II 

112TH CONGRESS 

2D SESSION S. 3651 

To amend title II of the Social Security Act and the Internal Revenue 

Code of 1986 to make improvements in the old-age, survivors, and 

disability insurance program, to provide for cash relief for years for 

which annual COLAs do not take effect under certain cash benefit 

programs, and to provide for Social Security benefit protection. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 4, 2012 

Mr. BEGICH 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 and the Internal 

Revenue Code of 1986 to make improvements in the 

old-age, survivors, and disability insurance program, to 

provide for cash relief for years for which annual COLAs 

do not take effect under certain cash benefit programs, 

and to provide for Social Security benefit protection. 

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 AND TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may cited as the ‘‘Pro5 tecting and Preserving Social Security Act’’. 


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1 (b) TABLE OF CONTENTS.—The table of contents of 

2 this Act is as follows: 

Sec. 1. Short title and table of contents. 

TITLE I—COST-OF-LIVING INCREASES 

Sec. 101. Consumer price index for elderly consumers. 

Sec. 102. Computation of cost-of-living increases. 

TITLE II—CONTRIBUTION AND BENEFIT FAIRNESS 

Sec. 201. Determination of wages and self-employment income above contribution and benefit base after 2012. 

Sec. 202. Inclusion of surplus earnings in social security benefit formula. 

3 TITLE I—COST-OF-LIVING 

4 INCREASES 

5 SEC. 101. CONSUMER PRICE INDEX FOR ELDERLY CON6 SUMERS. 

7 (a) IN GENERAL.—The Bureau of Labor Statistics 

8 of the Department of Labor shall prepare and publish an 

9 index for each calendar month to be known as the ‘‘Con10 sumer Price Index for Elderly Consumers’’ that indicates 

11 changes over time in expenditures for consumption which 

12 are typical for individuals in the United States who are 

13 62 years of age or older. 

14 (b) EFFECTIVE DATE.—Subsection (a) shall apply 

15 with respect to calendar months ending on or after July 

16 31 of the calendar year following the calendar year in 

17 which this Act is enacted. 

18 (c) AUTHORIZATION OF APPROPRIATIONS.—There 

19 are authorized to be appropriated such sums as are nec20 essary to carry out the provisions of this section. 


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

2 (a) IN GENERAL.—Section 215(i) of the Social Secu3 rity Act (42 U.S.C. 415(i)) is amended— 

4 (1) in paragraph (1)(G), by inserting before the 

5 period the following: ‘‘, and, solely with respect to 

6 any monthly insurance benefit payable under this 

7 title to an individual who has attained age 62, effec8 tive for adjustments under this subsection to the pri9 mary insurance amount on which such benefit is 

10 based (or to any such benefit under section 227 or 

11 228) occurring after such individual attains such 

12 age, the applicable Consumer Price Index shall be 

13 deemed to be the Consumer Price Index for Elderly 

14 Consumers and such primary insurance amount 

15 shall be deemed adjusted under this subsection using 

16 such Index’’; and 

17 (2) in paragraph (4), by striking ‘‘and by sec18 tion 9001’’ and inserting ‘‘, by section 9001’’, and 

19 by inserting after ‘‘1986,’’ the following: ‘‘and by 

20 section 102 of the Protecting and Preserving Social 

21 Security Act,’’. 

22 (b) CONFORMING AMENDMENTS IN APPLICABLE

23 FORMER LAW.—Section 215(i)(1)(C) of such Act, as in 

24 effect in December 1978 and applied in certain cases 

25 under the provisions of such Act in effect after December 

26 1978, is amended by inserting before the period the folVerDate Mar 15 2010 02:13 Dec 05, 2012 Jkt 029200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3651.IS S3651

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1 lowing: ‘‘, and, solely with respect to any monthly insur2 ance benefit payable under this title to an individual who 

3 has attained age 62, effective for adjustments under this 

4 subsection to the primary insurance amount on which such 

5 benefit is based (or to any such benefit under section 227 

6 or 228) occurring after such individual attains such age, 

7 the applicable Consumer Price Index shall be deemed to 

8 be the Consumer Price Index for Elderly Consumers and 

9 such primary insurance amount shall be deemed adjusted 

10 under this subsection using such Index’’. 

11 (c) EFFECTIVE DATE.—The amendments made by 

12 subsection (a) shall apply to determinations made with re13 spect to cost-of-living computation quarters (as defined in 

14 section 215(i)(1)(B) of the Social Security Act (42 U.S.C. 

15 415(i)(1)(B))) ending on or after September 30 of the sec16 ond calendar year following the calendar year in which this 

17 Act is enacted. 

18 TITLE II—CONTRIBUTION AND 

19 BENEFIT FAIRNESS 

20 SEC. 201. DETERMINATION OF WAGES AND SELF-EMPLOY21 MENT INCOME ABOVE CONTRIBUTION AND 

22 BENEFIT BASE AFTER 2012. 

23 (a) DETERMINATION OF WAGES ABOVE CONTRIBU24 TION AND BENEFIT BASE AFTER 2012.— 


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1 (1) AMENDMENTS TO THE INTERNAL REVENUE

2 CODE OF 1986.—Section 3121 of the Internal Rev3 enue Code of 1986 is amended— 

4 (A) in subsection (a)(1), by inserting ‘‘the 

5 applicable percentage (determined under sub6 section (c)(1)) of’’ before ‘‘that part of the re7 muneration’’; and 

8 (B) in subsection (c), by striking ‘‘(c) IN9 CLUDED AND EXCLUDED SERVICE.—For pur10 poses of this chapter, if’’ and inserting the fol11 lowing: 

12 ‘‘(c) SPECIAL RULES FOR WAGES AND EMPLOY13 MENT.— 

14 ‘‘(1) APPLICABLE PERCENTAGE OF REMUNERA15 TION IN DETERMINING WAGES.—For purposes of 

16 paragraph (1) of subsection (a), the applicable per17 centage for a calendar year, in connection with any 

18 calendar year referred to in such subparagraph, 

19 shall be the percentage determined in accordance 

20 with the following table: 

The applicable 

‘‘In the case of: percentage is: 

Calendar year 2013 ..................................................................... 86%

Calendar year 2014 ..................................................................... 71%

Calendar year 2015 ..................................................................... 57%

Calendar year 2016 ..................................................................... 43%

Calendar year 2017 ..................................................................... 29%

Calendar year 2018 ..................................................................... 14%

Calendar years after 2018 ........................................................... 0%. 


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1 ‘‘(2) INCLUDED AND EXCLUDED SERVICE.—For 

2 purposes of this chapter, if.’’. 

3 (2) AMENDMENTS TO THE SOCIAL SECURITY

4 ACT.—Section 209 of the Social Security Act (42 

5 U.S.C. 409) is amended— 

6 (A) in subsection (a)(1)(I)— 

7 (i) by inserting ‘‘and before 2013’’ 

8 after ‘‘1974’’; and 

9 (ii) by inserting ‘‘and’’ after the semi10 colon; 

11 (B) in subsection (a)(1), by adding at the 

12 end the following new subparagraph: 

13 ‘‘(J) The applicable percentage (deter14 mined under subsection (l)) of that part of re15 muneration which, after remuneration (other 

16 than remuneration referred to in the succeeding 

17 subsections of this section) equal to the con18 tribution and benefit base (determined under 

19 section 230) with respect to employment has 

20 been paid to an individual during any calendar 

21 year after 2012 with respect to which such con22 tribution and benefit base is effective, is paid to 

23 such individual during such calendar year;’’; 

24 and 


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1 (C) by adding at the end the following new 

2 subsection: 

3 ‘‘(l) For purposes of subparagraph (J) of subsection 

4 (a)(1), the applicable percentage for a calendar year, in 

5 connection with any calendar year referred to in such sub6 paragraph, shall be the percentage determined in accord7 ance with the following table: 

The applicable 

‘‘In the case of: percentage is: 

Calendar year 2013 ..................................................................... 86%

Calendar year 2014 ..................................................................... 71%

Calendar year 2015 ..................................................................... 57%

Calendar year 2016 ..................................................................... 43%

Calendar year 2017 ..................................................................... 29%

Calendar year 2018 ..................................................................... 14%

Calendar years after 2018 ........................................................... 0%.’’. 

8 (3) EFFECTIVE DATE.—The amendments made 

9 by this subsection shall apply with respect to remu10 neration paid in calendar years after 2012. 

11 (b) DETERMINATION OF SELF-EMPLOYMENT IN12 COME ABOVE CONTRIBUTION AND BENEFIT BASE AFTER

13 2012.— 

14 (1) AMENDMENTS TO THE INTERNAL REVENUE

15 CODE OF 1986.—Section 1402 of the Internal Rev16 enue Code of 1986 is amended— 

17 (A) in subsection (b)(1), by inserting ‘‘an 

18 amount equal to the applicable percentage (as 

19 determined under subsection (d)(2)) of’’ before 

20 ‘‘that part of the net earnings from self-employ21 ment’’; and 


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1 (B) in subsection (d)— 

2 (i) by striking ‘‘(d) EMPLOYEE AND

3 WAGES.—The term’’ and inserting the fol4 lowing: 

5 ‘‘(d) RULES AND DEFINITIONS.— 

6 ‘‘(1) EMPLOYEE AND WAGES.—The term’’; and 

7 (ii) by adding at the end the fol8 lowing: 

9 ‘‘(2) APPLICABLE PERCENTAGE OF NET EARN10 INGS FROM SELF-EMPLOYMENT IN DETERMINING

11 SELF-EMPLOYMENT INCOME.—For purposes of para12 graph (1) of subsection (b), the applicable percent13 age for a taxable year beginning in any calendar 

14 year referred to in such paragraph shall be the per15 centage determined in accordance with the following 

16 table: 

The applicable 

‘‘In the case of: percentage is: 

Calendar year 2013 ..................................................................... 86%

Calendar year 2014 ..................................................................... 71%

Calendar year 2015 ..................................................................... 57%

Calendar year 2016 ..................................................................... 43%

Calendar year 2017 ..................................................................... 29%

Calendar year 2018 ..................................................................... 14%

Calendar years after 2018 ........................................................... 0%.’’. 

17 (2) AMENDMENTS TO THE SOCIAL SECURITY

18 ACT.—Section 211 of the Social Security Act (42 

19 U.S.C. 411) is amended— 

20 (A) in subsection (b)(1)(I)— 


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1 (i) by striking ‘‘or’’ after the semi2 colon; and 

3 (ii) by inserting ‘‘and before 2013’’ 

4 after ‘‘1974’’; 

5 (B) in subsection (b)— 

6 (i) by redesignating paragraph (2) as 

7 paragraph (3); and 

8 (ii) by inserting after paragraph (1) 

9 the following: 

10 ‘‘(2) For any taxable year beginning in any cal11 endar year after 2012, an amount equal to the appli12 cable percentage (as determined under subsection 

13 (l)) of that part of net earnings from self-employ14 ment which is in excess of (A) an amount equal to 

15 the contribution and benefit base (determined under 

16 section 230) that is effective for such calendar year, 

17 minus (B) the amount of the wages paid to such in18 dividual during such taxable year; or’’; and 

19 (C) by adding at the end the following: 

20 ‘‘(l) For purposes of paragraph (2) of subsection (b), 

21 the applicable percentage for a taxable year beginning in 

22 any calendar year referred to in such paragraph, shall be 

23 the percentage determined in accordance with the fol24 lowing table: 


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The applicable 

‘‘In the case of: percentage is: 

Calendar year 2013 ..................................................................... 86%

Calendar year 2014 ..................................................................... 71%

Calendar year 2015 ..................................................................... 57%

Calendar year 2016 ..................................................................... 43%

Calendar year 2017 ..................................................................... 29%

Calendar year 2018 ..................................................................... 14%

Calendar years after 2018 ........................................................... 0%.’’. 

1 (3) EFFECTIVE DATE.—The amendments made 

2 by this subsection shall apply with respect to taxable 

3 years beginning during or after calendar year 2013. 

4 SEC. 202. INCLUSION OF SURPLUS EARNINGS IN SOCIAL SE5 CURITY BENEFIT FORMULA. 

6 (a) INCLUSION OF SURPLUS AVERAGE INDEXED

7 MONTHLY EARNINGS IN DETERMINATION OF PRIMARY

8 INSURANCE AMOUNTS.— 

9 (1) IN GENERAL.—Section 215(a)(1)(A) of the 

10 Social Security Act (42 U.S.C. 415(a)(1)(A)) is 

11 amended— 

12 (A) in clauses (i), (ii), and (iii), by insert13 ing ‘‘basic’’ before ‘‘average indexed monthly 

14 earnings’’ each place it appears; 

15 (B) in clause (ii), by striking ‘‘and’’ at the 

16 end; and 

17 (C) by inserting after clause (iii) the fol18 lowing new clauses: 

19 ‘‘(iv) 3 percent of the individual’s surplus aver20 age indexed monthly earnings to the extent such 

21 surplus average indexed monthly earnings do not exVerDate Mar 15 2010 02:13 Dec 05, 2012 Jkt 029200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S3651.IS S3651

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1 ceed the excess of the amount established for purposes of this clause by subparagraph (B) over 1 2 ⁄12

3 of the contribution and benefit base for the last of 

4 such individual’s computation base years, and 

5 ‘‘(v) 0.25 percent of the sum of the individual’s 

surplus average indexed monthly earnings plus 1 6 ⁄12

7 of the contribution and benefit base for the last of 

8 such individual’s computation base years, to the ex9 tent such sum exceeds the amount established for 

10 purposes of clause (iv) by subparagraph (B).’’. 

11 (2) BEND POINT FOR SURPLUS EARNINGS.— 

12 Section 215(a)(1)(B) of such Act (42 U.S.C. 

13 415(a)(1)(B)) is amended— 

14 (A) in clause (ii), by striking ‘‘the amounts 

15 so established’’ and inserting ‘‘the amounts es16 tablished for purposes of clauses (i) and (ii) of 

17 subparagraph (A)’’; 

18 (B) by redesignating clause (iii) as clause 

19 (v); 

20 (C) in clause (v) (as redesignated), by in21 serting ‘‘or (iv)’’ after ‘‘clause (ii)’’; and 

22 (D) by inserting after clause (ii) the fol23 lowing new clauses: 

24 ‘‘(iii) For individuals who initially become eligible for 

25 old-age or disability insurance benefits, or who die (before 


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1 becoming eligible for such benefits), in the calendar year 

2 2013, the amount established for purposes of clause (iv) 

3 of subparagraph (A) shall be $11,933. 

4 ‘‘(iv) For individuals who initially become eligible for 

5 old-age or disability insurance benefits, or who die (before 

6 becoming eligible for such benefits), in any calendar year 

7 after 2013, the amount established for purposes of clause 

8 (iv) of subparagraph (A) shall equal the product of the 

9 amount established with respect to the calendar year 2013 

10 under clause (iii) of this subparagraph and the quotient 

11 obtained by dividing— 

12 ‘‘(I) the national average wage index (as de13 fined in section 209(k)(1)) for the second calendar 

14 year preceding the calendar year for which the de15 termination is made, by 

16 ‘‘(II) the national average wage index (as so de17 fined) for 2011.’’. 

18 (b) BASIC AIME AND SURPLUS AIME.— 

19 (1) BASIC AIME.—Section 215(b)(1) of such 

20 Act (42 U.S.C. 415(b)(1)) is amended— 

21 (A) by inserting ‘‘basic’’ before ‘‘average’’; 

22 and 

23 (B) in subparagraph (A), by striking 

24 ‘‘paragraph (3)’’ and inserting ‘‘paragraph 

25 (3)(A)’’ and by inserting before the comma the 


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1 following: ‘‘to the extent such total does not ex2 ceed the contribution and benefit base for the 

3 applicable year’’. 

4 (2) SURPLUS AIME.— 

5 (A) IN GENERAL.—Section 215(b)(1) of 

6 such Act (as amended by paragraph (1)) is 

7 amended— 

8 (i) by redesignating subparagraphs 

9 (A) and (B) as clauses (i) and (ii), respec10 tively; 

11 (ii) by inserting ‘‘(A)’’ after ‘‘(b)(1)’’; 

12 and 

13 (iii) by adding at the end the fol14 lowing new subparagraph: 

15 ‘‘(B)(i) An individual’s surplus average indexed 

16 monthly earnings shall be equal to the quotient obtained 

17 by dividing— 

18 ‘‘(I) the total (after adjustment under para19 graph (3)(B)) of such individual’s surplus earnings 

20 (determined under clause (ii)) for such individual’s 

21 benefit computation years (determined under para22 graph (2)), by 

23 ‘‘(II) the number of months in those years. 

24 ‘‘(ii) For purposes of clause (i) and paragraph (3)(B), 

25 an individual’s surplus earnings for a benefit computation 


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1 year are the total of such individual’s wages paid in and 

2 self-employment income credited to such benefit computa3 tion year, to the extent such total (before adjustment 

4 under paragraph (3)(B)) exceeds the contribution and 

5 benefit base for such year.’’. 

6 (B) CONFORMING AMENDMENT.—The 

7 heading for section 215(b) of such Act is 

8 amended by striking ‘‘Average Indexed Monthly 

9 Earnings’’ and inserting ‘‘Basic Average In10 dexed Monthly Earnings; Surplus Average In11 dexed Monthly Earnings’’. 

12 (3) ADJUSTMENT OF SURPLUS EARNINGS FOR

13 PURPOSES OF DETERMINING SURPLUS AIME.—Sec14 tion 215(b)(3) of such Act (42 U.S.C. 415(b)(3)) is 

15 amended— 

16 (A) in subparagraph (A), by striking ‘‘sub17 paragraph (B)’’ and inserting ‘‘subparagraph 

18 (C)’’ and by inserting ‘‘and determination of 

19 basic average indexed monthly income’’ after 

20 ‘‘paragraph (2)’’; 

21 (B) by redesignating subparagraph (B) as 

22 subparagraph (C); and 

23 (C) by inserting after subparagraph (A) 

24 the following new subparagraph: 


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1 ‘‘(B) For purposes of determining under paragraph 

2 (1)(B) an individual’s surplus average indexed monthly 

3 earnings, the individual’s surplus earnings (described in 

4 paragraph (2)(B)(ii)) for a benefit computation year shall 

5 be deemed to be equal to the product of— 

6 ‘‘(i) the individual’s surplus earnings for such 

7 year (as determined without regard to this subpara8 graph), and 

9 ‘‘(ii) the quotient described in subparagraph 

10 (A)(ii).’’. 

11 (c) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply with respect to individuals who ini13 tially become eligible (within the meaning of section 

14 215(a)(3)(B) of the Social Security Act) for old-age or dis15 ability insurance benefits under title II of the Social Secu16 rity Act, or who die (before becoming eligible for such ben17 efits), in any calendar year after 2012. 

Æ 


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