To amend title II of the Social Security Act and the Internal Revenue Code of 1986 to provide for modest adjustments necessary to restore the old-age, survivors, and disability insurance program to long-term actuarial balance.

Summary: Social Security Solvency Act of 2004 - Amends title II (Old Age, Survivors, and Disability Insurance) of the Social Security Act (SSA) to: (1) revise requirements for calculating the contribution and benefit base with respect to remuneration paid (including self-employment income derived) during the calendar years between 2005 and 2037; and (2) apply the chained consumer price index for all urban consumers in determining cost-of-living increases in benefits.

Amends the Internal Revenue Code, with respect to the unified credit against the estate tax, to set the applicable exclusion amount permanently at $3.5 million (the amount currently set for 2009).

Makes appropriations (and requires transfers from the General Fund) at least quarterly to the Federal Old-Age and Survivors Insurance Trust Fund equivalent to estate taxes and taxes on generation-skipping transfers.

Amends SSA title II to require the statement of projected insolvency in the annual report of the Board of Trustees of the Social Security Trust Funds to include: (1) the Board's best estimate of the date as of which the Trust Funds will, with no change in employment tax rates, first have assets insufficient to pay scheduled benefits in full on a timely basis; and (2) if such date is within two years after the filing of the report, the minimum increase necessary in such tax rates necessary to preclude such an insufficiency period.

Amends the Internal Revenue Code to provide for future adjustment of employment tax rates to keep the Social Security Trust Funds in balance.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Social Security Solvency Act of 
2004''.

SEC. 2. ADJUSTMENT TO RATE OF INCREASE IN CONTRIBUTION AND BENEFIT 
              BASE.

    Section 230(b)(2) of the Social Security Act (42 U.S.C. 430(b)(2)) 
is amended to read as follows:
            ``(2) the sum of--
                    ``(A) the ratio (expressed as a percentage) of (i) 
                the national average wage index (as defined in section 
                209(k)(1)) for the calendar year before the calendar 
                year in which the determination under subsection (a) is 
                made to (ii) the national average wage index (as so 
                defined) for 1992, plus
                    ``(B) for purposes of determining the contribution 
                and benefit base effective with respect to remuneration 
                paid during calendar years after 2005 and before 2037 
                and self-employment income derived in taxable years 
                beginning with or during such calendar years, 2 
                percentage points,''.

SEC. 3. APPLICATION OF THE CHAINED CONSUMER PRICE INDEX FOR ALL URBAN 
              CONSUMERS IN DETERMINING COST-OF-LIVING INCREASES IN 
              BENEFITS.

    (a) In General.--Section 215(i)(1) of the Social Security Act (42 
U.S.C. 425(i)(1)) is amended--
            (1) in subparagraph (G), by striking the period and 
        inserting ``; and''; and
            (2) by adding at the end the following new subparagraph:
            ``(H) the term `Consumer Price Index' means the chained 
        consumer price index for all urban consumers, published by the 
        Bureau of Labor Statistics.''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to increases described in section 215(i)(2)(A) of 
the Social Security Act effective with the month of December of 
calendar years after 2005.

SEC. 4. RETENTION OF ESTATE TAX; TRANSFERS TO SOCIAL SECURITY TRUST 
              FUND.

    (a) Exclusion Equivalent Made Permanent at 2009 Amount.--The item 
relating to 2009 in the table in section 2010(c) of the Internal 
Revenue Code of 1986 (relating to applicable credit amount) is amended 
by striking all that follows ``the applicable exclusion amount'' and 
inserting ``. For purposes of the preceding sentence, the applicable 
exclusion amount is $3,500,000.''.
    (b) Conforming Amendments.--
            (1) Subtitles A and E of title V of the Economic Growth and 
        Tax Relief Reconciliation Act of 2001, and the amendments made 
        by such subtitles, are hereby repealed; and the Internal 
        Revenue Code of 1986 shall be applied as if such subtitles, and 
        amendments, had never been enacted.
            (2)(A) Subsection (a) of section 901 of the Economic Growth 
        and Tax Relief Reconciliation Act of 2001 is amended by 
        striking ``this Act'' and all that follows and inserting ``this 
        Act (other than title V) shall not apply to taxable, plan, or 
        limitation years beginning after December 31, 2010.''.
            (B) Subsection (b) of such section 901 is amended by 
        striking ``, estates, gifts, and transfers''.
            (3) Subsections (d) and (e) of section 511 of the Economic 
        Growth and Tax Relief Reconciliation Act of 2001, and the 
        amendments made by such subsections, are hereby repealed; and 
        the Internal Revenue Code of 1986 shall be applied as if such 
        subsections, and amendments, had never been enacted.
    (c) Transfers to Trust Fund.--
            (1) In general.--There are hereby appropriated to the 
        Federal Old-Age and Survivors Insurance Trust Fund amounts 
        equivalent to the taxes received in the Treasury under chapters 
        11 and 13 of the Internal Revenue Code of 1986 (relating to 
        estate tax and tax on generation-skipping transfers, 
        respectively).
            (2) Transfers.--The amounts appropriated by paragraph (1) 
        shall be transferred from time to time (but not less frequently 
        than quarterly) from the general fund of the Treasury on the 
        basis of estimates made by the Secretary of the Treasury of the 
        amounts referred to in such paragraph. Any such quarterly 
        payment shall be made on the first day of such quarter. Proper 
        adjustments shall be made in the amounts subsequently 
        transferred to the extent prior estimates were in excess of or 
        less than the amounts required to be transferred.
            (3) Reports.--The Secretary of the Treasury shall submit 
        annual reports to the Congress and to the Commissioner of 
        Social Security regarding--
                    (A) the transfers made under this subsection during 
                the year, and the methodology used in determining the 
                amount of such transfers, and
                    (B) the anticipated operation of this subsection 
                during the next 5 years.

SEC. 5. FUTURE ADJUSTMENT OF EMPLOYMENT TAX RATES TO KEEP SOCIAL 
              SECURITY TRUST FUNDS IN BALANCE.

    (a) Statement of Projected Insolvency in Annual Report of Board of 
Trustees.--Section 201(c) of the Social Security Act (42 U.S.C. 401(c)) 
is amended, in the second sentence following clause (5), by striking 
``Trustees).'' and inserting ``Trustees), the Board's best estimate of 
the date as of which, using intermediate assumptions, the Trust Funds 
will, with no change in rates of tax under chapters 2 and 21 of the 
Internal Revenue Code of 1986, first have assets insufficient to pay 
scheduled benefits in full on a timely basis, and, if such date is 
within 2 years after the date of the filing of the report, the minimum 
increase necessary in such rates of tax (using such assumptions and 
assuming pro rata adjustments in the taxes applicable under sections 
1401(a), 3101(a), and 3111(a) of such Code) necessary to take effect 
(effective for the calendar year and applicable taxable years in which 
such date occurs) to preclude such an insufficiency (rounded, if not a 
multiple of 0.01 percent, to the next higher multiple of 0.01 
percent).''.
    (b) Employee Contribution.--Subsection (a) of section 3101 of the 
Internal Revenue Code of 1986 (relating to rate of tax for old-age, 
survivors, and disability insurance) is amended by adding at the end 
the following flush sentence: ``In the case of the year in which occurs 
the date determined under section 201(c) of the Social Security Act to 
be the date as of which the Trust Funds will first have assets 
insufficient to pay scheduled benefits in full on a timely basis, the 
rate in effect under the preceding sentence for such year and each year 
thereafter (without regard for this sentence) shall be increased to the 
extent determined under section 201(c) of such Act to be necessary to 
preclude such an insufficiency. Such increase shall be prescribed by 
the Secretary.''.
    (c) Employer Contribution.--Subsection (a) of section 3111 of such 
Code (relating to rate of tax for old-age, survivors, and disability 
insurance) is amended by adding at the end the following flush 
sentence: ``In the case of the year in which occurs the date determined 
under section 201(c) of the Social Security Act to be the date as of 
which the Trust Funds will first have assets insufficient to pay 
scheduled benefits in full on a timely basis, the rate in effect under 
the preceding sentence for such year and each year thereafter (without 
regard for this sentence) shall be increased to the extent determined 
under section 201(c) of such Act to be necessary to preclude such an 
insufficiency. Such increase shall be prescribed by the Secretary.''.
    (d) Self-Employment Contribution.--Subsection (a) of section 1401 
of such Code (relating to rate of tax for old-age, survivors, and 
disability insurance) is amended by adding at the end the following 
flush sentence: ``In the case of the year in which occurs the date 
determined under section 201(c) of the Social Security Act to be the 
date as of which the Trust Funds will first have assets insufficient to 
pay scheduled benefits in full on a timely basis, the rate in effect 
under the preceding sentence for such year and each year thereafter 
(without regard for this sentence) shall be increased to the extent 
determined under section 201(c) of such Act to be necessary to preclude 
such an insufficiency. Such increase shall be prescribed by the 
Secretary.''.