[House Report 107-252]
[From the U.S. Government Publishing Office]



107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    107-252

======================================================================



 
    PROVIDING FOR CONSIDERATION OF H.R. 3090, ECONOMIC SECURITY AND 
                          RECOVERY ACT OF 2001

                                _______
                                

  October 23, 2001.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

    Mr. Linder, from the Committee on Rules, submitted the following

                              R E P O R T

                       [To accompany H. Res. 270]

    The Committee on Rules, having had under consideration 
House Resolution 270, by a nonrecord vote, report the same to 
the House with the recommendation that the resolution be 
adopted.

                summary of provisions of the resolution

    The resolution provides for consideration in the House of 
H.R. 3090, the Economic Security and Recovery Act of 2001, 
under a modified closed rule. The rule provides one hour of 
debate equally divided and controlled by the chairman and 
ranking minority member of the Committee on Ways and Means. The 
rule waives all points of order against consideration of the 
bill.
    The rule provides that the amendment recommended by the 
Committee on Ways and Means now printed in the bill shall be 
considered as adopted. The rule further provides for 
consideration of the amendment in the nature of a substitute 
printed in this report, if offered by Representative Rangel or 
his designee, which shall be considered as read and shall be 
separately debatable for one hour equally divided and 
controlled by the proponent and an opponent. The rule waives 
all points of order against the amendment in the nature of a 
substitute. Finally, the rule provides one motion to recommit 
with or without instructions.
    The waiver of all points of order includes a waiver of 
section 302 of the Congressional Budget Act of 1974 
(prohibiting consideration of legislation providing new budget 
authority in excess of a committee's allocation of such 
authority) and section 401(b) of the Congressional Budget Act 
of 1974 (prohibiting consideration of legislation, as reported, 
providing new entitlement authority which becomes effective 
during the current fiscal year).
    The waivers of section 302 and 401 are necessary because 
Title V of the bill not only expands health benefits to the 
unemployed, thus providing new entitlement authority for the 
current fiscal year, but it does so in excess of the 
Committee's budget authority for the current fiscal year.

           summary of amendment made in order under the rule

    (Summary derived from information provided by sponsor.)
    Rangel--Democratic Substitute. Provides a rebate of $600 
for joint filers ($500 for heads-of-household, $300 for single 
filers), reduced by any rebate already received, to individuals 
who filed tax returns for taxable year 2000 and who did not 
receive the maximum rebate from the recently-enacted bill. 
Dependent and non-resident aliens would not be eligible. 
Extends for one year all tax provisions that expire this year. 
Provides tax provisions to create $11 billion in interest-free 
financing for school construction and repair. Provides a five-
year carryback of NOLs for taxable years 2001 or 2002 and 
waives the 90% AMT limitations in determining the portion of 
those losses allowed during the carryback period. Increases 
Sec. 179 expensing for taxable years 2001 and 2002 from $25,000 
to $50,000 and increases the point at which the phaseout of 
Sec. 197 expensing begins from $200,000 to $400,000 for those 
taxable years. Waives, for taxable years 2001 and 2002, the 90% 
AMT limitations on loss carryovers for those years and on the 
allowance of the foreign tax credit. Provides assistance to 
individuals suffering disproportionately large tax liabilities 
due to the exercise of incentive stock options. Provides a one-
year expansion of unemployment benefits that would provide up 
to an additional 26 weeks of benefits to those exhausting their 
rights to regular benefits, provides coverage to certain 
unemployed workers not currently covered by the system, and 
increases all unemployment benefits to the greater of 25% or 
$65 per week. Creates a temporary one-year program providing 
federal payment of 75% of COBRA continuation costs, and 
provides states with an enhanced match to offer Medicaid 
coverage to certain low-income unemployed individuals and their 
families. Provides a revenue offset freezing the top rate at 
38.6%. Creates a trust fund setting aside resources for the 
portions of the Task Force recommendations that are outside the 
jurisdiction of the Committee on Ways and Means, such as 
community redevelopment efforts and public security and 
infrastructure improvements.

             text of amendment made in order under the rule

 An Amendment To Be Offered by Representative Rangel of New York, or a 
                   Designee; Debatable for 60 Minutes

  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE, ETC.

  (a) Short Title.--This Act may be cited as the ``Fiscal 
Stimulus and Worker Relief Act of 2001''.
  (b) References to Internal Revenue Code of 1986.--Except as 
otherwise expressly provided, whenever in this Act an amendment 
or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be 
considered to be made to a section or other provision of the 
Internal Revenue Code of 1986.
  (c) Table of Contents.--The table of contents for this Act is 
as follows:

Sec. 1. Short title, etc.

                         TITLE I--TAX PROVISIONS

                     Subtitle A--Supplemental Rebate

Sec. 101. Supplemental rebate.

          Subtitle B--Extensions of Certain Expiring Provisions

Sec. 111. Allowance of nonrefundable personal credits against regular 
          and minimum tax liability.
Sec. 112. Credit for qualified electric vehicles.
Sec. 113. Credit for electricity produced from renewable resources.
Sec. 114. Work Opportunity Credit.
Sec. 115. Welfare-to-Work credit.
Sec. 116. Deduction for clean-fuel vehicles and certain refueling 
          property.
Sec. 117. Taxable income limit on percentage depletion for oil and 
          natural gas produced from marginal properties.
Sec. 118. Qualified zone academy bonds.
Sec. 119. Cover over of tax on distilled spirits.
Sec. 120. Parity in the application of certain limits to mental health 
          benefits.
Sec. 121. Delay in effective date of requirement for approved diesel or 
          kerosene terminals.

                      Subtitle C--Other Provisions

Sec. 131. Alternative minimum tax relief with respect to incentive stock 
          options exercised during 2000.
Sec. 132. Carryback for 2001 and 2002 net operating losses allowed for 5 
          years.
Sec. 133. Temporary increase in expensing under section 179.
Sec. 134. Temporary waiver of 90 percent AMT limitations.
Sec. 135. Expansion of incentives for public schools.

                         TITLE II--WORKER RELIEF

             Subtitle A--Temporary Unemployment Compensation

Sec. 201. Short title.
Sec. 202. Federal-State agreements.
Sec. 203. Temporary Supplemental Unemployment Compensation Account.
Sec. 204. Payments to States having agreements under this subtitle.
Sec. 205. Financing provisions.
Sec. 206. Fraud and overpayments.
Sec. 207. Definitions.
Sec. 208. Applicability.

     Subtitle B--Premium Assistance For COBRA Continuation Coverage

Sec. 211. Premium assistance for COBRA continuation coverage.

    Subtitle C--Additional Assistance for Temporary Health Insurance 
                                Coverage

Sec. 221. Optional temporary medicaid coverage for certain uninsured 
          employees.
Sec. 222. Optional temporary coverage for unsubsidized portion of COBRA 
          continuation premiums.

    TITLE III--FREEZE OF TOP INDIVIDUAL INCOME TAX RATE AND DOMESTIC 
                           SECURITY TRUST FUND

Sec. 301. Freeze of top individual income tax rate and domestic security 
          trust fund.

                        TITLE I--TAX PROVISIONS

                    Subtitle A--Supplemental Rebate

SEC. 101. SUPPLEMENTAL REBATE.

  (a) In General.--Section 6428 (relating to acceleration of 10 
percent income tax rate bracket benefit for 2001) is amended by 
adding at the end the following new subsection:
  ``(f) Supplemental Rebate.--
          ``(1) In general.--Each individual who was an 
        eligible individual for such individual's first taxable 
        year beginning in 2000 and who, before October 12, 
        2001, filed a return of tax imposed by subtitle A for 
        such taxable year shall be treated as having made a 
        payment against the tax imposed by chapter 1 for such 
        first taxable year in an amount equal to the 
        supplemental refund amount for such taxable year.
          ``(2) Supplemental refund amount.--For purposes of 
        this subsection, the supplemental refund amount is an 
        amount equal to the excess (if any) of--
                  ``(A)(i) $600 in the case of taxpayers to 
                whom section 1(a) applies,
                  ``(ii) $500 in the case of taxpayers to whom 
                section 1(b) applies, and
                  ``(iii) $300 in the case of taxpayers to whom 
                subsections (c) or (d) of section 1 applies, 
                over
                  ``(B) the taxpayer's advance refund amount 
                under subsection (e).
          ``(3) Timing of payments.--In the case of any 
        overpayment attributable to this subsection, the 
        Secretary shall, to the maximum extent practicable, 
        refund or credit such overpayment before December 31, 
        2001.
          ``(4) No interest.--No interest shall be allowed on 
        any overpayment attributable to this subsection.''
  (b) Conforming Amendments.--
          (1) Paragraph (1) of section 6428(d) is amended by 
        adding at the end the following new subparagraph:
                  ``(C) Coordination With supplemental 
                rebate.--No credit shall be allowed under 
                subsection (a) to any individual who is 
                entitled to a supplemental rebate amount under 
                subsection (f).''
          (2) Paragraph (3) of section 6428(e) is amended by 
        striking ``December 31, 2001'' and inserting ``the date 
        of the enactment of the Fiscal Stimulus and Worker 
        Relief Act of 2001''.
  (c) Effective Date.--The amendments made by this section 
shall take effect on the date of the enactment of this Act.

         Subtitle B--Extensions of Certain Expiring Provisions

SEC. 111. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS AGAINST REGULAR 
                    AND MINIMUM TAX LIABILITY.

  (a) In General.--Paragraph (2) of section 26(a) is amended--
          (1) by striking ``rule for 2000 and 2001.--'' and 
        inserting ``rule for 2000, 2001, and 2002.--'', and
          (2) by striking ``during 2000 or 2001,'' and 
        inserting ``during 2000, 2001, or 2002,''.
  (b) Conforming Amendments.--
          (1) Section 904(h) is amended by striking ``during 
        2000 or 2001'' and inserting ``during 2000, 2001, or 
        2002''.
          (2) The amendments made by sections 201(b), 202(f), 
        and 618(f) of the Economic Growth and Tax Relief 
        Reconciliation Act of 2001 shall not apply to taxable 
        years beginning during 2002.
  (c) Technical Correction.--Section 24(d)(1)(B) is amended by 
striking ``amount of credit allowed by this section'' and 
inserting ``aggregate amount of credits allowed by this 
subpart.''.
  (d) Effective Dates.--
          (1) The amendments made by subsections (a) and (b) 
        shall apply to taxable years beginning after December 
        31, 2001.
          (2) The amendment made by subsection (c) shall apply 
        to taxable years beginning after December 31, 2000.

SEC. 112. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

  (a) In General.--Section 30 is amended--
          (1) in subsection (b)(2)--
                  (A) by striking ``December 31, 2001,'' and 
                inserting ``December 31, 2002,'', and
                  (B) in subparagraphs (A), (B), and (C), by 
                striking ``2002'', ``2003'', and ``2004'', 
                respectively, and inserting ``2003'', ``2004'', 
                and ``2005'', respectively, and
          (2) in subsection (e), by striking ``December 31, 
        2004'' and inserting ``December 31, 2005''.
  (b) Effective Date.--The amendments made by subsection (a) 
shall apply to taxable years beginning after December 31, 2001.

SEC. 113. CREDIT FOR ELECTRICITY PRODUCED FROM RENEWABLE RESOURCES.

  (a) In General.--Subparagraphs (A), (B), and (C) of section 
45(c)(3) are each amended by striking ``2002'' and inserting 
``2003''.
  (b) Effective Date.--The amendments made by subsection (a) 
shall apply to taxable years beginning after December 31, 2001.

SEC. 114. WORK OPPORTUNITY CREDIT.

  (a) In General.--Subparagraph (B) of section 51(c)(4) is 
amended by striking ``2001'' and inserting ``2002''.
  (b) Effective Date.--The amendment made by subsection (a) 
shall apply to individuals who begin work for the employer 
after December 31, 2001.

SEC. 115. WELFARE-TO-WORK CREDIT.

  (a) In General.--Subsection (f) of section 51A is amended by 
striking ``2001'' and inserting ``2002''.
  (b) Effective Date.--The amendment made by subsection (a) 
shall apply to individuals who begin work for the employer 
after December 31, 2001.

SEC. 116. DEDUCTION FOR CLEAN-FUEL VEHICLES AND CERTAIN REFUELING 
                    PROPERTY.

  (a) In General.--Section 179A is amended--
          (1) in subsection (b)(1)(B)--
                  (A) by striking ``December 31, 2001,'' and 
                inserting ``December 31, 2002,'', and
                  (B) in clauses (i), (ii), and (iii), by 
                striking ``2002'', ``2003'', and ``2004'', 
                respectively, and inserting ``2003'', ``2004'', 
                and ``2005'', respectively, and
          (2) in subsection (f), by striking ``December 31, 
        2004'' and inserting ``December 31, 2005''.
  (b) Effective Date.--The amendments made by subsection (a) 
shall apply to taxable years beginning after December 31, 2001.

SEC. 117. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR OIL AND 
                    NATURAL GAS PRODUCED FROM MARGINAL PROPERTIES.

  (a) In General.--Subparagraph (H) of section 613A(c)(6) is 
amended by striking ``2002'' and inserting ``2003''.
  (b) Effective Date.--The amendment made by subsection (a) 
shall apply to taxable years beginning after December 31, 2001.

SEC. 118. QUALIFIED ZONE ACADEMY BONDS.

  (a) In General.--Paragraph (1) of section 1397E(e) is amended 
by striking ``2000, and 2001'' and inserting ``2000, 2001, and 
2002''.
  (b) Extension of Carryover of Unused Limitation From 1998.--
Paragraph (4) of section 1397E(e) is amended by striking ``3 
years for carryforwards from 1998 or 1999'' and inserting ``4 
years for carryforwards from 1998 and 3 years for carryforwards 
from 1999''.
  (c) Effective Date.--The amendments made by this section 
shall take effect on the date of enactment of this Act.

SEC. 119. COVER OVER OF TAX ON DISTILLED SPIRITS.

  (a) In General.--Paragraph (1) of section 7652(f) is amended 
by striking ``January 1, 2002'' and inserting ``January 1, 
2003''.
  (b) Effective Date.--The amendment made by subsection (a) 
shall take effect on the date of the enactment of this Act.

SEC. 120. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH 
                    BENEFITS.

  (a) In General.--Subsection (f) of section 9812 is amended by 
striking ``2001'' and inserting ``2002''.
  (b) Effective Date.--The amendment made by subsection (a) 
shall apply to plan years beginning after December 31, 2001.

SEC. 121. DELAY IN EFFECTIVE DATE OF REQUIREMENT FOR APPROVED DIESEL OR 
                    KEROSENE TERMINALS.

  Paragraph (2) of section 1032(f) of the Taxpayer Relief Act 
of 1997 (Public Law 105-34) is amended by striking ``January 1, 
2002'' and inserting ``January 1, 2003''.

                      Subtitle C--Other Provisions

SEC. 131. ALTERNATIVE MINIMUM TAX RELIEF WITH RESPECT TO INCENTIVE 
                    STOCK OPTIONS EXERCISED DURING 2000.

  In the case of an incentive stock option (as defined in 
section 422 of the Internal Revenue Code of 1986) exercised 
during calendar year 2000 or 2001, the amount taken into 
account under section 56(b)(3) of such Code by reason of such 
exercise shall not exceed the amount that would have been taken 
into account if, on the date of such exercise, the fair market 
value of the stock acquired pursuant to such option had been--
          (1) its fair market value as of--
                  (A) April 15, 2001, in the case of options 
                exercised during 2000, and
                  (B) December 31, 2001, in the case of options 
                exercised during 2001, or
          (2) if such stock is sold or exchanged on or before 
        the applicable date under paragraph (1), the amount 
        realized on such sale or exchange.

SEC. 132. CARRYBACK FOR 2001 AND 2002 NET OPERATING LOSSES ALLOWED FOR 
                    5 YEARS.

  (a) In General.--Paragraph (1) of section 172(b) (relating to 
years to which loss may be carried) is amended by adding at the 
end the following new subparagraph:
                  ``(H) In the case of a taxpayer which has a 
                net operating loss for any taxable year 
                beginning in 2001 or 2002, subparagraph (A)(i) 
                shall be applied by substituting `5' for `2' 
                and subparagraph (F) shall not apply.''.
  (b) Election to Disregard 5-Year Carryback for Net Operating 
Loss Arising in 2001 or 2002.--Section 172 of such Code 
(relating to net operating loss deduction) is amended by 
redesignating subsection (j) as subsection (k) and by inserting 
after subjection (i) the following new subsection:
  ``(j) Election to Disregard 5-Year Carryback for Net 
Operating Loss Arising in 2001 or 2002.--Any taxpayer entitled 
to a 5-year carryback under subsection (b)(1)(H) from any loss 
year may elect to have the carryback period with respect to 
such loss year determined without regard to subsection 
(b)(1)(H). Such election shall be made in such manner as may be 
prescribed by the Secretary and shall be made by the due date 
(including extensions of time) for filing the taxpayer's return 
for the taxable year of the net operating loss. Such election, 
once made for any taxable year, shall be irrevocable for such 
taxable year.''.
  (c) Suspension of 90 Percent AMT Limit on 2001 and 2002 NOL 
Carrybacks.--Subparagraph (A) of section 56(d)(1) (relating to 
general rule defining alternative tax net operating loss 
deduction) is amended to read as follows:
                  ``(A) the amount of such deduction shall not 
                exceed the sum of--
                          ``(i) the lesser of--
                                  ``(I) the amount of such 
                                deduction attributable to net 
                                operating losses (other than 
                                the deduction attributable to 
                                carrybacks of net operating 
                                losses for taxable years 
                                beginning in 2001 or 2002), or
                                  ``(II) 90 percent of 
                                alternate minimum taxable 
                                income determined without 
                                regard to such deduction, plus
                          ``(ii) the lesser of--
                                  ``(I) the amount of such 
                                deduction attributable to 
                                carrybacks of net operating 
                                losses for taxable years 
                                beginning in 2001 or 2002, or
                                  ``(II) alternate minimum 
                                taxable income determined 
                                without regard to such 
                                deduction reduced by the amount 
                                determined under clause (i), 
                                and''.
  (d) Effective Date.--The amendments made by this section 
shall apply to net operating losses for taxable years beginning 
after 2000.

SEC. 133. TEMPORARY INCREASE IN EXPENSING UNDER SECTION 179.

  (a) In General.--The table contained in section 179(b)(1) 
(relating to dollar limitation) is amended to read as follows:

    ``If the taxable year                                 The applicable
      begins in:                                              amount is:
          2001 or 2002..................................        $50,000 
          2003 or thereafter............................       25,000.''
  (b) Temporary Increase in Amount of Property Triggering 
Phaseout of Maximum Benefit.--Paragraph (2) of section 179(b) 
of such Code is amended by inserting before the period 
``($400,000 in the case of taxable years beginning during 2001 
or 2002)''.
  (c) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 2000.

SEC. 134. TEMPORARY WAIVER OF 90 PERCENT AMT LIMITATIONS.

  Subparagraph (A) of section 56(b)(1) of the Internal Revenue 
Code of 1986 and paragraph (2) of section 59(a) of such Code 
shall not apply in determining alternative minimum tax 
liability for taxable years beginning in 2001 or 2002.

SEC. 135. EXPANSION OF INCENTIVES FOR PUBLIC SCHOOLS.

  (a) In General.--Chapter 1 is amended by adding at the end 
the following new subchapter:

         ``Subchapter Y--Public School Modernization Provisions

        ``Sec. 1400K. Credit to holders of qualified public school 
                  modernization bonds.
        ``Sec. 1400L. Qualified school construction bonds.
        ``Sec. 1400M. Qualified zone academy bonds.

``SEC. 1400K. CREDIT TO HOLDERS OF QUALIFIED PUBLIC SCHOOL 
                    MODERNIZATION BONDS.

  ``(a) Allowance of Credit.--In the case of a taxpayer who 
holds a qualified public school modernization bond on a credit 
allowance date of such bond which occurs during the taxable 
year, there shall be allowed as a credit against the tax 
imposed by this chapter for such taxable year an amount equal 
to the sum of the credits determined under subsection (b) with 
respect to credit allowance dates during such year on which the 
taxpayer holds such bond.
  ``(b) Amount of Credit.--
          ``(1) In general.--The amount of the credit 
        determined under this subsection with respect to any 
        credit allowance date for a qualified public school 
        modernization bond is 25 percent of the annual credit 
        determined with respect to such bond.
          ``(2) Annual credit.--The annual credit determined 
        with respect to any qualified public school 
        modernization bond is the product of--
                  ``(A) the applicable credit rate, multiplied 
                by
                  ``(B) the outstanding face amount of the 
                bond.
          ``(3) Applicable credit rate.--For purposes of 
        paragraph (1), the applicable credit rate with respect 
        to an issue is the rate equal to an average market 
        yield (as of the day before the date of issuance of the 
        issue) on outstanding long-term corporate debt 
        obligations (determined under regulations prescribed by 
        the Secretary).
          ``(4) Special rule for issuance and redemption.--In 
        the case of a bond which is issued during the 3-month 
        period ending on a credit allowance date, the amount of 
        the credit determined under this subsection with 
        respect to such credit allowance date shall be a 
        ratable portion of the credit otherwise determined 
        based on the portion of the 3-month period during which 
        the bond is outstanding. A similar rule shall apply 
        when the bond is redeemed.
  ``(c) Limitation Based on Amount of Tax.--
          ``(1) In general.--The credit allowed under 
        subsection (a) for any taxable year shall not exceed 
        the excess of--
                  ``(A) the sum of the regular tax liability 
                (as defined in section 26(b)) plus the tax 
                imposed by section 55, over
                  ``(B) the sum of the credits allowable under 
                part IV of subchapter A (other than subpart C 
                thereof, relating to refundable credits).
          ``(2) Carryover of unused credit.--If the credit 
        allowable under subsection (a) exceeds the limitation 
        imposed by paragraph (1) for such taxable year, such 
        excess shall be carried to the succeeding taxable year 
        and added to the credit allowable under subsection (a) 
        for such taxable year.
  ``(d) Qualified Public School Modernization Bond; Credit 
Allowance Date.--For purposes of this section--
          ``(1) Qualified public school modernization bond.--
        The term `qualified public school modernization bond' 
        means--
                  ``(A) a qualified zone academy bond, and
                  ``(B) a qualified school construction bond.
          ``(2) Credit allowance date.--The term `credit 
        allowance date' means--
                  ``(A) March 15,
                  ``(B) June 15,
                  ``(C) September 15, and
                  ``(D) December 15.
        Such term includes the last day on which the bond is 
        outstanding.
  ``(e) Other Definitions.--For purposes of this subchapter--
          ``(1) Local educational agency.--The term `local 
        educational agency' has the meaning given to such term 
        by section 14101 of the Elementary and Secondary 
        Education Act of 1965. Such term includes the local 
        educational agency that serves the District of Columbia 
        but does not include any other State agency.
          ``(2) Bond.--The term `bond' includes any obligation.
          ``(3) State.--The term `State' includes the District 
        of Columbia and any possession of the United States.
          ``(4) Public school facility.--The term `public 
        school facility' shall not include--
                  ``(A) any stadium or other facility primarily 
                used for athletic contests or exhibitions or 
                other events for which admission is charged to 
                the general public, or
                  ``(B) any facility which is not owned by a 
                State or local government or any agency or 
                instrumentality of a State or local government.
  ``(f) Credit Included in Gross Income.--Gross income includes 
the amount of the credit allowed to the taxpayer under this 
section (determined without regard to subsection (c)) and the 
amount so included shall be treated as interest income.
  ``(g) Recapture of Portion of Credit Where Cessation of 
Compliance.--
          ``(1) In general.--If any bond which when issued 
        purported to be a qualified public school modernization 
        bond ceases to be a qualified public school 
        modernization bond, the issuer shall pay to the United 
        States (at the time required by the Secretary) an 
        amount equal to the sum of--
                  ``(A) the aggregate of the credits allowable 
                under this section with respect to such bond 
                (determined without regard to subsection (c)) 
                for taxable years ending during the calendar 
                year in which such cessation occurs and the 2 
                preceding calendar years, and
                  ``(B) interest at the underpayment rate under 
                section 6621 on the amount determined under 
                subparagraph (A) for each calendar year for the 
                period beginning on the first day of such 
                calendar year.
          ``(2) Failure to pay.--If the issuer fails to timely 
        pay the amount required by paragraph (1) with respect 
        to such bond, the tax imposed by this chapter on each 
        holder of any such bond which is part of such issue 
        shall be increased (for the taxable year of the holder 
        in which such cessation occurs) by the aggregate 
        decrease in the credits allowed under this section to 
        such holder for taxable years beginning in such 3 
        calendar years which would have resulted solely from 
        denying any credit under this section with respect to 
        such issue for such taxable years.
          ``(3) Special rules.--
                  ``(A) Tax benefit rule.--The tax for the 
                taxable year shall be increased under paragraph 
                (2) only with respect to credits allowed by 
                reason of this section which were used to 
                reduce tax liability. In the case of credits 
                not so used to reduce tax liability, the 
                carryforwards and carrybacks under section 39 
                shall be appropriately adjusted.
                  ``(B) No credits against tax.--Any increase 
                in tax under paragraph (2) shall not be treated 
                as a tax imposed by this chapter for purposes 
                of determining--
                          ``(i) the amount of any credit 
                        allowable under this part, or
                          ``(ii) the amount of the tax imposed 
                        by section 55.
  ``(h) Bonds Held by Regulated Investment Companies.--If any 
qualified public school modernization bond is held by a 
regulated investment company, the credit determined under 
subsection (a) shall be allowed to shareholders of such company 
under procedures prescribed by the Secretary.
  ``(i) Credits May Be Stripped.--Under regulations prescribed 
by the Secretary--
          ``(1) In general.--There may be a separation 
        (including at issuance) of the ownership of a qualified 
        public school modernization bond and the entitlement to 
        the credit under this section with respect to such 
        bond. In case of any such separation, the credit under 
        this section shall be allowed to the person who on the 
        credit allowance date holds the instrument evidencing 
        the entitlement to the credit and not to the holder of 
        the bond.
          ``(2) Certain rules to apply.--In the case of a 
        separation described in paragraph (1), the rules of 
        section 1286 shall apply to the qualified public school 
        modernization bond as if it were a stripped bond and to 
        the credit under this section as if it were a stripped 
        coupon.
  ``(j) Treatment for Estimated Tax Purposes.--Solely for 
purposes of sections 6654 and 6655, the credit allowed by this 
section to a taxpayer by reason of holding a qualified public 
school modernization bonds on a credit allowance date shall be 
treated as if it were a payment of estimated tax made by the 
taxpayer on such date.
  ``(k) Credit May Be Transferred.--Nothing in any law or rule 
of law shall be construed to limit the transferability of the 
credit allowed by this section through sale and repurchase 
agreements.
  ``(k) Reporting.--Issuers of qualified public school 
modernization bonds shall submit reports similar to the reports 
required under section 149(e).
  ``(l) Penalty on Contractors Failing To Pay Prevailing 
Wage.--
          ``(1) In general.--If the Secretary of Labor 
        certifies to the Secretary that any contractor on any 
        project funded by any qualified public school 
        modernization bond has failed, during any portion of 
        such contractor's taxable year, to pay prevailing wages 
        as would be required under section 439 of the General 
        Education Provisions Act if such funding were an 
        applicable program under such section, the tax imposed 
        by chapter 1 on such contractor for such taxable year 
        shall be increased by 100 percent of the amount 
        involved in such failure. The preceding sentence shall 
        not apply to the extent the Secretary of Labor 
        determines that such failure is due to reasonable cause 
        and not willful neglect.
          ``(2) Amount involved.--For purposes of paragraph 
        (1), the amount involved with respect to any failure is 
        the excess of the amount of wages such contractor would 
        be so required to pay under such section over the 
        amount of wages paid.
          ``(3) No credits against tax.--The tax imposed by 
        this section shall not be treated as a tax imposed by 
        this chapter for purposes of determining--
                  ``(A) the amount of any credit allowable 
                under this chapter, or
                  ``(B) the amount of the minimum tax imposed 
                by section 55.
  ``(m) Termination.--This section shall not apply to any bond 
issued after September 30, 2006.

``SEC. 1400L. QUALIFIED SCHOOL CONSTRUCTION BONDS.

  ``(a) Qualified School Construction Bond.--For purposes of 
this subchapter, the term `qualified school construction bond' 
means any bond issued as part of an issue if--
          ``(1) 95 percent or more of the proceeds of such 
        issue are to be used for the construction, 
        rehabilitation, or repair of a public school facility 
        or for the acquisition of land on which such a facility 
        is to be constructed with part of the proceeds of such 
        issue,
          ``(2) the bond is issued by a State or local 
        government within the jurisdiction of which such school 
        is located,
          ``(3) the issuer designates such bond for purposes of 
        this section, and
          ``(4) the term of each bond which is part of such 
        issue does not exceed 15 years.
  ``(b) Limitation on Amount of Bonds Designated.--The maximum 
aggregate face amount of bonds issued during any calendar year 
which may be designated under subsection (a) by any issuer 
shall not exceed the sum of--
          ``(1) the limitation amount allocated under 
        subsection (d) for such calendar year to such issuer, 
        and
          ``(2) if such issuer is a large local educational 
        agency (as defined in subsection (e)(4)) or is issuing 
        on behalf of such an agency, the limitation amount 
        allocated under subsection (e) for such calendar year 
        to such agency.
  ``(c) National Limitation on Amount of Bonds Designated.--
There is a national qualified school construction bond 
limitation for each calendar year. Such limitation is--
          ``(1) $11,000,000,000 for 2002, and
          ``(2) except as provided in subsection (f), zero 
        after 2002.
  ``(d) 60 Percent of Limitation Allocated Among States.--
          ``(1) In general.--60 percent of the limitation 
        applicable under subsection (c) for any calendar year 
        shall be allocated by the Secretary among the States in 
        proportion to the respective numbers of children in 
        each State who have attained age 5 but not age 18 for 
        the most recent fiscal year ending before such calendar 
        year. The limitation amount allocated to a State under 
        the preceding sentence shall be allocated by the State 
        to issuers within such State.
          ``(2) Minimum allocations to states.--
                  ``(A) In general.--The Secretary shall adjust 
                the allocations under this subsection for any 
                calendar year for each State to the extent 
                necessary to ensure that the sum of--
                          ``(i) the amount allocated to such 
                        State under this subsection for such 
                        year, and
                          ``(ii) the aggregate amounts 
                        allocated under subsection (e) to large 
                        local educational agencies in such 
                        State for such year,
                is not less than an amount equal to such 
                State's minimum percentage of the amount to be 
                allocated under paragraph (1) for the calendar 
                year.
                  ``(B) Minimum percentage.--A State's minimum 
                percentage for any calendar year is the minimum 
                percentage described in section 1124(d) of the 
                Elementary and Secondary Education Act of 1965 
                (20 U.S.C. 6334(d)) for such State for the most 
                recent fiscal year ending before such calendar 
                year.
          ``(3) Allocations to certain possessions.--The amount 
        to be allocated under paragraph (1) to any possession 
        of the United States other than Puerto Rico shall be 
        the amount which would have been allocated if all 
        allocations under paragraph (1) were made on the basis 
        of respective populations of individuals below the 
        poverty line (as defined by the Office of Management 
        and Budget). In making other allocations, the amount to 
        be allocated under paragraph (1) shall be reduced by 
        the aggregate amount allocated under this paragraph to 
        possessions of the United States.
          ``(4) Allocations for indian schools.--In addition to 
        the amounts otherwise allocated under this subsection, 
        $200,000,000 for calendar year 2002, and $200,000,000 
        for calendar year 2003, shall be allocated by the 
        Secretary of the Interior for purposes of the 
        construction, rehabilitation, and repair of schools 
        funded by the Bureau of Indian Affairs. In the case of 
        amounts allocated under the preceding sentence, Indian 
        tribal governments (as defined in section 7871) shall 
        be treated as qualified issuers for purposes of this 
        subchapter.
  ``(e) 40 Percent of Limitation Allocated Among Largest School 
Districts.--
          ``(1) In general.--40 percent of the limitation 
        applicable under subsection (c) for any calendar year 
        shall be allocated under paragraph (2) by the Secretary 
        among local educational agencies which are large local 
        educational agencies for such year.
          ``(2) Allocation formula.--The amount to be allocated 
        under paragraph (1) for any calendar year shall be 
        allocated among large local educational agencies in 
        proportion to the respective amounts each such agency 
        received for Basic Grants under subpart 2 of part A of 
        title I of the Elementary and Secondary Education Act 
        of 1965 (20 U.S.C. 6331 et seq.) for the most recent 
        fiscal year ending before such calendar year.
          ``(3) Allocation of unused limitation to state.--The 
        amount allocated under this subsection to a large local 
        educational agency for any calendar year may be 
        reallocated by such agency to the State in which such 
        agency is located for such calendar year. Any amount 
        reallocated to a State under the preceding sentence may 
        be allocated as provided in subsection (d)(1).
          ``(4) Large local educational agency.--For purposes 
        of this section, the term `large local educational 
        agency' means, with respect to a calendar year, any 
        local educational agency if such agency is--
                  ``(A) among the 100 local educational 
                agencies with the largest numbers of children 
                aged 5 through 17 from families living below 
                the poverty level, as determined by the 
                Secretary using the most recent data available 
                from the Department of Commerce that are 
                satisfactory to the Secretary, or
                  ``(B) 1 of not more than 25 local educational 
                agencies (other than those described in 
                subparagraph (A)) that the Secretary of 
                Education determines (based on the most recent 
                data available satisfactory to the Secretary) 
                are in particular need of assistance, based on 
                a low level of resources for school 
                construction, a high level of enrollment 
                growth, or such other factors as the Secretary 
                deems appropriate.
  ``(f) Carryover of Unused Limitation.--If for any calendar 
year--
          ``(1) the amount allocated under subsection (d) to 
        any State, exceeds
          ``(2) the amount of bonds issued during such year 
        which are designated under subsection (a) pursuant to 
        such allocation,
the limitation amount under such subsection for such State for 
the following calendar year shall be increased by the amount of 
such excess. A similar rule shall apply to the amounts 
allocated under subsection (d)(4) or (e).
  ``(g) Special Rules Relating to Arbitrage.--
          ``(1) In general.--A bond shall not be treated as 
        failing to meet the requirement of subsection (a)(1) 
        solely by reason of the fact that the proceeds of the 
        issue of which such bond is a part are invested for a 
        temporary period (but not more than 36 months) until 
        such proceeds are needed for the purpose for which such 
        issue was issued.
          ``(2) Binding commitment requirement.--Paragraph (1) 
        shall apply to an issue only if, as of the date of 
        issuance, there is a reasonable expectation that--
                  ``(A) at least 10 percent of the proceeds of 
                the issue will be spent within the 6-month 
                period beginning on such date for the purpose 
                for which such issue was issued, and
                  ``(B) the remaining proceeds of the issue 
                will be spent with due diligence for such 
                purpose.
          ``(3) Earnings on proceeds.--Any earnings on proceeds 
        during the temporary period shall be treated as 
        proceeds of the issue for purposes of applying 
        subsection (a)(1) and paragraph (1) of this subsection.

``SEC. 1400M. QUALIFIED ZONE ACADEMY BONDS.

  ``(a) Qualified Zone Academy Bond.--For purposes of this 
subchapter--
          ``(1) In general.--The term `qualified zone academy 
        bond' means any bond issued as part of an issue if--
                  ``(A) 95 percent or more of the proceeds of 
                such issue are to be used for a qualified 
                purpose with respect to a qualified zone 
                academy established by a local educational 
                agency,
                  ``(B) the bond is issued by a State or local 
                government within the jurisdiction of which 
                such academy is located,
                  ``(C) the issuer--
                          ``(i) designates such bond for 
                        purposes of this section,
                          ``(ii) certifies that it has written 
                        assurances that the private business 
                        contribution requirement of paragraph 
                        (2) will be met with respect to such 
                        academy, and
                          ``(iii) certifies that it has the 
                        written approval of the local 
                        educational agency for such bond 
                        issuance, and
                  ``(D) the term of each bond which is part of 
                such issue does not exceed 15 years.
        Rules similar to the rules of section 1400L(g) shall 
        apply for purposes of paragraph (1).
          ``(2) Private business contribution requirement.--
                  ``(A) In general.--For purposes of paragraph 
                (1), the private business contribution 
                requirement of this paragraph is met with 
                respect to any issue if the local educational 
                agency that established the qualified zone 
                academy has written commitments from private 
                entities to make qualified contributions having 
                a present value (as of the date of issuance of 
                the issue) of not less than 10 percent of the 
                proceeds of the issue.
                  ``(B) Qualified contributions.--For purposes 
                of subparagraph (A), the term `qualified 
                contribution' means any contribution (of a type 
                and quality acceptable to the local educational 
                agency) of--
                          ``(i) equipment for use in the 
                        qualified zone academy (including 
                        state-of-the-art technology and 
                        vocational equipment),
                          ``(ii) technical assistance in 
                        developing curriculum or in training 
                        teachers in order to promote 
                        appropriate market driven technology in 
                        the classroom,
                          ``(iii) services of employees as 
                        volunteer mentors,
                          ``(iv) internships, field trips, or 
                        other educational opportunities outside 
                        the academy for students, or
                          ``(v) any other property or service 
                        specified by the local educational 
                        agency.
          ``(3) Qualified zone academy.--The term `qualified 
        zone academy' means any public school (or academic 
        program within a public school) which is established by 
        and operated under the supervision of a local 
        educational agency to provide education or training 
        below the postsecondary level if--
                  ``(A) such public school or program (as the 
                case may be) is designed in cooperation with 
                business to enhance the academic curriculum, 
                increase graduation and employment rates, and 
                better prepare students for the rigors of 
                college and the increasingly complex workforce,
                  ``(B) students in such public school or 
                program (as the case may be) will be subject to 
                the same academic standards and assessments as 
                other students educated by the local 
                educational agency,
                  ``(C) the comprehensive education plan of 
                such public school or program is approved by 
                the local educational agency, and
                  ``(D)(i) such public school is located in an 
                empowerment zone or enterprise community 
                (including any such zone or community 
                designated after the date of the enactment of 
                this section), or
                  ``(ii) there is a reasonable expectation (as 
                of the date of issuance of the bonds) that at 
                least 35 percent of the students attending such 
                school or participating in such program (as the 
                case may be) will be eligible for free or 
                reduced-cost lunches under the school lunch 
                program established under the National School 
                Lunch Act.
          ``(4) Qualified purpose.--The term `qualified 
        purpose' means, with respect to any qualified zone 
        academy--
                  ``(A) constructing, rehabilitating, or 
                repairing the public school facility in which 
                the academy is established,
                  ``(B) acquiring the land on which such 
                facility is to be constructed with part of the 
                proceeds of such issue,
                  ``(C) providing equipment for use at such 
                academy,
                  ``(D) developing course materials for 
                education to be provided at such academy, and
                  ``(E) training teachers and other school 
                personnel in such academy.
  ``(b) Limitations on Amount of Bonds Designated.--
          ``(1) In general.--There is a national zone academy 
        bond limitation for each calendar year. Such limitation 
        is--
                  ``(A) $400,000,000 for 1998,
                  ``(B) $400,000,000 for 1999,
                  ``(C) $400,000,000 for 2000,
                  ``(D) $400,000,000 for 2001,
                  ``(E) $1,400,000,000 for 2002, and
                  ``(F) except as provided in paragraph (3), 
                zero after 2002.
          ``(2) Allocation of limitation.--
                  ``(A) Allocation among states.--
                          ``(i) 1998, 1999, 2000, and 2001 
                        limitations.--The national zone academy 
                        bond limitations for calendar years 
                        1998, 1999, 2000, and 2001 shall be 
                        allocated by the Secretary among the 
                        States on the basis of their respective 
                        populations of individuals below the 
                        poverty line (as defined by the Office 
                        of Management and Budget).
                          ``(ii) Limitation after 2001.--The 
                        national zone academy bond limitation 
                        for any calendar year after 2001 shall 
                        be allocated by the Secretary among the 
                        States in proportion to the respective 
                        amounts each such State received for 
                        Basic Grants under subpart 2 of part A 
                        of title I of the Elementary and 
                        Secondary Education Act of 1965 (20 
                        U.S.C. 6331 et seq.) for the most 
                        recent fiscal year ending before such 
                        calendar year.
                  ``(B) Allocation to local educational 
                agencies.--The limitation amount allocated to a 
                State under subparagraph (A) shall be allocated 
                by the State to qualified zone academies within 
                such State.
                  ``(C) Designation subject to limitation 
                amount.--The maximum aggregate face amount of 
                bonds issued during any calendar year which may 
                be designated under subsection (a) with respect 
                to any qualified zone academy shall not exceed 
                the limitation amount allocated to such academy 
                under subparagraph (B) for such calendar year.
          ``(3) Carryover of unused limitation.--If for any 
        calendar year--
                  ``(A) the limitation amount under this 
                subsection for any State, exceeds
                  ``(B) the amount of bonds issued during such 
                year which are designated under subsection (a) 
                (or the corresponding provisions of prior law) 
                with respect to qualified zone academies within 
                such State,
        the limitation amount under this subsection for such 
        State for the following calendar year shall be 
        increased by the amount of such excess.''
  (b) Reporting.--Subsection (d) of section 6049 (relating to 
returns regarding payments of interest) is amended by adding at 
the end the following new paragraph:
          ``(8) Reporting of credit on qualified public school 
        modernization bonds.--
                  ``(A) In general.--For purposes of subsection 
                (a), the term `interest' includes amounts 
                includible in gross income under section 
                1400K(f) and such amounts shall be treated as 
                paid on the credit allowance date (as defined 
                in section 1400K(d)(2)).
                  ``(B) Reporting to corporations, etc.--Except 
                as otherwise provided in regulations, in the 
                case of any interest described in subparagraph 
                (A) of this paragraph, subsection (b)(4) of 
                this section shall be applied without regard to 
                subparagraphs (A), (H), (I), (J), (K), and 
                (L)(i).
                  ``(C) Regulatory authority.--The Secretary 
                may prescribe such regulations as are necessary 
                or appropriate to carry out the purposes of 
                this paragraph, including regulations which 
                require more frequent or more detailed 
                reporting.''
  (c) Conforming Amendments.--
          (1) Subchapter U of chapter 1 is amended by striking 
        part IV, by redesignating part V as part IV, and by 
        redesignating section 1397F as section 1397E.
          (2) The table of subchapters for chapter 1 is amended 
        by adding at the end the following new item:

        ``Subchapter Y. Public school modernization provisions.''

          (3) The table of parts of subchapter U of chapter 1 
        is amended by striking the last 2 items and inserting 
        the following item:

        ``Part IV. Regulations.''

  (e) Effective Dates.--
          (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall 
        apply to obligations issued after December 31, 2001.
          (2) Repeal of restriction on zone academy bond 
        holders.--In the case of bonds to which section 1397E 
        of the Internal Revenue Code of 1986 (as in effect 
        before the date of the enactment of this Act) applies, 
        the limitation of such section to eligible taxpayers 
        (as defined in subsection (d)(6) of such section) shall 
        not apply after the date of the enactment of this Act.

                        TITLE II--WORKER RELIEF

            Subtitle A--Temporary Unemployment Compensation

SEC. 201. SHORT TITLE.

  This subtitle may be cited as the ``Temporary Unemployment 
Compensation Act of 2001''.

SEC. 202. FEDERAL-STATE AGREEMENTS.

  (a) In General.--Any State which desires to do so may enter 
into and participate in an agreement under this subtitle with 
the Secretary of Labor (hereinafter in this subtitle referred 
to as the ``Secretary''). Any State which is a party to an 
agreement under this subtitle may, upon providing 30 days' 
written notice to the Secretary, terminate such agreement.
  (b) Provisions of Agreement.--
          (1) In general.--Any agreement under subsection (a) 
        shall provide that the State agency of the State will 
        make--
                  (A) payments of regular compensation to 
                individuals in amounts and to the extent that 
                they would be determined if the State law were 
                applied with the modifications described in 
                paragraph (2), and
                  (B) payments of temporary supplemental 
                unemployment compensation to individuals who--
                          (i) have exhausted all rights to 
                        regular compensation under the State 
                        law,
                          (ii) do not, with respect to a week, 
                        have any rights to compensation 
                        (excluding extended compensation) under 
                        the State law of any other State 
                        (whether one that has entered into an 
                        agreement under this subtitle or 
                        otherwise) nor compensation under any 
                        other Federal law (other than under the 
                        Federal-State Extended Unemployment 
                        Compensation Act of 1970), and are not 
                        paid or entitled to be paid any 
                        additional compensation under any State 
                        or Federal law, and
                          (iii) are not receiving compensation 
                        with respect to such week under the 
                        unemployment compensation law of 
                        Canada.
          (2) Modifications described.--The modifications 
        described in this paragraph are as follows:
                  (A) An individual shall be eligible for 
                regular compensation if the individual would be 
                so eligible, determined by applying--
                          (i) the base period that would 
                        otherwise apply under the State law if 
                        this subtitle had not been enacted, or
                          (ii) a base period ending at the 
                        close of the calendar quarter most 
                        recently completed before the date of 
                        the individual's application for 
                        benefits,
                whichever results in the greater amount.
                  (B) An individual shall not be denied regular 
                compensation under the State law's provisions 
                relating to availability for work, active 
                search for work, or refusal to accept work, 
                solely by virtue of the fact that such 
                individual is seeking, or available for, only 
                part-time (and not full-time) work.
                  (C)(i) Subject to clause (ii), the amount of 
                regular compensation (including dependents' 
                allowances) payable for any week shall be equal 
                to the amount determined under the State law 
                (before the application of this subparagraph), 
                plus an additional--
                          (I) 25 percent, or
                          (II) $65,
                whichever is greater.
                  (ii) In no event may the total amount 
                determined under clause (i) with respect to any 
                individual exceed the average weekly insured 
                wages of that individual in that calendar 
                quarter of the base period in which such 
                individual's insured wages were the highest (or 
                one such quarter if his wages were the same for 
                more than one such quarter).
  (c) Nonreduction Rule.--Under the agreement, subsection 
(b)(2)(C) shall not apply (or shall cease to apply) with 
respect to a State upon a determination by the Secretary that 
the method governing the computation of regular compensation 
under the State law of that State has been modified in a way 
such that--
          (1) the average weekly amount of regular compensation 
        which will be payable during the period of the 
        agreement (determined disregarding the modifications 
        described in subsection (b)(2)) will be less than
          (2) the average weekly amount of regular compensation 
        which would otherwise have been payable during such 
        period under the State law, as in effect on September 
        11, 2001.
  (d) Coordination Rules.--
          (1) Regular compensation payable under a federal 
        law.--The modifications described in subsection (b)(2) 
        shall also apply in determining the amount of benefits 
        payable under any Federal law to the extent that those 
        benefits are determined by reference to regular 
        compensation payable under the State law of the State 
        involved.
          (2) TSUC to serve as second-tier benefits.--
        Notwithstanding any other provision of law, extended 
        benefits shall not be payable to any individual for any 
        week for which temporary supplemental unemployment 
        compensation is payable to such individual.
  (e) Exhaustion of Benefits.--For purposes of subsection 
(b)(1)(B)(i), an individual shall be considered to have 
exhausted such individual's rights to regular compensation 
under a State law when--
          (1) no payments of regular compensation can be made 
        under such law because such individual has received all 
        regular compensation available to such individual based 
        on employment or wages during such individual's base 
        period, or
          (2) such individual's rights to such compensation 
        have been terminated by reason of the expiration of the 
        benefit year with respect to which such rights existed.
  (f) Weekly Benefit Amount, Terms and Conditions, etc. 
Relating to TSUC.--For purposes of any agreement under this 
subtitle--
          (1) the amount of temporary supplemental unemployment 
        compensation which shall be payable to an individual 
        for any week of total unemployment shall be equal to 
        the amount of regular compensation (including 
        dependents' allowances) payable to such individual 
        under the State law for a week for total unemployment 
        during such individual's benefit year,
          (2) the terms and conditions of the State law which 
        apply to claims for regular compensation and to the 
        payment thereof shall apply to claims for temporary 
        supplemental unemployment compensation and the payment 
        thereof, except where inconsistent with the provisions 
        of this subtitle or with the regulations or operating 
        instructions of the Secretary promulgated to carry out 
        this subtitle, and
          (3) the maximum amount of temporary supplemental 
        unemployment compensation payable to any individual for 
        whom a temporary supplemental unemployment compensation 
        account is established under section 203 shall not 
        exceed the amount established in such account for such 
        individual.

SEC. 203. TEMPORARY SUPPLEMENTAL UNEMPLOYMENT COMPENSATION ACCOUNT.

  (a) In General.--Any agreement under this subtitle shall 
provide that the State will establish, for each eligible 
individual who files an application for temporary supplemental 
unemployment compensation, a temporary supplemental 
unemployment compensation account.
  (b) Amount in Account.--
          (1) In general.--The amount established in an account 
        under subsection (a) shall be equal to the product 
        obtained by multiplying an individual's weekly benefit 
        amount by the applicable factor under paragraph (3).
          (2) Weekly benefit amount.--For purposes of this 
        subsection, an individual's weekly benefit amount for 
        any week is the amount of regular compensation 
        (including dependents' allowances) under the State law 
        payable to such individual for a week of total 
        unemployment in such individual's benefit year.
          (3) Applicable factor.--
                  (A) General rule.--The applicable factor 
                under this paragraph is 13, unless the 
                individual's benefit year begins or ends during 
                a period of high unemployment within such 
                individual's State, in which case the 
                applicable factor is 26.
                  (B) Period of high unemployment.--For 
                purposes of this paragraph, a period of high 
                unemployment within a State shall begin and 
                end, if at all, in a way (to be set forth in 
                the State's agreement under this subtitle) 
                similar to the way in which an extended benefit 
                period would under section 203 of the Federal-
                State Extended Unemployment Compensation Act of 
                1970, subject to the following:
                          (i) To determine if there is a State 
                        ``on'' or ``off'' indicator, apply 
                        section 203(f) of such Act, but--
                                  (I) substitute ``5 percent'' 
                                for ``6.5 percent'' in 
                                paragraph (1)(A)(i) thereof, 
                                and
                                  (II) disregard paragraph 
                                (1)(A)(ii) thereof and the last 
                                sentence of paragraph (1) 
                                thereof.
                          (ii) To determine the beginning and 
                        ending dates of a period of high 
                        unemployment within a State, apply 
                        section 203(a) and (b) of such Act, 
                        except that--
                                  (I) in applying such section 
                                203(a), deem paragraphs (1) and 
                                (2) thereof to be amended by 
                                striking ``the third week 
                                after'', and
                                  (II) in applying such section 
                                203(b), deem paragraph (1)(A) 
                                thereof amended by striking 
                                ``thirteen'' and inserting 
                                ``twenty-six'' and paragraph 
                                (1)(B) thereof amended by 
                                striking ``fourteenth'' and 
                                inserting ``twenty-seventh''.
          (4) Rule of construction.--For purposes of any 
        computation under paragraph (1) (and any determination 
        of amount under section 202(f)(1)), the modification 
        described in section 202(b)(2)(C) (relating to 
        increased benefits) shall be deemed to have been in 
        effect with respect to the entirety of the benefit year 
        involved.
  (c) Eligibility Period.--An individual whose applicable 
factor under subsection (b)(3) is 26 shall be eligible for 
temporary supplemental unemployment compensation for each week 
of total unemployment in his benefit year which begins in the 
State's period of high unemployment and, if his benefit year 
ends within such period, any such weeks thereafter which begin 
in such period of high unemployment, not to exceed a total of 
26 weeks.

SEC. 204. PAYMENTS TO STATES HAVING AGREEMENTS UNDER THIS SUBTITLE.

  (a) General Rule.--There shall be paid to each State which 
has entered into an agreement under this subtitle an amount 
equal to--
          (1) 100 percent of any regular compensation made 
        payable to individuals by such State by virtue of the 
        modifications which are described in section 202(b)(2) 
        and deemed to be in effect with respect to such State 
        pursuant to section 202(b)(1)(A),
          (2) 100 percent of any regular compensation--
                  (A) which is paid to individuals by such 
                State by reason of the fact that its State law 
                contains provisions comparable to the 
                modifications described in section 
                202(b)(2)(A)-(B), but only
                  (B) to the extent that those amounts would, 
                if such amounts were instead payable by virtue 
                of the State law's being deemed to be so 
                modified pursuant to section 202(b)(1)(A), have 
                been reimbursable under paragraph (1), and
          (3) 100 percent of the temporary supplemental 
        unemployment compensation paid to individuals by the 
        State pursuant to such agreement.
  (b) Determination of Amount.--Sums under subsection (a) 
payable to any State by reason of such State having an 
agreement under this subtitle shall be payable, either in 
advance or by way of reimbursement (as may be determined by the 
Secretary), in such amounts as the Secretary estimates the 
State will be entitled to receive under this subtitle for each 
calendar month, reduced or increased, as the case may be, by 
any amount by which the Secretary finds that the Secretary's 
estimates for any prior calendar month were greater or less 
than the amounts which should have been paid to the State. Such 
estimates may be made on the basis of such statistical, 
sampling, or other method as may be agreed upon by the 
Secretary and the State agency of the State involved.
  (c) Administrative Expenses, Etc.--There is hereby 
appropriated out of the employment security administration 
account of the Unemployment Trust Fund (as established by 
section 901(a) of the Social Security Act) $500,000,000 to 
reimburse States for the costs of the administration of 
agreements under this subtitle (including any improvements in 
technology in connection therewith) and to provide reemployment 
services to unemployment compensation claimants in States 
having agreements under this subtitle. Each State's share of 
the amount appropriated by the preceding sentence shall be 
determined by the Secretary according to the factors described 
in section 302(a) of the Social Security Act and certified by 
the Secretary to the Secretary of the Treasury.

SEC. 205. FINANCING PROVISIONS.

  (a) In General.--Funds in the extended unemployment 
compensation account (as established by section 905(a) of the 
Social Security Act), and the Federal unemployment account (as 
established by section 904(g) of the Social Security Act), of 
the Unemployment Trust Fund shall be used, in accordance with 
subsection (b), for the making of payments (described in 
section 204(a)) to States having agreements entered into under 
this subtitle.
  (b) Certification.--The Secretary shall from time to time 
certify to the Secretary of the Treasury for payment to each 
State the sums described in section 204(a) which are payable to 
such State under this subtitle. The Secretary of the Treasury, 
prior to audit or settlement by the General Accounting Office, 
shall make payments to the State in accordance with such 
certification by transfers from the extended unemployment 
compensation account (or, to the extent that there are 
insufficient funds in that account, from the Federal 
unemployment account) to the account of such State in the 
Unemployment Trust Fund.

SEC. 206. FRAUD AND OVERPAYMENTS.

  (a) In General.--If an individual knowingly has made, or 
caused to be made by another, a false statement or 
representation of a material fact, or knowingly has failed, or 
caused another to fail, to disclose a material fact, and as a 
result of such false statement or representation or of such 
nondisclosure such individual has received any regular 
compensation or temporary supplemental unemployment 
compensation under this subtitle to which he was not entitled, 
such individual--
          (1) shall be ineligible for any further benefits 
        under this subtitle in accordance with the provisions 
        of the applicable State unemployment compensation law 
        relating to fraud in connection with a claim for 
        unemployment compensation, and
          (2) shall be subject to prosecution under section 
        1001 of title 18, United States Code.
  (b) Repayment.--In the case of individuals who have received 
any regular compensation or temporary supplemental unemployment 
compensation under this subtitle to which they were not 
entitled, the State shall require such individuals to repay 
those benefits to the State agency, except that the State 
agency may waive such repayment if it determines that--
          (1) the payment of such benefits was without fault on 
        the part of any such individual, and
          (2) such repayment would be contrary to equity and 
        good conscience.
  (c) Recovery by State Agency.--
          (1) In general.--The State agency may recover the 
        amount to be repaid, or any part thereof, by deductions 
        from any regular compensation or temporary supplemental 
        unemployment compensation payable to such individual 
        under this subtitle or from any unemployment 
        compensation payable to such individual under any 
        Federal unemployment compensation law administered by 
        the State agency or under any other Federal law 
        administered by the State agency which provides for the 
        payment of any assistance or allowance with respect to 
        any week of unemployment, during the 3-year period 
        after the date such individuals received the payment of 
        the regular compensation or temporary supplemental 
        unemployment compensation to which they were not 
        entitled, except that no single deduction may exceed 50 
        percent of the weekly benefit amount from which such 
        deduction is made.
          (2) Opportunity for hearing.--No repayment shall be 
        required, and no deduction shall be made, until a 
        determination has been made, notice thereof and an 
        opportunity for a fair hearing has been given to the 
        individual, and the determination has become final.
  (d) Review.--Any determination by a State agency under this 
section shall be subject to review in the same manner and to 
the same extent as determinations under the State unemployment 
compensation law, and only in that manner and to that extent.

SEC. 207. DEFINITIONS.

  For purposes of this subtitle:
          (1) In general.--The terms ``compensation'', 
        ``regular compensation'', ``extended compensation'', 
        ``additional compensation'', ``benefit year'', ``base 
        period'', ``State'', ``State agency'', ``State law'', 
        and ``week'' have the respective meanings given such 
        terms under section 205 of the Federal-State Extended 
        Unemployment Compensation Act of 1970, subject to 
        paragraph (2).
          (2) State law and regular compensation.--In the case 
        of a State entering into an agreement under this 
        subtitle--
                  (A) ``State law'' shall be considered to 
                refer to the State law of such State, applied 
                in conformance with the modifications described 
                in section 202(b)(2), subject to section 
                202(c), and
                  (B) ``regular compensation'' shall be 
                considered to refer to such compensation, 
                determined under its State law (applied in the 
                manner described in subparagraph (A)),
        except as otherwise provided or where the context 
        clearly indicates otherwise.

SEC. 208. APPLICABILITY.

  (a) In General.--An agreement entered into under this 
subtitle shall apply to weeks of unemployment--
          (1) beginning after the date on which such agreement 
        is entered into, and
          (2) ending before January 1, 2003.
  (b) Specific Rules.--Under such an agreement--
          (1) the modification described in section 
        202(b)(2)(A) (relating to alternative base periods) 
        shall not apply except in the case of initial claims 
        filed after September 11, 2001,
          (2) the modifications described in section 
        202(b)(2)(B)-(C) (relating to part-time employment and 
        increased benefits, respectively) shall apply to weeks 
        of unemployment (described in subsection (a)), 
        irrespective of the date on which an individual's claim 
        for benefits is filed, and
          (3) the payments described in section 202(b)(1)(B) 
        (relating to temporary supplemental unemployment 
        compensation) shall not apply except in the case of 
        individuals exhausting their rights to regular 
        compensation (as described in clause (i) thereof) after 
        September 11, 2001.

     Subtitle B--Premium Assistance for COBRA Continuation Coverage

SEC. 211. PREMIUM ASSISTANCE FOR COBRA CONTINUATION COVERAGE.

  (a) Establishment.--
          (1) In general.--Not later than 60 days after the 
        date of enactment of this Act, the Secretary of the 
        Treasury, in consultation with the Secretary of Labor, 
        shall establish a program under which premium 
        assistance for COBRA continuation coverage shall be 
        provided for qualified individuals under this section.
          (2) Qualified individuals.--For purposes of this 
        section, a qualified individual is an individual who--
                  (A) establishes that the individual--
                          (i) on or after July 1, 2001, and 
                        before the end of the 1-year period 
                        beginning on the date of the enactment 
                        of this Act, became entitled to elect 
                        COBRA continuation coverage; and
                          (ii) has elected such coverage; and
                  (B) enrolls in the premium assistance program 
                under this section by not later than the end of 
                such 1-year period.
  (b) Limitation of Period of Premium Assistance.--Premium 
assistance provided under this subsection shall end with 
respect to an individual on the earlier of--
          (1) the date the individual is no longer covered 
        under COBRA continuation coverage; or
          (2) 12 months after the date the individual is first 
        enrolled in the premium assistance program established 
        under this section.
  (c) Payment, and Crediting of Assistance.--
          (1) Amount of assistance.--Premium assistance 
        provided under this section shall be equal to 75 
        percent of the amount of the premium required for the 
        COBRA continuation coverage.
          (2) Provision of assistance.--Premium assistance 
        provided under this section shall be provided through 
        the establishment of direct payment arrangements with 
        the administrator of the group health plan (or other 
        entity) that provides or administers the COBRA 
        continuation coverage. It shall be a fiduciary duty of 
        such administrator (or other entity) to enter into such 
        arrangements under this section.
          (3) Premiums payable by qualified individual reduced 
        by amount of assistance.--Premium assistance provided 
        under this section shall be credited by such 
        administrator (or other entity) against the premium 
        otherwise owed by the individual involved for such 
        coverage.
  (d) Change in COBRA Notice.--
          (1) General notice.--
                  (A) In general.--In the case of notices 
                provided under section 4980B(f)(6) of the 
                Internal Revenue Code of 1986 with respect to 
                individuals who, on or after July 1, 2001, and 
                before the end of the 1-year period beginning 
                on the date of the enactment of this Act, 
                become entitled to elect COBRA continuation 
                coverage, such notices shall include an 
                additional notification to the recipient of the 
                availability of premium assistance for such 
                coverage under this section.
                  (B) Alternative notice.--In the case of COBRA 
                continuation coverage to which the notice 
                provision under section 4980B(f)(6) of the 
                Internal Revenue Code of 1986 does not apply, 
                the Secretary of the Treasury shall, in 
                coordination with administrators of the group 
                health plans (or other entities) that provide 
                or administer the COBRA continuation coverage 
                involved, assure provision of such notice.
                  (C) Form.--The requirement of the additional 
                notification under this paragraph may be met by 
                amendment of existing notice forms or by 
                inclusion of a separate document with the 
                notice otherwise required.
          (2) Specific requirements.--Each additional 
        notification under paragraph (1) shall include--
                  (A) the forms necessary for establishing 
                eligibility under subsection (a)(2)(A) and 
                enrollment under subsection (a)(2)(B) in 
                connection with the coverage with respect to 
                each covered employee or other qualified 
                beneficiary;
                  (B) the name, address, and telephone number 
                necessary to contact the plan administrator and 
                any other person maintaining relevant 
                information in connection with the premium 
                assistance; and
                  (C) the following statement displayed in a 
                prominent manner:
  ``You may be eligible to receive assistance with payment of 
75 percent of your COBRA continuation coverage premiums for a 
duration of not to exceed 12 months.''.
          (3) Notice relating to retroactive coverage.--In the 
        case of such notices previously transmitted before the 
        date of the enactment of this Act in the case of an 
        individual described in paragraph (1) who has elected 
        (or is still eligible to elect) COBRA continuation 
        coverage as of the date of the enactment of this Act, 
        the administrator of the group health plan (or other 
        entity) involved or the Secretary of the Treasury (in 
        the case described in the paragraph (1)(B)) shall 
        provide (within 60 days after the date of the enactment 
        of this Act) for the additional notification required 
        to be provided under paragraph (1).
          (4) Model notices.--The Secretary shall prescribe 
        models for the additional notification required under 
        this subsection.
  (f) Obligation of Funds.--This section constitutes budget 
authority in advance of appropriations Acts and represents the 
obligation of the Federal Government to provide for the payment 
of premium assistance under this section.
  (g) Prompt Issuance of Guidance.--The Secretary of the 
Treasury, in consultation with the Secretary of Labor, shall 
issue guidance under this section not later than 30 days after 
the date of the enactment of this Act.
  (h) Definitions.--In this section:
          (1) Administrator.--The term ``administrator'' has 
        the meaning given such term in section 3(16) of the 
        Employee Retirement Income Security Act of 1974.
          (2) COBRA continuation coverage.--The term ``COBRA 
        continuation coverage'' means continuation coverage 
        provided pursuant to title XXII of the Public Health 
        Service Act, section 4980B of the Internal Revenue Code 
        of 1986 (other than subsection (f)(1) of such section 
        insofar as it relates to pediatric vaccines), part 6 of 
        subtitle B of title I of the Employee Retirement Income 
        Security Act of 1974 (other than under section 609), 
        section 8905a of title 5, United States Code, or under 
        a State program that provides continuation coverage 
        comparable to such continuation coverage.
          (3) Group health plan.--The term ``group health 
        plan'' has the meaning given such term in section 
        9832(a) of the Internal Revenue Code of 1986.
          (4) State.--The term ``State'' includes the District 
        of Columbia, the Commonwealth of Puerto Rico, the 
        Virgin Islands, Guam, American Samoa, and the 
        Commonwealth of the Northern Mariana Islands.

   Subtitle C--Additional Assistance for Temporary Health Insurance 
                                Coverage

SEC. 221. OPTIONAL TEMPORARY MEDICAID COVERAGE FOR CERTAIN UNINSURED 
                    EMPLOYEES.

  (a) In General.--Notwithstanding any other provision of law, 
with respect to any month before the ending month, a State may 
elect to provide, under its medicaid program under title XIX of 
the Social Security Act, medical assistance in the case of an 
individual--
          (1)(A) who has become totally or partially separated 
        from employment on or after July 1, 2001, and before 
        the end of such ending month; or
          (B) whose hours of employment have been reduced on or 
        after July 1, 2001, and before the end of such ending 
        month;
          (2) who is not eligible for COBRA continuation 
        coverage; and
          (3) who is uninsured.
  (b) Limitation of Period of Coverage.--Assistance under this 
section shall end with respect to an individual on the earlier 
of--
          (1) the date the individual is no longer uninsured; 
        or
          (2) 12 months after the date the individual is first 
        determined to be eligible for medical assistance under 
        this section.
  (c) Special Rules.--In the case of medical assistance 
provided under this section--
          (1) the Federal medical assistance percentage under 
        section 1905(b) of the Social Security Act shall be the 
        enhanced FMAP (as defined in section 2105(b) of such 
        Act);
          (2) a State may elect to apply alternative income, 
        asset, and resource limitations and the provisions of 
        section 1916(g) of such Act, except that in no case 
        shall a State cover individuals with higher family 
        income without covering individuals with a lower family 
        income;
          (3) such medical assistance shall not be provided for 
        periods before the date the individual becomes 
        uninsured;
          (4) a State may elect to make eligible for such 
        assistance a spouse or children of an individual 
        eligible for medical assistance under paragraph (1), if 
        such spouse or children are uninsured;
          (5) individuals eligible for medical assistance under 
        this section shall be deemed to be described in the 
        list of individuals described in the matter preceding 
        paragraph (1) of section 1905(a) of such Act; and
          (6) the Secretary of Health and Human Services shall 
        not count, for purposes of section 1108(f) of the 
        Social Security Act, such amount of payments under this 
        section as bears a reasonable relationship to the 
        average national proportion of payments made under this 
        section for the 50 States and the District of Columbia 
        to the payments otherwise made under title XIX for such 
        States and District.
  (d) Definitions.--For purposes of this subtitle:
          (1) Uninsured.--The term ``uninsured'' means, with 
        respect to an individual, that the individual is not 
        covered under--
                  (A) a group health plan (as defined in 
                section 2791(a) of the Public Health Service 
                Act),
                  (B) health insurance coverage (as defined in 
                section 2791(b)(1) of the Public Health Service 
                Act), or
                  (C) a program under title XVIII, XIX, or XXI 
                of the Social Security Act, other than under 
                such title XIX pursuant to this section.
        For purposes of this paragraph, such coverage under 
        subparagraph (A) or (B) shall not include coverage 
        consisting solely of coverage of excepted benefits (as 
        defined in section 2791(c) of the Public Health Service 
        Act).
          (2) COBRA continuation coverage.--The term ``COBRA 
        continuation coverage'' means coverage under a group 
        health plan provided by an employer pursuant to title 
        XXII of the Public Health Service Act, section 4980B of 
        the Internal Revenue Code of 1986, part 6 of subtitle B 
        of title I of the Employee Retirement Income Security 
        Act of 1974, or section 8905a of title 5, United States 
        Code.
          (3) State.--The term ``State'' has the meaning given 
        such term for purposes of title XIX of the Social 
        Security Act.
          (4) Ending month.--The term ``ending month'' means 
        the last month that begins before the date that is 1 
        year after the date of the enactment of this Act.
  (e) Effective Date.--This section shall take effect upon its 
enactment, whether or not regulations implementing this section 
are issued.
  (f) Limitation on Election.--A State may not elect to provide 
coverage under this section unless the State elects to provide 
coverage under section 222.

SEC. 222. OPTIONAL TEMPORARY COVERAGE FOR UNSUBSIDIZED PORTION OF COBRA 
                    CONTINUATION PREMIUMS.

  (a) In General.--Notwithstanding any other provision of law, 
with respect to COBRA continuation coverage provided for any 
month through the ending month, a State may elect to provide 
payment of the unsubsidized portion of the premium for COBRA 
continuation coverage in the case of any individual--
          (1)(A) who has become totally or partially separated 
        from employment on or after July 1, 2001, and before 
        the end of the ending month; or
          (B) whose hours of employment have been reduced on or 
        after July 1, 2001, and before the end of such ending 
        month; and
          (2) who is eligible for, and has elected coverage 
        under, COBRA continuation coverage.
  (b) Limitation of Period of Coverage.--Premium assistance 
under this section shall end with respect to an individual on 
the earlier of--
          (1) the date the individual is no longer covered 
        under COBRA continuation coverage; or
          (2) 12 months after the date the individual is first 
        determined to be eligible for premium assistance under 
        this section.
  (c) Financial Payment to States.--A State providing premium 
assistance under this section shall be entitled to payment 
under section 1903(a) of the Social Security Act with respect 
to such assistance (and administrative expenses relating to 
such assistance) in the same manner as such State is entitled 
to payment with respect to medical assistance (and such 
administrative expenses) under such section, except that, for 
purposes of this subsection, any reference to the Federal 
medical assistance percentage shall be deemed a reference to 
the enhanced FMAP (as defined in section 2105(b) of such Act). 
The provisions of subsection (c)(6) of section 221 shall apply 
with respect to this section in the same manner as it applies 
under such section.
  (d) Unsubsidized Portion of Premium for COBRA Continuation 
Coverage.--For purposes of this section, the term 
``unsubsidized portion of premium for COBRA continuation 
coverage'' means that portion of the premium for COBRA 
continuation coverage for which there is no financial 
assistance available under section 211.
  (e) Effective Date.--This section shall take effect upon its 
enactment, whether or not regulations implementing this section 
are issued.
  (f) Limitation on Election.--A State may not elect to provide 
coverage under this section unless the State elects to provide 
coverage under section 221.

   TITLE III--FREEZE OF TOP INDIVIDUAL INCOME TAX RATE AND DOMESTIC 
                          SECURITY TRUST FUND

SEC. 301. FREEZE OF TOP INDIVIDUAL INCOME TAX RATE AND DOMESTIC 
                    SECURITY TRUST FUND.

  (a) Freeze of Top Individual Income Tax Rate.--Paragraph (2) 
of section 1(i) (relating to reductions in rates after June 30, 
2001) is amended--
                  (A) by striking ``37.6'' and inserting 
                ``38.6'', and
                  (B) by striking ``35.0'' and inserting 
                ``38.6''.
  (b) Domestic Security Trust Fund.--Subchapter A of chapter 98 
(relating to trust fund code) is amended by adding at the end 
the following new section:

``SEC. 9511. DOMESTIC SECURITY TRUST FUND.

  ``(a) Creation of Trust Fund.--There is established in the 
Treasury of the United States a trust fund to be known as the 
`Domestic Security Trust Fund', consisting of such amounts as 
may be transferred or credited to the Trust Fund as provided in 
this section and section 9602(b).
  ``(b) Transfers to Fund.--There are hereby transferred from 
the General Fund of the Treasury to the Domestic Security Trust 
Fund so much of the additional amounts received in the Treasury 
by reason of the amendment made by section 301(a) of the Fiscal 
Stimulus and Worker Relief Act of 2001 (relating to freeze in 
top individual income tax rate) as does not exceed the sum of--
          ``(1) $32,000,000,000, plus
          ``(2) the amount determined by the Secretary to be 
        necessary to pay the interest on any repayable advance 
        made to the Trust Fund.
  ``(c) Expenditures.--Amounts in the Domestic Security Trust 
Fund shall be available, as provided by appropriation Acts, for 
purposes of making the following expenditures to the extent 
such expenditures are hereafter authorized by law:
          ``(1) $7,000,000,000 for domestic economic 
        development programs.
          ``(2) $25,000,000,000 for programs to significantly 
        enhance safety and security of transportation systems, 
        facilities, and environmental protection, including the 
        emergency management systems and emergency response 
        training.
  ``(d) Repayable Advances.--
          ``(1) In general.--If amounts in the Trust Fund are 
        not sufficient for the purposes of subsection (c), the 
        Secretary shall transfer from the General Fund of the 
        Treasury to the Trust Fund such additional amounts as 
        may be necessary for such purposes. Such amounts shall 
        be transferred as repayable advances.
          ``(2) Repayment of advances.--
                  ``(A) In general.--Advances made to the Trust 
                Fund shall be repaid, and interest on such 
                advances shall be paid, to the General Fund of 
                the Treasury when the Secretary determines that 
                moneys are available for such purposes in the 
                Trust Fund.
                  ``(B) Rate of interest.--Interest on advances 
                made to the Trust Fund shall be at a rate 
                determined by the Secretary of the Treasury (as 
                of the close of the calendar month preceding 
                the month in which the advance is made) to be 
                equal to the current average market yield on 
                outstanding marketable obligations of the 
                United States with remaining periods to 
                maturity comparable to the anticipated period 
                during which the advance will be outstanding 
                and shall be compounded annually.''.
  (c) Clerical Amendment.--The table of sections for subchapter 
A of chapter 98 is amended by adding at the end the following 
new item:

        ``Sec. 9511. Domestic security trust fund.''.

  (d) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 2001.

                                  
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