Senior Citizens' Freedom to Work Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Senior Citizens' Freedom to Work 
Act''.

SEC. 2. ADJUSTMENTS IN MONTHLY EXEMPT AMOUNT FOR PURPOSES OF THE SOCIAL 
              SECURITY EARNINGS TEST.

    (a) Increase in Monthly Exempt Amount for Individuals Who Have 
Attained Retirement Age.--
            (1) In general.--Section 203(f)(8)(D) of the Social 
        Security Act (42 U.S.C. 403(f)(8)(D)) is amended to read as 
        follows:
            ``(D)(i) Notwithstanding any other provision of this 
        subsection, the exempt amount which is applicable to an 
        individual who has attained retirement age (as defined in 
        section 216(l)) before the close of the taxable year involved 
        shall be--
                    ``(I) $1,208.33\1/3\ for each month of any taxable 
                year ending after 1995 and before 1997,
                    ``(II) $1,416.66\2/3\ for each month of any taxable 
                year ending after 1996 and before 1998,
                    ``(III) $1,666.66\2/3\ for each month of any 
                taxable year ending after 1997 and before 1999,
                    ``(IV) $1,875.00 for each month of any taxable year 
                ending after 1998 and before 2000,
                    ``(V) $2,083.33\1/3\ for each month of any taxable 
                year ending after 1999 and before 2001,
                    ``(VI) $2,291.66\2/3\ for each month of any taxable 
                year ending after 2000 and before 2002, and
                    ``(VII) $2,500.00 for each month of any taxable 
                year ending after 2001 and before 2003.''.
            (2) Increased amounts subject to present law cost-of-living 
        adjustment after 2002.--Section 203(f)(8)(D) of such Act (42 
        U.S.C. 403(f)(8)(D)), as amended by paragraph (1), is amended 
        by adding at the end the following new clause:
            ``(ii) For purposes of this paragraph, the increase in the 
        exempt amount provided under clause (i)(VII) shall be deemed to 
        have resulted from a determination which shall be deemed to 
        have been made under subparagraph (A) in 2001.''.
            (3) Conforming amendment.--The second sentence of section 
        223(d)(4)(A) of such Act (42 U.S.C. 423(d)(4)(A)) is amended by 
        striking ``the exempt amount under section 203(f)(8) which is 
        applicable to individuals described in subparagraph (D) 
thereof'' and inserting the following: ``an amount equal to the exempt 
amount which would have been applicable under section 203(f)(8), to 
individuals described in subparagraph (D) thereof, if the amendments 
made to such section by the Senior Citizens' Freedom to Work Act had 
not been enacted''.
            (4) Effective date of subsection.--The amendments made by 
        this subsection shall apply with respect to taxable years 
        beginning after 1995.
    (b) Compensation of Trust Fund for Increased Outlays.--
            (1) In general.--Section 201(d) of the Social Security Act 
        (42 U.S.C. 401(d)) is amended--
                    (A) by inserting ``(1)'' after ``(d)'';
                    (B) in the fifth sentence, by striking ``shall bear 
                interest'' and inserting ``shall (subject to paragraph 
                (2)) bear interest''; and
                    (C) by adding at the end the following new 
                paragraph:
    ``(2) In the case of the Federal Old-Age and Survivors Insurance 
Trust Fund, the Managing Trustee shall increase the rate of interest 
(otherwise specified in the fifth sentence of paragraph (1)) which is 
to be borne by obligations referred to in the fourth sentence of 
paragraph (1) issued after September 30, 1995, and before October 1, 
2002, by .25 percent point for each fiscal year beginning after 
September 30, 1995, and before October 1, 2002. For purposes of this 
paragraph, any obligation in which any portion of such Trust Fund is 
invested which was issued before October 1, 1995, shall be deemed to 
have matured on September 30, 1995, and to have been reissued on 
October 1, 1995, with the same maturation date and same rate of 
interest (subject to the increase provided under this paragraph).''.
            (2) Effective date of subsection.--The amendments made by 
        this subsection shall apply with respect to obligations issued 
        after December 31, 1995.
    (c) Additional Offsets.--
            (1) In general.--Notwithstanding any other provision of 
        law, each nonexempt account within the discretionary spending 
        category for each of the fiscal years 1996 through 2002 shall 
        be reduced, if necessary, by the uniform percentage necessary 
        to offset the Federal Old-Age and Survivors Insurance Trust 
        Fund shortfall resulting from the amendments made to section 
        203(f)(8) of the Social Security Act by the Senior Citizens' 
        Freedom to Work Act.
            (2) Effective date.--The reductions required by this 
        subsection shall be implemented pursuant to a Presidential 
        order as provided for a sequester to eliminate a budget-year 
        breach under section 251 of the Balanced Budget and Deficit 
        Control Act of 1985. The reductions required by this subsection 
        shall be in addition to any reductions required by section 251 
        of the Balanced Budget and Deficit Control Act of 1985.
    (d) Report by GAO.--Not later than the date which is 2 years after 
the date of the enactment of this Act, the Comptroller General of the 
United States shall report to the Congress regarding an analysis of the 
dynamic effect of the reform of the social security earnings limit 
under section 203(f)(8) of the Social Security Act, as provided by 
subsection (a) of this section, and a calculation of the reform's true 
effect on the Federal budget.

Summary: Senior Citizens' Freedom to Work Act - Amends title II (OASDI) of the Social Security Act to increase the monthly exempt amount, under the earnings test, for individuals who have attained retirement age. Sets forth the schedule of monthly adjustments increasing from $1,208 for taxable year 1996 to $2,500 for taxable year 2002. Subjects such increased amounts to current law cost-of-living adjustments after 2002. Requires the Managing Trustee of the Federal Old-Age and Survivors Insurance Trust Fund to increase by a specified percentage per year the rate of interest borne by public-debt obligations issued for purchase by the OASDI trust funds between September 30, 1995, and October 1, 2002. Provides that each nonexempt account within the discretionary spending category for each of FY 1996 through 2002 shall be reduced, if necessary, by the uniform percentage necessary to offset the Federal Old-Age and Survivors Insurance Trust Fund shortfall resulting from the amendments of this Act increasing the monthly exempt amount. Directs the Comptroller General to analyze and report to the Congress on the dynamic effect of the revision of the social security earnings limit made by this Act and a calculation of its true effect on the Federal budget.