Protecting and Preserving Social Security Act

Summary: Protecting and Preserving Social Security Act  This bill revises the methodology for calculating Old Age, Survivors, and Disability Insurance (OASDI) benefits and phases out the cap on compensation subject to Social Security taxation. The bill directs the Bureau of Labor Statistics to prepare and publish a Consumer Price Index for Elderly Consumers (CPI-E) to track cost-of-living changes for individuals age 62 or older. Beginning in two years after the enactment of this bill, the CPI-E, instead of the Consumer Price Index for Urban Wage Earners and Clerical Workers, shall be used to calculate the cost-of-living adjustment for OASDI benefits.  The bill also includes surplus earnings in the&nbsp;calculation of the primary insurance amount (i.e., the amount received by a beneficiary who elects to receive&nbsp;OASDI benefits at&nbsp;full retirement age). The bill phases out and, after 2023, eliminates&nbsp;the cap on compensation ($128,400 in 2018) subject to Social Security taxation.

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may cited as the ``Protecting and 
Preserving Social Security Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title and table of contents.
                   TITLE I--COST-OF-LIVING INCREASES

Sec. 101. Consumer Price Index for Elderly Consumers.
Sec. 102. Computation of cost-of-living increases.
              TITLE II--CONTRIBUTION AND BENEFIT FAIRNESS

Sec. 201. Determination of wages and self-employment income above 
                            contribution and benefit base after 2017.
Sec. 202. Inclusion of surplus earnings in Social Security benefit 
                            formula.

                   TITLE I--COST-OF-LIVING INCREASES

SEC. 101. CONSUMER PRICE INDEX FOR ELDERLY CONSUMERS.

    (a) In General.--The Bureau of Labor Statistics of the Department 
of Labor shall prepare and publish an index for each calendar month to 
be known as the ``Consumer Price Index for Elderly Consumers'' that 
indicates changes over time in expenditures for consumption which are 
typical for individuals in the United States who are 62 years of age or 
older.
    (b) Effective Date.--Subsection (a) shall apply with respect to 
calendar months ending on or after July 31 of the calendar year 
following the calendar year in which this Act is enacted.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out the provisions of 
this section.

SEC. 102. COMPUTATION OF COST-OF-LIVING INCREASES.

    (a) In General.--Section 215(i)(1) of the Social Security Act (42 
U.S.C. 415(i)(1)) is amended by adding at the end the following new 
subparagraph:
                    ``(H) the term `Consumer Price Index' means the 
                Consumer Price Index for Elderly Consumers (CPI-E, as 
                published by the Bureau of Labor Statistics of the 
                Department of Labor).''.
    (b) Application to Pre-1979 Law.--
            (1) In general.--Section 215(i)(1) of the Social Security 
        Act as in effect in December 1978, and as applied in certain 
        cases under the provisions of such Act as in effect after 
        December 1978, is amended by adding at the end the following 
        new subparagraph:
                    ``(D) the term `Consumer Price Index' means the 
                Consumer Price Index for Elderly Consumers (CPI-E, as 
                published by the Bureau of Labor Statistics of the 
                Department of Labor).''.
            (2) Conforming amendment.--Section 215(i)(4) of the Social 
        Security Act (42 U.S.C. 415(i)(4)) is amended by inserting 
        ``and by section 102 of the Protecting and Preserving Social 
        Security Act'' after ``1986''.
    (c) No Effect on Adjustments Under Other Laws.--Section 215(i) of 
the Social Security Act (42 U.S.C. 415(i)) is amended by adding at the 
end the following:
            ``(6) Any provision of law (other than in this title or 
        title XVI) which provides for adjustment of an amount based on 
        a change in benefit amounts resulting from a determination made 
        under this subsection shall be applied and administered without 
        regard to the amendments made by section 102 of the Protecting 
        and Preserving Social Security Act.''.
    (d) No Effect on Eligibility for SSI and Medicaid.--Any increase to 
an individual's monthly benefit amount under title II of the Social 
Security Act as a result of the amendments made by this section shall 
not be regarded as income or resources for any subsequent month, for 
purposes of determining the eligibility of the recipient (or the 
recipient's spouse or family) for benefits or assistance, or the amount 
or extent of benefits or assistance, under the Supplemental Security 
Income program or the Medicaid program.
    (e) Effective Date.--The amendments made by this section shall 
apply to determinations made with respect to cost-of-living computation 
quarters (as defined in section 215(i)(1)(B) of the Social Security Act 
(42 U.S.C. 415(i)(1)(B))) ending on or after September 30 of the second 
calendar year following the calendar year in which this Act is enacted.

              TITLE II--CONTRIBUTION AND BENEFIT FAIRNESS

SEC. 201. DETERMINATION OF WAGES AND SELF-EMPLOYMENT INCOME ABOVE 
              CONTRIBUTION AND BENEFIT BASE AFTER 2017.

    (a) Determination of Wages Above Contribution and Benefit Base 
After 2017.--
            (1) Amendments to the internal revenue code of 1986.--
        Section 3121 of the Internal Revenue Code of 1986 is amended--
                    (A) in subsection (a)(1), by inserting ``the 
                applicable percentage (determined under subsection 
                (c)(1)) of'' before ``that part of the remuneration''; 
                and
                    (B) in subsection (c), by striking ``(c) Included 
                and Excluded Service.--For purposes of this chapter, 
                if'' and inserting the following:
    ``(c) Special Rules for Wages and Employment.--
            ``(1) Applicable percentage of remuneration in determining 
        wages.--For purposes of paragraph (1) of subsection (a), the 
        applicable percentage for a calendar year, in connection with 
        any calendar year referred to in such subparagraph, shall be 
        the percentage determined in accordance with the following 
        table:

                                                         The applicable
``In the case of:                                        percentage is:
        Calendar year 2018.................................        86% 
        Calendar year 2019.................................        71% 
        Calendar year 2020.................................        57% 
        Calendar year 2021.................................        43% 
        Calendar year 2022.................................        29% 
        Calendar year 2023.................................        14% 
        Calendar years after 2023..........................         0%.
            ``(2) Included and excluded service.--For purposes of this 
        chapter, if''.
            (2) Amendments to the social security act.--Section 209 of 
        the Social Security Act (42 U.S.C. 409) is amended--
                    (A) in subsection (a)(1)--
                            (i) in subparagraph (I)--
                                    (I) by inserting ``and before 
                                2018'' after ``1974''; and
                                    (II) by inserting ``and'' after the 
                                semicolon; and
                            (ii) by adding at the end the following new 
                        subparagraph:
                    ``(J) The applicable percentage (determined under 
                subsection (l)) of that part of remuneration which, 
                after remuneration (other than remuneration referred to 
                in the succeeding subsections of this section) equal to 
                the contribution and benefit base (determined under 
                section 230) with respect to employment has been paid 
                to an individual during any calendar year after 2017 
                with respect to which such contribution and benefit 
                base is effective, is paid to such individual during 
                such calendar year;''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(l) For purposes of subparagraph (J) of subsection (a)(1), the 
applicable percentage for a calendar year, in connection with any 
calendar year referred to in such subparagraph, shall be the percentage 
determined in accordance with the following table:

                                                         The applicable
``In the case of:                                        percentage is:
        Calendar year 2018.................................        86% 
        Calendar year 2019.................................        71% 
        Calendar year 2020.................................        57% 
        Calendar year 2021.................................        43% 
        Calendar year 2022.................................        29% 
        Calendar year 2023.................................        14% 
        Calendar years after 2023..........................      0%.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply with respect to remuneration paid in calendar years 
        after 2017.
    (b) Determination of Self-Employment Income Above Contribution and 
Benefit Base After 2017.--
            (1) Amendments to the internal revenue code of 1986.--
        Section 1402 of the Internal Revenue Code of 1986 is amended--
                    (A) in subsection (b)(1), by inserting ``an amount 
                equal to the applicable percentage (as determined under 
                subsection (d)(2)) of'' before ``that part of the net 
                earnings from self-employment''; and
                    (B) in subsection (d)--
                            (i) by striking ``(d) Employee and Wages.--
                        The term'' and inserting the following:
    ``(d) Rules and Definitions.--
            ``(1) Employee and wages.--The term''; and
                            (ii) by adding at the end the following:
            ``(2) Applicable percentage of net earnings from self-
        employment in determining self-employment income.--For purposes 
        of paragraph (1) of subsection (b), the applicable percentage 
        for a taxable year beginning in any calendar year referred to 
        in such paragraph shall be the percentage determined in 
        accordance with the following table:

                                                         The applicable
``In the case of:                                        percentage is:
        Calendar year 2018.................................        86% 
        Calendar year 2019.................................        71% 
        Calendar year 2020.................................        57% 
        Calendar year 2021.................................        43% 
        Calendar year 2022.................................        29% 
        Calendar year 2023.................................        14% 
        Calendar years after 2023..........................      0%.''.
            (2) Amendments to the social security act.--Section 211 of 
        the Social Security Act (42 U.S.C. 411) is amended--
                    (A) in subsection (b)--
                            (i) in paragraph (1)(I)--
                                    (I) by striking ``or'' after the 
                                semicolon; and
                                    (II) by inserting ``and before 
                                2018'' after ``1974'';
                            (ii) by redesignating paragraph (2) as 
                        paragraph (3); and
                            (iii) by inserting after paragraph (1) the 
                        following new paragraph:
            ``(2) For any taxable year beginning in any calendar year 
        after 2017, an amount equal to the applicable percentage (as 
        determined under subsection (l)) of that part of net earnings 
        from self-employment which is in excess of (A) an amount equal 
        to the contribution and benefit base (determined under section 
        230) that is effective for such calendar year, minus (B) the 
        amount of the wages paid to such individual during such taxable 
        year; or''; and
                    (B) by adding at the end the following:
    ``(l) For purposes of paragraph (2) of subsection (b), the 
applicable percentage for a taxable year beginning in any calendar year 
referred to in such paragraph, shall be the percentage determined in 
accordance with the following table:

                                                         The applicable
``In the case of:                                        percentage is:
        Calendar year 2018.................................        86% 
        Calendar year 2019.................................        71% 
        Calendar year 2020.................................        57% 
        Calendar year 2021.................................        43% 
        Calendar year 2022.................................        29% 
        Calendar year 2023.................................        14% 
        Calendar years after 2023..........................      0%.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply with respect to taxable years beginning during or 
        after calendar year 2018.

SEC. 202. INCLUSION OF SURPLUS EARNINGS IN SOCIAL SECURITY BENEFIT 
              FORMULA.

    (a) Inclusion of Surplus Average Indexed Monthly Earnings in 
Determination of Primary Insurance Amounts.--
            (1) In general.--Section 215(a)(1)(A) of the Social 
        Security Act (42 U.S.C. 415(a)(1)(A)) is amended--
                    (A) in clauses (i), (ii), and (iii), by inserting 
                ``basic'' before ``average indexed monthly earnings'' 
                each place it appears;
                    (B) in clause (ii), by striking ``and'' at the end; 
                and
                    (C) by inserting after clause (iii) the following 
                new clauses:
            ``(iv) 3 percent of the individual's surplus average 
        indexed monthly earnings to the extent such surplus average 
        indexed monthly earnings do not exceed the excess of the amount 
        established for purposes of this clause by subparagraph (B) 
        over \1/12\ of the contribution and benefit base for the last 
        of such individual's computation base years, and
            ``(v) 0.25 percent of the sum of the individual's surplus 
        average indexed monthly earnings plus \1/12\ of the 
        contribution and benefit base for the last of such individual's 
        computation base years, to the extent such sum exceeds the 
        amount established for purposes of clause (iv) by subparagraph 
        (B).''.
            (2) Bend point for surplus earnings.--Section 215(a)(1)(B) 
        of such Act (42 U.S.C. 415(a)(1)(B)) is amended--
                    (A) in clause (ii), by striking ``the amounts so 
                established'' and inserting ``the amounts established 
                for purposes of clauses (i) and (ii) of subparagraph 
                (A)'';
                    (B) by redesignating clause (iii) as clause (v);
                    (C) in clause (v) (as redesignated), by inserting 
                ``or (iv)'' after ``clause (ii)''; and
                    (D) by inserting after clause (ii) the following 
                new clauses:
    ``(iii) For individuals who initially become eligible for old-age 
or disability insurance benefits, or who die (before becoming eligible 
for such benefits), in the calendar year 2018, the amount established 
for purposes of clause (iv) of subparagraph (A) shall be $10,958.
    ``(iv) For individuals who initially become eligible for old-age or 
disability insurance benefits, or who die (before becoming eligible for 
such benefits), in any calendar year after 2018, the amount established 
for purposes of clause (iv) of subparagraph (A) shall equal the product 
of the amount established with respect to the calendar year 2018 under 
clause (iii) of this subparagraph and the quotient obtained by 
dividing--
            ``(I) the national average wage index (as defined in 
        section 209(k)(1)) for the second calendar year preceding the 
        calendar year for which the determination is made, by
            ``(II) the national average wage index (as so defined) for 
        2016.''.
    (b) Basic AIME and Surplus AIME.--
            (1) Basic aime.--Section 215(b)(1) of such Act (42 U.S.C. 
        415(b)(1)) is amended--
                    (A) by inserting ``basic'' before ``average''; and
                    (B) in subparagraph (A), by striking ``paragraph 
                (3)'' and inserting ``paragraph (3)(A)'' and by 
                inserting before the comma the following: ``to the 
                extent such total does not exceed the contribution and 
                benefit base for the applicable year''.
            (2) Surplus aime.--
                    (A) In general.--Section 215(b)(1) of such Act (as 
                amended by paragraph (1)) is amended--
                            (i) by redesignating subparagraphs (A) and 
                        (B) as clauses (i) and (ii), respectively;
                            (ii) by inserting ``(A)'' after ``(b)(1)''; 
                        and
                            (iii) by adding at the end the following 
                        new subparagraph:
    ``(B)(i) An individual's surplus average indexed monthly earnings 
shall be equal to the quotient obtained by dividing--
            ``(I) the total (after adjustment under paragraph (3)(B)) 
        of such individual's surplus earnings (determined under clause 
        (ii)) for such individual's benefit computation years 
        (determined under paragraph (2)), by
            ``(II) the number of months in those years.
    ``(ii) For purposes of clause (i) and paragraph (3)(B), an 
individual's surplus earnings for a benefit computation year are the 
total of such individual's wages paid in and self-employment income 
credited to such benefit computation year, to the extent such total 
(before adjustment under paragraph (3)(B)) exceeds the contribution and 
benefit base for such year.''.
                    (B) Conforming amendment.--The heading for section 
                215(b) of such Act is amended by striking ``Average 
                Indexed Monthly Earnings'' and inserting ``Basic 
                Average Indexed Monthly Earnings; Surplus Average 
                Indexed Monthly Earnings''.
            (3) Adjustment of surplus earnings for purposes of 
        determining surplus aime.--Section 215(b)(3) of such Act (42 
        U.S.C. 415(b)(3)) is amended--
                    (A) in subparagraph (A), by striking ``subparagraph 
                (B)'' and inserting ``subparagraph (C)'' and by 
                inserting ``and determination of basic average indexed 
                monthly income'' after ``paragraph (2)'';
                    (B) by redesignating subparagraph (B) as 
                subparagraph (C); and
                    (C) by inserting after subparagraph (A) the 
                following new subparagraph:
    ``(B) For purposes of determining under paragraph (1)(B) an 
individual's surplus average indexed monthly earnings, the individual's 
surplus earnings (described in paragraph (2)(B)(ii)) for a benefit 
computation year shall be deemed to be equal to the product of--
            ``(i) the individual's surplus earnings for such year (as 
        determined without regard to this subparagraph), and
            ``(ii) the quotient described in subparagraph (A)(ii).''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to individuals who initially become eligible (within 
the meaning of section 215(a)(3)(B) of the Social Security Act) for 
old-age or disability insurance benefits under title II of the Social 
Security Act, or who die (before becoming eligible for such benefits), 
in any calendar year after 2017.