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1654 ...continued)

According to CBO, those three months will achieve more than 35.6 percent
of the total amount of savings that would be achieved by a full-year sequester.
The savings achieved during those three months will count as savings under
the new order.

A second minor exception applies to Vocation Rehabilitation Basic State Grants and the Special Milk programs. The entitlement formulas in those programs are indexed to price increases; in the event of a sequester, the COLAs are frozen. Section 11002 overrides the COLA freeze that would otherwise be in place for the full year, and instead reduces the COLA by 35.6 percent. As with GSL's, the savings achieved by partial COLAs will count as savings under the new order.

Except as noted above, all the provisions of the Balanced Budget Act apply to the calculation and implementation of the new order. Specifically, it is still required that reductions in each program, project, or activity within a budget account be proportional to the reduction in the full account. However, since the new order is not technically the order of October 16, 1989, various requirements or procedures that are ancillary to that order do not apply. Specifically, the special Congressional procedures under section 258 of the Balanced Budget Act are not available, and the administration is not required to file a new accompanying message under section 252(a)(4) of the Act.

The final minor exception to the overlap between section 11002 and provisions in Title VI that achieve reconciliation savings by continuing the Medicare sequester under the original order of October 16 in full force for part of the year (e.g. through March 31, 1990, in the case of Part B Medicare). In order to prevent the Medicare sequester that would occur under this new order from applying on top of the Title VI sequester during the period when the two are concurrent, subsection (d) provides that during that period the Medicare cuts under Title XI will not take place. In effect, the continued Medicare cuts under Title VI (at a rate higher than the rate under Title XI) are deemed to achieve the Title XI Medicare savings during the period when the Title VI savings are in effect. After they expire, however, the Title XI Medicare savings will be in effect for the remainder of the year. This rule for the application of the Medicare reductions under Title XI is not taken into account in calculating the new OMB report and in the President's new order, although this rule then supercedes the President's new order with regard to Medicare cuts.

H.R. CONF. REP. No. 101-386, 101st Cong., 1st Sess. 942-44 (1989), reprinted in 1989 U.S.

Subtitle E Government-sponsored Enterprises

SEC. 13501. FINANCIAL SAFETY AND

SOUNDNESS OF GOVERNMENT-SPON-
SORED ENTERPRISES. 1655

(a) DEFINITION. -- For purposes of this section, the terms "Government-sponsored enterprise" and "GSE" mean the Farm Credit System (including the Farm Credit Banks, Banks for Cooperatives, and Federal Agricultural Mortgage Corporation), the Federal Home Loan Bank System, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, and the Student Loan Marketing Association. 1656

1655

The statement of managers accompanying the conference report on the Budget Enforcement Act explains the state of the law prior to enactment of that Act:

VIII. GOVERNMENT SPONSORED ENTERPRISES

Current law

Congress has created several Government-sponsored enterprises or GSEs to help make credit more reliably available to farmers, homeowners, colleges, and students. Through federal charters provided in statute, GSEs are privately owned and operated, limited in their activities to specific economic sectors, and given certain benefits that help them accomplish their goals.

Due to the public missions described in the charters of these entities, the Government does have an interest in the activities of the GSEs. While there is no explicit Federal backing for the GSEs, in 1987, the Government infused significant additional resources into the Farm Credit System when the system had financial difficulties. This Government financial assistance to a GSE and the problems of the Savings and Loan sector have generated increased interest in Congressional oversight of the GSES.

H.R. CONF. REP. No. 101-964, 101st Cong., 2d Sess. 1,166 (1990).

1656

Note that section 3(8) of the Congressional Budget Act provides a different definition of "Government-sponsored enterprise" for the purposes of that Act. See supra pp. 17-18. (Section 13112(a)(2)(A) of the Budget Enforcement Act amended section 3(8)

(b) TREASURY DEPARTMENT STUDY AND PROPOSED LEGISLATION.

(1) The Department of the Treasury shall prepare and submit to Congress no later than April 30, 1991, a study of GSEs and recommended legislation.

(2) The study shall include an objective assessment of the financial soundness of GSEs, the adequacy of the existing regulatory structure for GSEs, the financial exposure of the Federal Government posed by GSEs, and the effects of GSE activities on Treasury borrowing.

1657

1656 ...continued) to read as it does now. See supra 624.)

The statement of managers accompanying the conference report on the Budget Enforcement Act explains this subsection:

House bill

Section 13501(a), of the House bill defined GSEs for this legislation
to include the Farm Credit System (including Farm Credit Banks, Banks for
Cooperatives, Federal Agricultural Mortgage Corporation, and the Farm
Credit Insurance Corporation) the Federal Home Loan Bank System, the
Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, and Student Loan Marketing Association.

Senate amendment

The Senate had no similar provision.

Conference report

The conference report adopts the House language except that it deletes the reference to the Farm Credit Insurance Corporation which is an on-budget entity.

H.R. CONF. REP. No. 101-964, 101st Cong., 2d Sess. 1,166 (1990).

1657

The statement of managers accompanying the conference report on the Budget Enforcement Act explains this subsection:

House bill

Subsection (b) mandates a Treasury study on the financial safety and

(c) CONGRESSIONAL BUDGET OFFICE STUDY.

(1) The Congressional Budget Office shall prepare and submit to Congress no later than April 30, 1991, a study of GSES.

(2) The study shall include an analysis of the financial risks each GSE assumes, how. Congress may improve its understanding of those risks, the supervision and regulation of GSEs' risk management, the financial exposure of the Federal Government posed by GSEs, and the effects of GSE activities on Treasury borrowing. The study shall also include an analysis of alternative models for oversight of GSEs and of the costs and benefits of each alternative model to the Government and to the markets and beneficiaries served by GSEs.

1658

1657 ...continued)

soundness of GSEs, the adequacy of the existing regulatory structure for
GSEs, and the financial exposure of the Federal Government posed by GSEs.
The Department of the Treasury shall prepare and submit to Congress no
later than April 30, 1991, a study of GSEs and recommended legislation.

Senate amendment

Section 12254(a)(1) of the Senate amendment contained an essentially identical provision.

Conference report

The conference report accepts the House provision but expands the scope of the Treasury study to analyze the impact of GSE activities on Treasury borrowing.

H.R. CONF. REP. No. 101-964, 101st Cong., 2d Sess. 1,166-69 (1990).

1658

The statement of managers accompanying the conference report on the Budget Enforcement Act explains this subsection:

House bill

Subsection (c) mandates a Congressional Budget Office study on GSEs due to Congress no later than April 30, 1991. The study will includes an analysis of the financial risks each GSE assumes, how Congress may

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