary 
     resources and the resulting reductions in new budget 
     authority and outlays; and
       (g) Presidential Order.--(1) On the day that OMB issues a 
     final sequestration report, the President shall issue an 
     order fully implementing without change all sequestrations 
     actions required by the final sequestration report that 
     requires the lesser total amount of direct spending 
     sequestration under section 8 or 9 (as applicable). The order 
     shall be effective on issuance and shall be issued only if 
     sequestration is required.
       (h) Use of Major Estimating Assumptions and Scorekeeping 
     Conventions.--In the estimates, projections, and reports 
     under this subtitle, OMB shall use the same economic and 
     technical assumptions as used in the most recent budget 
     submitted by the President under section 1105(a) of title 31, 
     United States Code. CBO shall use the same economic and 
     technical assumptions as used in the msot recent report 
     submitted by CBO under section 202(f)(1) of the Congressional 
     Budget Act of 1974.

     SEC. 13. THE CURRENT POLICY BASELINE.

       (a) In General.--For any budget year, the baseline refers 
     to a projection of current-year levels of new budget 
     authority, outlays, revenues, and the surplus or deficit into 
     the budget year and the outyears based on laws enacted 
     through, and discretionary regulations promulgated as final 
     by, the applicable date.
       (b) Direct Spending.--For the current year, the budget 
     year, and each outyear, the baseline shall be calculated 
     using the following assumptions:
       (1) In general.--Laws providing or creating direct spending 
     are assumed to operate in the manner specified in those laws 
     for each such year, funding for entitlement authority is 
     assumed to be adequate to make all payments required by those 
     entitlements, and funding for deposit insurance is assumed to 
     be adequate to meet the costs of the Financial Institutions 
     Reform, Recovery, and Enforcement Act of 1989 or successor 
     laws.
       (2) Exceptions.--Except as provided in paragraph (3):
       (A) No program with estimated current-year gross new budget 
     authority greater than $100 million is assumed to expire in 
     the budget year or outyears. In carrying out the preceding 
     sentence, expiring entitlement programs and programs financed 
     by indefinite budget authority are assumed to continue as in 
     effect just prior to their expiration, and other expiring 
     programs are assumed to continue with new budget authority 
     projected as equal to budget authority in the last year for 
     which budget authority is enacted.
       (B) The percentage increase for veterans' compensation for 
     a fiscal year is assumed to be the same as that required by 
     law for veterans' pensions unless otherwise provided by a law 
     enacted in that session.
       (3) Cutoff date.--Programs that expire on or before 
     December 31 and that have not been reauthorized by the date 
     of the final sequestration report are assumed to expire. If 
     an increase in veterans compensation has not been enacted by 
     the date of the final sequestration report, it is not 
     assumed.
       (c) Up-to-Date Concepts.--In deriving the baseline for any 
     budget year or outyear, current-year amounts shall be 
     calculated using the concepts and definitions that are 
     required for that budget year.

     SEC. 14. RELATIONSHIP TO PAY-AS-YOU-GO.

       Reductions in outlays resulting in legislation enacted 
     pursuant to section 6 shall not be taken into account for 
     purposes of section 252 of the Balanced Budget and Emergency 
     Deficit Control Act of 1985, except to the extent necessary 
     to achieve a balance in the paygo scorecard under such 
     section 252(d).

     SEC. 15. JUDICIAL REVIEW.

       (a) Expedited Review.--
       (1) Any Member of Congress may bring an action, in the 
     United States District Court for the District of Columbia, 
     for declaratory judgment and injunctive relief on the ground 
     that any order that might be issued pursuant to section 12 
     violates the Constitution.
       (2) Any Member of Congress, or any other person adversely 
     affected by any action taken under this Act, may bring an 
     action, in the United States District Court for the District 
     of Columbia, for declaratory judgment and injunctive relief 
     concerning the constitutionality of this Act.
       (3) Any Member of Congress may bring an action, in the 
     United States District Court for the District of Columbia, 
     for declaratory and injunctive relief on the ground that the 
     terms of an order issued under section 12 do not comply with 
     the requirements of this Act.
       (4) A copy of any complaint in an action brought under 
     paragraph (1), (2), or (3) shall be promptly delivered to the 
     Secretary of the Senate and the Clerk of the House of 
     Representatives, and each House of Congress shall have the 
     right to intervene in such action.
       (5) Any action brought under paragraph (1), (2), or (3) 
     shall be heard and determined by a three-judge court in 
     accordance with section 2284 of title 28, United States Code.

     Nothing in this section or in any other law shall infringe 
     upon the right of the House of Representatives to intervene 
     in an action brought under paragraph (1), (2), or (3) without 
     the necessity of adopting a resolution to authorize such 
     intervention.
       (b) Appeal to Supreme Court.--Notwithstanding any other 
     provision of law, any order of the United States District 
     Court for the District of Columbia which is issued pursuant 
     to an action brought under paragraph (1), (2), or (3) of 
     subsection (a) shall be reviewable by appeal directly to the 
     Supreme Court of the United States. Any such appeal shall be 
     taken by a notice of appeal filed within 10 days after such 
     order is entered; and the jurisdictional statement shall be 
     filed within 30 days after such order is entered. No stay of 
     an order issued pursuant to an action brought under paragraph 
     (1), (2), or (3) of subsection (a) shall be issued by a 
     single Justice of the Supreme Court.
       (c) Expedited Consideration.--It shall be the duty of the 
     District Court for the District of Columbia and the Supreme 
     Court of the United States to advance on the docket and to 
     expedite to the greatest possible extent the disposition of 
     any matter brought under subsection (a).
       (d) Noncompliance With Sequestration Procedures.--
       (1) If it is finally determined by a court of competent 
     jurisdiction that an order issued by the President under 
     section 12 for any fiscal year does not fully implement 
     without change all sequestrations required by the OMB report, 
     the President shall, within 20 days after such determination 
     is made, revise the order in accordance with such 
     determination.
       (2) If the order issued by the President under section 12 
     for any fiscal year does not fully implement without change 
     all sequestrations required by the OMB report which is the 
     basis for the order on the claim or defense that the 
     constitutional powers of the President prevent such 
     sequestration or reduction or permit the avoidance of such 
     sequestration or reduction, and such claim or defense is 
     finally determined by the Supreme Court of the United States 
     to be valid, then the entire order issued pursuant to section 
     12 for such fiscal year shall be null and void.
       (e) Timing of Relief.--No order of any court granting 
     declaratory or injunctive relief from the order of the 
     President issued under section 12, including relief 
     permitting or requiring the expenditure of funds sequestered 
     by such order, shall take effect during the pendency of the 
     action before such court, during the time appeal may be 
     taken, or, if appeal is taken, during the period before the 
     court to which such appeal is taken has entered its final 
     order disposing of such action.
       (f) Preservation of Other Rights.--The rights created by 
     this section are in addition to the rights of any person 
     under law, subject to subsection (e).
       (g) Economic Data, Assumptions, and Methodologies.--The 
     economic data and economic and technical assumptions and 
     estimation of methodologies used by OMB or CBO in preparing 
     any report issued under section 12 shall not be subject to 
     review in any judicial or administrative proceeding.

     SEC. 16. APPLICATION.

       The application of provisions, procedures, and points of 
     order under House Resolution 235, One Hundred Third Congress, 
     agreed to August 5, 1993, shall not be effective for fiscal 
     year 1995 or any later fiscal year.

     SEC. 17. EFFECTIVE DATE.

       Except as otherwise specified, this Act and the amendments 
     made by it shall take effect on the date of its enactment and 
     shall apply to fiscal years 1995 and subsequent fiscal years.

  The CHAIRMAN. Pursuant to the rule, the gentleman from Texas [Mr. 
Stenholm] will be recognized for 20 minutes, and a Member opposed will 
be recognized for 20 minutes.
  Mr. DERRICK. Mr. Chairman, I rise in opposition to the Stenholm 
amendment.
  The CHAIRMAN. The gentleman from South Carolina [Mr. Derrick] will be 
recognized for 20 minutes.
  The Chair recognizes the gentleman from Texas [Mr. Stenholm].
  Mr. STENHOLM. I thank the Chair.
  Mr. Chairman, in order to accommodate my colleague, the gentleman 
from Colorado [Mr. Schaefer], I yield 2 minutes to the gentleman.
  (Mr. SCHAEFER asked and was given permission to revise and extend his 
remarks.)
  Mr. SCHAEFER. I thank the gentleman for yielding this time to me.
  Mr. Chairman, this is a refreshing debate. We are doing something 
today that we should do every year: vote on proposals to control 
entitlement spending. Fortunately we have before us the Stenholm 
substitute, which provides the caps, the hammers, and the procedures 
needed to control the rapid and dangerous growth of entitlement 
spending.
  And make no mistake, entitlement spending is skyrocketing, taking the 
budget deficit with it. Since 1978, spending on entitlements has 
increased 286 percent.
  If growth continues on its current path, by 2030 entitlements will 
consume literally all Federal revenues. At that point a solution will 
become excruciating: We will either have to raise taxes to unimaginably 
high levels, or enact spending cuts that are truly draconian.
  Now we can either ignore the problem, and hope that future 
generations have the wisdom and political courage that escapes us, or 
we can vote for a proposal that will help solve the problem.
  The Stenholm substitute will put into place hard caps, tied to 
inflation, that are needed to arrest the growth of entitlement 
spending.
  Only the Stenholm substitute contains a mechanism to force Congress 
to prioritize how it spends our limited resources on entitlements. The 
Congressional Budget Office estimates that if we comply with those 
caps, we will save the taxpayers $83.4 billion over the next 4 years.
  Now, Congress can raise those caps, but that would require a separate 
vote, letting every taxpayer in America know if their Representative is 
serious about controlling spending.
  Furthermore, the Stenholm substitute includes all entitlement 
programs. Now, I know that we are all committed to protecting the 
retirement incomes of Social Security recipients, but we cannot 
seriously address entitlement spending if we put the largest 
entitlement program off the table.
  And we cannot protect Social Security recipients from the budget 
deficit and the rising interest payments on the debt, unless we start 
controlling entitlement spending--now.
  Quite simply we have a choice: Keep the status quo by ignoring the 
problem, or make the first of the many tough choices needed to control 
entitlement spending. I encourage my colleagues, on both sides of the 
aisle, to make that first tough choice: Vote for the Stenholm 
substitute.
  Mr. STENHOLM. Mr. Chairman, I yield myself 4 minutes.
  Mr. Chairman, I rise today to offer a substitute amendment to H.R. 
4604, the Budget Control Act of 1994. I am pleased to be joined today 
by my colleagues, Mr. Penny, Mr. Orton, and Mr. LaRocco. I appreciate 
the statement of my colleague, the gentleman from Colorado [Mr. 
Schaefer].
  The substance of our amendment was laid out in the bill we introduced 
last month, H.R. 4593, referred to as the Entitlement Control Act of 
1994, establishing a formula for setting limits on the aggregate level 
of direct spending in each fiscal year. We believe that this amendment 
draws out the best provisions from the budget enforcement legislation 
developed last Congress by then-Chairman Leon Panetta, amendments 
offered by Senators Nunn and Domenici and the entitlement review 
procedure passed by the House last year and incorporated in an 
Executive order.
  Our amendment requires the OMB Director to issue a report within 30 
days of enactment, setting forth direct spending targets for fiscal 
years 1995 through 2000 using a calculation provided by the 
legislation.

                              {time}  1500

  The target for 1995 will equal projected baseline outlays for direct 
spending in that year, and the target for subsequent years must equal 
the 1995 target, and listen carefully, plus adjustments for, first, 
changes in the Consumer Price Index; second, demographic changes; and, 
third, an additional growth cushion of 1 percent in 1996, 1997, and 
1998. If OMB determines that baseline direct spending for the upcoming 
year will exceed that target, the President's budget must propose 
legislative changes to offset the excess through reductions in direct 
spending programs, an increase in the target, or some combination of 
the two. Special procedures for congressional action are then laid out 
whereby Congress would set limits on direct spending for each 
functional category of the budget, restricted by the requirement that 
the sum of the function targets does not exceed the aggregate target. 
Congress would then have the entire year in which to make the policy 
decisions necessary to meet those targets.
  Our amendment provides two alternative sequestration procedures 
intended to assure that direct spending does not exceed the targets if 
legislation to cut spending, or increase the targets, is not enacted. A 
targeted sequestration would apply if legislation establishing direct 
spending targets for each budget function has been enacted. For any 
function with projected spending in excess of the function target, the 
targeted sequestration would reduce  spending in that function by the 
uniform percentage required to meet the target.

  If function targets are not enacted, a comprehensive sequestration 
would apply. In that case, direct spending programs would be cut by the 
percentage required to meet the aggregate target.
  CBO has estimated that the entitlement caps which are laid out by 
this amendment would require cuts of $83.4 billion through 1999.
  One of the uncertainties in setting an entitlement cap that has been 
noted by its critics is the uncertainty of the increases in entitlement 
spending that would result from passage of health care reform. This 
problem would be resolved by allowing the entitlement caps to be 
adjusted to reflect any increased entitlement spending resulting from 
the reform package. This adjustment would only apply to health care 
reform legislation which is deficit neutral over 1995-99. The spending 
caps also would be adjusted for legislation increasing mandatory 
spending that was enacted under the existing pay-as-you-go 
requirements.
  No programs would be exempt from the general entitlement sequester. 
By eliminating all exemptions to sequestration, this mechanism would 
give everyone a vested interest in reaching an agreement on budget 
priorities in order to avoid sequestration. It would also do a great 
deal to maintain a sense of fairness among Social Security 
beneficiaries, military retirees, civil service retirees, and all 
others receiving entitlement benefits.
  It is true that the deficit is projected to take a slight downturn 
over the next few years, and I am pleased that such is the case. I 
remain convinced, however, that sustained deficits of $200 billion-plus 
per year present a great economic hazard to our Nation's future.
  We will face many tough choices. This is one of them. I am hopeful 
that the Kerry-Danforth commission will produce constructive 
suggestions on steps that can be taken to deal with the growth of 
entitlement spending. That notwithstanding, I believe the hammer of an 
enforcable entitlement cap is necessary to provide Congress and the 
President with the necessary incentive to make the tough choices we all 
know we must make.

 H.R. 4593, Entitlement Control Act of 1994--Section-by-Section Summary

       Section 1--Short title, table of contents.
       Section 2--Purposes.
       Section 3--Definitions.--Defines budget year, direct 
     spending and other technical definitions.
       Section 4--Establishment of direct spending caps.--Thirty 
     days after the enactment of this legislation, the Director of 
     OMB would issue an initial direct spending report setting 
     forth projected mandatory spending for fiscal year 1995. All 
     mandatory spending except deposit insurance and interest 
     payments would be included in the targets. The Director of 
     OMB shall establish caps for fiscal years 1995 through 2000 
     based on the projected mandatory spending for 1995 and 
     allowing for growth each year to reflect:
       a. Changes in the consumer price index;
       b. Changes in the number of beneficiaries;
       c. An additional growth allowance of 1 percent in 1996, 1 
     percent in 1997, 1 percent in 1998 and 0 percent in 1999.
       The caps would be adjusted to reflect increased direct 
     spending resulting from health care reform legislation 
     enacted by the end of 1994 which is deficit neutral over 
     1995-1999.
       Each year, the President's budget shall adjust the caps to 
     reflect:
       a. Actual inflation;
       b. Actual beneficiary changes;
       c. Direct spending legislation enacted under the PAYGO 
     requirements, i.e. paid for by increased taxes or declared as 
     emergency spending.
       d. Legislation reducing direct spending to offset the 
     deficit impact of a tax cut under PAYGO requirements.
       Section 5--Special direct spending message by the 
     President.--If OMB projects that mandatory spending will 
     exceed the cap for that year, the President's budget must 
     include a proposal to offset any projected excess of the caps 
     for each fiscal year. The President would be allowed to 
     propose to increase the levels of the caps to allow for all 
     or part of the excess if he provided a written explanation 
     justifying an increase in the caps.
       Section 6--Congressional response required.--If OMB 
     projects that entitlement spending will exceed the caps, 
     Congress must pass a budget resolution that includes 
     reconciliation instructions to offset the excess of the caps 
     for each fiscal year or to increase the caps.
       A budget resolution (including conference report) that does 
     not deal with the spending above the caps would not be in 
     order in the House.
       If the House does not pass a budget resolution conference 
     report that deals with the spending above the caps, it would 
     not be in order to consider any appropriation bill in the 
     House, unless a resolution devoted solely to the subject of 
     waiving this requirement is passed on a recorded vote.
       If the Budget Committee does not report legislation dealing 
     with the excess, an expedited procedure would be established 
     to bring legislation incorporating the President's 
     recommendations for dealing with the excess directly to the 
     House floor.
       Section 7--Spin-off law.--Upon passage of the budget 
     resolution conference report, the Chairman of the Budget 
     Committee would introduce spin-off legislation allocating 
     spending under the overall entitlement cap for that fiscal 
     year among the budget functions and establishing individual 
     caps for each budget function based on the levels set forth 
     in the budget resolution.
       Spin-off legislation introduced by the Budget Committee 
     Chairman would be considered by the House and the Senate 
     under expedited procedures similar to the procedures for 
     consideration of a budget resolution.
       If spin-off legislation is passed by the House and Senate, 
     it would be sent to the President for signature. If the 
     President signs the spin-off legislation, the individual caps 
     would become binding in law.
       Section 8--Targeted sequestration.--If legislation setting 
     individual caps for each budget function for that year had 
     been enacted, there would be a separate sequester for any 
     function that exceeded its cap.
       Section 9--Comprehensive sequestration.--If legislation 
     establishing individual caps has not been enacted, there 
     would be a comprehensive sequester with across-the-board cuts 
     in all entitlement programs to eliminate any breech of the 
     aggregate cap that had not been eliminated.
       Section 10--Exempt programs and activities.--Provides a 
     limited number of technical, non-policy exemptions from 
     sequestration. Effectively eliminates all policy exemptions 
     from sequestration under current PAYGO sequestration. (Taken 
     from Panetta Balanced Budget Enforcement Act, H.R. 5676 in 
     102nd Congress)
       Section 11--Sepcial sequestration rules.--Provides for the 
     procedure for executing an across-the-board sequestration in 
     all programs, with special guidelines for applying 
     sequestration to unusual programs. These rules would be 
     applied to both general and targeted sequesters. Provides 
     that all sequestrations are permanent. (Taken from Panetta 
     Balanced Budget Enforcement Act)
       Section 12--Estimating assumptions, reports and orders.--
     CBO shall issue an estimate of the cap for the upcoming 
     fiscal year and a sequestration preview report as part of the 
     January Budget and Economic Outlook. The President's Budget 
     shall include the adjusted caps as calculated by OMB and a 
     sequestration preview report. The OMB report would be the 
     official report for the purposes of ordering sequestration. 
     OMB would be required to explain any difference between OMB 
     and CBO estimates.
       Ten days after the end of a session, CBO and OMB would be 
     required to submit a final sequestration report. The OMB 
     report would be the official report. OMB would be required to 
     explain differences between the OMB and CBO reports.
       On the day that OMB issues its final sequestration report, 
     the President would be required to issue an order 
     implementing the sequestration report without change.
       Section 13--Current policy baseline.--Provides rules for 
     determining current policy baseline for sequestration 
     reports. (Taken from Panetta Balanced Budget Enforcement Act)
       Section 14--Relationship to pay-as-you-go.--Provides that 
     reductions in entitlements spending made to comply with the 
     caps would not be entered on the PAYGO scorecard.
       Section 15--Judicial review.--Provides for judicial review 
     identical to the procedure established for Gramm-Rudman.
       Section 16--Application.--Provides that the House rules 
     changes enacted as part of the entitlement review process 
     would not apply for 1995 and beyond.
       Section 17--Effective dates.--Provides that the title will 
     be effective for fiscal years 1995 and beyond.
                                  ____

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                    Washington, DC, July 20, 1994.
     Hon. Charles W. Stenholm,
     House of Representatives,
     Washington, DC.
       Dear Congressman: At your request, the Congressional Budget 
     Office has reviewed H.R. 4593, the Entitlement Control Act of 
     1994, introduced by you on June 16, 1994. That bill 
     establishes a formula for setting limits on the aggregate 
     level of direct spending (excluding net interest and deposit 
     insurance) in each fiscal year, and provides a sequestration 
     process to reduce spending to that level if legislation 
     achieving the required reductions is not enacted.
       H.R. 4593 requires the Director of the Office of Management 
     and Budget (OMB) to issue a report within 30 days of 
     enactment setting forth direct spending targets for fiscal 
     years 1995 through 2000, calculated as provided in the bill. 
     The target for 1995 is to equal projected baseline outlays 
     for direct spending (excluding net interest and deposit 
     insurance) in that year. The target for subsequent years must 
     equal the 1995 target plus adjustments for (1) changes in the 
     Consumer Price Index, (2) changes in the number of 
     beneficiaries in programs affected by beneficiary levels, and 
     (3) an additional growth allowance of 1 percent in 1996, 
     1997, and 1998. The targets are adjusted each year when the 
     President's budget is submitted to reflect changes in 
     inflation projections and estimates of beneficiaries. They 
     are also adjusted to reflect newly enacted direct spending 
     that is designated as an emergency or is offset by an 
     increase or decrease in revenues under the pay-as-you-go 
     procedures of the Balanced Budget and Emergency Deficit 
     Control Act of 1985.
       H.R. 4593 provides that, if OMB determines that baseline 
     direct spending for the upcoming fiscal year will exceed the 
     adjusted target, the President's budget must propose 
     legislative changes to offset the excess through some 
     combination of reductions in direct spending programs or an 
     increase in the target. It also provides special procedures 
     for Congressional consideration of such proposals and of 
     legislation that would set limits on direct spending for each 
     functional category of the budget, where the sum of the 
     function targets is not greater than the aggregate target.
       H.R. 4593 provides two alternative sequestration procedures 
     intended to assure that direct spending does not exceed the 
     targets if legislation to cut spending or increase the 
     targets is not enacted. A ``targeted sequestration'' would 
     apply if legislation establishing direct spending targets for 
     each budget function has been enacted. For any function with 
     projected direct spending in excess of the function target, 
     the targeted sequestration would reduce each nonexempt direct 
     spending program within that function by the uniform 
     percentage required to reduce direct spending for the 
     function to the target.
       If function targets are not enacted, a ``compreshensive 
     sequestration'' would apply. In that case, all nonexempt 
     direct spending programs would be cut by the uniform 
     percentage required to reduce total direct spending to the 
     aggregate target. In either case, spending is not supposed to 
     exceed the aggregate direct spending target.
       CBO has calculated what the aggregate target would be for 
     each year, 1995 through 1999, based on CBO's current baseline 
     assumptions. In calculating the targets, CBO has assumed that 
     the bill allows the implicit target for offsetting receipts 
     (which represent negative outlays) to decline at the rate of 
     inflation and the additional growth allowance, thereby 
     increasing the aggregate target. The language currently 
     included in H.R. 4593 could be interpreted instead to 
     increase that target for offsetting receipts (thus lowering 
     the aggregate target and requiring additional reductions from 
     the baseline), but because the provision is ambiguous, we 
     have assumed an interpretation consistent with your stated 
     intent. No comparison is made for 2000 because CBO does not 
     currently have a complete programmatic baseline for years 
     after 1999 and, therefore, does not have assumptions about 
     beneficiary levels that are needed to calculate a target for 
     2000. The table below compares the targets for 1995 through 
     1999 with CBO's baseline projections of direct spending, 
     excluding net interest and deposit insurance expenditures.

------------------------------------------------------------------------
                          1995      1996      1997      1998      1999  
------------------------------------------------------------------------
Target................     770.2     820.5     872.5     925.1     971.8
Baseline..............     770.2     824.2     886.4     946.7   1,015.9
                       -------------------------------------------------
      Target minus                                                      
       baseline.......         0      -3.7     -14.0     -21.6     -44.1
------------------------------------------------------------------------

       Enactment of H.R. 4593 would not directly affect direct 
     spending or receipts. Therefore, pay-as-you-go procedures 
     would not apply to the bill.
       If you wish further detail on this estimate, we will be 
     pleased to provide them. The CBO staff contact is Jim Horney, 
     who can be reached at 226-2880.
           Sincerely,

                                                James L. Blum,

                                        (For Robert D. Reischauer,
                                                        Director).
  Mr. DERRICK. Mr. Chairman, I yield myself 5 minutes.
  Mr. Chairman, the committee ought to reject the Stenholm amendment 
for several reasons. First, the amendment proposes much more than the 
mere establishment of an entitlement-review procedure. In my opinion 
the Stenholm amendment proposes a train wreck. I do not know about your 
district, Mr. Chairman, but in my district a train wreck is definitely 
something we try to avoid, not cause.
  The Stenholm amendment proposes to cap spending on virtually every 
entitlement except net interest and deposit insurance, for each fiscal 
year from now through the year 2000. The amendment would include Social 
Security under the caps along with Medicare, Medicaid, unemployment 
insurance, food stamps, veterans' benefits, Federal civilian and 
military retirement, supplemental security income, and farm subsidies, 
among others.
  The caps would be established at levels based on 1995 spending, and 
would be adjusted upward each year for inflation, and up or down for 
beneficiary growth with an extra adjustment of 1 percent in 1996, 1997, 
and 1998 only. This formula for adjusting the caps virtually guarantees 
that entitlement spending will sooner or later exceed the caps, and I 
bet it would be sooner, rather than later. The proponent himself 
estimates that Congress would have to cut entitlement benefits by over 
$100 billion over the next 5 years to keep spending within the cap.
  When the day arrives when entitlement spending exceeds the cap, the 
President will have to recommend Congress either cut benefits or raise 
the caps. If Congress did not pass legislation cutting benefits or 
raising the caps, automatic cuts would occur, permanently reducing the 
various entitlement benefits by whatever amounts were needed to 
eliminate the excess spending.
  Mr. Chairman, we don't need the threat of a train wreck to prod a 
future Congress to deal with the root causes of the entitlement 
problem. Under the leadership of this President, this very Congress is 
working to solve the real problem driving Federal deficits, which is 
spending on the Federal health-care entitlements.
  According to the Congressional Budget Office, over the next 10 years 
total spending for entitlements other than Medicare and Medicaid will 
not increase the projected deficit. We need to get health-care reform 
enacted this year, and if we can do that, much of our problem will have 
been solved. If we fail to enact health-care reform this year, the 
Stenholm amendment could actually make it harder to pass in the future.
  Second, the Stenholm amendment would hamstring the reconciliation 
process in this context by restricting committees' prerogatives and 
policy choices for reducing spending. The amendment would require 
committees to reduce program totals within budget functions, rather 
than merely requiring them to achieve a total amount of budgetary 
savings as now required. It is difficult enough for committees to 
fashion reduction proposals that can pass Congress and be signed into 
law. To limit committees' range of options further in this or any other 
regard makes little sense.
  Third, Mr. Chairman, by reviving a Gramm-Rudman-style threat of a 
train wreck, the Stenholm amendment would also likely revive the use of 
rosy economic assumptions, receipts speed-ups, outlay postponements, 
and all the other gimmicks developed and honed to perfection during the 
late 1980's. These kinds of gimmicks don't save any money, and they 
surely do not foster public respect for the integrity of the budget 
process.
  Finally, a General Accounting Office report released this week 
questions the utility of entitlement caps enforced by sequestration as 
a device to reduce entitlement spending. According to the GAO, the 
characteristics that have made mandatory programs difficult to control 
would make sequestration difficult to administer. Moreover, because of 
how the various entitlement programs, work, one sequester would likely 
cause other sequesters, year after year since sequestration would not 
affect the underlying statutory eligibility criteria. GAO noted that 
these problems could be overcome by instead creating a mechanism to 
compare entitlement spending to targets and require a response if the 
targets are exceeded--in other words, the committee bill.
  Mr. Chairman, if Members believe they want to cut entitlements in 
1996 or 1997, then let's bring a bill to the floor to cut entitlements 
in 1996 or 1997. Let us not pass the buck to the 104th or 105th 
Congress to do it, and let us not create a cumbersome, inscrutable 
process deliberately and cleverly designed to try to force the 104th or 
105th Congress to do it. We have been down that road with Gramm-Rudman, 
and it just does not work.
  The committee bill will establish a procedure to monitor entitlement 
spending, and if it exceeds expectations then the President and 
Congress at that time can deal with it in whatever manner they see fit. 
Let's not try to confound them by defining their problems and limiting 
their solutions. All we will do by adopting the Stenholm amendment is 
frighten our Social Security beneficiaries, Federal military and 
civilian retirees, poor and hungry children, the unemployed, farmers, 
veterans, the poor elderly, and others, even including State and local 
governments, and for no good reason.
  Mr. Chairman, I reserve the balance of my time.

                              {time}  1510

  Mr. STENHOLM. Mr. Chairman, I am happy to yield 2 minutes to the 
gentlewoman from Pennsylvania [Ms. Margolies-Mezvinsky], one of the 
original and hardest working entitlement reformers in this Congress.
  Ms. MARGOLIES-MEZVINSKY. Mr. Chairman, when we held our conference on 
the future of entitlements in Montgomery County last December, we began 
a dialog committed to taking an honest and serious look at our 
entitlement programs. We began this dialogue in the name of our 
children's future and to protect senior citizens.
  This debate will secure the vitality of these programs, which have 
saved millions of Americans from poverty and helped to preserve their 
dignity. These very programs define our great Nation, a Nation that 
cares about its elderly and cares about those who have been left 
behind.
  There were many in December who did not want us to begin this 
conversation, those who see danger when we move our Nation from what is 
politically popular to what is fiscally responsible and fundamentally 
right. Every day in the news, as new facts and reports reveal to us the 
reality of the situation, we realize we cannot wait and we must act 
now.
  This is one major step in a long journey toward that goal. I ask my 
colleagues to support the Stenholm-Penny substitute. This plan achieves 
real deficit reduction in a reasonable and responsible fashion.
  Mr. DERRICK. Mr. Chairman, I yield 3 minutes to the gentleman from 
Michigan [Mr. Stupak].
  Mr. STUPAK. Mr. Chairman, I rise in opposition to the Stenholm 
substitute to H.R. 4604. One of the main reasons is the Stenholm 
substitute will actually use sequestration if its targets are not met 
to enforce its entitlement caps.
  When you use sequestration, which is really across-the-board cuts, 
that includes every program. There would be no entitlement program that 
would remain untouched, including Social Security, where in my district 
of northern Michigan, we have 130,000 beneficiaries under Social 
Security. For many of those people, 90 percent of their retirement 
income comes from Social Security, and further cuts or caps would be 
devastating for these individuals.
  Further, I believe the Stenholm amendment or substitute would also 
limit our options. If I read the Stenholm amendment correctly, it 
appears that it would prohibit Congress from exercising its 
constitutional authority necessary to raise revenue or to actually get 
into discretionary spending cuts to offset any part of any excess 
entitlement spending.
  Therefore, I believe that the Stenholm substitute would be not a 
responsible way to address entitlement caps. Later this afternoon we 
are going to have an opportunity to talk about H.R. 4604, but with the 
Spratt-Stupak substitute, which brings in some caps, but gives us the 
Congress the legislative authority and discretion to look at raising 
revenue, raising entitlement caps, or to cut spending in discretionary 
programs.
  Mr. Chairman, I think if we look at the basis of some of the Stenholm 
substitute, enforcement relies entirely on projections of spending 
during a 5-year cycle. We all know what has happened when we have used 
projections before in spending cycles. Remember the Gramm-Rudman-
Hollings. We used and projected into the future, which led to very rosy 
scenarios. When it came right down to it, they were not fulfilled and 
it left us with a greater budget deficit than what we had before.
  Since our hands are more or less tied under Stenholm because it is 
based upon projections, some $150 billion over the next 5 years, I 
believe that true cutting of discretionary spending would not be 
achieved under Stenholm. Therefore, I urge my colleagues to vote no on 
the Stenholm substitute.
  Mr. STENHOLM. Mr. Chairman, I yield 2 minutes to the gentleman from 
North Carolina [Mr. McMillan].
  Mr. McMILLAN. Mr. Chairman, I thank the gentleman for yielding.
  Mr. Chairman, I am amazed that we got 194 votes for the Kasich, 
McMillan, and Kolbe bill, but I said at the outset that I was also 
going to support the Stenholm amendment, because I think there are a 
lot of things in common here that really get at the heart of the 
problem that we are facing.
  I actually introduced a bill very similar to this a year ago. It is 
probably a little stronger than either of the ones introduced or 
discussed here today, because it is a little stronger on caps, but it 
has the same enforcement mechanism.
  I think that is the key, getting an early budget resolution, with the 
President in accord. But the important thing is that once we have 
adopted a budget resolution, we force reconciliation to the authorizing 
committees. And that is where the whole system is breaking down on 
mandatory or entitlement programs. We are passing legislation in the 
authorizing committees that provide for spending under the label ``such 
sums as necessary.''
  That is an open-ended ticket to spend more money, and that is where 
we have got to get discipline into this process.
  There are two things that Stenholm has been criticized for that I 
would like to address very briefly. One is that it does not exclude 
Social Security. I think the fact that it has within it a cap that 
includes COLA's plus 1 percent in effect renders that question moot. So 
those who are afraid of this because of Social Security should not be 
particularly concerned about that.
  The other is this, and that is on the question of taxes. There is no 
way that we can exclude taxes from anything in this Congress. As soon 
as the gavel orders us into session, this place has the power to tax. I 
am against taxes, and I think the gentleman from Texas [Mr. Stenholm] 
is against taxes. What we are trying to do here is to get control of 
spending so in fact we will not have to raise taxes. We need to get our 
priorities straight, and I think this is one among several things that 
is very constructive in that respect.
  So I would urge my colleagues on both sides to again show support for 
this concept and support the Stenholm amendment.
  Mr. STENHOLM. Mr. Chairman, I yield 2 minutes to the gentleman from 
Idaho [Mr. LaRocco], an original cosponsor of the Stenholm-Penny-Orton-
Deal-LaRocco amendment.
  (Mr. LaROCCO asked and was given permission to revise and extend his 
remarks.)
  Mr. LaROCCO. Mr. Chairman, I thank the gentleman for yielding and for 
his leadership on this key issue.
  Mr. Chairman, what are we doing here? We are trying to keep the 
deficit reduction budget process bandwagon rolling. This is another 
critical piece of the ongoing effort to reduce the deficit.
  The folks back home in Idaho tell me that controlling the Federal 
spending and cutting the deficit is critical for the future economic 
health of our Nation, and I agree with my constituents.
  Entitlements are the fastest growing portion of the Federal budget. 
We cannot address this problem without making some tough choices. In 
the past, Congress has avoided these tough choices by simply passing 
them on to future generations. In the 1980's, deficits exploded, the 
debt tripled, and we were promising everything to everyone. For the 
future of our children, this has to stop.
  What is this substitute all about? It is an honest, straightforward 
proposal to get control of what we all recognize as the fastest growing 
portion of the Federal budget, entitlements. It takes entitlement 
spending off automatic pilot. It will force Congress to set its own 
entitlement spending priorities and make the tough choices.
  The budget caps on the discretionary side of the budget have worked. 
If you do not think they have and that they are not real, then ask a 
member of the Committee on Appropriations. They will tell you.
  When I tell people back in Idaho that we have frozen the 
discretionary part of the budget, they say that is good work, Congress, 
but you have got to do more. You have got to keep going. You have got 
to get the real problem, and that is entitlements.
  This substitute amendment that we are debating right now and that I 
think we should pass adopts this very same approach as the 
discretionary side. It sets numerical caps.
  Uncontrolled growth in entitlements spending represents the single 
largest threat to our economic health and the fiscal future of this 
Nation. It will be our children and grandchildren who will curse us if 
we do not address this problem.
  If you support strong enforceable limits on spending, then I think 
there is only one choice. Do you think we should have a balanced 
budget? Do you want to cut spending? Do you want to cut the deficit? Do 
you want the Federal Government to meet its obligations in the present 
and in the future? If you do, vote for the Stenholm-Orton-Penny-Deal-
LaRocco amendment.
   Mr. Chairman, for the record I offer the following letter from the 
gentleman from Texas [Mr. Stenholm].

                                                    U.S. Congress,


                                     House of Representatives,

                                    Washington, DC, July 21, 1994.

       Stenholm Amendment Provides Enforceable Spending Restraint

       Dear Colleague: The General Accounting Office released a 
     study yesterday that was portrayed as critical of my 
     entitlement cap amendment. After reviewing the report, I 
     found that all of the criticisms did not apply to my 
     amendment or missed the point about the reason for enacting 
     an entitlement cap. The report makes four criticisms, none of 
     which apply to my amendment:
       1. It would be difficult to implement a sequester. While 
     any effort to sequester entitlement programs is difficult, my 
     amendment improves upon the existing PAYGO sequester for 
     entitlement spending by drawing from the sequestration 
     mechanism developed by former Budget Committee Chairman Leon 
     Panetta. This sequestration formula broadens the base of 
     sequestration by eliminating all of the exemptions in the 
     PAYGO sequester and establishes specific guidelines for 
     implementing a sequester.
       2. It will be difficult to estimate the size of the breach. 
     GAO notes that changing projections could make it difficult 
     to know how much entitlement spending has to be reduced under 
     some entitlement cap proposals. My amendment addresses that 
     concern by providing that any sequestration will be based on 
     the same assumptions used in the President's budget. In other 
     words, the amount of a breach will be identified in the 
     President's budget, and the rules of the game will not change 
     again that year.
       3. Sequestration may not reduce the base from which 
     entitlement programs grow. GAO criticized entitlement cap 
     proposals which provided for one-year sequesters for leaving 
     an even greater problem in the subsequent year when 
     entitlement spending bounces back to the higher, pre-
     sequester level. My amendment addresses that concern by 
     providing that all sequesters are permanent.
       4. An entitlement cap is not a substitute for making 
     reforms to address the underlying reasons for growth in 
     entitlement programs. I completely agree with this point, but 
     do not believe that it is a reason not to establish an 
     entitlement cap. A cap will provide a hammer to force us to 
     address the underlying causes of growth. As GAO stressed, a 
     sequester would be painful and unpleasant for all entitlement 
     programs. Congress, Presidents and affected groups would all 
     have a powerful incentive to work together to make the policy 
     changes necessary to reduce the underlying growth in 
     entitlement programs in order to avoid the threat of 
     sequestration.
       An entitlement cap is an admittedly crude device to control 
     entitlement spending. Unfortunately, nothing else will force 
     Congress to confront the growth of these programs. Vote for 
     the Stenholm amendment to limit the growth of entitlement 
     spending.
           Sincerely,
                                              Charles W. Stenholm.

  The CHAIRMAN. The Chair would advise Members that the gentleman from 
Texas [Mr. Stenholm] has 8\1/2\ minutes remaining, and the gentleman 
from South Carolina [Mr. Derrick] has 11\1/2\ minutes remaining.

                              {time}  1520

  Mr. DERRICK. Mr. Chairman, I yield 4 minutes to the gentleman from 
South Carolina [Mr. Spratt].
  (Mr. SPRATT asked and was given permission to revise and extend his 
remarks.)
  Mr. SPRATT. Mr. Chairman, I thank the gentleman for yielding time to 
me.
  Mr. Chairman, the previous speaker, my good friend from Idaho, just 
said that if we want protection against uncontrolled entitlement 
spending, vote for Stenholm. And it will take us in that direction, but 
so will the base bill.
  The proof of the pudding is simply to look in the report that was 
issued with this bill and look at the mandatory target report that was 
filed by the President this year. Members will see that entitlement 
spending is not uncontrolled at this point in time. Fortunately, it is 
coming down. It is $25 billion below the baseline for 1994 and 
predicted to be $24.9 billion below the baseline for 1995.
  What we will do with the base bill, if it becomes law, is require a 
reformulation of the baseline to take into account current economic 
conditions and the current fiscal situation for entitlement spending 
per the latest projection. So we will reformulate it and we will codify 
a baseline that is potentially $70 billion below where we set out, 
because that is what we are tracking right now, a lower path of 
spending on entitlement programs with mandatory direct spending 
programs as a result of restraints that we are putting into law and 
improvements in the economy.
  The base bill will do this. It will give us further controls and it 
will work. The Stenholm bill would take us even further. It would 
require us to notch down another, he says, $83.4 billion; according to 
the Congressional Budget Office, another $83 billion in entitlement 
spending reduction over the next 5 years. So our bill will take it down 
also; his bill will take us down even further.
  The gentleman from Texas [Mr. Stenholm] says we can go further, $83.4 
billion lower in total entitlement spending and still have room to 
accommodate health care reform, still have room to make cuts in 
Medicare and cuts in Medicaid, because almost all of the reform 
proposals on both sides of the aisle from all of the committees 
involved to some extent self-financing, self-funding, internal funding 
through savings to be generated from Medicare, Medicaid, CHAMPUS, and 
the Federal health care entitlements. But it will be much, much more 
difficult if we are trying to squeeze $83 billion out in order to stay 
under this new cap, to squeeze even more out in order to siphon funds 
from these programs into the health care reform programs.
  The gentleman from Texas [Mr. Stenholm] also proposes or resurrects 
an idea that at one time seemed to be the salvation of the budget 
situation. That is the idea of sequestration.
  As I said earlier, it is a notable idea, but it has proved so far to 
be illusory. It has only worked once on March 1, 1986. And whether it 
will work again is questionable indeed.
  Basically, I think when we telescope the inevitable and ask what is 
going to happen if Stenholm passes or if Spratt-Stupak passes, we will 
probably have about the same thing. We are going to have to come to the 
floor and be accountable for entitlement spending.
  If we have an overage, in both cases, if we have an overage, we will 
have to come here early in the budget process and deal with 
entitlements up front and we will have to be recorded and accountable 
for whatever we decide to do. If we wish to punt and avoid the problem, 
there will be a recorded vote to that effect. If we wish to deal with 
the problem, there will be a recorded vote to that effect.
  Whether we have sequestration or have simply accountability in the 
budget process, the net result will be the same. We are not going to 
have across-the-board cuts. We will have some alternative to it, and 
the net result will be the same.
  One other problem that I have with the Stenholm proposal is that it 
precludes the use of taxes, offsetting receipts, user fees, and other 
things. As I pointed out earlier in the debate, if we were to issue 
reconciliation instructions with respect to Medicare to the Ways and 
Means Committee, they could not go to part B and raise the premium as 
partial performance on the reconciliation requirements. They could not 
go to tax expenditures.
  The gentleman from Texas [Mr. Stenholm] supported a line-item veto 
which included tax expenditures but they would be precluded from using 
tax expenditures confined solely to spending cuts.
  For all these reasons, I think what we have before us is workable and 
flexible and is a better proposal than this particular proposal.
  Mr. STENHOLM. Mr. Chairman, I yield 4 minutes to the gentleman from 
Utah [Mr. Orton], another original cosponsor of the Stenholm-Penny-
Orton-Deal-LaRocco amendment.
  (Mr. ORTON asked and was given permission to revise and extend his 
remarks.)
  Mr. ORTON. Mr. Chairman, I thank all of my colleagues.
  I would like to express my respect and thanks to the gentleman from 
South Carolina [Mr. Spratt], who has worked long and hard on these 
issues; the gentleman from Texas [Mr. Stenholm] and the gentleman from 
Ohio [Mr. Kasich], all of whom share the goal which I share, and that 
is to reduce deficit spending.
  The way to do that is by placing a cap on entitlement spending.
  These debates on this amendment versus that amendment really have to 
do with how we set that cap and how we enforce that cap. I hope that we 
can adopt the strongest mechanism that will help us set the strongest 
cap and the strongest enforcement mechanism so we have the greatest 
chance of achieving that goal.
  In doing so, I would like to explain to my colleagues on both sides 
of the aisle, particularly those who just supported the Kasich 
amendment, why I believe they should be supporting this amendment as 
well as other Members of the House.
  As we compare the Stenholm and Kasich amendments, the Kasich 
amendment would have set caps on entitlement by the committees year by 
year. Those caps could go up or down. There is no guaranteed savings, 
no guarantee that we actually would get to savings.
  Under the Stenholm approach, however, caps are set by a formula. That 
formula takes the CPI plus growth in the number of beneficiaries, plus 
a 1-percent growth rate. We know that over the next 5 years we are 
going to save over $100 billion in entitlement spending under this 
formula. So that is a stronger approach.
  Under Kasich, the caps are program by program. But under Stenholm 
also they would be program by program. They could be under section 7, 
the spin-off legislation, which deals with these things function by 
function. So we still get the strength of the Kasich but, in addition, 
we would have a forced vote by this body, if there is a desire, rather 
than cutting spending, increasing the cap, we would have to vote in 
this body to increase the cap.
  Next when we get to sequestration, Kasich again would go function by 
function, which I think is a good idea. But under the Stenholm 
proposal, we also would have function-by-function reduction through 
reconciliation. If in fact we choose not to reconcile but to increase 
the caps, we have to have a vote on increasing the caps. If we cannot 
reconcile, if we cannot increase the caps, then and only then comes 
this last ditch attempt to really bring down spending. And that is the 
sequestration, which is the only safeguard in any of these, which I 
believe finally comes in if we fail to act.
  Finally, in closing, there are a couple of points that I think in the 
Kasich proposal made it weak, the removal of revenue as an option to 
consider. Unfortunately, in the Stenholm proposal revenue is also 
removed, and that is an area that I personally would change. In the 
Kasich approach, it exempts Social Security, and this does not exempt 
anything.
  Just in closing, I think we cannot ignore any portion of the budget. 
We are spending Federal dollars. We have to budget those dollars and 
budget the revenue.
  In the Spratt approach I think there are a couple of strengths in 
that he has a real look-back provision that considers actual receipts 
of the previous year. That ought to be adopted. And also I think, 
however, there are weaknesses in that there is no sequestration, there 
is no specific formula for the caps, and it also exempts portions of 
the budget. I think once we start exempting those portions of the 
budget, then we will see, well, let us exempt veterans, how can we 
possibly not exempt Federal retirement? If we are exempting those, how 
can we not exempt Medicare, Medicaid. Well, if we exempt Social Secure, 
Medicare, Medicare, Federal retirement, veterans benefits, what else is 
there? We can eliminate all the rest of entitlements and we are not 
going to balance the budget.
  So I would just urge my colleagues to adopt the strongest mechanism 
we have before us, the Stenholm amendment.

                              {time}  1530

  Mr. STENHOLM. Mr. Chairman, I would ask how much time I have 
remaining.
  Mr. CHAIRMAN. The gentleman from Texas [Mr. Stenholm] has 4\1/2\ 
minutes remaining, and the gentleman from South Carolina [Mr. Derrick] 
has 7\1/2\ minutes remaining.
  Mr. STENHOLM. Mr. Chairman, I yield myself 1 minute.
  Mr. Chairman, I take this minute to respond to a couple of statements 
my colleagues from South Carolina have made. My colleague, the 
gentleman from South Carolina [Mr. Spratt], is correct when he says 
that the sequestration under Gramm-Rudman has not worked. That is a 
very fair and accurate statement. That is why our amendment changes and 
improves on these procedures in three fundamental ways: We do not take 
anything off of the table, we include entitlements, not just 
discretionary spending, and we do not allow for any rosy scenarios.
  The GAO has stated that our amendment, with the manner in which the 
first OMB reports, and then it has to be reconciled with CBO, that the 
chances of rosy scenario have been much reduced under our amendment.
  The other thing that I would respond to to the gentleman from South 
Carolina [Mr. Derrick] concerns the train wreck that my amendment would 
cause. I have to smile at that. Over the 5 years of our amendment we 
will spend $4.8 trillion. Under my amendment we will be forced to 
reduce that $4.8 trillion by 1.7 percent. If that is a train wreck, we 
have got different styles of train wrecks in Texas from South Carolina.
  Mr. Chairman, I yield the remainder of my time to the gentleman from 
Minnesota [Mr. Penny], another original cosponsor of the Penny-LaRocco-
Orton-Stenholm amendment.
  The CHAIRMAN. The gentleman from Minnesota [Mr. Penny] is recognized 
for 3\1/2\ minutes.
  (Mr. PENNY asked and was given permission to revise and extend his 
remarks.)
  Mr. PENNY. Mr. Chairman, a member of the first Congress, John 
Randolph of Virginia, once said, in observing the operations of the 
Congress of which he was a part, ``We know our duty better than we 
discharge it.'' I do not think there is a comment that better describes 
our behavior here in the U.S. Congress.
  Mr. Chairman, we all know that tough choices have to be made to rein 
in red ink, but we always find a way to dodge that bullet. We blame the 
appropriators, we blame the authorizers. We talk about entitlement 
spending, but when we put budget enforcement up for a vote, we exempt 
one program and then another, pretending that popular programs do not 
have to be part of the solution to our deficit problem.
  Mr. Chairman, we all know our duty better than we discharge it. We 
have some unfinished business here. On my side of the aisle there is a 
lot of self-congratulation going on because of the economic plan which 
we approved a year ago. That plan does represent $500 billion worth of 
deficit reduction over a 5-year period, perhaps better, based on recent 
assessments of the budget and based on a continuing improvement in the 
economy.
  However, when we passed that plan we knew it was not enough. We knew 
it was only a first step. Now we have to take the next step. The easy 
stuff, frankly, is behind us.
  Last year's budget represented tax increases on the wealthy. Nothing 
terribly tough about that. And it included significant Pentagon 
spending cuts. Again, take a poll of the American public, and you will 
not find those cuts to be particularly troublesome as a budget choice, 
either.
  The tough stuff lies ahead, Mr. Chairman. It includes entitlement 
spending. Better than half of our Federal budget is tied up in one 
entitlement program or another: Retirement programs, health care 
programs, and, yes, some of these are programs for the vulnerable among 
us.
  When we tried to take an extra step last November with the Penny-
Kasich budget reductions, half of our cuts were in the entitlement 
area, reflecting the reality that half of the spending in the Federal 
budget is in the entitlement area. But that plan was defeated on a 
close vote, in part because many Members said, ``We do not want to take 
these health care related entitlement cuts now. Reserve them for health 
care reform.''
  We are on the eve of a health care reform vote now, and none of the 
committees in the House of Representatives had delivered to the 
Congress a health care reform package that takes one dime out of those 
health care programs. As you look at these plans, there is a no means 
testing of Medicare, there is no copayment on health care services. 
None of the cuts that we were told would be part of health care reform 
are in these plans.
  In fact, in the first several years we need to raise taxes in order 
to pay for these health care reform plans. In its current form, there 
is no deficit reduction to be found in health care reform.
  If Members are concerned about that, wait until they see the welfare 
reform plan. That costs more than the current welfare system. So, where 
are we going to get the savings out of our entitlement programs if we 
continue to follow businesses as usual? The savings are not there. Caps 
are the only way to force us to make the tough choices.
  Mr. Chairman, speaker after speaker in the last several weeks has 
proven that point, because we have talked about our cuts in 
discretionary programs resulting from the caps that are in place. The 
only plan before us today that places a cap on entitlement spending and 
forces us to make cuts in the entitlement area is the Stenholm plan. I 
urge its adoption.
  Mr. DERRICK. Mr. Chairman, I have one speaker remaining, and I 
reserve the right to close.
  The CHAIRMAN. The gentleman from South Carolina [Mr. Derrick] has the 
right to close debate.
  The gentleman from Texas [Mr. Stenholm] has no time remaining.
  Mr. DERRICK. Mr. Chairman, I yield 4 minutes to the distinguished 
gentleman from Minnesota [Mr. Sabo].
  Mr. SABO. Mr. Chairman, I thank the gentleman for yielding time to 
me.
  Mr. Chairman, I rise in opposition to the amendment. First let me 
commend the gentleman from Texas [Mr. Stenholm] for his amendment, and 
also say I know he is someone who would make the specific voting cuts 
to get his number, because I find many Members are great in the 
generalities and are never there when it comes to the specifics, and I 
know the gentleman from Texas [Mr. Stenholm] would do that. I do not 
share that optimism about all his supporters.
  Mr. Chairman, let me give a few reasons why I think there are real 
problems with the Stenholm proposal. There are always problems when we 
simply want to turn Government over to a formula for a number of years 
in the future. There are variations in entitlement programs to not 
necessarily reflect the type of formula that the gentleman from Texas 
[Mr. Stenholm] is using. If one looks at agriculture programs, the 
variation in cost is likely to be governed by the weather, not by CPI 
or participants or a variety of other factors, but either weather or 
maybe imports will impact what the cost of that program is as 
deficiency payments go up and down with the cost of products.
  There are other programs where the costs vary from year to year based 
on the calendar, because if a payment comes on Saturday, in some years 
we will make 11 payments and in other years we will make 13, and all 
those kinds of variations exist as we try and take a very complex 
system and make it fit a formula. However, I expect those kinds of 
things could even be worked out.
  My fundamental problem, Mr. Chairman, with this proposal which would 
reduce entitlements by $150 billion over 5 years, $83 billion over 4 
years, is they fundamentally have to come from health care. As we look 
to the future of whether growth is above CPI, above case load, it is 
fundamentally in health care.
  Mr. Chairman, we are in effect prejudging the health care debate that 
hopefully will occur within the next 2 or 3 years, where this Congress 
faces some fundamental choices: Do we take some savings from health 
care, and all the proposals do, whether it is those that are to be 
merged from the various committees in the House or Senate, or the 
Chafee plan or the Dole plan, or I think the plan of the gentleman from 
Tennessee [Mr. Cooper], and I expect some other plans, all of them take 
savings from the existing health care programs to provide additional 
access to health care, whether it is universal or a partial expansion 
of coverage, particularly for those of us who are supporting universal 
coverage.
  Fundamental to that belief is the belief that if we are going to 
control long-term health care costs, we need a system with everyone in 
it; that there are mechanisms, some of those supported by my friend, 
the gentleman from Texas, which might reduce health care costs somewhat 
in the short term but in the long term would not produce the 
fundamental savings we need, because in the long term we need to have 
much more comprehensive coverage of people in this health care system 
or the costs keep escalating, or when we make these savings we simply 
transfer costs from the public to the private sector, or we simply do 
not reduce costs of the plan but we simply switch costs from the public 
to the beneficiary sector.
  Mr. Chairman, we are in effect prejudging what should be a very 
fundamental debate on health care in the next few weeks by passing this 
amendment today.

                              {time}  1540

  There are technical problems, but more importantly it would again 
prejudge the very important debate that we are going to have on health 
care and how we control the most fundamental entitlement cost that is 
growing faster than inflation in our program.
  Mr. Chairman, I urge a no vote at this point.
  The CHAIRMAN. The question is on the amendment in the nature of a 
substitute offered by the gentleman from Texas [Mr. Stenholm].
  The question was taken; and the Chairman announced that the noes 
appeared to have it.


                             recorded vote

  Mr. STENHOLM. Mr. Chairman, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 37, 
noes 392, not voting 10, as follows:

                             [Roll No. 344]

                                AYES--37

     Andrews (NJ)
     Bacchus (FL)
     Barton
     Bateman
     Browder
     Cardin
     Deal
     Dooley
     Geren
     Grandy
     Hansen
     Hutto
     Inglis
     Johnson (CT)
     Johnson (GA)
     Lambert
     LaRocco
     Lloyd
     Long
     Margolies-Mezvinsky
     McHale
     McMillan
     Meehan
     Minge
     Montgomery
     Orton
     Parker
     Penny
     Pickle
     Sangmeister
     Schaefer
     Shays
     Skaggs
     Stenholm
     Torricelli
     Valentine
     Visclosky

                               NOES--392

     Abercrombie
     Ackerman
     Allard
     Andrews (ME)
     Andrews (TX)
     Applegate
     Archer
     Armey
     Bachus (AL)
     Baesler
     Baker (CA)
     Baker (LA)
     Ballenger
     Barca
     Barcia
     Barlow
     Barrett (NE)
     Barrett (WI)
     Bartlett
     Becerra
     Beilenson
     Bentley
     Bereuter
     Berman
     Bevill
     Bilbray
     Bilirakis
     Bishop
     Blackwell
     Bliley
     Blute
     Boehlert
     Boehner
     Bonilla
     Bonior
     Borski
     Boucher
     Brewster
     Brooks
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Bryant
     Bunning
     Burton
     Buyer
     Byrne
     Callahan
     Calvert
     Camp
     Canady
     Cantwell
     Castle
     Chapman
     Clay
     Clayton
     Clement
     Clinger
     Clyburn
     Coble
     Coleman
     Collins (GA)
     Collins (IL)
     Collins (MI)
     Combest
     Condit
     Conyers
     Cooper
     Coppersmith
     Costello
     Cox
     Coyne
     Cramer
     Crane
     Crapo
     Cunningham
     Danner
     Darden
     de la Garza
     de Lugo (VI)
     DeFazio
     DeLauro
     DeLay
     Dellums
     Derrick
     Deutsch
     Diaz-Balart
     Dickey
     Dicks
     Dingell
     Dixon
     Doolittle
     Dornan
     Dreier
     Duncan
     Dunn
     Durbin
     Edwards (CA)
     Edwards (TX)
     Ehlers
     Emerson
     Engel
     English
     Eshoo
     Evans
     Everett
     Ewing
     Farr
     Fawell
     Fazio
     Fields (LA)
     Fields (TX)
     Filner
     Fingerhut
     Fish
     Flake
     Foglietta
     Ford (TN)
     Fowler
     Frank (MA)
     Franks (CT)
     Franks (NJ)
     Frost
     Furse
     Gallegly
     Gejdenson
     Gekas
     Gephardt
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Gingrich
     Glickman
     Gonzalez
     Goodlatte
     Goodling
     Gordon
     Goss
     Grams
     Green
     Greenwood
     Gunderson
     Gutierrez
     Hall (OH)
     Hall (TX)
     Hamburg
     Hamilton
     Hancock
     Harman
     Hastert
     Hastings
     Hayes
     Hefley
     Hefner
     Herger
     Hilliard
     Hinchey
     Hoagland
     Hobson
     Hochbrueckner
     Hoekstra
     Hoke
     Holden
     Horn
     Houghton
     Hoyer
     Hughes
     Hunter
     Hutchinson
     Hyde
     Inhofe
     Inslee
     Istook
     Jacobs
     Jefferson
     Johnson (SD)
     Johnson, E. B.
     Johnson, Sam
     Johnston
     Kanjorski
     Kaptur
     Kasich
     Kennedy
     Kennelly
     Kildee
     Kim
     King
     Kingston
     Kleczka
     Klein
     Klink
     Klug
     Knollenberg
     Kolbe
     Kopetski
     Kreidler
     Kyl
     LaFalce
     Lancaster
     Lantos
     Laughlin
     Lazio
     Leach
     Lehman
     Levin
     Levy
     Lewis (CA)
     Lewis (FL)
     Lewis (GA)
     Lewis (KY)
     Lightfoot
     Linder
     Lipinski
     Livingston
     Lowey
     Lucas
     Machtley
     Maloney
     Mann
     Manton
     Manzullo
     Markey
     Martinez
     Matsui
     Mazzoli
     McCandless
     McCloskey
     McCollum
     McCrery
     McCurdy
     McDade
     McDermott
     McHugh
     McInnis
     McKeon
     McKinney
     McNulty
     Meek
     Menendez
     Meyers
     Mfume
     Mica
     Michel
     Miller (CA)
     Miller (FL)
     Mineta
     Mink
     Moakley
     Molinari
     Mollohan
     Moorhead
     Moran
     Morella
     Murphy
     Murtha
     Myers
     Nadler
     Neal (MA)
     Neal (NC)
     Norton (DC)
     Nussle
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Oxley
     Packard
     Pallone
     Pastor
     Paxon
     Payne (NJ)
     Payne (VA)
     Pelosi
     Peterson (FL)
     Peterson (MN)
     Petri
     Pickett
     Pombo
     Pomeroy
     Porter
     Portman
     Poshard
     Price (NC)
     Pryce (OH)
     Quillen
     Quinn
     Rahall
     Ramstad
     Rangel
     Ravenel
     Reed
     Regula
     Reynolds
     Richardson
     Ridge
     Roberts
     Roemer
     Rogers
     Rohrabacher
     Romero-Barcelo (PR)
     Rose
     Rostenkowski
     Roth
     Roukema
     Rowland
     Roybal-Allard
     Royce
     Rush
     Sabo
     Sanders
     Santorum
     Sarpalius
     Sawyer
     Saxton
     Schenk
     Schiff
     Schroeder
     Schumer
     Scott
     Sensenbrenner
     Serrano
     Sharp
     Shaw
     Shepherd
     Shuster
     Sisisky
     Skeen
     Skelton
     Slattery
     Slaughter
     Smith (IA)
     Smith (MI)
     Smith (NJ)
     Smith (OR)
     Smith (TX)
     Snowe
     Solomon
     Spence
     Spratt
     Stark
     Stearns
     Stokes
     Strickland
     Studds
     Stump
     Stupak
     Sundquist
     Swett
     Swift
     Synar
     Talent
     Tanner
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Tejeda
     Thomas (WY)
     Thompson
     Thornton
     Thurman
     Torkildsen
     Torres
     Towns
     Traficant
     Unsoeld
     Upton
     Velazquez
     Vento
     Volkmer
     Vucanovich
     Walker
     Walsh
     Waters
     Watt
     Waxman
     Weldon
     Wheat
     Whitten
     Williams
     Wilson
     Wise
     Wolf
     Woolsey
     Wyden
     Wynn
     Yates
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                             NOT VOTING--10

     Carr
     Faleomavaega (AS)
     Ford (MI)
     Gallo
     Huffington
     Ros-Lehtinen
     Thomas (CA)
     Tucker
     Underwood (GU)
     Washington

                              {time}  1559

  Messrs. SMITH of Iowa, de la GARZA, ALLARD, McINNIS, HORN, PACKARD, 
SMITH of Michigan, and PAYNE of Virginia changed their vote from 
``aye'' to ``no.''
  So the amendment in the nature of a substitute was rejected.
  The result of the vote was announced as above recorded.
  The CHAIRMAN. It is now in order to consider amendment No. 3 printed 
in House Report 103-614.


     amendment in the nature of a substitute offered by mr. stupak

  Mr. STUPAK. Mr. Chairman, I offer an amendment in the nature of a 
substitute.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment in the nature of a substitute is as 
follows:

       Amendment in the nature of a substitute offered by Mr. 
     Stupak:
       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE; PURPOSE.

       (a) Short Title.--This Act may be cited as the ``Budget 
     Control Act of 1994''.
       (b) Purpose.--The purpose of this Act is to create a 
     mechanism to monitor total costs of direct spending programs, 
     and, in the event that actual or projected costs exceed 
     targeted levels, to require the President and Congress to 
     address adjustments in direct spending.

     SEC. 2. ESTABLISHMENT OF DIRECT SPENDING TARGETS.

       (a) In General.--The initial direct spending targets for 
     each of fiscal years 1994 through 1997 shall equal total 
     outlays for all direct spending except net interest and 
     deposit insurance as determined by the Director of the Office 
     of Management and Budget (hereinafter referred to in this Act 
     as the ``Director``) under subsection (b).
       (b) Initial Report by Director.--
       (1) Not later than 30 days after the date of enactment of 
     this Act, the Director shall submit a report to Congress 
     setting forth projected direct spending targets for each of 
     fiscal years 1994 through 1997.
       (2) The Director's projections shall be based on 
     legislation enacted as of 5 days before the report is 
     submitted under paragraph (1). To the extent feasible, the 
     Director shall use the same economic and technical 
     assumptions used in preparing the concurrent resolution on 
     the budget for fiscal year 1994 (H. Con. Res. 64, One Hundred 
     Third Congress).
       (c) Adjustments.--Direct spending targets shall be 
     subsequently adjusted by the Director under section 6.

     SEC. 3. ANNUAL REVIEW OF DIRECT SPENDING AND RECEIPTS BY 
                   PRESIDENT.

       As part of each budget submitted under section 1105(a) of 
     title 31, United States Code, the President shall provide an 
     annual review of direct spending and receipts, which shall 
     include (1) information supporting the adjustment of direct 
     spending targets pursuant to section 6, (2) information on 
     total outlays for programs covered by the direct spending 
     targets, including actual outlays for the prior fiscal year 
     and projected outlays for the current fiscal year and the 5 
     succeeding fiscal years, and (3) information on the major 
     categories of Federal receipts, including a comparison 
     between the levels of those receipts and the levels projected 
     as of the date of enactment of this Act.

     SEC. 4. SPECIAL DIRECT SPENDING MESSAGE BY PRESIDENT.

       (a) Trigger.--In the event that the information submitted 
     by the President under section 3 indicates --
       (1) that actual outlays for direct spending in the prior 
     fiscal year exceeded the applicable direct spending target, 
     or
       (2) that outlays for direct spending for the current or 
     budget year are projected to exceed the applicable direct 
     spending targets,
     the President shall include in his budget a special direct 
     spending message meeting the requirements of subsection (b).
       (b) Contents.--(1) The special direct spending message 
     shall include:
       (A) An explanation of any adjustments to the direct 
     spending targets pursuant to section 6.
       (B) An analysis of the variance in direct spending over the 
     adjusted direct spending targets.
       (C) The President's recommendations for addressing the 
     direct spending overages, if any, in the prior, current, or 
     budget year.
       (2) The President's recommendations may consist of any of 
     the following:
       (A) Proposed legislative changes to reduce outlays, 
     increase revenues, or both, in order to recoup or eliminate 
     the overage for the prior, current, and budget years in the 
     current year, the budget year, and the 4 outyears.
       (B) Proposed legislative changes to reduce outlays, 
     increase revenues, or both, in order to recoup or eliminate 
     part of the overage for the prior, current, and budget year 
     in the current year, the budget year, and the 4 outyears, 
     accompanied by a finding by the President that, because of 
     economic conditions or for other specified reasons, only some 
     of the overage should be recouped or eliminated by outlay 
     reductions or revenue increases, or both.
       (C) A proposal to make no legislative changes to recoup or 
     eliminate any overage, accompanied by a finding by the 
     President that, because of economic conditions or for other 
     specified reasons, no legislative changes are warranted.
       (3) Except as provided by paragraph (4), any proposed 
     legislative change under paragraph (2) to reduce outlays may 
     include reductions in direct spending or in the discretionary 
     spending limits under section 601 of the Congressional Budget 
     Act of 1974.
       (4) The President's recommendations may not consist of any 
     proposed legislative changes to reduce benefits under the 
     old-age, survivors, and disability insurance program 
     established under title II of the Social Security Act.
       (c) Proposed Special Direct Spending Resolution.--
       (1) President's recommendations to be submitted as draft 
     resolution.--If the President recommends reductions 
     consistent with subsection (b)(2)(A) or (B), the special 
     direct spending message shall include the text of a special 
     direct spending resolution implementing the President's 
     recommendations through reconciliation directives instructing 
     the appropriate committees of the House of Representatives 
     and Senate to determine and recommend changes in laws within 
     their jurisdictions to reduce outlays or increase revenues by 
     specified amounts. If the President recommends no reductions 
     pursuant to (b)(2)(C), the special direct spending message 
     shall include the text of a special resolution concurring in 
     the President's recommendation of no legislative action.
       (2) Resolution to be introduced in house.--Within 10 days 
     after the President's special direct spending message is 
     submitted, the text required by paragraph (1) shall be 
     introduced as a concurrent resolution in the House of 
     Representatives by the chairman of the Committee on the 
     Budget of the House of Representatives without substantive 
     revision. If the chairman fails to do so, after the tenth day 
     the resolution may be introduced by any Member of the House 
     of Representatives. A concurrent resolution introduced under 
     this paragraph shall be referred to the Committee on the 
     Budget.

     SEC. 5. REQUIRED RESPONSE BY CONGRESS.

       (a) Requirement for Special Direct Spending Resolution.--
     Whenever the President submits a special direct spending 
     message under section 4, the Committee on the Budget of the 
     House of Representatives shall report, not later than April 
     15, the concurrent resolution on the budget and include in it 
     a separate title that meets the requirements of subsections 
     (b) and (c).
       (b) Contents of Separate Title.--The separate title of the 
     concurrent resolution on the budget shall contain 
     reconciliation directives to the appropriate committees of 
     the House of Representatives and Senate to determine and 
     recommend changes in laws within their jurisdictions to 
     reduce outlays or increase revenues by specified amounts 
     (which in total equal or exceed the reductions recommended by 
     the President, up to the amount of the overage). If this 
     separate title recommends that no legislative changes be made 
     to recoup or eliminate an overage, then a statement to that 
     effect shall be set forth in that title.
       (c) Requirement for Separate Vote to Increase Targets.--If 
     the separate title of a concurrent resolution on the budget 
     proposes to recoup or eliminate less than the entire overage 
     for the prior, current, and budget years, then the Committee 
     on the Budget of the House of Representatives shall report a 
     resolution directing the Committee on Government Operations 
     to report legislation increasing the direct spending targets 
     for each applicable year by the full amount of the overage 
     not recouped or eliminated. It shall not be in order in the 
     House of Representatives to consider that concurrent 
     resolution on the budget until the House of Representatives 
     has agreed to the resolution directing the increase in direct 
     spending targets.
       (d) Conference Reports Must Fully Address Overage.--It 
     shall not be in order in the House of Representatives to 
     consider a conference report on a concurrent resolution on 
     the budget unless that conference report fully addresses the 
     entirety of any overage contained in the applicable report of 
     the President under section 4 through reconciliation 
     directives requiring spending reductions, revenue increases, 
     or changes in the direct spending targets.
       (e) Procedure if House Budget Committee Fails to Report 
     Required Resolution.--
       (1) Automatic discharge of house budget committee.--If a 
     special direct spending resolution is required and the 
     Committee on the Budget of the House of Representatives fails 
     to report a resolution meeting the requirements of 
     subsections (b) and (c) by April 15, then the committee shall 
     be automatically discharged from further consideration of the 
     concurrent resolution reflecting the President's 
     recommendations introduced pursuant to section 4(c)(2) and 
     the concurrent resolution shall be placed on the appropriate 
     calendar.
       (2) Consideration by house.--Ten days after the Committee 
     on the Budget of the House of Representatives has been 
     discharged under paragraph (1), any Member may move that the 
     House proceed to consider the resolution. Such motion shall 
     be highly privileged and not debatable.
       (f) Application of Congressional Budget Act.--To the extent 
     that they are relevant and not inconsistent with this Act, 
     the provisions of title III of the Congressional Budget Act 
     of 1974 shall apply in the House of Representatives and the 
     Senate to special direct spending resolutions, resolutions 
     increasing targets under subsection (c), and reconciliation 
     legislation reported pursuant to directives contained in 
     those resolutions.
       (g) Limitation on Changes to the Social Security Act.--
     Notwithstanding any other provision of law, it shall not be 
     in order in the Senate or the House of Representatives to 
     consider any reconciliation bill reported pursuant to a 
     concurrent resolution on the budget agreed to under section 
     301 or 304 or reconciliation legislation reported pursuant to 
     directives contained in any special direct spending 
     resolution, or any amendment thereto or conference report 
     thereon, that contains recommendations to reduce benefits 
     under the old-age, survivors, and disability insurance 
     program established under title II of the Social Security 
     Act.

     SEC. 6. ADJUSTMENTS TO DIRECT SPENDING TARGETS.

       (a) Required Annual Adjustments.--Prior to the submission 
     of the President's budget for each of fiscal years 1994 
     through 1997, the Director shall adjust the direct spending 
     targets in accordance with this section. Any such adjustments 
     shall be reflected in the targets used in the President's 
     report under section 3 and message (if any) under section 4.
       (b) Adjustment for Increases in Beneficiaries.--(1) The 
     Director shall adjust the direct spending targets for 
     increases (if any) in actual or projected numbers of 
     beneficiaries under direct spending programs for which the 
     number of beneficiaries is a variable in determining costs.
       (2) The adjustment shall be made by--
       (A) computing, for each program under paragraph (1), the 
     percentage change between (i) the annual average number of 
     beneficiaries under that program (including actual numbers of 
     beneficiaries for the prior fiscal year and projections for 
     the budget and subsequent fiscal years) to be used in the 
     President's budget with which the adjustments will be 
     submitted, and (ii) the annual average number of 
     beneficiaries used in the adjustments made by the Director in 
     the previous year (or, in the case of adjustments made in 
     1994, the annual average number of beneficiaries used in the 
     Director's initial report under section 2(b));
       (B) applying the percentages computed under subparagraph 
     (A) to the projected levels of outlays for each program 
     consistent with the direct spending targets in effect 
     immediately prior to the adjustment; and
       (C) adding the results of the calculations required by 
     subparagraph (B) to the direct spending targets in effect 
     immediately prior to the adjustment.
       (3) No adjustment shall be made for any program for a 
     fiscal year in which the percentage increase computed under 
     paragraph (2)(A) is less than or equal to zero.
       (c) Adjustments for Revenue Legislation.--(1) The Director 
     shall adjust the targets as follows--
       (A) they shall be increased by the amount of any increase 
     in receipts; or
       (B) they shall be decreased by the amount of any decrease 
     in receipts,

     resulting from receipts legislation enacted after the date of 
     enactment of this Act, except legislation enacted under 
     section 5.
       (d) Adjustments to Reflect Congressional Decisions.--Upon 
     enactment of a reconciliation bill pursuant to instructions 
     under section 5, the Director shall adjust direct spending 
     targets for the current year, the budget year, and each 
     outyear through 1997 by--
       (1) increasing the target for the current year and the 
     budget year by the amount stated for that year in that 
     reconciliation bill (but if a separate vote was required by 
     section 5(c), only if that vote has occurred); and
       (2) decreasing the target for the current, budget, and 
     outyears through 1997 by the amount of reductions in direct 
     spending enacted in that reconciliation bill.
       (e) Designated Emergencies.--The Director shall adjust the 
     targets to reflect the costs of legislation that is 
     designated as an emergency by Congress and the President 
     under section 252(b) of the Balanced Budget and Emergency 
     Deficit Control Act of 1985.

     SEC. 7. RELATIONSHIP TO BALANCED BUDGET AND EMERGENCY DEFICIT 
                   CONTROL ACT.

       Reductions in outlays or increases in receipts resulting 
     from legislation reported pursuant to section 5 shall not be 
     taken into account for purposes of any budget enforcement 
     procedures under the Balanced Budget and Emergency Deficit 
     Control Act of 1985.

     SEC. 8. ESTIMATING MARGIN.

       For any fiscal year for which the overage is less than one-
     half of 1 percent of the direct spending target for that 
     year, the procedures set forth in sections 4 and 5 shall not 
     apply.

     SEC. 9. CONSIDERATION OF APPROPRIATION BILLS.

       (a) Point of Order.--It shall not be in order in the House 
     of Representatives to consider any general appropriation bill 
     if the President has submitted a direct spending message 
     under section 4 until Congress has adopted a concurrent 
     resolution on the budget for the budget year that meets the 
     requirements of section 5.
       (b) Waiver.--The point of order established by subsection 
     (a) may only be waived for all general appropriation bills 
     for that budget year through the adoption of one resolution 
     waiving that point of order.

     SEC. 10. MEANS-TESTED PROGRAMS.

       In making recommendations under sections 4 and 5, the 
     President and the Congress should seriously consider all 
     other alternatives before proposing reductions in means-
     tested programs.

     SEC. 11. EFFECTIVE DATE.

       This Act shall apply to direct spending targets for fiscal 
     years 1994 through 1997 and shall expire at the end of fiscal 
     year 1997.


                         parliamentary inquiry

  Mr. SOLOMON. Mr. Chairman, for the benefit of the Members, I am 
trying to ascertain under the rule, this amendment that is being called 
up now, and as I understand it, this amendment is identical to the 
basic text of the bill.
  The CHAIRMAN. That is the understanding of the Chair.
  Mr. SOLOMON. And since the Kasich amendment was defeated and the 
Stenholm amendment was defeated, then there is no need to have this 
amendment called up and voted on since it is identical to what is 
already there, and it would be an act of duplication.
  The CHAIRMAN. The amendment is in order under the rule, and the Chair 
would not offer comment on the gentleman's remarks.
  Mr. SOLOMON. I hope the gentleman is not going to take up the time of 
the House to debate an amendment that is already there, because we 
would object to him withdrawing it if he attempted to.
  The CHAIRMAN. The gentleman is not stating a parliamentary inquiry.
  Pursuant to the rule, the gentleman from Michigan [Mr. Stupak] will 
be recognized for 20 minutes, and the gentleman from Florida [Mr. Goss] 
will be recognized for 20 minutes.
  The Chairman recognizes the gentleman from Michigan [Mr. Stupak].
  Mr. STUPAK. Mr. Chairman, I yield myself such time as I may consume.
  (Mr. STUPAK asked and was given permission to revise and extend his 
remarks.)
  Mr. STUPAK. Mr. Chairman, I am pleased to join with my friend, the 
gentleman from South Carolina [Mr. Spratt], to offer this Spratt-Stupak 
substitute. This substitute is a concept that this House previously 
debated and endorsed during the budget debate of 1993.
  Although the vote may have been close back then, no one can deny the 
favorable reaction of the bond and stock markets to our tough but 
fiscally responsible vote.
  Unfortunately the elements of the executive order in the budget bill 
were knocked out in the Senate version of the budget deficit reduction 
package under the Byrd rule. Therefore, it is necessary that we, the 
House, once again bring back fiscal responsibility, fiscal control, to 
the budget process.
  The Spratt-Stupak substitute will place budgetary growth caps on 
entitlement programs. Our substitute provides that growth in 
entitlement spending cannot exceed the target amount by one-half 
percent. Therefore, if the entitlement growth exceeds the target by 
one-half percent, then the President must make a recommendation to the 
Congress, and the Congress, under our substitute, has three options. We 
can cut spending including discretionary spending, we can raise 
revenue, or we can vote to increase the entitlement cap.
  The Spratt-Stupak substitute will make each entitlement program 
subject to the entitlement cap except one program, and that program 
being Social Security benefits that provides old age, survivor, and 
disability benefits.
  Under our substitute, we exempt Social Security, so let us make no 
mistake about it, that Social Security dependents, senior citizens, 
depend on their Social Security. In 1993, there were 42.2 million 
Social Security beneficiaries.
  In my district alone in northern Michigan, there were 130,000 
recipients. About 25 percent of all Social Security recipients rely on 
Social Security for at least 90 percent of their retirement income. For 
60 percent of our older Americans, Social Security comprises at least 
one-half of their retirement income.
  Social Security has significantly reduced the poverty rate for older 
Americans. Before Social Security, older Americans were the largest 
segment of our Nation's poor. Without Social Security, 8.4 million 
seniors would be pushed below the poverty line, and many more would be 
near the poverty line.
  Social Security is different from the other entitlement programs that 
we seek to cap today. Social Security is not only a commitment to older 
Americans but a social compact at the core of our social insurance 
system. It is a long-term compact between every American citizen and 
the U.S. Government.
  Every working American pays into the Social Security tax that 
contributes to the system. They have the right to expect that their 
investment will be there when they retire.
  Congress must not threaten this compact with the American citizens in 
order to meet short-term budget requirements. Social Security is not an 
entitlement but, rather, it is an earned benefit; people work and pay 
into it with the promise that they will receive money back when they 
retire. We cannot, and we should not, renege on this promise. People 
plan their lives around Social Security and expect it to be there when 
they retire. They do not expect short-term budget hits or Washington 
budget games to tamper with Social Security. Social Security is a long-
term program, and we need a long-term, phased-in solution to some of 
the problems that we do face in Social Security.

                              {time}  1610

  Unlike other mandatory programs, Social Security is a self-sustaining 
program. Presently, Social Security has over $400 billion in its 
reserves and is expected to grow an additional $55 billion next year.
  Under our substitute, we want to keep Social Security out of the 
budget-driven reconciliation process, as Congress has done in the past 
under the Gramm-Rudman-Hollings Act of 1985, under the 1991 Omnibus 
Reconciliation Act and under the 1993 Omnibus Reconciliation Act.
  If we do not pass this amendment, we create ambiguity about how we 
are going to treat Social Security in the process. This substitute will 
remove any ambiguity. This amendment would follow through with the 
Congress' commitment to keep Social Security off budget.
  Mr. Chairman, let us remove Social Security benefits from the fickle 
budget process. Let us protect our senior citizens, with whom we have a 
sacred compact. Let us keep the trust of our seniors and our word to 
the American people that Social Security will always be there and not 
become a victim of a politically expedient budget debate.
  Let us keep our trust in the faith of our seniors.
  Mr. Chairman, I urge all of my colleagues to vote for the Spratt-
Stupak amendment.
  Mr. Chairman, I reserve the balance of my time.
  Mr. GOSS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, there is not much point in debating this again. We went 
through this in general debate.
  Clearly, we are dealing with a process here that is pretty much 
toothless. What my colleague, Mr. Stupak, is talking about here is a 
partial fix of a problem that was discovered up in the Committee on 
Rules by the minority, that we were getting into a serious problem with 
Social Security, both the benefits and the tax process, in putting it 
back in the mix of entitlements and removing the cloak of separateness 
and protection and special treatment that it has and deserves.
  Unfortunately, the gentleman's proposal only fixes part of the 
problem. We identified the whole problem for them, but they were only 
going to fix part of it. It is true that the benefits of the senior 
citizens are protected, but it is not true that we have fixed the 
taxation part. It is therefore possible that taxes can be raised in the 
area of Social Security, payroll taxes, and those dollars can be used 
for entitlement purposes that are not Social Security purposes.
  Mr. Chairman, that is a very important point, and it is a point that 
apparently this body is sensitive to, judging from the outcome of the 
Stenholm vote which we just saw, which was just a little bit lopsided.
  Mr. Chairman, this is a very, very important issue. I want to say 
that I have got here in my hands--I know people cannot see it--but this 
is a chart from the Entitlement Reform Commission, chart No. 18. It 
shows that in 2 generations if we do not do something about entitlement 
spending, that we will end up with our entitlement spending exceeding 
all of our total revenues available to the Government. That is not very 
far from now.
  So we are right to be doing what we are doing, trying to deal with 
entitlements; but we are wrong to be doing it in this way, because the 
way we are doing it creates some exposure in Social Security and 
partially reneges on a commitment we have made there.
  Second, it does not solve the problem of controlling the expenditure 
spending for entitlements. That is the problem.
  That is what we have been talking about on this side of the aisle all 
day.
  Now, I thought I had understood how this works, but I have got to say 
that perhaps I can get a little bit of illumination from the gentleman 
or any colleague on the other side of the aisle because I have here a 
statement from the office of the doorkeeper, the ``Floor Today'' 
statement, which I will read from, thinking that I had understood this 
process. It goes on to talk about the process.

       The process of monitoring would begin with the President. 
     If the President finds direct spending outlays to be more 
     than .5 percent over the target, she would have to make 
     recommendations to Congress to address the excess spending.

  Mr. SOLOMON. Mr. Chairman, will the gentleman repeat that?
  Mr. GOSS. Yes. ``If the President finds direct spending outlays to be 
more than .5 percent over the target, she would have to make 
recommendations to the Congress to address the excess spending.'' 
Perhaps the gentleman could illuminate. Have we missed something in 
this process that I did not understand?
  Mr. STUPAK. Mr. Chairman, will the gentleman yield?
  Mr. GOSS. I am happy to yield to the gentleman from Michigan.
  Mr. STUPAK. I thank the gentleman from Florida.
  Mr. Chairman, because those of us on this side of the aisle are so 
advanced in our thinking, we realized that some day a lady would be the 
President of the United States, and I hope that the gentleman from 
Florida [Mr. Goss] does not have a problem with that.
  Mr. GOSS. I think that is a wonderful answer.
  Reclaiming my time, I would like to address the gentleman and ask: Is 
it possible that none of this will be in effect until such time as we 
have our first lady President?
  Mr. STUPAK. With the gentleman's positive vote, it will be effective 
much sooner.
  Mr. GOSS. Mr. Chairman, I reserve the balance of my time.
  Mr. STUPAK. Mr. Chairman, I yield 3 minutes to my friend, the 
gentleman from North Dakota [Mr. Pomeroy].
  Mr. POMEROY. I thank the gentleman for yielding this time to me.
  Mr. Chairman, I rise in strong support of the Spratt-Stupak 
substitute, of which I am a cosponsor. When the balanced budget 
amendment was considered by the House earlier this year, I joined in 
offering a version which would have explicitly put Social Security off 
limits.
  We argued at that time that Social Security should not be cut to pay 
for overspending in other areas of Government.
  Today's debate is very similar to that balanced budget debate. Social 
Security is not part of the deficit problem. This year alone, it will 
run a surplus of $60 billion. Huge surpluses, however, will continue to 
be built until into the next century, when every dime of that money, 
every dime will be needed to fund the draw by the future retirees upon 
the Social Security trust fund. Because the Social Security system is 
self-financing, we have no business putting in place today a mechanism 
that could result in benefits being cut. Consideration of cuts and 
benefits should only occur if the fund itself becomes actuarially 
unsound, not because of a raid by other spending programs.
  Everyone here knows that the entitlement spending needs to be brought 
under control, but we also know that comprehensive health care reform 
still remains the single most important deficit reduction tool before 
us, particularly when dealing with entitlement spending.
  Leaving the door open to using Social Security as a temporary 
artificial means to reducing the entitlement spending only makes it 
more difficult to truly reduce entitlement spending.
  I applaud the sponsors of this Senate amendment and urge favorable 
consideration this afternoon.
  Mr. GOSS. Mr. Chairman, it is my understanding that there remains 
just the two authors of the amendment to address this debate, and that 
being the case, I yield myself such time as I may consume and simply 
close on our side by saying that a ``yes'' vote for Spratt-Stupak means 
that you open the door for higher Social Security payroll taxes; a 
``yes'' vote means that, and a ``no'' vote of course means the 
opposite.
  Mr. Chairman, I yield back the balance of our time.
  Mr. STUPAK. Mr. Chairman, I yield myself such time as I may consume 
in order to make one quick comment. Mr. Chairman, what a ``yes'' vote 
does is open up the opportunity for this Congress to address, if there 
is a shortfall in Social Security, through either cuts, through raising 
revenues, or raising entitlement cap. We are giving the options that 
were not, maybe, available in the last substitute, but we are at least 
having three options here.
  It is not so narrowly defined as the gentleman insists.
  Mr. GOSS. Mr. Chairman, will the gentleman yield?
  Mr. STUPAK. I yield to the gentleman.
  Mr. GOSS. I thank the gentleman.
  Mr. Chairman, the reason I say that is because we plan to offer a 
motion to recommit on this subject which will make a full and complete 
remedy of the total problem. We think that is what is deserved. We 
think that is what the people who are interested in the Social Security 
issue want to hear.
  Mr. STUPAK. Mr. Chairman, reclaiming my time, is the gentleman's 
motion to recommit then to raise taxes? Is that his motion to recommit?
  Mr. GOSS. The motion to recommit will be basically to send this back 
to keep Social Security completely out of the direct spending 
reconciliation. We want to get it back to where we all though it was 
when we started this in the Rules Committee and only through the 
diligence of the minority staff were we able to find out, perhaps 
inadvertently and perhaps not, that Social Security had gotten involved 
in this process in the mix.

                              {time}  1620

  We think that is a terrible mistake, but I say to the gentleman, We 
congratulate you for fixing half the problem. We want to fix the whole 
problem, which is why we are offering the motion to recommit.
  Mr. STUPAK. Mr. Chairman, to close debate I yield 3 minutes to the 
gentleman from South Carolina [Mr. Spratt].
  Mr. SPRATT. Mr. Chairman, I thank the gentleman from Michigan [Mr. 
Stupak] for yielding this time to me.
  Mr. Chairman, I think, if we listen to this afternoon's debate, we 
will find more common ground than division despite some divisive 
debate. We all agree that the entitlement spending problem is the 
biggest part of the deficit problem left before us. We all agree that 
in the past we have tended to authorize and forget to put these on 
autopilot in that, when we have adopted reconciliation measures and set 
goals for ourselves for cost reduction, these goals have mostly been 
honored in the breach because they have not been attained. Fortunately, 
Mr. Chairman, this year we have had a change from that pattern, and our 
entitlement spending is below what we projected when we adopted the 
budget reconciliation bill in this House in May 1993, and that is 
positive change.
  Mr. Chairman, this bill would strengthen the process. I would be the 
first to admit that this bill could be stronger than it is. But it is a 
good start on a very, very difficult problem, and I urge Members of the 
House to vote for this bill, and, as we operate under it, and I hope 
the other body will respond in kind and take it up before we adjourn, I 
will also be one of the first to come back here and offer solutions to 
it, improvements to it, to make it work better so we can get our hands 
around the entitlement spending problem, contain these costs, and use 
this measure and others to bring down the budget deficit. I have no 
problem with allowing some sort of provision to be put in the bill with 
respect to payroll taxes because I think it is the most far-fetched 
idea in the world to think that on this side of the aisle, or anywhere 
in this House, we would vote for a payroll tax increase to do anything, 
much less to settle our entitlement reconciliation problems.
  So Mr. Chairman, with that said, I conclude my remarks.
  Mr. SPRATT. Mr. Chairman, I yield back the balance of my time.
  The CHAIRMAN. The question is on the amendment in the nature of a 
substitute offered by the gentleman from Michigan [Mr. Stupak].
  The amendment in the nature of a substitute was agreed to.
  The CHAIRMAN. The question is on the amendment in the nature of a 
substitute, as modified as amended.
  The committee amendment in the nature of a substitute, as modified, 
as amended, was agreed to.
  The CHAIRMAN. Under the rule, the committee rises.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Durbin) having assumed the chair, Mr. Visclosky, chairman of the 
Committee of the Whole House on the State of the Union, reported that 
that Committee, having had under consideration the bill (H.R. 4604) to 
establish direct spending targets, and for other purposes, pursuant to 
House Resolution 484, he reported the bill back to the House with an 
amendment adopted by the Committee of the Whole.
  The SPEAKER pro tempore. Under the rule, the previous question is 
ordered.
  The question is on the amendment.
  The amendment was agreed to.
  The SPEAKER pro tempore. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


                 motion to recommit offered by mr. goss

  Mr. GOSS. Mr. Speaker, I offer a motion to recommit.
  The SPEAKER pro tempore. Is the gentleman opposed to the bill?
  Mr. GOSS. I am, Mr. Speaker.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

       Mr. Goss moves to recommit the bill H.R. 4604 to the 
     Committee on Rules with instructions to report the same back 
     to the House forthwith with the following amendments:
       In section 4(b)(4) strike the words ``to reduce benefits''.
       In section 5(g) strike the words ``to reduce benefits'' and 
     insert in lieu thereof the words ``to make any legislative 
     changes''.

  The SPEAKER pro tempore. The gentleman from Florida [Mr. Goss] is 
recognized for 5 minutes in support of his motion to recommit.
  Mr. GOSS. Mr. Speaker, the motion to recommit I have offered is quite 
simple and should be overwhelmingly adopted. All it does is to make 
sure Social Security remains secure and out of reach of cuts and taxes 
that might be triggered by this bill.
  The Spratt-Stupak amendment went only part way in fixing the problem 
in H.R. 4604 which would have permitted the President to make 
legislative recommendations affecting Social Security to address any 
breach in the direct spending targets. And it would have permitted 
Congress to do the same in reconciliation legislation.
  The Spratt-Stupak substitute changed this so that neither the 
President nor Congress could recommend changes in Social Security as 
part of any direct spending reconciliation legislation. But they left 
the door open for raising Social Security payroll taxes or borrowing 
from the trust fund to offset deficits in other entitlement programs.
  Mr. Speaker, back in 1984, 1985, and 1990, we made a compact with the 
American people to take Social Security off-budget, to prohibit 
throwing it into the reconciliation process, and to build a firewall 
around it so it would be self-sustaining.
  In short, we took it out of politics and out of the budget process 
games that are sometimes played in pitting one program against another. 
We knew that the current surpluses in Social Security would be an 
inviting target for some to use for other purposes, even though those 
surpluses are already spoken for in the next century when the baby 
boomers begin to retire.
  My motion to recommit would ensure that we keep that commitment to 
the American people and to the soundness and integrity of the Social 
Security system--by keeping it out of this new direct spending 
reconciliation process. I urge the overwhelming adoption of my motion.
  The SPEAKER pro tempore. Does any Member seek recognition in 
opposition to the motion?
  Mr. SPRATT. Mr. Speaker, we have no objection to the motion and are 
willing to accept it so long as I can gain an understanding.
  The SPEAKER pro tempore. The Chair recognizes the gentleman from 
South Carolina [Mr. Spratt] for 5 minutes on the motion to recommit.
  Mr. SPRATT. Mr. Speaker, we are willing to accept the motion to 
recommit so long as I can understand that it means that payroll taxes, 
Social Security payroll taxes, are precluded from being used for 
reconciliation in connection with the functioning of this particular 
bill if it is adopted.
  Mr. GOSS. Mr. Speaker, will the gentleman yield?
  Mr. SPRATT. I yield to the gentleman from Florida.
  Mr. GOSS. Mr. Speaker, that is correct, and that would include not 
using those revenues currently available to the Social Security system 
to bail out any other entitlement programs. In other words, keeping the 
whole enterprise funded in the trust fund of Social Security intact, 
untouched, and fully protected from the spending and taxing side, both.
  Mr. SPRATT. Mr. Chairman, we accept the motion to recommit.
  The SPEAKER pro tempore. Without objection, the previous question is 
ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Sperker pro tempore announced that 
the ayes appeared to have it.
  Mr. GOSS. Mr. Chairman, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  The Sergeant at Arms will notify absent Members.
  Pursuant to the provisions of clause 5 of rule XV, the Chair 
announces that he will reduce to a minimum of 5 minutes the period of 
time within which a vote by electronic device, if ordered, will be 
taken on the question of passage.
  The vote was taken by electronic device, and there were--yeas 424, 
nays 0, not voting 10, as follows:

                             [Roll No. 345]

                               YEAS--424

     Abercrombie
     Ackerman
     Allard
     Andrews (ME)
     Andrews (NJ)
     Andrews (TX)
     Applegate
     Archer
     Armey
     Bacchus (FL)
     Bachus (AL)
     Baesler
     Baker (CA)
     Baker (LA)
     Ballenger
     Barca
     Barcia
     Barlow
     Barrett (NE)
     Barrett (WI)
     Bartlett
     Barton
     Bateman
     Becerra
     Beilenson
     Bentley
     Bereuter
     Berman
     Bevill
     Bilbray
     Bilirakis
     Bishop
     Blackwell
     Bliley
     Blute
     Boehlert
     Boehner
     Bonilla
     Bonior
     Borski
     Boucher
     Brewster
     Brooks
     Browder
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Bryant
     Bunning
     Burton
     Buyer
     Byrne
     Callahan
     Calvert
     Camp
     Canady
     Cantwell
     Cardin
     Castle
     Chapman
     Clay
     Clayton
     Clement
     Clinger
     Clyburn
     Coble
     Coleman
     Collins (GA)
     Collins (IL)
     Collins (MI)
     Combest
     Condit
     Conyers
     Cooper
     Coppersmith
     Costello
     Cox
     Coyne
     Cramer
     Crane
     Crapo
     Cunningham
     Danner
     Darden
     de la Garza
     Deal
     DeFazio
     DeLauro
     DeLay
     Dellums
     Derrick
     Deutsch
     Diaz-Balart
     Dickey
     Dicks
     Dingell
     Dixon
     Dooley
     Doolittle
     Dornan
     Dreier
     Duncan
     Dunn
     Durbin
     Edwards (CA)
     Edwards (TX)
     Ehlers
     Emerson
     Engel
     English
     Eshoo
     Evans
     Everett
     Ewing
     Farr
     Fawell
     Fazio
     Fields (LA)
     Fields (TX)
     Filner
     Fingerhut
     Fish
     Flake
     Foglietta
     Ford (TN)
     Fowler
     Frank (MA)
     Franks (CT)
     Franks (NJ)
     Frost
     Furse
     Gallegly
     Gejdenson
     Gekas
     Gephardt
     Geren
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Gingrich
     Glickman
     Gonzalez
     Goodlatte
     Goodling
     Gordon
     Goss
     Grams
     Grandy
     Green
     Greenwood
     Gunderson
     Gutierrez
     Hall (OH)
     Hall (TX)
     Hamburg
     Hamilton
     Hancock
     Hansen
     Harman
     Hastert
     Hastings
     Hayes
     Hefley
     Hefner
     Herger
     Hilliard
     Hinchey
     Hoagland
     Hobson
     Hochbrueckner
     Hoekstra
     Hoke
     Holden
     Horn
     Houghton
     Hoyer
     Hughes
     Hunter
     Hutchinson
     Hutto
     Hyde
     Inglis
     Inhofe
     Inslee
     Istook
     Jacobs
     Jefferson
     Johnson (CT)
     Johnson (GA)
     Johnson (SD)
     Johnson, E. B.
     Johnson, Sam
     Johnston
     Kanjorski
     Kaptur
     Kasich
     Kennedy
     Kennelly
     Kildee
     Kim
     King
     Kingston
     Kleczka
     Klein
     Klink
     Klug
     Knollenberg
     Kolbe
     Kopetski
     Kreidler
     Kyl
     LaFalce
     Lambert
     Lancaster
     Lantos
     LaRocco
     Laughlin
     Lazio
     Leach
     Lehman
     Levin
     Levy
     Lewis (CA)
     Lewis (FL)
     Lewis (GA)
     Lewis (KY)
     Lightfoot
     Linder
     Lipinski
     Livingston
     Lloyd
     Long
     Lowey
     Machtley
     Maloney
     Mann
     Manton
     Manzullo
     Margolies-Mezvinsky
     Markey
     Martinez
     Matsui
     Mazzoli
     McCandless
     McCloskey
     McCollum
     McCrery
     McCurdy
     McDermott
     McHale
     McHugh
     McInnis
     McKeon
     McKinney
     McMillan
     McNulty
     Meehan
     Meek
     Menendez
     Meyers
     Mfume
     Mica
     Michel
     Miller (CA)
     Miller (FL)
     Mineta
     Minge
     Mink
     Moakley
     Molinari
     Mollohan
     Montgomery
     Moorhead
     Moran
     Morella
     Murphy
     Murtha
     Myers
     Nadler
     Neal (MA)
     Neal (NC)
     Nussle
     Oberstar
     Obey
     Olver
     Ortiz
     Orton
     Owens
     Oxley
     Packard
     Pallone
     Parker
     Pastor
     Paxon
     Payne (NJ)
     Payne (VA)
     Pelosi
     Penny
     Peterson (FL)
     Peterson (MN)
     Petri
     Pickett
     Pickle
     Pombo
     Pomeroy
     Porter
     Portman
     Poshard
     Price (NC)
     Pryce (OH)
     Quillen
     Quinn
     Rahall
     Ramstad
     Rangel
     Ravenel
     Reed
     Regula
     Reynolds
     Richardson
     Ridge
     Roberts
     Roemer
     Rogers
     Rohrabacher
     Rose
     Rostenkowski
     Roth
     Roukema
     Rowland
     Roybal-Allard
     Royce
     Rush
     Sabo
     Sanders
     Sangmeister
     Santorum
     Sarpalius
     Sawyer
     Saxton
     Schaefer
     Schenk
     Schiff
     Schroeder
     Schumer
     Scott
     Sensenbrenner
     Serrano
     Sharp
     Shaw
     Shays
     Shepherd
     Shuster
     Sisisky
     Skaggs
     Skeen
     Skelton
     Slattery
     Slaughter
     Smith (IA)
     Smith (MI)
     Smith (NJ)
     Smith (OR)
     Smith (TX)
     Snowe
     Solomon
     Spence
     Spratt
     Stark
     Stearns
     Stenholm
     Stokes
     Strickland
     Studds
     Stump
     Stupak
     Sundquist
     Swett
     Swift
     Synar
     Talent
     Tanner
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Tejeda
     Thomas (CA)
     Thomas (WY)
     Thompson
     Thornton
     Thurman
     Torkildsen
     Torres
     Torricelli
     Towns
     Traficant
     Unsoeld
     Upton
     Valentine
     Velazquez
     Vento
     Visclosky
     Volkmer
     Vucanovich
     Walker
     Walsh
     Waters
     Watt
     Waxman
     Wheat
     Whitten
     Williams
     Wilson
     Wise
     Wolf
     Woolsey
     Wyden
     Wynn
     Yates
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                             NOT VOTING--10

     Carr
     Ford (MI)
     Gallo
     Huffington
     Lucas
     McDade
     Ros-Lehtinen
     Tucker
     Washington
     Weldon

                              {time}  1649

  Mrs. SCHROEDER, Messrs. MARTINEZ, MURPHY, OWENS, and SKAGGS, Ms. 
WATERS, and Mr. OBERSTAR changed their vote from ``nay'' to ``yea.''
  So the motion to recommit was agreed to.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________