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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2774 Introduced in Senate (IS)]

106th CONGRESS
  2d Session
                                S. 2774

To amend title II of the Social Security Act to provide for individual 
   savings accounts funded by employee and employer social security 
 payroll deductions, to extend the solvency of the old-age, survivors, 
       and disability insurance program, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             June 22, 2000

   Mr. Gregg (for himself, Mr. Kerrey, Mr. Breaux, Mr. Grassley, Mr. 
  Thompson, Mr. Robb, and Mr. Thomas) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
To amend title II of the Social Security Act to provide for individual 
   savings accounts funded by employee and employer social security 
 payroll deductions, to extend the solvency of the old-age, survivors, 
       and disability insurance program, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Bipartisan Social 
Security Reform Act of 2000.''
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                  TITLE I--INDIVIDUAL SAVINGS ACCOUNTS

Sec. 101. Individual savings accounts.
Sec. 102. Social security KidSave Accounts.
Sec. 103. Adjustments to primary insurance amounts under part A of 
                            title II of the Social Security Act.
              TITLE II--SOCIAL SECURITY SYSTEM ADJUSTMENTS

Sec. 201. Adjustments to bend points in determining primary insurance 
                            amounts.
Sec. 202. Adjustment of widows' and widowers' insurance benefits.
Sec. 203. Elimination of earnings test for individuals who have 
                            attained early retirement age.
Sec. 204. Gradual increase in number of benefit computation years; use 
                            of all years in computation.
Sec. 205. Maintenance of benefit and contribution base.
Sec. 206. Reduction in the amount of certain transfers to Medicare 
                            Trust Fund.
Sec. 207. Actuarial adjustment for retirement.
Sec. 208. Improvements in process for cost-of-living adjustments.
Sec. 209. Modification of PIA factors to reflect changes in life 
                            expectancy.
Sec. 210. Mechanism for remedying unforeseen deterioration in social 
                            security solvency.

                  TITLE I--INDIVIDUAL SAVINGS ACCOUNTS

SEC. 101. INDIVIDUAL SAVINGS ACCOUNTS.

    (a) Establishment and Maintenance of Individual Savings Accounts.--
Title II of the Social Security Act (42 U.S.C. 401 et seq.) is 
amended--
            (1) by inserting before section 201 the following:

                    ``Part A--Insurance Benefits'';

        and
            (2) by adding at the end the following:

                 ``Part B--Individual Savings Accounts

                     ``individual savings accounts

    ``Sec. 251. (a) Establishment.--
            ``(1) In general.--
                    ``(A) Establishment in absence of kidsave 
                account.--Except as provided in subparagraph (B), the 
                Commissioner of Social Security, within 30 days of the 
                receipt of the first contribution received pursuant to 
                subsection (b) with respect to an eligible individual, 
                shall establish in the name of such individual an 
                individual savings account. The individual savings 
                account shall be identified to the account holder by 
                means of the account holder's Social Security account 
                number.
                    ``(B) Use of kidsave account.--If a KidSave Account 
                has been established in the name of an eligible 
                individual under section 262(a) before the date of the 
                first contribution received by the Commissioner 
                pursuant to subsection (b) with respect to such 
                individual, the Commissioner shall redesignate the 
                KidSave Account as an individual savings account for 
                such individual.
            ``(2) Definition of eligible individual.--In this part, the 
        term `eligible individual' means any individual born after 
        December 31, 1937.
    ``(b) Contributions.--
            ``(1) Amounts transferred from the trust fund.--The 
        Secretary of the Treasury shall transfer from the Federal Old-
        Age and Survivors Insurance Trust Fund, for crediting by the 
        Commissioner of Social Security to an individual savings 
        account of an eligible individual, an amount equal to the sum 
        of any amount received by such Secretary on behalf of such 
        individual under section 3101(a)(2) or 1401(a)(2) of the 
        Internal Revenue Code of 1986.
            ``(2) Other contributions.--For provisions relating to 
        additional contributions credited to individual savings 
        accounts, see sections 531(c)(2) and 6402(l) of the Internal 
        Revenue Code of 1986.
    ``(c) Designation of Investment Type of Individual Savings 
Account.--
            ``(1) Designation.--Each eligible individual who is 
        employed or self-employed shall designate the investment type 
        of individual savings account to which the contributions 
        described in subsection (b) on behalf of such individual are to 
        be credited.
            ``(2) Form of designation.--The designation described in 
        paragraph (1) shall be made in such manner and at such 
        intervals as the Commissioner of Social Security may prescribe 
        in order to ensure ease of administration and reductions in 
        burdens on employers.
            ``(3) Special rule for 2001.--Not later than January 1, 
        2001, any eligible individual that is employed or self-employed 
        as of such date shall execute the designation required under 
        paragraph (1).
            ``(4) Designation in absence of designation by eligible 
        individual.--In any case in which no designation of the 
        individual savings account is made, the Commissioner of Social 
        Security shall make the designation of the individual savings 
        account in accordance with regulations that take into account 
        the competing objectives of maximizing returns on investments 
        and minimizing the risk involved with such investments.
    ``(d) Treatment of Incompetent Individuals.--Any designation under 
subsection (c)(1) to be made by an individual mentally incompetent or 
under other legal disability may be made by the person who is 
constituted guardian or other fiduciary by the law of the State of 
residence of the individual or is otherwise legally vested with the 
care of the individual or his estate. Payment under this part due an 
individual mentally incompetent or under other legal disability may be 
made to the person who is constituted guardian or other fiduciary by 
the law of the State of residence of the claimant or is otherwise 
legally vested with the care of the claimant or his estate. In any case 
in which a guardian or other fiduciary of the individual under legal 
disability has not been appointed under the law of the State of 
residence of the individual, if any other person, in the judgment of 
the Commissioner, is responsible for the care of such individual, any 
designation under subsection (c)(1) which may otherwise be made by such 
individual may be made by such person, any payment under this part 
which is otherwise payable to such individual may be made to such 
person, and the payment of an annuity payment under this part to such 
person bars recovery by any other person.

   ``definition of individual savings account; treatment of accounts

    ``Sec. 252. (a) Individual Savings Account.--In this part, the term 
`individual savings account' means any individual savings account in 
the Individual Savings Fund (established under section 254) which is 
administered by the Individual Savings Fund Board.
    ``(b) Treatment of Account.--Except as otherwise provided in this 
part and in section 531 of the Internal Revenue Code of 1986, any 
individual savings account described in subsection (a) shall be treated 
in the same manner as an individual account in the Thrift Savings Fund 
under subchapter III of chapter 84 of title 5, United States Code.

               ``individual savings account distributions

    ``Sec. 253. (a) Date of Initial Distribution.--Except as provided 
in subsection (c), distributions may only be made from an individual 
savings account of an eligible individual on and after the earliest 
of--
            ``(1) the date the eligible individual attains normal 
        retirement age, as determined under section 216 (or early 
        retirement age (as so determined) if elected by such 
        individual), or
            ``(2) the date on which funds in the eligible individual's 
        individual savings account are sufficient to provide a monthly 
        payment over the life expectancy of the eligible individual 
        (determined under reasonable actuarial assumptions) which, when 
        added to the eligible individual's monthly benefit under part A 
        (if any), is at least equal to an amount equal to \1/12\ of the 
        poverty line (as defined in section 673(2) of the Community 
        Services Block Grant Act (42 U.S.C. 9902(2) and determined on 
        such date for an individual) and adjusted annually thereafter 
        by the adjustment determined under section 215(i).
    ``(b) Forms of Distribution.--
            ``(1) Required monthly payments.--Except as provided in 
        paragraph (2), beginning with the date determined under 
        subsection (a), the balance in an individual savings account 
        available to provide monthly payments not in excess of the 
        amount described in subsection (a)(2) shall be paid, as elected 
        by the account holder (in such form and manner as shall be 
        prescribed in regulations of the Individual Savings Fund 
        Board), by means of the purchase of annuities or equal monthly 
        payments over the life expectancy of the eligible individual 
        (determined under reasonable actuarial assumptions) in 
        accordance with requirements (which shall be provided in 
        regulations of the Board) similar to the requirements 
        applicable to payments of benefits under subchapter III of 
        chapter 84 of title 5, United States Code, and providing for 
        indexing for inflation.
            ``(2) Payment of excess funds.--To the extent funds remain 
        in an eligible individual's individual savings account after 
        the application of paragraph (1), such funds shall be payable 
        to the eligible individual in such manner and in such amounts 
        as determined by the eligible individual, subject to the 
        provisions of subchapter III of chapter 84 of title 5, United 
        States Code.
    ``(c) Distribution in the Event of Death Before the Date of Initial 
Distribution.--If the eligible individual dies before the date 
determined under subsection (a), the balance in such individual's 
individual savings account shall be distributed in a lump sum, under 
rules established by the Individual Savings Fund Board, to the 
individual's heirs.

                       ``individual savings fund

    ``Sec. 254. (a) Establishment.--There is established and maintained 
in the Treasury of the United States an Individual Savings Fund in the 
same manner as the Thrift Savings Fund under sections 8437, 8438, and 
8439 (but not section 8440) of title 5, United States Code.
    ``(b) Individual Savings Fund Board.--
            ``(1) In general.--There is established and operated in the 
        Social Security Administration an Individual Savings Fund Board 
        in the same manner as the Federal Retirement Thrift Investment 
        Board under subchapter VII of chapter 84 of title 5, United 
        States Code.
            ``(2) Specific investment and reporting duties.--
                    ``(A) In general.--The Individual Savings Fund 
                Board shall manage and report on the activities of the 
                Individual Savings Fund and the individual savings 
                accounts of such Fund in the same manner as the Federal 
                Retirement Thrift Investment Board manages and reports 
                on the Thrift Savings Fund and the individual accounts 
                of such Fund under subchapter VII of chapter 84 of 
                title 5, United States Code.
                    ``(B) Study and report on increased investment 
                options.--
                            ``(i) Study.--The Individual Savings Fund 
                        Board shall conduct a study regarding ways to 
                        increase an eligible individual's investment 
                        options with respect to such individual's 
                        individual savings account and with respect to 
                        rollovers or distributions from such account.
                            ``(ii) Report.--Not later than 2 years 
                        after the date of enactment of the Bipartisan 
                        Social Security Reform Act of 2000, the 
                        Individual Savings Fund Board shall submit a 
                        report to the President and Congress that 
                        contains a detailed statement of the results of 
                        the study conducted pursuant to clause (i), 
                        together with the Board's recommendations for 
                        such legislative actions as the Board considers 
                        appropriate.

     ``budgetary treatment of individual savings fund and accounts

    ``Sec. 255. The receipts and disbursements of the Individual 
Savings Fund and any accounts within such fund shall not be included in 
the totals of the budget of the United States Government as submitted 
by the President or of the congressional budget and shall be exempt 
from any general budget limitation imposed by statute on expenditures 
and net lending (budget outlays) of the United States Government.''.
    (b) Modification of FICA Rates.--
            (1) Employees.--Section 3101(a) of the Internal Revenue 
        Code of 1986 (relating to tax on employees) is amended to read 
        as follows:
    ``(a) Old-Age, Survivors, and Disability Insurance.--
            ``(1) In general.--
                    ``(A) Individuals covered under part a of title ii 
                of the social security act.--In addition to other 
                taxes, there is hereby imposed on the income of every 
                individual who is not a part B eligible individual a 
                tax equal to 6.2 percent of the wages (as defined in 
                section 3121(a)) received by him with respect to 
                employment (as defined in section 3121(b)).
                    ``(B) Individuals covered under part b of title ii 
                of the social security act.--In addition to other 
                taxes, there is hereby imposed on the income of every 
                part B eligible individual a tax equal to 4.2 percent 
                of the wages (as defined in section 3121(a)) received 
                by such individual with respect to employment (as 
                defined in section 3121(b)).
            ``(2) Contribution of oasdi tax reduction to individual 
        savings accounts.--
                    ``(A) In general.--In addition to other taxes, 
                there is hereby imposed on the income of every part B 
                eligible individual an individual savings account 
                contribution equal to the sum of--
                            ``(i) 2 percent of the wages (as so 
                        defined) received by such individual with 
                        respect to employment (as so defined), plus
                            ``(ii) so much of such wages (not to exceed 
                        $2,000) as designated by the individual in the 
                        same manner as described in section 251(c) of 
                        the Social Security Act.
                    ``(B) Inflation adjustment.--
                            ``(i) In general.--In the case of any 
                        calendar year beginning after 2001, the dollar 
                        amount in subparagraph (A)(ii) shall be 
                        increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for the calendar year, 
                                determined by substituting `calendar 
                                year 2000' for `calendar year 1992' in 
                                subparagraph (B) thereof.
                            ``(ii) Rounding.--If any dollar amount 
                        after being increased under clause (i) is not a 
                        multiple of $10, such dollar amount shall be 
                        rounded to the nearest multiple of $10.''.
            (2) Self-employed.--Section 1401(a) of the Internal Revenue 
        Code of 1986 (relating to tax on self-employment income) is 
        amended to read as follows:
    ``(a) Old-Age, Survivors, and Disability Insurance.--
            ``(1) In general.--
                    ``(A) Individuals covered under part a of the 
                social security act.--In addition to other taxes, there 
                shall be imposed for each taxable year, on the self-
                employment income of every individual who is not a part 
                B eligible individual for the calendar year ending with 
                or during such taxable year, a tax equal to 12.40 
                percent of the amount of the self-employment income for 
                such taxable year.
                    ``(B) Individuals covered under part b of title ii 
                of the social security act.--In addition to other 
                taxes, there is hereby imposed for each taxable year, 
                on the self-employment income of every part B eligible 
                individual, a tax equal to 10.4 percent of the amount 
                of the self-employment income for such taxable year.
            ``(2) Contribution of oasdi tax reduction to individual 
        savings accounts.--
                    ``(A) In general.--In addition to other taxes, 
                there is hereby imposed for each taxable year, on the 
                self-employment income of every individual, an 
                individual savings account contribution equal to the 
                sum of--
                            ``(i) 2 percent of the amount of the self-
                        employment income for each individual for such 
                        taxable year, and
                            ``(ii) so much of such self-employment 
                        income (not to exceed $2,000) as designated by 
                        the individual in the same manner as described 
                        in section 251(c) of the Social Security Act.
                    ``(B) Inflation adjustment.--
                            ``(i) In general.--In the case of any 
                        taxable year beginning after 2001, the dollar 
                        amount in subparagraph (A)(ii) shall be 
                        increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for the calendar year in which 
                                the taxable year begins, determined by 
                                substituting `calendar year 2000' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                            ``(ii) Rounding.--If any dollar amount 
                        after being increased under clause (i) is not a 
                        multiple of $10, such dollar amount shall be 
                        rounded to the nearest multiple of $10.''.
            (3) Part b eligible individual.--
                    (A) Taxes on employees.--Section 3121 of such Code 
                (relating to definitions) is amended by inserting after 
                subsection (s) the following:
    ``(t) Part B Eligible Individual.--For purposes of this chapter, 
the term `part B eligible individual' means, for any calendar year, an 
individual who is an eligible individual (as defined in section 
251(a)(2) of the Social Security Act) for such calendar year.''.
                    (B) Self-employment tax.--Section 1402 of such Code 
                (relating to definitions) is amended by adding at the 
                end the following:
    ``(k) Part B Eligible Individual.--The term `part B eligible 
individual' means, for any calendar year, an individual who is an 
eligible individual (as defined in section 251(a)(2) of the Social 
Security Act) for such calendar year.''.
            (4) Effective dates.--
                    (A) Employees.--The amendments made by paragraphs 
                (1) and (3)(A) apply to remuneration paid after 
                December 31, 2000.
                    (B) Self-employed individuals.--The amendments made 
                by paragraphs (2) and (3)(B) apply to taxable years 
                beginning after December 31, 2000.
    (c) Matching Contributions.--
            (1) In general.--Part IV of subchapter A of chapter 1 of 
        the Internal Revenue Code of 1986 (relating to credits against 
        tax) is amended by adding at the end the following:

            ``Subpart H--Individual Savings Account Credits

``Sec. 54. Individual savings account credit.''.

``SEC. 54. INDIVIDUAL SAVINGS ACCOUNT CREDIT.

    ``(a) Allowance of Credit.--Each part B eligible individual is 
entitled to a credit for the taxable year in an amount equal to the sum 
of--
            ``(1) $100, plus
            ``(2) 100 percent of the designated wages of such 
        individual for the taxable year, plus
            ``(3) 100 percent of the designated self-employment income 
        of such individual for the taxable year.
    ``(b) Limitations.--
            ``(1) Amount.--The amount determined under subsection (a) 
        with respect to such individual for any taxable year may not 
        exceed the excess (if any) of--
                    ``(A) an amount equal to 1 percent of the 
                contribution and benefit base for such taxable year (as 
                determined under section 230 of the Social Security 
                Act), over
                    ``(B) the sum of the amounts received by the 
                Secretary on behalf of such individual under sections 
                3101(a)(2)(A)(i) and 1401(a)(2)(A)(i) for such taxable 
                year.
            ``(2) Failure to make voluntary contributions.--In the case 
        of a part B eligible individual with respect to whom the amount 
        of wages designated under section 3101(a)(2)(A)(ii) plus the 
        amount self-employment income designated under section 
        1401(a)(2)(A)(ii) for the taxable year is less that $1, the 
        credit to which such individual is entitled under this section 
        shall be equal to zero.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Part b eligible individual.--The term `part B 
        eligible individual' means, for any calendar year, an 
        individual who--
                    ``(A) is an eligible individual (as defined in 
                section 251(a)(2) of the Social Security Act) for such 
                calendar year, and
                    ``(B) is not an individual with respect to whom 
                another taxpayer is entitled to a deduction under 
                section 151(c).
            ``(2) Designated wages.--The term `designated wages' means 
        with respect to any taxable year the amount designated under 
        section 3101(a)(2)(A)(ii).
            ``(3) Designated self-employment income.--The term 
        `designated self-employment income' means with respect to any 
        taxable year the amount designated under section 
        1401(a)(2)(A)(ii) for such taxable year.
    ``(d) Credit Used Only for Individual Savings Account.--For 
purposes of this title, the credit allowed under this section with 
respect to any part B eligible individual--
            ``(1) shall not be treated as a credit allowed under this 
        part, but
            ``(2) shall be treated as an overpayment of tax under 
        section 6401(b)(3) which may, in accordance with section 
        6402(l), only be transferred to an individual savings account 
        established under part B of title II of the Social Security Act 
        with respect to such individual.''.
            (2) Contribution of credited amounts to individual savings 
        account.--
                    (A) Credited amounts treated as overpayment of 
                tax.--Subsection (b) of section 6401 of such Code 
                (relating to excessive credits) is amended by adding at 
                the end the following:
            ``(3) Special rule for credit under section 54.--Subject to 
        the provisions of section 6402(l), the amount of any credit 
        allowed under section 54 for any taxable year shall be 
        considered an overpayment.''.
                    (B) Transfer of credit amount to individual savings 
                account.--Section 6402 of such Code (relating to 
                authority to make credits or refunds) is amended by 
                adding at the end the following:
    ``(l) Overpayments Attributable to Individual Savings Account 
Credit.--In the case of any overpayment described in section 6401(b)(3) 
with respect to any individual, the Secretary shall transfer for 
crediting by the Commissioner of Social Security to the individual 
savings account of such individual, an amount equal to the amount of 
such overpayment.''.
            (3) Conforming amendments.--
                    (A) Section 1324(b)(2) of title 31, United States 
                Code, is amended by inserting before the period at the 
                end ``, or enacted by the Bipartisan Social Security 
                Reform Act of 2000''.
                    (B) The table of subparts for part IV of subchapter 
                A of chapter 1 of the Internal Revenue Code of 1986 is 
                amended by adding at the end the following:

``Subpart H. Individual Savings Account Credits.''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to refunds payable after December 31, 2000.
    (d) Tax Treatment of Individual Savings Accounts.--
            (1) In general.--Subchapter F of chapter 1 of the Internal 
        Revenue Code of 1986 (relating to exempt organizations) is 
        amended by adding at the end the following:

            ``PART IX--INDIVIDUAL SAVINGS FUND AND ACCOUNTS

                              ``Sec. 531. Individual Savings Fund and 
                                        Accounts.

``SEC. 531. INDIVIDUAL SAVINGS FUND AND ACCOUNTS.

    ``(a) General Rule.--The Individual Savings Fund and individual 
savings accounts shall be exempt from taxation under this subtitle.
    ``(b) Individual Savings Fund and Accounts Defined.--For purposes 
of this section, the terms `Individual Savings Fund' and `individual 
savings account' means the fund and account established under sections 
254 and 251, respectively, of part B of title II of the Social Security 
Act.
    ``(c) Contributions.--
            ``(1) In general.--No deduction shall be allowed for 
        contributions credited to an individual savings account under 
        section 251 of the Social Security Act or section 6402(l).
            ``(2) Rollover of inheritance.--Any portion of a 
        distribution to an heir from an individual savings account made 
        by reason of the death of the beneficiary of such account may 
        be rolled over to the individual savings account of the heir 
        after such death.
    ``(d) Distributions.--
            ``(1) In general.--Any distribution from an individual 
        savings account under section 253 of the Social Security Act 
        shall be included in gross income under section 72.
            ``(2) Period in which distributions must be made from 
        account of decedent.--In the case of amounts remaining in an 
        individual savings account from which distributions began 
        before the death of the beneficiary, rules similar to the rules 
        of section 401(a)(9)(B) shall apply to distributions of such 
        remaining amounts.
            ``(3) Rollovers.--Paragraph (1) shall not apply to amounts 
        rolled over under subsection (c)(2) in a direct transfer by the 
        Commissioner of Social Security, under regulations which the 
        Commissioner shall prescribe.''.
            (2) Clerical amendment.--The table of parts for subchapter 
        F of chapter 1 of such Code is amended by adding after the item 
        relating to part VIII the following:

                              ``Part IX. Individual savings fund and 
                                        accounts.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 2000.

SEC. 102. SOCIAL SECURITY KIDSAVE ACCOUNTS.

    Title II of the Social Security Act (42 U.S.C. 401 et seq.), as 
amended by section 101(a), is amended by adding at the end the 
following:

                       ``Part C--KidSave Accounts

                           ``kidsave accounts

    ``Sec. 261. (a) Establishment.--The Commissioner of Social Security 
shall establish in the name of each individual born on or after January 
1, 1995, a KidSave Account upon the later of--
            ``(1) the date of enactment of this part, or
            ``(2) the date of the issuance of a Social Security account 
        number under section 205(c)(2) to such individual.
The KidSave Account shall be identified to the account holder by means 
of the account holder's Social Security account number.
    ``(b) Contributions.--
            ``(1) In general.--There are authorized to be appropriated 
        and are appropriated such sums as are necessary in order for 
        the Secretary of the Treasury to transfer from the general fund 
        of the Treasury for crediting by the Commissioner to each 
        account holder's KidSave Account under subsection (a), an 
        amount equal to the sum of--
                    ``(A) in the case of any individual born on or 
                after January 1, 2001, $1,000, on the date of the 
                establishment of such individual's KidSave Account, and
                    ``(B) in the case of any individual born on or 
                after January 1, 1995, $500, on the 1st, 2nd, 3rd, 4th, 
                and 5th birthdays of such individual occurring on or 
                after January 1, 2001.
            ``(2) Adjustment for inflation.--For any calendar year 
        after 2001, each of the dollar amounts under paragraph (1) 
        shall be increased by the cost-of-living adjustment using the 
        wage increase percentage determined under section 215(i) for 
        the calendar year.
    ``(c) Designations Regarding KidSave Accounts.--
            ``(1) Initial designations of investment vehicle.--A person 
        described in subsection (d) shall, on behalf of the individual 
        described in subsection (a), designate the investment vehicle 
        for the KidSave Account to which contributions on behalf of 
        such individual are to be deposited. Such designation shall be 
        made on the application for such individual's Social Security 
        account number.
            ``(2) Changes in investment vehicles.--The Commissioner 
        shall by regulation provide the time and manner by which an 
        individual or a person described in subsection (d) on behalf of 
        such individual may change 1 or more investment vehicles for a 
        KidSave Account.
    ``(d) Treatment of Minors and Incompetent Individuals.--Any 
designation under subsection (c) to be made by a minor, or an 
individual mentally incompetent or under other legal disability, may be 
made by the person who is constituted guardian or other fiduciary by 
the law of the State of residence of the individual or is 
otherwise legally vested with the care of the individual or his estate. 
Payment under this part due a minor, or an individual mentally 
incompetent or under other legal disability, may be made to the person 
who is constituted guardian or other fiduciary by the law of the State 
of residence of the claimant or is otherwise legally vested with the 
care of the claimant or his estate. In any case in which a guardian or 
other fiduciary of the individual under legal disability has not been 
appointed under the law of the State of residence of the individual, if 
any other person, in the judgment of the Commissioner, is responsible 
for the care of such individual, any designation under subsection (c) 
which may otherwise be made by such individual may be made by such 
person, any payment under this part which is otherwise payable to such 
individual may be made to such person, and the payment of an annuity 
payment under this part to such person bars recovery by any other 
person.

                    ``definitions and special rules

    ``Sec. 262. (a) Kidsave Accounts.--In this part, the term `KidSave 
Account' means any KidSave Account in the Individual Savings Fund 
(established under section 254) which is administered by the Individual 
Savings Fund Board.
    ``(b) Treatment of Accounts.--
            ``(1) In general.--Except as provided in paragraph (2), any 
        KidSave Account described in subsection (a) shall be treated in 
        the same manner as an individual savings account under part B.
            ``(2) Distributions.--Notwithstanding any other provision 
        of law, distributions may only be made from a KidSave Account 
        of an individual on or after the earlier of--
                    ``(A) the date on which the individual begins 
                receiving benefits under this title, or
                    ``(B) the date of the individual's death.''.

SEC. 103. ADJUSTMENTS TO PRIMARY INSURANCE AMOUNTS UNDER PART A OF 
              TITLE II OF THE SOCIAL SECURITY ACT.

    (a) In General.--Section 215 of the Social Security Act (42 U.S.C. 
415) is amended by adding at the end the following:

 ``Adjustment of Primary Insurance Amount in Relation to Deposits Made 
          to Individual Savings Accounts and KidSave Accounts

    ``(j)(1) Except as provided in paragraph (2), an individual's 
primary insurance amount as determined in accordance with this section 
(before adjustments made under subsection (i)) shall be equal to--
            ``(A) the amount which would be so determined without the 
        application of this subsection, multiplied by
            ``(B) 1 minus the ratio of--
                    ``(i) the sum of--
                            ``(I) the total of all amounts which have 
                        been credited pursuant to sections 
                        3101(a)(2)(A)(i) and 1401(a)(2)(A)(i) of the 
                        Internal Revenue Code of 1986 to the individual 
                        savings account held by such individual, plus
                            ``(II) 50 percent of the accumulated value 
                        of the KidSave Account (established on behalf 
                        of such individual under section 261(a)) 
                        determined on the date such KidSave Account is 
                        redesignated as an individual savings account 
                        held by such individual under section 
                        251(a)(1)(B), plus
                            ``(III) accrued interest on such amounts 
                        compounded annually up to the date of initial 
                        benefit entitlement based on the individual's 
                        earnings, assuming an interest rate equal to 
                        the projected interest rate of the Federal Old-
                        Age and Survivors Trust Fund, to
                    ``(ii) the expected present value of all future 
                benefits paid based on the individual's earnings, as of 
                the date of initial benefit entitlement based on such 
                earnings, assuming future mortality and interest rates 
                for the Federal Old-Age and Survivors Trust Fund used 
                in the intermediate projections of the most recent 
                Board of Trustees report under section 201.
    ``(2) In the case of an individual who becomes entitled to 
disability insurance benefits under section 223, such individual's 
primary insurance amount shall be determined without regard to 
paragraph (1).''.
    (b) Conforming Amendment to Railroad Retirement Act of 1974.--
Section 1 of the Railroad Retirement Act of 1974 (45 U.S.C. 231) is 
amended by adding at the end the following:
    ``(s) In applying applicable provisions of the Social Security Act 
for purposes of determining the amount of the annuity to which an 
individual is entitled under this Act, section 215(j) of the Social 
Security Act and part B of title II of such Act shall be 
disregarded.''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to computations and recomputations of primary 
insurance amounts occurring after December 31, 2000.

              TITLE II--SOCIAL SECURITY SYSTEM ADJUSTMENTS

SEC. 201. ADJUSTMENTS TO BEND POINTS IN DETERMINING PRIMARY INSURANCE 
              AMOUNTS.

    (a) Additional Bend Point.--Section 215(a)(1)(A) of the Social 
Security Act (42 U.S.C. 415(a)(1)(A)) is amended--
            (1) in clause (ii), by striking ``and'' at the end;
            (2) in clause (iii)--
                    (A) by striking ``15 percent'' and inserting ``32 
                percent'';
                    (B) by striking ``clause (ii),'' and inserting the 
                following: ``clause (ii) but do not exceed the amount 
                established for purposes of this clause by subparagraph 
                (B), and''; and
            (3) by inserting after clause (iii) the following:
            ``(iv) 15 percent of the individual's average indexed 
        monthly earnings to the extent that such earnings exceed the 
        amount established for purposes of clause (iii),''.
    (b) Initial Level of Additional Bend Point.--Section 
215(a)(1)(B)(i) of such Act (42 U.S.C. 415(a)(1)(B)(i)) is amended--
            (1) by striking ``clause (i) and (ii)'' and inserting 
        ``clauses (i) and (iii)''; and
            (2) by adding at the end the following: ``For individuals 
        who initially become eligible for old-age or disability 
        insurance benefits, or who die (before becoming eligible for 
        such benefit), in the calendar year 2001, the amount 
        established for purposes of clause (ii) of subparagraph (A) 
        shall be equal to 197.5 percent of the amount established for 
        purposes of clause (i).''.
    (c) Adjustments to PIA Formula Factors.--Section 215(a)(1)(B) of 
such Act (42 U.S.C. 415(a)(1)(B)) is amended further--
            (1) by redesignating clause (iii) as clause (iv);
            (2) by inserting after clause (ii) the following:
    ``(iii) 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 2005, effective for such 
calendar year--
            ``(I) the percentage in effect under clause (ii) of 
        subparagraph (A) shall be equal to the percentage in effect 
        under such clause for calendar year 2005 increased the 
        applicable number of times by 3.8 percentage points,
            ``(II) the percentage in effect under clause (iii) of 
        subparagraph (A) shall be equal to the percentage in effect 
        under such clause for calendar year 2005 decreased the 
        applicable number of times by 1.2 percentage points, and
            ``(III) the percentage in effect under clause (iv) of 
        subparagraph (A) shall be equal to the percentage in effect 
        under such clause for calendar year 2005 decreased the 
        applicable number of times by 0.5 percentage points.
For purposes of the preceding sentence, the term `applicable number of 
times' means a number equal to the lesser of 10 or the number of years 
beginning with 2006 and ending with the year of initial eligibility or 
death.''; and
            (3) in clause (iv) (as redesignated), by striking 
        ``amount'' and inserting ``dollar amount''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to primary insurance amounts of individuals 
attaining early retirement age (as defined in section 216(l) of the 
Social Security Act), or dying, after December 31, 2000.

SEC. 202. ADJUSTMENT OF WIDOWS' AND WIDOWERS' INSURANCE BENEFITS.

    (a) Widow's Benefit.--Section 202(e)(2)(A) of the Social Security 
Act (42 U.S.C. 402(e)(2)(A)) is amended by striking ``equal to'' and 
all that follows and inserting ``equal to the greater of--
            ``(i) the primary insurance amount (as determined for 
        purposes of this subsection after application of subparagraphs 
        (B) and (C)) of such deceased individual, or
            ``(ii) the lesser of--
                    ``(I) the applicable percentage of the joint 
                benefit which would have been received by the widow or 
                surviving divorced wife and the deceased individual for 
                such month if such individual had not died, or
                    ``(II) the benefit which would have been received 
                by the widow or surviving divorced wife if such 
                individual's contributions were based on the maximum 
                contribution and benefit base amount (determined under 
                section 230) for each contribution base year (as 
                determined under section 215(b)(2)(B)(ii)) of such 
                individual.
For purposes of clause (ii)(I), the applicable percentage is equal to 
50 percent in 2001, increased (but not above 75 percent) by 1 
percentage point in every second year thereafter.''.
    (b) Widower's Benefit.--Section 202(f)(3)(A) of the Social Security 
Act (42 U.S.C. 402(b)(3)(A)) is amended by striking ``equal to'' and 
all that follows and inserting ``equal to the greater of--
            ``(i) the primary insurance amount (as determined for 
        purposes of this subsection after application of subparagraphs 
        (B) and (C)) of such deceased individual, or
            ``(ii) the lesser of--
                    ``(I) the applicable percentage of the joint 
                benefit which would have been received by the widow or 
                surviving divorced wife and the deceased individual for 
                such month if such individual had not died, or
                    ``(II) the benefit which would have been received 
                by the widower or surviving divorced husband if such 
                individual's contributions were based on the maximum 
                contribution and benefit base amount (determined under 
                section 230) for each contribution base year (as 
                determined under section 215(b)(2)(B)(ii)) of such 
                individual.
For purposes of clause (ii)(II), the applicable percentage is equal to 
50 percent in 2001, increased (but not above 75 percent) by 1 
percentage point in every second year thereafter.''.
    (c) Effective Date.--The amendments made by this section shall 
apply individuals entitled to benefits after the date of enactment of 
this Act.

SEC. 203. ELIMINATION OF EARNINGS TEST FOR INDIVIDUALS WHO HAVE 
              ATTAINED EARLY RETIREMENT AGE.

    (a) In General.--Section 203 of the Social Security Act (42 U.S.C. 
403) is amended--
            (1) in subsection (c)(1), by striking ``retirement age'' 
        and inserting ``early retirement age'';
            (2) in paragraphs (1)(A) and (2) of subsection (d), by 
        striking ``retirement age'' each place it appears and inserting 
        ``early retirement age'';
            (3) in subsection (f)(1)(B), by striking ``retirement age'' 
        and inserting ``early retirement age'';
            (4) in subsection (f)(3)--
                    (A) by striking ``33\1/3\ percent'' and all that 
                follows through ``any other individual,'' and inserting 
                ``50 percent of such individual's earnings for such 
                year in excess of the product of the exempt amount as 
                determined under paragraph (8),''; and
                    (B) by striking ``retirement age'' and inserting 
                ``early retirement age'';
            (5) in subsection (f)(5)(D)(i), by striking ``retirement 
        age'' and inserting ``early retirement age'';
            (6) in subsection (f)(9)--
                    (A) by striking ``, (5)(D)(i), and (8)(D)'' and 
                inserting ``and (5)(D)(i)''; and
                    (B) by striking ``retirement age'' both places it 
                appears and inserting ``early retirement age'';
            (7) in subsection (h)(1)(A), by striking ``retirement age 
        (as defined in section 216(l))'' each place it appears and 
        inserting ``early retirement age (as defined in section 
        216(l))''; and
            (8) in subsection (j)--
                    (A) in the heading, by striking ``Retirement Age'' 
                and inserting ``Early Retirement Age''; and
                    (B) by striking ``having attained retirement age 
                (as defined in section 216(l))'' and inserting ``having 
                attained early retirement age (as defined in section 
                216(l))''.
    (b) Conforming Amendments Eliminating the Special Exempt Amount for 
Individuals Who Have Attained Age 62.--
            (1) Uniform exempt amount.--Section 203(f)(8)(A) of the 
        Social Security Act (42 U.S.C. 403(f)(8)(A)) is amended by 
        striking ``the new exempt amounts (separately stated for 
        individuals described in subparagraph (D) and for other 
        individuals) which are to be applicable'' and inserting ``a new 
        exempt amount which shall be applicable''.
            (2) Conforming amendments.--Section 203(f)(8)(B) of the 
        Social Security Act (42 U.S.C. 403(f)(8)(B)) is amended--
                    (A) in the matter preceding clause (i), by striking 
                ``Except'' and all that follows through ``whichever'' 
                and inserting ``The exempt amount which is applicable 
                for each month of a particular taxable year shall be 
                whichever'';
                    (B) in clauses (i) and (ii), by striking 
                ``corresponding'' each place it appears; and
                    (C) in the last sentence, by striking ``an exempt 
                amount'' and inserting ``the exempt amount''.
            (3) Repeal of basis for computation of special exempt 
        amount.--Subparagraphs (D) and (E) of section 203(f)(8) of the 
        Social Security Act (42 U.S.C. 403(f)(8)) are repealed.
    (c) Additional Conforming Amendments.--
            (1) Elimination of redundant references to retirement 
        age.--Section 203 of the Social Security Act (42 U.S.C. 403) is 
        amended--
                    (A) in subsection (c), in the last sentence, by 
                striking ``nor shall any deduction'' and all that 
                follows and inserting ``nor shall any deduction be made 
                under this subsection from any widow's or widower's 
                insurance benefit if the widow, surviving divorced 
                wife, widower, or surviving divorced husband involved 
                became entitled to such benefit prior to attaining age 
                60.''; and
                    (B) in subsection (f)(1), by striking clause (D) 
                and inserting the following: ``(D) for which such 
                individual is entitled to widow's or widower's 
                insurance benefits if such individual became so 
                entitled prior to attaining age 60,''.
            (2) Provisions relating to earnings taken into account in 
        determining substantial gainful activity of blind 
        individuals.--The second sentence of section 223(d)(4) of such 
        Act (42 U.S.C. 423(d)(4)) is amended by striking ``if section 
        102 of the Senior Citizens' Right to Work Act of 1996 had not 
        been enacted'' and inserting the following: ``if the amendments 
        to section 203 made by section 102 of the Senior Citizens' 
        Right to Work Act of 1996 and by the Bipartisan Social Security 
        Reform Act of 2000 had not been enacted''.
    (d) Study of the Effect of Taking Earnings Into Account in 
Determining Substantial Gainful Activity of Disabled Individuals.--
            (1) In general.--Not later than February 15, 2001, the 
        Commissioner of Social Security shall conduct a study on the 
        effect that taking earnings into account in determining 
        substantial gainful activity of individuals receiving 
        disability insurance benefits has on the incentive for such 
        individuals to work and submit to Congress a report on the 
        study.
            (2) Contents of study.--The study conducted under paragraph 
        (1) shall include the evaluation of--
                    (A) the effect of the current limit on earnings on 
                the incentive for individuals receiving disability 
                insurance benefits to work;
                    (B) the effect of increasing the earnings limit or 
                changing the manner in which disability insurance 
                benefits are reduced or terminated as a result of 
                substantial gainful activity (including reducing the 
                benefits gradually when the earnings limit is exceeded) 
                on--
                            (i) the incentive to work; and
                            (ii) the financial status of the Federal 
                        Disability Insurance Trust Fund;
                    (C) the effect of extending eligibility for the 
                Medicare program to individuals during the period in 
                which disability insurance benefits of the individual 
                are gradually reduced as a result of substantial 
                gainful activity and extending such eligibility for a 
                fixed period of time after the benefits are terminated 
                on--
                            (i) the incentive to work; and
                            (ii) the financial status of the Federal 
                        Hospital Insurance Trust Fund and the Federal 
                        Supplementary Medical Insurance Trust Fund; and
                    (D) the relationship between the effect of 
                substantial gainful activity limits on blind 
                individuals receiving disability insurance benefits and 
                other individuals receiving disability insurance 
                benefits.
            (3) Consultation.--The analysis under paragraph (2)(C) 
        shall be done in consultation with the Administrator of the 
        Health Care Financing Administration.
    (e) Effective Date.--The amendments and repeals made by subsections 
(a), (b), and (c) shall apply with respect to taxable years ending 
after December 31, 2002.

SEC. 204. GRADUAL INCREASE IN NUMBER OF BENEFIT COMPUTATION YEARS; USE 
              OF ALL YEARS IN COMPUTATION.

    (a) In General.--Section 215(b)(2)(A) of the Social Security Act 
(42 U.S.C. 415(b)(2)(A)) is amended--
            (1) in clause (i), by striking ``5 years'' and inserting 
        ``the applicable number of years for purposes of this clause''; 
        and
            (2) by striking ``Clause (ii),'' in the matter following 
        clause (ii) and inserting the following:
``For purposes of clause (i), the applicable number of years is the 
number of years specified in connection with the year in which such 
individual reaches early retirement age (as defined in section 
216(l)(2)), or, if earlier, the calendar year in which such individual 
dies, as set forth in the following table:

``If such calendar year is:         The applicable number of years is:
        2002...................................................      4 
        2003...................................................      4 
        2004...................................................      3 
        2005...................................................      3 
        2006...................................................      2 
        2007...................................................      2 
        2008...................................................      1 
        2009...................................................      1 
        After 2009.............................................      0.
Notwithstanding the preceding sentence, the applicable number of years 
is 5, in the case of any individual who is entitled to old-age 
insurance benefits, and has a spouse who is also so entitled (or who 
died without having become so entitled) who has greater total wages and 
self-employment income credited to benefit computation years than the 
individual. Clause (ii),''.
    (b) Use of All Years in Computation.--
            (1) In general.--Section 215(b)(2)(B) of the Social 
        Security Act (42 U.S.C. 415(b)(2)(B)) is amended by striking 
        clauses (i) and (ii) and inserting the following:
            ``(i)(I) for calendar years after 2001 and before 2010, the 
        term `benefit computation years' means those computation base 
        years equal in number to the number determined under 
        subparagraph (A) plus the applicable number of years determined 
        under subclause (III), for which the total of such individual's 
        wages and self-employment income, after adjustment under 
        paragraph (3), is the largest;
            ``(II) for calendar years after 2009, the term `benefit 
        computation years' means all of the computation base years; and
            ``(III) for purposes of subclause (I), the applicable 
        number of years is the number of years specified in connection 
        with the year in which such individual reaches early retirement 
        age (as defined in section 216(l)(2)), or, if earlier, the 
        calendar year in which such individual dies, as set forth in 
        the following table:

``If such calendar year is:         The applicable number of years is:
        Before 2002............................................      0 
        2002...................................................      1 
        2003...................................................      1 
        2004...................................................      2 
        2005...................................................      2 
        2006...................................................      3 
        2007...................................................      3 
        2008...................................................      4 
        2009...................................................      4;
            ``(ii) the term `computation base years' means the calendar 
        years after 1950, except that such term excludes any calendar 
        year entirely included in a period of disability; and''.
            (2) Conforming amendment.--Section 215(b)(1)(B) of the 
        Social Security Act (42 U.S.C. 415(b)(1)(B)) is amended by 
        striking ``in those years'' and inserting ``in an individual's 
        computation base years determined under paragraph (2)(A)''.
    (c) Effective Date.--
            (1) Subsection (a).--The amendments made by subsection (a) 
        shall apply with respect to individuals attaining early 
        retirement age (as defined in section 216(l)(2) of the Social 
        Security Act) after December 31, 2001.
            (2) Subsection (b).--The amendment made by subsection (b) 
        shall apply to benefit computation years beginning after 
        December 31, 2000.

SEC. 205. MAINTENANCE OF BENEFIT AND CONTRIBUTION BASE.

    (a) In General.--Section 230 of the Social Security Act (42 U.S.C. 
430) is amended to read as follows:

            maintenance of the contribution and benefit base

    ``Sec. 230. (a) The Commissioner of Social Security shall determine 
and publish in the Federal Register on or before November 1 of each 
calendar year the contribution and benefit base determined under 
subsection (b) which shall be effective with respect to remuneration 
paid after such calendar year and taxable years beginning after such 
year.
    ``(b) For purposes of this section, for purposes of determining 
wages and self-employment income under sections 209, 211, 213, and 215 
of this Act and sections 54, 1402, 3121, 3122, 3125, 6413, and 6654 of 
the Internal Revenue Code of 1986, and for purposes of section 
4022(b)(3)(B) of Public Law 93-406, the contribution and benefit base 
with respect to remuneration paid in (and taxable years beginning in) 
any calendar year is an amount equal to 84.5 percent of the total wages 
and self-employment income for the preceding calendar year (within the 
meaning of section 209).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to remuneration paid in (and taxable years beginning in) any calendar 
year after 2000.

SEC. 206. REDUCTION IN THE AMOUNT OF CERTAIN TRANSFERS TO MEDICARE 
              TRUST FUND.

    Subparagraph (A) of section 121(e)(1) of the Social Security 
Amendments of 1983 (42 U.S.C. 401 note), as amended by section 
13215(c)(1) of the Omnibus Budget Reconciliation Act of 1993, is 
amended--
            (1) in clause (ii), by striking ``the amounts'' and 
        inserting ``the applicable percentage of the amounts''; and
            (2) by adding at the end the following: ``For purposes of 
        clause (ii), the applicable percentage for a year is equal to 
        100 percent, reduced (but not below zero) by 10 percentage 
        points for each year after 2004.''.

SEC. 207. ACTUARIAL ADJUSTMENT FOR RETIREMENT.

    (a) Early Retirement.--
            (1) In general.--Section 202(q) of the Social Security Act 
        (42 U.S.C. 402(q)) is amended--
                    (A) in paragraph (1)(A), by striking ``\5/9\'' and 
                inserting ``the applicable fraction (determined under 
                paragraph (12))''; and
                    (B) by adding at the end the following:
    ``(12) For purposes of paragraph (1)(A), the `applicable fraction' 
for an individual who attains the age of 62 in--
            ``(A) any year before 2001, is \5/9\;
            ``(B) 2001, is \7/12\;
            ``(C) 2002, is \11/18\;
            ``(D) 2003, is \23/36\;
            ``(E) 2004, is \2/3\; and
            ``(F) 2005 or any succeeding year, is \25/36\.''.
            (2) Months beyond first 36 months.--Section 202(q) of such 
        Act (42 U.S.C. 402(q)(9)) (as amended by paragraph (1)) is 
        amended--
                    (A) in paragraph (9)(A), by striking ``five-
                twelfths'' and inserting ``the applicable fraction 
                (determined under paragraph (13))''; and
                    (B) by adding at the end the following:
    ``(13) For purposes of paragraph (9)(A), the `applicable fraction' 
for an individual who attains the age of 62 in--
            ``(A) any year before 2001, is \5/12\;
            ``(B) 2001, is \16/36\;
            ``(C) 2002, is \16/36\;
            ``(D) 2003, is \17/36\;
            ``(E) 2004, is \17/36\; and
            ``(F) 2005 or any succeeding year, is \1/2\.''.
            (3) Effective date.--The amendments made by paragraphs (1) 
        and (2) shall apply to individuals who attain the age of 62 in 
        years after 2000.
    (b) Delayed Retirement.--Section 202(w)(6) of the Social Security 
Act (42 U.S.C. 402(w)(6)) is amended--
            (1) in subparagraph (C), by striking ``and'' at the end;
            (2) in subparagraph (D), by striking ``2004.'' and 
        inserting ``2004 and before 2007;''; and
            (3) by adding at the end the following:
            ``(E) \17/24\ of 1 percent in the case of an individual who 
        attains the age of 62 in a calendar year after 2006 and before 
        2009;
            ``(F) \3/4\ of 1 percent in the case of an individual who 
        attains the age of 62 in a calendar year after 2008 and before 
        2011;
            ``(G) \19/24\ of 1 percent in the case of an individual who 
        attains the age of 62 in a calendar year after 2010 and before 
        2013; and
            ``(H) \5/6\ of 1 percent in the case of an individual who 
        attains the age of 62 in a calendar year after 2012.''.

SEC. 208. IMPROVEMENTS IN PROCESS FOR COST-OF-LIVING ADJUSTMENTS.

    (a) Annual Declarations of Persisting Upper Level Substitution 
Bias, Quality-Change Bias, and New-Product Bias.--Not later than 
December 1, 2000, and annually thereafter, the Commissioner of the 
Bureau of Labor Statistics shall publish in the Federal Register an 
estimate of the upper level substitution bias, quality-change bias, and 
new-product bias retained in the Consumer Price Index, expressed in 
terms of a percentage point effect on the annual rate of change in the 
Consumer Price Index determined through the use of a superlative index 
that accounts for changes that consumers make in the quantities of 
goods and services consumed.
    (b) Modification of Cost-of-Living Adjustment.--
            (1) In general.--Notwithstanding any other provision of 
        law, for each calendar year after 2000 any cost-of-living 
        adjustment described in subsection (f) shall be further 
        adjusted by the greater of--
                    (A) the applicable percentage point, or
                    (B) the correction for the upper level substitution 
                bias, quality-change bias, and new-product bias (as 
                last published by the Commissioner of the Bureau of 
                Labor Statistics pursuant to subsection (a)).
            (2) Applicable percentage point.--For purposes of paragraph 
        (1)(A), the applicable percentage point shall be determined in 
        accordance with the following table:

                                                             Applicable
Calendar year:                                        Percentage Point:
    2001..........................................                 0.1 
    2002..........................................                 0.2 
    2003..........................................                 0.3 
    2004 and thereafter...........................                0.33.
    (c) Funding for CPI Improvements.--
            (1) In general.--There is hereby appropriated to the Bureau 
        of Labor Statistics in the Department of Labor, for each of 
        fiscal years 2001, 2002, and 2003, $60,000,000 for use by the 
        Bureau for the following purposes:
                    (A) Research, evaluation, and implementation of a 
                superlative index to estimate upper level substitution 
                bias, quality-change bias, and new-product bias in the 
                Consumer Price Index.
                    (B) Expansion of the Consumer Expenditure Survey 
                and the Point of Purchase Survey.
            (2) Reports.--The Commissioner of the Bureau of Labor 
        Statistics shall submit reports regarding the use of 
        appropriations made under paragraph (1) to the Committee on 
        Appropriations of the House of Representatives and the 
        Committee on Appropriations of the Senate upon the request of 
        each Committee.
    (d) Information Sharing.--The Commissioner of the Bureau of Labor 
Statistics may secure directly from the Secretary of Commerce 
information necessary for purposes of calculating the Consumer Price 
Index. Upon request of the Commissioner of the Bureau of Labor 
Statistics, the Secretary of Commerce shall furnish that information to 
the Commissioner.
    (e) Administrative Advisory Committee.--The Bureau of Labor 
Statistics shall, in consultation with the National Bureau of Economic 
Research, the American Economic Association, and the National Academy 
of Statisticians, establish an administrative advisory committee. The 
advisory committee shall periodically advise the Bureau of Labor 
Statistics regarding revisions of the Consumer Price Index and conduct 
research and experimentation with alternative data collection and 
estimating approaches.
    (f) Cost-of-Living Adjustment Described.--A cost-of-living 
adjustment described in this subsection is any cost-of-living 
adjustment for a calendar year after 2000 determined by reference to a 
percentage change in a consumer price index or any component thereof 
(as published by the Bureau of Labor Statistics of the Department of 
Labor and determined without regard to this section) and used in any of 
the following:
            (1) The Internal Revenue Code of 1986.
            (2) The provisions of this Act (other than programs under 
        title XVI and any adjustment in the case of an individual who 
        attains early retirement age before January 1, 2001).
            (3) Any other Federal program.
    (g) Recapture of CPI Reform Revenues Deposited Into the Federal 
Old-Age and Survivors Insurance Trust Fund.--Section 201 of the Social 
Security Act (42 U.S.C. 401) is amended by adding at the end the 
following:
    ``(n) On July 1 of each calendar year specified in the following 
table, the Secretary of the Treasury shall transfer, from the general 
fund of the Treasury to the Federal Old-Age and Survivors Insurance 
Trust Fund, an amount equal to the applicable percentage for such year, 
specified in such table, of the total wages paid in and self-employment 
income credited to such year.

``For a calendar year--             The applicable percentage for the 
                                            year is--
    After 2001 and before 2020.....
                                        0.4 percent 
    After 2019 and before 2040.....
                                        0.53 percent 
    After 2039 and before 2060.....
                                        0.67 percent 
    After 2059.....................
                                        0.8 percent.''.

SEC. 209. MODIFICATION OF PIA FACTORS TO REFLECT CHANGES IN LIFE 
              EXPECTANCY.

    (a) Modification of PIA Factors.--Section 215(a)(1) of the Social 
Security Act (42 U.S.C. 415(a)(1)(B)) is amended by redesignating 
subparagraph (D) as subparagraph (F) and by inserting after 
subparagraph (C) the following:
    ``(D)(i) For individuals who initially become eligible for old-age 
insurance benefits in any calendar year after 2005, each of the 
percentages under clauses (i), (ii), (iii), and (iv) of subparagraph 
(A) shall be multiplied the applicable number of times by the 
applicable factor.
    ``(ii) For purposes of clause (i)--
            ``(I) the term `applicable number of times' means a number 
        equal to the sum of--
                    ``(aa) the number of years beginning with 2006 and 
                ending with the earlier of 2016 or the year of initial 
                eligibility; plus
                    ``(bb) if the year of initial eligibility has not 
                occurred, the number of years beginning with 2023 and 
                ending with the earlier of 2053 or the year of initial 
                eligibility; and
            ``(II) the term `applicable factor' means .988 with respect 
        to the first 6 applicable number of times and .997 with respect 
        to the applicable number of times in excess of 6.
    ``(E) For any individual who initially becomes eligible for 
disability insurance benefits in any calendar year after 2005, the 
primary insurance amount for such individual shall be equal to the 
greater of--
            ``(i) such amount as determined under this paragraph, or
            ``(ii) such amount as determined under this paragraph 
        without regard to subparagraph (D) thereof.''.
    (b) Study of the Effect of Increases in Life Expectancy.--
            (1) Study plan.--Not later than February 15, 2001, the 
        Commissioner of Social Security shall submit to Congress a 
        detailed study plan for evaluating the effects of increases in 
        life expectancy on the expected level of retirement income from 
        social security, pensions, and other sources. The study plan 
        shall include a description of the methodology, data, and 
        funding that will be required in order to provide to Congress 
        not later than February 15, 2006--
                    (A) an evaluation of trends in mortality and their 
                relationship to trends in health status, among 
                individuals approaching eligibility for social security 
                retirement benefits;
                    (B) an evaluation of trends in labor force 
                participation among individuals approaching eligibility 
                for social security retirement benefits and among 
                individuals receiving retirement benefits, and of the 
                factors that influence the choice between retirement 
                and participation in the labor force;
                    (C) an evaluation of changes, if any, in the social 
                security disability program that would reduce the 
                impact of changes in the retirement income of workers 
                in poor health or physically demanding occupations;
                    (D) an evaluation of the methodology used to 
                develop projections for trends in mortality, health 
                status, and labor force participation among individuals 
                approaching eligibility for social security retirement 
                benefits and among individuals receiving retirement 
                benefits; and
                    (E) an evaluation of such other matters as the 
                Commissioner deems appropriate for evaluating the 
                effects of increases in life expectancy.
            (2) Report on results of study.--Not later than February 
        15, 2006, the Commissioner of Social Security shall provide to 
        Congress an evaluation of the implications of the trends 
        studied under paragraph (1), along with recommendations, if 
        any, of the extent to which the conclusions of such evaluations 
        indicate that projected increases in life expectancy require 
        modification in the social security disability program and 
        other income support programs.

SEC. 210. MECHANISM FOR REMEDYING UNFORESEEN DETERIORATION IN SOCIAL 
              SECURITY SOLVENCY.

    (a) In General.--Section 709 of the Social Security Act (42 U.S.C. 
910) is amended--
            (1) by redesignating subsection (b) as subsection (c); and
            (2) by striking ``Sec. 709. (a) If the Board of Trustees'' 
        and all that follows through ``any such Trust Fund'' and 
        inserting the following:
    ``Sec. 709. (a)(1)(A) If the Board of Trustees of the Federal Old-
Age and Survivors Insurance Trust Fund and the Federal Disability 
Insurance Trust Fund determines at any time, using intermediate 
actuarial assumptions, that the balance ratio of either such Trust Fund 
during any calendar year within the succeeding period of 75 calendar 
years will attain zero, the Board shall promptly submit to each House 
of the Congress and to the President a report setting forth its 
recommendations for statutory adjustments affecting the receipts and 
disbursements of such Trust Fund necessary to maintain the balance 
ratio of such Trust Fund at not less than 20 percent, with due regard 
to the economic conditions which created such inadequacy in the balance 
ratio and the amount of time necessary to alleviate such inadequacy in 
a prudent manner. The report shall set forth specifically the extent to 
which benefits would have to be reduced, taxes under section 1401, 
3101, or 3111 of the Internal Revenue Code of 1986 would have to be 
increased, or a combination thereof, in order to obtain the objectives 
referred to in the preceding sentence.
    ``(B) In addition to any reports under subparagraph (A), the Board 
shall, not later than May 30, 2001, prepare and submit to Congress and 
the President recommendations for statutory adjustments to the 
disability insurance program under title II of this Act to modify the 
changes in disability benefits under the Bipartisan Social Security 
Reform Act of 2000 without reducing the balance ratio of the Federal 
Disability Insurance Trust Fund. The Board shall develop such 
recommendations in consultation with the National Council on 
Disability, taking into consideration the adequacy of benefits under 
the program, the relationship of such program with old age benefits 
under such title, and changes in the process for determining initial 
eligibility and reviewing continued eligibility for benefits under such 
program.
    ``(2)(A) The President shall, no later than 30 days after the 
submission of the report to the President, transmit to the Board and to 
the Congress a report containing the President's approval or 
disapproval of the Board's recommendations.
    ``(B) If the President approves all the recommendations of the 
Board, the President shall transmit a copy of such recommendations to 
the Congress as the President's recommendations, together with a 
certification of the President's adoption of such recommendations.
    ``(C) If the President disapproves the recommendations of the 
Board, in whole or in part, the President shall transmit to the Board 
and the Congress the reasons for that disapproval. The Board shall then 
transmit to the Congress and the President, no later than 60 days after 
the date of the submission of the original report to the President, a 
revised list of recommendations.
    ``(D) If the President approves all of the revised recommendations 
of the Board transmitted to the President under subparagraph (C), the 
President shall transmit a copy of such revised recommendations to the 
Congress as the President's recommendations, together with a 
certification of the President's adoption of such recommendations.
    ``(E) If the President disapproves the revised recommendations of 
the Board, in whole or in part, the President shall transmit to the 
Board and the Congress the reasons for that disapproval, together with 
such revisions to such recommendations as the President determines are 
necessary to bring such recommendations within the President's 
approval. The President shall transmit a copy of such recommendations, 
as so revised, to the Board and the Congress as the President's 
recommendations, together with a certification of the President's 
adoption of such recommendations.
    ``(3)(A) This paragraph is enacted by Congress--
            ``(i) as an exercise of the rulemaking power of the Senate 
        and the House of Representatives, respectively, and as such it 
        is deemed a part of the rules of each House, respectively, but 
        applicable only with respect to the procedure to be followed in 
        that House in the case of a joint resolution described in 
        subparagraph (B), and it supersedes other rules only to the 
        extent that it is inconsistent with such rules; and
            ``(ii) with full recognition of the constitutional right of 
        either House to change the rules (so far as relating to the 
        procedure of that House) at any time, in the same manner, and 
        to the same extent as in the case of any other rule of that 
        House.
    ``(B) For purposes of this paragraph, the term `joint resolution' 
means only a joint resolution which is introduced within the 10-day 
period beginning on the date on which the President transmits the 
President's recommendations, together with the President's 
certification, to the Congress under subparagraph (B), (D), or (E) of 
paragraph (2), and--
            ``(i) which does not have a preamble;
            ``(ii) the matter after the resolving clause of which is as 
        follows: `That the Congress approves the recommendations of the 
        President as transmitted on ____ pursuant to section 709(a) of 
        the Social Security Act, as follows: ________', the first blank 
        space being filled in with the appropriate date and the second 
        blank space being filled in with the statutory adjustments 
        contained in the recommendations; and
            ``(iii) the title of which is as follows: `Joint resolution 
        approving the recommendations of the President regarding social 
        security.'.
    ``(C) A joint resolution described in subparagraph (B) that is 
introduced in the House of Representatives shall be referred to the 
Committee on Ways and Means of the House of Representatives. A joint 
resolution described in subparagraph (B) introduced in the Senate shall 
be referred to the Committee on Finance of the Senate.
    ``(D) If the committee to which a joint resolution described in 
subparagraph (B) is referred has not reported such joint resolution (or 
an identical joint resolution) by the end of the 20-day period 
beginning on the date on which the President transmits the 
recommendation to the Congress under paragraph (2), such committee 
shall be, at the end of such period, discharged from further 
consideration of such joint resolution, and such joint resolution shall 
be placed on the appropriate calendar of the House involved.
    ``(E)(i) On or after the third day after the date on which the 
committee to which such a joint resolution is referred has reported, or 
has been discharged (under subparagraph (D)) from further consideration 
of, such a joint resolution, it is in order (even though a previous 
motion to the same effect has been disagreed to) for any Member of the 
respective House to move to proceed to the consideration of the joint 
resolution. A Member may make the motion only on the day after the 
calendar day on which the Member announces to the House concerned the 
Member's intention to make the motion, except that, in the case of the 
House of Representatives, the motion may be made without such prior 
announcement if the motion is made by direction of the committee to 
which the joint resolution was referred. All points of order against 
the joint resolution (and against consideration of the joint 
resolution) are waived. The motion is highly privileged in the House of 
Representatives and is privileged in the Senate and is not debatable. 
The motion is not subject to amendment, or to a motion to postpone, or 
to a motion to proceed to the consideration of other business. A motion 
to reconsider the vote by which the motion is agreed to or disagreed to 
shall not be in order. If a motion to proceed to the consideration of 
the joint resolution is agreed to, the respective House shall 
immediately proceed to consideration of the joint resolution without 
intervening motion, order, or other business, and the joint resolution 
shall remain the unfinished business of the respective House until 
disposed of.
    ``(ii) Debate on the joint resolution, and on all debatable motions 
and appeals in connection therewith, shall be limited to not more than 
2 hours, which shall be divided equally between those favoring and 
those opposing the joint resolution. An amendment to the joint 
resolution is not in order. A motion further to limit debate is in 
order and not debatable. A motion to postpone, or a motion to proceed 
to the consideration of other business, or a motion to recommit the 
joint resolution is not in order. A motion to reconsider the vote by 
which the joint resolution is agreed to or disagreed to is not in 
order.
    ``(iii) Immediately following the conclusion of the debate on a 
joint resolution described in subparagraph (B) and a single quorum call 
at the conclusion of the debate if requested in accordance with the 
rules of the appropriate House, the vote on final passage of the joint 
resolution shall occur.
    ``(iv) Appeals from the decisions of the Chair relating to the 
application of the rules of the Senate or the House of Representatives, 
as the case may be, to the procedure relating to a joint resolution 
described in subparagraph (B) shall be decided without debate.
    ``(F)(i) If, before the passage by one House of a joint resolution 
of that House described in subparagraph (B), that House receives from 
the other House a joint resolution described in subparagraph (B), then 
the following procedures shall apply:
            ``(I) The joint resolution of the other House shall not be 
        referred to a committee and may not be considered in the House 
        receiving it except in the case of final passage as provided in 
        subclause (II).
            ``(II) With respect to a joint resolution described in 
        subparagraph (B) of the House receiving the joint resolution, 
        the procedure in that House shall be the same as if no joint 
        resolution had been received from the other House, but the vote 
        on final passage shall be on the joint resolution of the other 
        House.
    ``(ii) Upon disposition of the joint resolution received from the 
other House, it shall no longer be in order to consider the joint 
resolution that originated in the receiving House.
    ``(b) If the Board of Trustees of the Federal Hospital Insurance 
Trust Fund or the Federal Supplementary Medical Insurance Trust Fund 
determines as any time that the balance ratio of either such Trust 
Fund.''.
    (b) Conforming Amendments.--
            (1) Section 709(b) of the Social Security Act (42 U.S.C. 
        910(b)) (as amended by subsection (a) of this section) is 
        amended by striking ``any such'' and inserting ``either such''.
            (2) Section 709(c) of such Act (42 U.S.C. 910(c)) (as 
        redesignated by subsection (a) of this section) is amended by 
        inserting ``or (b)'' after ``subsection (a)''.
                                 <all>
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