I

104TH CONGRESS

2D SESSION H. R. 3098

To amend title II of the Social Security Act to diversify the investments

of the Social Security trust funds by providing for investment of 40

percent of each year’s surplus in such trust funds in certain private

obligations, securities, or other instruments.

IN THE HOUSE OF REPRESENTATIVES

MARCH 14, 1996

Ms. LOFGREN introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

To amend title II of the Social Security Act to diversify

the investments of the Social Security trust funds by

providing for investment of 40 percent of each year’s

surplus in such trust funds in certain private obligations,

securities, or other instruments.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Social Security Trust

5 Funds Investment Act of 1996’’.
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1 SEC. 2. INVESTMENT OF THE FEDERAL OLD-AGE AND SUR2 VIVORS INSURANCE TRUST FUND AND THE

3 FEDERAL DISABILITY INSURANCE TRUST

4 FUND.

5 (a) IN GENERAL.—Section 201(d) of the Social Secu6 rity Act (42 U.S.C. 401(d)) is amended—

7 (1) by inserting ‘‘(1)’’ after ‘‘(d)’’;

8 (2) in the second sentence, by striking ‘‘Such

9 investments may be made only’’ and inserting the

10 following: ‘‘Except as provided in paragraph (2),

11 such investments may be made only’’, and by strik12 ing ‘‘(1)’’ and ‘‘(2)’’ and inserting ‘‘(A)’’ and ‘‘(B)’’,

13 respectively; and

14 (3) by adding at the end the following new

15 paragraph:

16 ‘‘(2)(A) The Managing Trustee shall determine the

17 annual surplus (as defined in subparagraph (B)) for each

18 of the Trust Funds as of the end of each fiscal year. The

19 Managing Trustee shall ensure that an amount held by

20 each of the Trust Funds equal to at least 40 percent of

21 such annual surplus is invested, throughout the next fol22 lowing fiscal year, in the manner described in clause (i)

23 or (ii) or in a manner consisting of any combination there24 of.

25 ‘‘(i) Investments under this subparagraph may

26 be in the form of—
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1 ‘‘(I) insurance contracts,

2 ‘‘(II) certificates of deposit, or

3 ‘‘(III) other instruments or obligations se4 lected by qualified professional asset managers,

5 which return the amount invested and pay interest,

6 at a specified rate or rates, on that amount during

7 a specified period of time.

8 ‘‘(ii) Investments under this subparagraph may

9 be in the form of a portfolio of common stock de10 signed to replicate the performance of an index

11 which shall be selected by the Managing Trustee, in

12 consultation with the Board of Trustees. Such index

13 must be a commonly recognized index comprised of

14 common stock the aggregate market value of which

15 is a reasonably complete representation of the Unit16 ed States equity markets. The portfolio shall be de17 signed such that, to the extent practicable, the per18 centage of the total amount invested in the manner

19 described in this clause that is invested in each stock

20 is the same as the percentage determined by dividing

21 the aggregate market value of all shares of that

22 stock by the aggregate market value of all shares of

23 all stocks included in such index.
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1 ‘‘(B) For purposes of this paragraph, the ‘annual sur2 plus’ for either of the Trust Funds as of the end of a

3 fiscal year is the excess (if any) of—

4 ‘‘(i) the sum of—

5 ‘‘(I) in the case of the Federal Old-Age

6 and Survivors Insurance Trust Fund, the

7 amounts appropriated to such Trust Fund

8 under paragraphs (3) and (4) of subsection (a)

9 for the fiscal year,

10 ‘‘(II) in the case of the Federal Disability

11 Insurance Trust Fund, the amounts appro12 priated to such Trust Fund under paragraphs

13 (1) and (2) of subsection (b) for the fiscal year,

14 and

15 ‘‘(III) in either case, the amount appro16 priated to such Trust Fund under section

17 121(e) of the Social Security Amendments of

18 1983 for the fiscal year, and any amounts oth19 erwise credited to or deposited in such Trust

20 Fund under this title for the fiscal year, over

21 ‘‘(ii) the amounts paid or transferred from such

22 Trust Fund during the fiscal year.’’.

23 (b) CONFORMING AMENDMENTS.—Section 201 of

24 such Act is amended further—
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1 (1) in subsection (e) (42 U.S.C. 401(e)), by

2 striking ‘‘Any obligations’’ and inserting ‘‘Any obli3 gations, securities, or other instruments’’; and

4 (2) in subsection (f) (42 U.S.C. 401(f)), by

5 striking ‘‘any obligations’’ and inserting ‘‘any obliga6 tions, securities, or other instruments’’.

7 SEC. 3. EFFECTIVE DATE.

8 The amendments made by this Act shall apply with

9 respect to annual surpluses as of the end of fiscal years

10 beginning on or after October 1, 1996.

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