care and adoption assistance programs (established by part E of title IV of the Social Security Act [42 U.S.C. 670 et seq.]) only with respect to payments and expenditures made by States in which increases in foster care maintenance payment rates or adoption assistance payment rates (or both) are to take effect during the fiscal year involved, and only to the extent that the required reduction can be accomplished by applying a uniform percentage reduction to the Federal matching payments that each such State would otherwise receive under section 474 of that Act [42 U.S.C. 674] (for such fiscal year) for that portion of the State's payments which is attributable to the increases taking effect during that year. No State's matching payments from the Federal Government for foster care maintenance payments or for adoption assistance maintenance payments may be reduced by a percentage exceeding the applicable domestic sequestration percentage. No State may, after December 12, 1985, make any change in the timetable for making payments under a State plan approved under part E of title IV of the Social Security Act which has the effect of changing the fiscal year in which expenditures under such part are made.

(d) Special rules for Medicare program

(1) Calculation of reduction in individual payment amounts

To achieve the total percentage reduction in those programs required by sections 902 and 903 of this title, and notwithstanding section 710 of the Social Security Act [42 U.S.C. 9111, OMB shall determine, and the applicable Presidential order under section 904 of this title shall implement, the percentage reduction that shall apply to payments under the health insurance programs under title XVIII of the Social Security Act [42 U.S.C. 1395 et seq.] for services furnished after the order is issued, such that the reduction made in payments under that order shall achieve the required total percentage reduction in those payments for that fiscal year as determined on a 12-month basis.

(2) Timing of application of reductions (A) In general

Except as provided in subparagraph (B), if a reduction is made under paragraph (1) in payment amounts pursuant to a sequestration order, the reduction shall be applied to payment for services furnished during the effective period of the order. For purposes of the previous sentence, in the case of inpatient services furnished for an individual, the services shall be considered to be furnished on the date of the individual's discharge from the inpatient facility. (B) Payment on the basis of cost reporting peri

ods

In the case in which payment for services of a provider of services is made under title XVIII of the Social Security Act [42 U.S.C. 1395 et seq.) on a basis relating to the reasonable cost incurred for the services during a cost reporting period of the provider, if a reduction is made under paragraph (1) in

payment amounts pursuant to a sequestration order, the reduction shall be applied to payment for costs for such services incurred at any time during each cost reporting period of the provider any part of which occurs during the effective period of the order, but only (for each such cost reporting period) in the same proportion as the fraction of the cost reporting period that occurs during the effective period of the order.

(3) No increase in beneficiary charges in assignment-related cases

If a reduction in payment amounts is made under paragraph (1) for services for which payment under part B of title XVIII of the Social Security Act [42 U.S.C. 1395j et seq.] is made on the basis of an assignment described

in section 1842(b)(3)(B)(ii) [42 U.S.C.

1395u(b)(3)(B)(ii)], in accordance with section 1842(b)(6)(B) [42 U.S.C. 1395u(b)(6)(B)], or under the procedure described in section 1870(f)(1) [42 U.S.C. 1395gg(f)(1)], of such Act, the person furnishing the services shall be considered to have accepted payment of the reasonable charge for the services, less any reduction in payment amount made pursuant to a sequestration order, as payment in full.

(4) No effect on computation of AAPCC

In computing the adjusted average per capita cost for purposes of section 1876(a)(4) of the Social Security Act [42 U.S.C. 1395mm(a)(4)], the Secretary of Health and Human Services shall not take into account any reductions in payment amounts which have been or may be effected under this subchapter.

(e) Community and migrant health centers, Indian health services and facilities, and veterans' medical care

(1) The maximum permissible reduction in budget authority for any account listed in paragraph (2) for any fiscal year, pursuant to an order issued under section 904 of this title, shall be

(A) 1 percent in the case of the fiscal year 1986, and

(B) 2 percent in the case of any subsequent fiscal year.

(2) The accounts referred to in paragraph (1) are as follows:

(A) Community health centers (75-0350-0-1550).

(B) Migrant health centers (75-0350-0-1550).

(C) Indian health facilities (75-0391-0-1551).

(D) Indian health services (75-0390-0-1-551). (E) Veterans' medical care (36-0160-0-1-703). For purposes of the preceding provisions of this paragraph, programs are identified by the designated budget account identification code numbers set forth in the Budget of the United States Government-Appendix.

(g) Federal pay

(1) In general

(2) Definitions

For purposes of this subsection:

(A) The term "statutory pay system" shall have the meaning given that term in section 5302(1) of title 5.

(B) The term "elements of military pay"

means

(i) the elements of compensation of members of the uniformed services specified in section 1009 of title 37,

(ii) allowances provided members of the uniformed services under sections 403a and 405 of such title, and

(iii) cadet pay and midshipman pay under section 203(c) of such title.

(C) The term "uniformed services" shall have the meaning given that term in section 101(3) of title 37.

(h) Treatment of Federal administrative expenses

(1) Notwithstanding any other provision of this title, administrative expenses incurred by the departments and agencies, including independent agencies, of the Federal Government in connection with any program, project, activity, or account shall be subject to reduction pursuant to an order issued under section 904 of this title, without regard to any exemption, exception, limitation, or special rule which is otherwise applicable with respect to such program, project, activity, or account under this subchapter.

'See References in Text note below.

(2) Notwithstanding any other provision of law, administrative expenses of any program, project, activity, or account which is self-supporting and does not receive appropriations shall be subject to reduction under a sequester order, unless specifically exempted in this joint resolution.

(3) Payments made by the Federal Government to reimburse or match administrative costs incurred by a State or political subdivision under or in connection with any program, project, activity, or account shall not be consid ered administrative expenses of the Federal Government for purposes of this section, and shall be subject to reduction or sequestration under this subchapter to the extent (and only to the extent) that other payments made by the Federal Government under or in connection with that program, project, activity, or account are subject to such reduction or sequestration; except that Federal payments made to a State as reimbursement of administrative costs incurred by such State under or in connection with the unemployment compensation programs specified in subsection (h)(1) 1 of this section shall be subject to reduction or sequestration under this subchapter notwithstanding the exemption otherwise granted to such programs under that subsection.

(4) Notwithstanding any other provision of law, this subsection shall not apply with respect to the following:

(A) Comptroller of the Currency.

(B) Federal Deposit Insurance Corporation.
(C) Office of Thrift Supervision.2
(D) Office of Thrift Supervision.2

(E) National Credit Union Administration.
(F) National Credit Union Administration,
central liquidity facility.

(G) Federal Retirement Thrift Investment Board.

(H) Resolution Funding Corporation.
(I) Resolution Trust Corporation.

(i) Treatment of payments and advances made with respect to unemployment compensation programs (1) For purposes of section 904 of this title

(A) any amount paid as regular unemployment compensation by a State from its account in the Unemployment Trust Fund (established by section 904(a) of the Social Security Act [42 U.S.C. 1104(a)]),

(B) any advance made to a State from the Federal unemployment account (established by section 904(g) of such Act [42 U.S.C. 1104(g)]) under title XII of such Act [42 U.S.C. 1321 et seq.] and any advance appropriated to the Federal unemployment account pursuant to section 1203 of such Act [42 U.S.C. 1323], and

(C) any payment made from the Federal Employees Compensation Account (as established under section 909 of such Act [42 U.S.C. 1109]) for the purpose of carrying out chapter 85 of title 5 and funds appropriated or transferred to or otherwise deposited in such Account,

shall not be subject to reduction.

(2)(A) A State may reduce each weekly benefit payment made under the Federal-State Extended Unemployment Compensation Act of 1970 for any week of unemployment occurring during any period with respect to which payments are reduced under an order issued under section 904 of this title by a percentage not to exceed the percentage by which the Federal payment to the State under section 204 of such Act is to be reduced for such week as a result of such order.

(B) A reduction by a State in accordance with subparagraph (A) shall not be considered as a failure to fulfill the requirements of section 3304(a)(11) of title 26.

(j) Commodity Credit Corporation

(1) Powers and authorities of the Commodity Credit Corporation

This title shall not restrict the Commodity Credit Corporation in the discharge of its authority and responsibility as a corporation to buy and sell commodities in world trade, to use the proceeds as a revolving fund to meet other obligations and otherwise operate as a corporation, the purpose for which it was created.

(2) Reduction in payments made under contracts

(A) Payments and loan eligibility under any contract entered into with a person by the Commodity Credit Corporation prior to the time an order has been issued under section 904 of this title shall not be reduced by an order subsequently issued. Subject to subparagraph (B), after an order is issued under such section for a fiscal year, any cash payments made by the Commodity Credit Corporation

(i) under the terms of any one-year contract entered into in such fiscal year and after the issuance of the order; and

(ii) out of an entitlement account,

to any person (including any producer, lender, or guarantee entity) shall be subject to reduction under the order.

(B) Each contract entered into with producers or producer cooperatives with respect to a particular crop of a commodity and subject to reduction under subparagraph (A) shall be reduced in accordance with the same terms and conditions. If some, but not all, contracts applicable to a crop of a commodity have been entered into prior to the issuance of an order under section 904 of this title, the order shall provide that the necessary reduction in payments under contracts applicable to the commodity be uniformly applied to all contracts for the next succeeding crop of the commodity, under the authority provided in paragraph

(3).

(3) Delayed reduction in outlays permissible

Notwithstanding any other provision of this joint resolution, if an order under section 904 of this title is issued with respect to a fiscal year, any reduction under the order applicable to contracts described in paragraph (1)

'See References in Text note below.

may provide for reductions in outlays for the account involved to occur in the fiscal year following the fiscal year to which the order applies. No other account, or other program, project, or activity, shall bear an increased reduction for the fiscal year to which the order applies as a result of the operation of the preceding sentence.

(4) Uniform percentage rate of reduction and other limitations

All reductions described in paragraph (2) which are required to be made in connection with an order issued under section 904 of this title with respect to a fiscal year

(A) shall be made so as to ensure that outlays for each program, project, activity, or account involved are reduced by a percentage rate that is uniform for all such programs, projects, activities, and accounts, and may not be made so as to achieve a percentage rate of reduction in any such item exceeding the rate specified in the order; and

(B) with respect to commodity price support and income protection programs, shall be made in such manner and under such procedures as will attempt to ensure that

(i) uncertainty as to the scope of benefits under any such program is minimized; (ii) any instability in market prices for agricultural commodities resulting from the reduction is minimized; and

(iii) normal production and marketing relationships among agricultural commodities (including both contract and noncontract commodities) are not distorted.

In meeting the criterion set out in clause (iii) of subparagraph (B) of the preceding sentence, the President shall take into consideration that reductions under an order may apply to programs for two or more agricultural commodities that use the same type of production or marketing resources or that are alternative commodities among which a producer could choose in making annual production decisions.

(5) No double reduction

No agricultural price support or income protection program that is subject to reduction under an order issued under section 904 of this title for a fiscal year may be subject, as well, to modification or suspension under such order as an automatic spending increase. (6) Certain authority not to be limited

Nothing in this joint resolution shall limit or reduce, in any way, any appropriation that provides the Commodity Credit Corporation with budget authority to cover the Corporation's net realized losses.

(k) Special rules for JOBS portion of AFDC (1) Full amount of sequestration required

Any order issued by the President under section 904 of this title shall accomplish the full amount of any required sequestration of the job opportunities and basic skills training program under section 402(a)(19) [42 U.S.C.

602(a)(19)], and part F of title VI,1 of the Social Security Act, in the manner specified in this subsection. Such an order may not reduce any Federal matching rate pursuant to section 403(1) of the Social Security Act [42 U.S.C. 603(Z)].

(2) New allotment formula

(A) General rule

Notwithstanding section 403(k) of the Social Security Act [42 U.S.C. 603(k)], each State's percentage share of the amount available after sequestration for direct spending pursuant to section 403(1) of such Act for the fiscal year to which the sequestration applies shall be equal to—

(i) the lesser of

total

(I) that percentage of the amount paid to the States pursuant to such section 403(1) for the prior fiscal year that is represented by the amount paid to such State pursuant to such section 403(1) for the prior fiscal year; or

(II) the amount that would have been allotted to such State pursuant to such section 403(k) had the sequestration not been in effect.

(B) Reallotment of amounts remaining unallotted after application of general rule

Any amount made available after sequestration for direct spending pursuant to section 403(7) of the Social Security Act [42 U.S.C. 603(1)] for the fiscal year to which the sequestration applies that remains unallotted as a result of subparagraph (A) of this paragraph shall be allotted among the States in proportion to the absolute difference between the amount allotted, respectively, to each State as a result of such subparagraph and the amount that would have been allotted to such State pursuant to section 403(k) of such Act had the sequestration not been in effect, except that a State may not be allotted an amount under this subparagraph that results in a total allotment to the State under this paragraph of more than the amount that would have been allotted to such State pursuant to such section 403(k) had the sequestration not been in effect.

(1) Effects of sequestration

The effects of sequestration shall be as follows:

(1) Budgetary resources sequestered from any account other than a trust or special fund account shall be permanently cancelled. (2) Except as otherwise provided, the same percentage sequestration shall apply to all programs, projects, and activities within a budget account (with programs, projects, and activities as delineated in the appropriation Act or accompanying report for the relevant fiscal year covering that account, or for accounts not included in appropriation Acts, as delineated in the most recently submitted President's budget).

* See References in Text note below.

"So in original. Subsec. (k)(2)(A) enacted without a cl. (fi).

(3) Administrative regulations or similar actions implementing a sequestration shall be made within 120 days of the sequestration order. To the extent that formula allocations differ at different levels of budgetary resources within an account, program, project, or activity, the sequestration shall be interpreted as producing a lower total appropriation, with the remaining amount of the appropriation being obligated in a manner consistent with program allocation formulas in substantive law.

(4) Except as otherwise provided, obligations in sequestered accounts shall be reduced only in the fiscal year in which a sequester occurs.

(5) If an automatic spending increase is sequestered, the increase (in the applicable index) that was disregarded as a result of that sequestration shall not be taken into account in any subsequent fiscal year.

(6) Except as otherwise provided, sequestration in trust and special fund accounts for which obligations are indefinite shall be taken in a manner to ensure that obligations in the fiscal year of a sequestration are reduced, from the level that would actually have occurred, by the applicable sequestration percentage.

(As amended Pub. L. 101-73, title VII, § 743(b), Aug. 9, 1989, 103 Stat. 437; Pub. L. 101-508, title XIII, § 13101(d), Nov. 5, 1990, 104 Stat. 1388-589; Pub. L. 101-509, title V, § 529 [title I, § 101(b)(2)(A), (4)(H)], Nov. 5, 1990, 104 Stat. 1427, 1439, 1440.)

TERMINATION OF SECTION

For termination of section by section 14002(c)(3)(A) of Pub. L. 103-66, see Effective and Termination Dates note set out under section 900 of this title.

REFERENCES IN TEXT

This joint resolution, referred to in subsecs. (h)(2) and (j)(3), (6), means Pub. L. 99-177, Dec. 12, 1985, 99 Stat. 1037, as amended, which enacted this chapter and sections 654 to 656 of this title, amended sections 602, 622, 631 to 642, and 651 to 653 of this title, sections 1104 to 1106, 1109, and 3101 of Title 31, Money and Finance, and section 911 of Title 42, The Public Health and Welfare, repealed section 661 of this title, enacted provisions set out as notes under section 900 of this title and section 911 of Title 42, and amended provisions set out as a note under section 621 of this title. For complete classification of this Act to the Code, see Tables.

Subsec. (h)(1) of this section, referred to in subsec. (h)(3), was redesignated subsec. (i)(1) of this section by Pub. L. 101-508, title XIII, § 13101(d)(2), Nov. 5, 1990, 104 Stat. 1388-589.

The Federal-State Extended Unemployment Compensation Act of 1970, referred to in subsec. (i)(2)(A), is title II of Pub. L. 91-373, Aug. 10, 1970, 84 Stat. 708, as amended, which is classified generally as a note under section 3304 of Title 26, Internal Revenue Code. Section 204 of such Act is set out in the note under section 3304 of Title 26. For complete classification of this Act to the Code, see Tables.

AMENDMENTS

1990 Subsec. (a). Pub. L. 101-508, § 13101(d)(1), amended subsec. (a) generally, substituting provisions relating to automatic spending increases for provisions relating to effect of reductions and sequestrations.

Subsec. (b). Pub. L. 101-508, § 13101(d)(3), substituted "section 904 of this title" for "section 902 of this title" in pars. (1) to (3).

Pub. L. 101-508, § 13101(d)(2), redesignated subsec. (c) as (b). Former subsec. (b) redesignated (h).

Subsec. (c). Pub. L. 101-508, § 13101(d)(4), inserted after first sentence "No State's matching payments from the Federal Government for foster care maintenance payments or for adoption assistance maintenance payments may be reduced by a percentage exceeding the applicable domestic sequestration percentage."

Pub. L. 101-508, § 13101(d)(3), substituted "section 904 of this title" for "section 902 of this title".

Pub. L. 101-508, § 13101(d)(2), redesignated subsec. (f) as (c). Former subsec. (c) redesignated (b).

Subsec. (d)(1). Pub. L. 101-508, § 13101(d)(5), amended par. (1) generally. Prior to amendment, par. (1) read as follows: "The maximum permissible reduction for the health insurance programs under title XVIII of the Social Security Act for any fiscal year, pursuant to an order issued under section 902 of this title, consists only of a reduction of—

“(A) 1 percent in the case of fiscal year 1986, and "(B) 2 percent (or such higher percentage as may apply as determined in accordance with section 902(a)(4)(B)(ii) of this title) in the case of any subsequent fiscal year,

in each separate payment amount otherwise made for a covered service under those programs without regard to this subchapter."

Subsec. (d)(2)(C). Pub. L. 101-508, § 13101(d)(6), struck out subpar. (C) which read as follows: "For purposes of this paragraph, the effective period of a sequestration order for fiscal year 1986 is the period beginning on March 1, 1986, and ending on September 30, 1986."

Subsec. (e). Pub. L. 101-508, § 13101(d)(2), redesignated subsec. (k) as (e). Former subsec. (e) redesignated (f).

Subsec. (e)(1). Pub. L. 101-508, § 13101(d)(3), substituted "section 904 of this title" for "section 902 of this title".

Subsec. (f). Pub. L. 101-508, § 13101(d)(3), substituted "section 904 of this title" for "section 902 of this title".

Pub. L. 101-508, § 13101(d)(2), redesignated subsec. (e) as (f). Former subsec. (f) redesignated (c). Subsec. (g)(1). Pub. L. 101-509, § 529 [title I, § 101(b)(4)(H)], in closing provisions, inserted “(as in

creased by any amount payable under section 5304 of title 5 or section 302 of the Federal Employees Pay Comparability Act of 1990)" after "pay system" and substituted "5303" for "5305".

Pub. L. 101-508, § 13101(d)(3), substituted "section 904 of this title" for "section 902 of this title".

Subsec. (g)(2)(A). Pub. L. 101-509, § 529 [title I, § 101(b)(2)(A)], substituted “5302(1)” for “5301(c)". Subsec. (h). Pub. L. 101-508, § 13101(d)(2), redesignated subsec. (b) as (h). Former subsec. (h) redesignated (i).

Subsec. (h)(1). Pub. L. 101-508, § 13101(d)(3), substituted "section 904 of this title" for "section 902 of this title".

Subsec. (i). Pub. L. 101-508, § 13101(d)(2), redesignated subsec. (h) as (i) and struck out former subsec. (i) which related to treatment of mine worker disability compensation increases as automatic spending in

creases.

Subsec. (i)(1), (2)(A). Pub. L. 101-508, § 13101(d)(3), substituted "section 904 of this title" for "section 902 of this title".

Subsec. (j). Pub. L. 101-508, § 13101(d)(3), substituted "section 904 of this title" for "section 902 of this title" wherever appearing in pars. (2) to (5).

Subsec. (k). Pub. L. 101-508, § 13101(d)(2), added subsec. (k). Former subsec. (k) redesignated (e).

Subsec. (1). Pub. L. 101-508, § 13101(d)(2), added subsec. (1) and struck out former subsec. (1) which related to treatment of obligated balances.

1989-Subsec. (b)(4)(C). Pub. L. 101-73, § 743(b)(1), substituted "Office of Thrift Supervision" for "Federal Home Loan Bank Board".

Subsec. (b)(4)(D). Pub. L. 101-73, § 743(b)(2), substituted "Office of Thrift Supervision" for "Federal Savings and Loan Insurance Corporation".

Subsec. (b)(4)(H), (I). Pub. L. 101-73, § 743(b)(3), added subpars. (H) and (I).

EFFECTIVE Date of 1990 AMENDMENT Amendment by Pub. L. 101-509 effective on such date as the President shall determine, but not earlier than 90 days, and not later than 180 days, after Nov. 5, 1990, see section 529 [title III, § 305] of Pub. L. 101-509, set out as a note under section 5301 of Title 5, Government Organization and Employees.

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 901, 902, 903, 905 of this title; title 12 section 1772c.

§ 907. The baseline

(a) In general

For any budget year, the baseline refers to a projection of current-year levels of new budget authority, outlays, revenues, and the surplus or deficit into the budget year and the outyears based on laws enacted through the applicable date.

(b) Direct spending and receipts

For the budget year and each outyear, the baseline shall be calculated using the following assumptions:

(1) In general

Laws providing or creating direct spending and receipts are assumed to operate in the manner specified in those laws for each such year and funding for entitlement authority is assumed to be adequate to make all payments required by those laws. (2) Exceptions

(A) No program with estimated currentyear outlays greater than $50 million shall be