I

106TH CONGRESS

1ST SESSION H. R. 1793

To amend title II of the Social Security Act to provide for individual security

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 HOUSE OF REPRESENTATIVES

MAY 13, 1999

Mr. KOLBE (for himself, Mr. STENHOLM, Mr. SMITH of Michigan, Mr.

DOOLEY of California, Mr. SANFORD, Ms. MCCARTHY of Missouri, and

Mr. GREENWOOD) introduced the following bill; which was referred to the

Committee on Ways and Means, and in addition to the Committee on

Rules, for a period to be subsequently determined by the Speaker, in each

case for consideration of such provisions as fall within the jurisdiction of

the committee concerned

A BILL

To amend title II of the Social Security Act to provide

for individual security 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.

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; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘21st Century Retirement 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; table of contents.

Sec. 2. Individual security accounts.

Sec. 3. Minimum social security benefit.

Sec. 4. Elimination of earnings test for individuals who have attained retirement age.

Sec. 5. Reduction in the amount of certain transfers to Medicare Trust Fund.

Sec. 6. Increase in number of years taken into account in determining average

indexed monthly earnings.

Sec. 7. Actuarial adjustment for retirement.

Sec. 8. Improvements in process for cost-of-living adjustments.

Sec. 9. Adjustment to upper 2 benefit formula factors.

Sec. 10. Phased-in increase in social security retirement ages.

Sec. 11. Modifications in PIA formula to reflect changes in life expectancy.

Sec. 12. Mechanism for remedying unforeseen deterioration in social security

solvency.

3 SEC. 2. INDIVIDUAL SECURITY ACCOUNTS.

4 (a) ESTABLISHMENT AND MAINTENANCE OF INDI5 VIDUAL SECURITY ACCOUNTS.—Title II of the Social Se6 curity Act (42 U.S.C. 401 et seq.) is amended—

7 (1) by inserting before section 201 the fol8 lowing:

9 ‘‘PART A—INSURANCE BENEFITS’’;

10 and

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

12 ‘‘PART B—INDIVIDUAL SECURITY ACCOUNTS

13 ‘‘INDIVIDUAL SECURITY ACCOUNTS

14 ‘‘SEC. 251. (a) ESTABLISHMENT.—

15 ‘‘(1) IN GENERAL.—The Commissioner of So16 cial Security, within 30 days of the receipt of the

17 first contribution received pursuant to subsection (b)

18 with respect to an eligible individual, shall establish
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1 in the name of such individual an individual security

2 account. The individual security account shall be

3 identified to the account holder by means of the ac4 count holder’s Social Security account number.

5 ‘‘(2) DEFINITION OF ELIGIBLE INDIVIDUAL.—

6 In this part, the term ‘eligible individual’ means any

7 individual born after December 31, 1944.

8 ‘‘(b) CONTRIBUTIONS.—

9 ‘‘(1) AMOUNTS TRANSFERRED FROM THE

10 TRUST FUND.—The Secretary of the Treasury shall

11 transfer from the Federal Old-Age and Survivors In12 surance Trust Fund, for crediting by the Commis13 sioner of Social Security to an individual security ac14 count of an eligible individual, an amount equal to

15 the sum of any amount received by such Secretary

16 on behalf of such individual under section

17 3101(a)(2) or 1401(a)(2) of the Internal Revenue

18 Code of 1986.

19 ‘‘(2) OTHER CONTRIBUTIONS.—For provisions

20 relating to additional contributions credited to indi21 vidual security accounts, see sections 531(c)(2) and

22 6402(l) of the Internal Revenue Code of 1986.

23 ‘‘(c) DESIGNATION OF INVESTMENT TYPE OF INDI24 VIDUAL SECURITY ACCOUNT.—
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1 ‘‘(1) DESIGNATION.—Each eligible individual

2 who is employed or self-employed shall designate the

3 investment type of individual security account to

4 which the contributions described in subsection (b)

5 on behalf of such individual are to be credited.

6 ‘‘(2) FORM OF DESIGNATION.—The designation

7 described in paragraph (1) shall be made in such

8 manner and at such intervals as the Commissioner

9 of Social Security may prescribe in order to ensure

10 ease of administration and reductions in burdens on

11 employers.

12 ‘‘(3) SPECIAL RULE FOR 2000.—Not later than

13 January 1, 2000, any eligible individual that is em14 ployed or self-employed as of such date shall execute

15 the designation required under paragraph (1).

16 ‘‘(4) DESIGNATION IN ABSENCE OF DESIGNA17 TION BY ELIGIBLE INDIVIDUAL.—In any case in

18 which no designation of the individual security ac19 count is made, the Commissioner of Social Security

20 shall make the designation of the individual security

21 account in accordance with regulations that take

22 into account the competing objectives of maximizing

23 returns on investments and minimizing the risk in24 volved with such investments.
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1 ‘‘DEFINITION OF INDIVIDUAL SECURITY ACCOUNT;

2 TREATMENT OF ACCOUNTS

3 ‘‘SEC. 252. (a) INDIVIDUAL SECURITY ACCOUNT.—

4 In this part, the term ‘individual security account’ means

5 any individual security account in the Individual Security

6 Fund (established under section 254) which is adminis7 tered by the Individual Security Fund Board.

8 ‘‘(b) TREATMENT OF ACCOUNT.—Except as other9 wise provided in this part and in section 531 of the Inter10 nal Revenue Code of 1986, any individual security account

11 described in subsection (a) shall be treated in the same

12 manner as an individual account in the Thrift Savings

13 Fund under subchapter III of chapter 84 of title 5, United

14 States Code.

15 ‘‘INDIVIDUAL SECURITY ACCOUNT DISTRIBUTIONS

16 ‘‘SEC. 253. (a) DATE OF INITIAL DISTRIBUTION.—

17 Except as provided in subsection (c), distributions may

18 only be made from an individual security account of an

19 eligible individual on and after the earliest of—

20 ‘‘(1) the date the eligible individual attains nor21 mal retirement age, as determined under section 216

22 (or early retirement age (as so determined) if elected

23 by such individual), or

24 ‘‘(2) the date on which funds in the eligible in25 dividual’s individual security account are sufficient

26 to provide a monthly payment over the life expect-
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1 ancy of the eligible individual (determined under rea2 sonable actuarial assumptions) which, when added to

3 the eligible individual’s monthly benefit under part A

(if any), is at least equal to an amount equal to 1 4 ⁄12

5 of the poverty line (as defined in section 673(2) of

6 the Community Services Block Grant Act (42 U.S.C.

7 9902(2) and determined on such date for a family

8 of the size involved) and adjusted annually there9 after by the adjustment determined under section

10 215(i).

11 ‘‘(b) FORMS OF DISTRIBUTION.—

12 ‘‘(1) REQUIRED MONTHLY PAYMENTS.—Except

13 as provided in paragraph (2), beginning with the

14 date determined under subsection (a), the balance in

15 an individual security account available to provide

16 monthly payments not in excess of the amount de17 scribed in subsection (a)(2) shall be paid, as elected

18 by the account holder (in such form and manner as

19 shall be prescribed in regulations of the Individual

20 Security Fund Board), by means of the purchase of

21 annuities or equal monthly payments over the life

22 expectancy of the eligible individual (determined

23 under reasonable actuarial assumptions) in accord24 ance with requirements (which shall be provided in

25 regulations of the Board) similar to the require-
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1 ments applicable to payments of benefits under sub2 chapter III of chapter 84 of title 5, United States

3 Code, and providing for indexing for inflation.

4 ‘‘(2) PAYMENT OF EXCESS FUNDS.—To the ex5 tent funds remain in an eligible individual’s indi6 vidual security account after the application of para7 graph (1) and to the extent not inconsistent with the

8 provisions of subchapter III of chapter 84 of title 5,

9 United States Code, such funds shall be payable to

10 the eligible individual in such manner and in such

11 amounts as determined by the eligible individual.

12 ‘‘(c) DISTRIBUTION IN THE EVENT OF DEATH BE13 FORE THE DATE OF INITIAL DISTRIBUTION.—If the eligi14 ble individual dies before the date determined under sub15 section (a), the balance in such individual’s individual se16 curity account shall be distributed in a lump sum, under

17 rules established by the Individual Security Fund Board,

18 to the individual’s heirs.

19 ‘‘INDIVIDUAL SECURITY FUND

20 ‘‘SEC. 254. (a) ESTABLISHMENT.—There is estab21 lished and maintained in the Treasury of the United

22 States an Individual Security Fund in the same manner

23 as the Thrift Savings Fund under sections 8437, 8438,

24 and 8439 (but not section 8440) of title 5, United States

25 Code.

26 ‘‘(b) INDIVIDUAL SECURITY FUND BOARD.—
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1 ‘‘(1) IN GENERAL.—There is established and

2 operated in the Social Security Administration an

3 Individual Security Fund Board in the same manner

4 as the Federal Retirement Thrift Investment Board

5 under subchapter VII of chapter 84 of title 5,

6 United States Code.

7 ‘‘(2) SPECIFIC INVESTMENT AND REPORTING

8 DUTIES.—

9 ‘‘(A) IN GENERAL.—The Individual Secu10 rity Fund Board shall manage and report on

11 the activities of the Individual Security Fund

12 and the individual security accounts of such

13 Fund in the same manner as the Federal Re14 tirement Thrift Investment Board manages and

15 reports on the Thrift Savings Fund and the in16 dividual accounts of such Fund under sub17 chapter VII of chapter 84 of title 5, United

18 States Code.

19 ‘‘(B) STUDY AND REPORT ON INCREASED

20 INVESTMENT OPTIONS.—

21 ‘‘(i) STUDY.—The Individual Security

22 Fund Board shall conduct a study regard23 ing ways to increase an eligible individual’s

24 investment options with respect to such in25 dividual’s individual security account and
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1 with respect to rollovers or distributions

2 from such account.

3 ‘‘(ii) REPORT.—Not later than 2

4 years after the date of enactment of the

5 21st Century Retirement Act of 1999, the

6 Individual Security Fund Board shall sub7 mit a report to the President and Congress

8 that contains a detailed statement of the

9 results of the study conducted pursuant to

10 clause (i), together with the Board’s rec11 ommendations for such legislative actions

12 as the Board considers appropriate.

13 ‘‘BUDGETARY TREATMENT OF INDIVIDUAL SECURITY

14 FUND AND ACCOUNTS

15 ‘‘SEC. 255. The receipts and disbursements of the In16 dividual Security Fund and any accounts within such fund

17 shall not be included in the totals of the budget of the

18 United States Government as submitted by the President

19 or of the congressional budget and shall be exempt from

20 any general budget limitation imposed by statute on ex21 penditures and net lending (budget outlays) of the United

22 States Government.’’.

23 (b) MODIFICATION OF FICA RATES.—

24 (1) EMPLOYEES.—Section 3101(a) of the Inter25 nal Revenue Code of 1986 (relating to tax on em26 ployees) is amended to read as follows:
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1 ‘‘(a) OLD-AGE, SURVIVORS, AND DISABILITY INSUR2 ANCE.—

3 ‘‘(1) IN GENERAL.—

4 ‘‘(A) INDIVIDUALS COVERED UNDER PART

5 A OF TITLE II OF THE SOCIAL SECURITY ACT.—

6 In addition to other taxes, there is hereby im7 posed on the income of every individual who is

8 not a part B eligible individual a tax equal to

9 6.2 percent of the wages (as defined in section

10 3121(a)) received by him with respect to em11 ployment (as defined in section 3121(b)).

12 ‘‘(B) INDIVIDUALS COVERED UNDER PART

13 B OF TITLE II OF THE SOCIAL SECURITY ACT.—

14 In addition to other taxes, there is hereby im15 posed on the income of every part B eligible in16 dividual a tax equal to 4.2 percent of the wages

17 (as defined in section 3121(a)) received by such

18 individual with respect to employment (as de19 fined in section 3121(b)).

20 ‘‘(2) CONTRIBUTION OF OASDI TAX REDUCTION

21 TO INDIVIDUAL SECURITY ACCOUNTS.—

22 ‘‘(A) IN GENERAL.—In addition to other

23 taxes, there is hereby imposed on the income of

24 every part B eligible individual an individual se-
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1 curity account contribution equal to the sum

2 of—

3 ‘‘(i) 2 percent of the wages (as so de4 fined) received by such individual with re5 spect to employment (as so defined), plus

6 ‘‘(ii) so much of such wages (not to

7 exceed $2,000) as designated by the indi8 vidual in the same manner as described in

9 section 251(c) of the Social Security Act.

10 ‘‘(B) INFLATION ADJUSTMENT.—

11 ‘‘(i) IN GENERAL.—In the case of any

12 calendar year beginning after 2000, the

13 dollar amount in subparagraph (A)(ii)

14 shall be increased by an amount equal to—

15 ‘‘(I) such dollar amount, multi16 plied by

17 ‘‘(II) the cost-of-living adjust18 ment determined under section 1(f)(3)

19 for the calendar year, determined by

20 substituting ‘calendar year 1999’ for

21 ‘calendar year 1992’ in subparagraph

22 (B) thereof.

23 ‘‘(ii) ROUNDING.—If any dollar

24 amount after being increased under clause

25 (i) is not a multiple of $10, such dollar
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1 amount shall be rounded to the nearest

2 multiple of $10.’’.

3 (2) SELF-EMPLOYED.—Section 1401(a) of the

4 Internal Revenue Code of 1986 (relating to tax on

5 self-employment income) is amended to read as fol6 lows:

7 ‘‘(a) OLD-AGE, SURVIVORS, AND DISABILITY INSUR8 ANCE.—

9 ‘‘(1) IN GENERAL.—

10 ‘‘(A) INDIVIDUALS COVERED UNDER PART

11 A OF THE SOCIAL SECURITY ACT.—In addition

12 to other taxes, there shall be imposed for each

13 taxable year, on the self-employment income of

14 every individual who is not a part B eligible in15 dividual for the calendar year ending with or

16 during such taxable year, a tax equal to 12.40

17 percent of the amount of the self-employment

18 income for such taxable year.

19 ‘‘(B) INDIVIDUALS COVERED UNDER PART

20 B OF TITLE II OF THE SOCIAL SECURITY ACT.—

21 In addition to other taxes, there is hereby im22 posed for each taxable year, on the self-employ23 ment income of every part B eligible individual,

24 a tax equal to 10.4 percent of the amount of
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1 the self-employment income for such taxable

2 year.

3 ‘‘(2) CONTRIBUTION OF OASDI TAX REDUCTION

4 TO INDIVIDUAL SECURITY ACCOUNTS.—

5 ‘‘(A) IN GENERAL.—In addition to other

6 taxes, there is hereby imposed for each taxable

7 year, on the self-employment income of every

8 individual, an individual security account con9 tribution equal to the sum of—

10 ‘‘(i) 2 percent of the amount of the

11 self-employment income for each individual

12 for such taxable year; and

13 ‘‘(ii) so much of such self-employment

14 income (not to exceed $2,000) as des15 ignated by the individual in the same man16 ner as described in section 251(c) of the

17 Social Security Act.

18 ‘‘(B) INFLATION ADJUSTMENT.—

19 ‘‘(i) IN GENERAL.—In the case of any

20 taxable year beginning after 2000, the dol21 lar amount in subparagraph (A)(ii) shall

22 be increased by an amount equal to—

23 ‘‘(I) such dollar amount, multi24 plied by
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1 ‘‘(II) the cost-of-living adjust2 ment determined under section 1(f)(3)

3 for the calendar year in which the tax4 able year begins, determined by sub5 stituting ‘calendar year 1999’ for ‘cal6 endar year 1992’ in subparagraph (B)

7 thereof.

8 ‘‘(ii) ROUNDING.—If any dollar

9 amount after being increased under clause

10 (i) is not a multiple of $10, such dollar

11 amount shall be rounded to the nearest

12 multiple of $10.’’.

13 (3) PART B ELIGIBLE INDIVIDUAL.—

14 (A) TAXES ON EMPLOYEES.—Section 3121

15 of such Code (relating to definitions) is amend16 ed by inserting after subsection (s) the fol17 lowing new subsection:

18 ‘‘(t) PART B ELIGIBLE INDIVIDUAL.—For purposes

19 of this chapter, the term ‘part B eligible individual’ means,

20 for any calendar year, an individual who is an eligible indi21 vidual (as defined in section 251(a)(2) of the Social Secu22 rity Act) for such calendar year.’’.

23 (B) SELF-EMPLOYMENT TAX.—Section

24 1402 of such Code (relating to definitions) is
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1 amended by adding at the end the following

2 new subsection:

3 ‘‘(k) PART B ELIGIBLE INDIVIDUAL.—The term

4 ‘part B eligible individual’ means, for any calendar year,

5 an individual who is an eligible individual (as defined in

6 section 251(a)(2) of the Social Security Act) for such cal7 endar year.’’.

8 (4) EFFECTIVE DATES.—

9 (A) EMPLOYEES.—The amendments made

10 by paragraphs (1) and (3)(A) apply to remu11 neration paid after December 31, 1999.

12 (B) SELF-EMPLOYED INDIVIDUALS.—The

13 amendments made by paragraphs (2) and

14 (3)(B) apply to taxable years beginning after

15 December 31, 1999.

16 (c) MATCHING CONTRIBUTIONS.—

17 (1) IN GENERAL.—Part IV of subchapter A of

18 chapter 1 of the Internal Revenue Code of 1986 (re19 lating to credits against tax) is amended by adding

20 at the end the following new subpart:

21 ‘‘Subpart H—Individual Security Account Credits

‘‘Sec. 54. Individual security account credit.’’.
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1 ‘‘SEC. 54. INDIVIDUAL SECURITY ACCOUNT CREDIT.

2 ‘‘(a) ALLOWANCE OF CREDIT.—Each part B eligible

3 individual is entitled to a credit for the taxable year in

4 an amount equal to the sum of—

5 ‘‘(1) $150,

6 ‘‘(2) 50 percent of the designated wages of such

7 individual for the taxable year,

8 ‘‘(3) 50 percent of the designated self-employ9 ment income of such individual for the taxable year,

10 and

11 ‘‘(4) 50 percent of the designated earned in12 come credit.

13 ‘‘(b) LIMITATIONS.—

14 ‘‘(1) AMOUNT.—The amount determined under

15 subparagraphs (A) and (B) of paragraph (1) with

16 respect to such individual for any taxable year may

17 not exceed the excess (if any) of—

18 ‘‘(A) $600, over

19 ‘‘(B) the sum of the amounts received by

20 the Secretary on behalf of such individual under

21 sections 3101(a)(2)(A)(i) and 1401(a)(2)(A)(i)

22 for the taxable year.

23 ‘‘(2) FAILURE TO MAKE VOLUNTARY CONTRIBU24 TIONS.—In the case of a part B eligible individual

25 with respect to whom the amount of wages des26 ignated under section 3101(a)(2)(A)(ii) plus the
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1 amount self-employment income designated under

2 section 1401(a)(2)(A)(ii) for the taxable year is zero,

3 the credit to which such individual is entitled under

4 this section shall be equal to zero.

5 ‘‘(c) DEFINITIONS.—For purposes of this section—

6 ‘‘(1) PART B ELIGIBLE INDIVIDUAL.—The term

7 ‘part B eligible individual’ means, for any calendar

8 year, an individual who is an eligible individual (as

9 defined in section 251(a)(2) of the Social Security

10 Act) for such calendar year.

11 ‘‘(2) DESIGNATED WAGES.—The term ‘des12 ignated wages’ means with respect to any taxable

13 year the amount designated under section

14 3101(a)(2)(A)(ii).

15 ‘‘(3) DESIGNATED SELF-EMPLOYMENT IN16 COME.—The term ‘designated self-employment in17 come’ means with respect to any taxable year the

18 amount designated under section 1401(a)(2)(A)(ii)

19 for such taxable year.

20 ‘‘(4) DESIGNATED EARNED INCOME CREDIT.—

21 The term ‘designated earned income credit’ means

22 the amount of the credit allowed under section 32

23 for the taxable year that is designated by the part

24 B eligible individual in the same manner as de25 scribed in section 251(c) of the Social Security Act.
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1 ‘‘(d) CREDIT USED ONLY FOR INDIVIDUAL SECU2 RITY ACCOUNT.—For purposes of this title, the credit al3 lowed under this section with respect to any part B eligible

4 individual—

5 ‘‘(1) shall not be treated as a credit allowed

6 under this part, but

7 ‘‘(2) shall be treated as an overpayment of tax

8 under section 6401(b)(3) which may, in accordance

9 with section 6402(l), only be transferred to an indi10 vidual security account established under part B of

11 title II of the Social Security Act with respect to

12 such individual.’’.

13 (2) CONTRIBUTION OF EITC AMOUNTS TO INDI14 VIDUAL SECURITY ACCOUNTS.—Section 32 of such

15 Code (relating to earned income) is amended by add16 ing at the end the following new subsection:

17 ‘‘(o) CONTRIBUTION TO INDIVIDUAL SECURITY AC18 COUNT.—

19 ‘‘(1) IN GENERAL.—An eligible part B indi20 vidual who is allowed a credit under this section may

21 designate all or a portion of such credit as a con22 tribution to the individual security account estab23 lished on behalf of such individual.

24 ‘‘(2) CREDIT USED ONLY FOR INDIVIDUAL SE25 CURITY ACCOUNT.—For purposes of this title, the
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1 amount designated under paragraph (1) with respect

2 to any part B eligible individual—

3 ‘‘(A) shall not be treated as a credit al4 lowed under this section, but

5 ‘‘(B) shall be treated as an overpayment of

6 tax under section 6401(b)(3) which may, in ac7 cordance with section 6402(l), only be trans8 ferred to an individual security account estab9 lished under part B of title II of the Social Se10 curity Act with respect to such individual.’’.

11 (3) CONTRIBUTION OF CREDITED AMOUNTS TO

12 INDIVIDUAL SECURITY ACCOUNT.—

13 (A) CREDITED AMOUNTS TREATED AS

14 OVERPAYMENT OF TAX.—Subsection (b) of sec15 tion 6401 (relating to excessive credits) is

16 amended by adding at the end the following

17 new paragraph:

18 ‘‘(3) SPECIAL RULE FOR CREDIT UNDER SEC19 TIONS 32 AND 54.—Subject to the provisions of sec20 tion 6402(l), the following sum shall be considered

21 an overpayment—

22 ‘‘(A) SECTION 54 CREDIT.—The amount of

23 any credit allowed under section 54 for any tax24 able year, plus
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1 ‘‘(B) SECTION 32 DESIGNATED EARNED IN2 COME CREDIT CONTRIBUTION.—The amount of

3 the earned income credit designated as a con4 tribution to an individual security account

5 under section 32(o) for the taxable year.’’.

6 (B) TRANSFER OF CREDIT AMOUNT TO IN7 DIVIDUAL SECURITY ACCOUNT.—Section 6402

8 of such Code (relating to authority to make

9 credits or refunds) is amended by adding at the

10 end the following new subsection:

11 ‘‘(l) OVERPAYMENTS ATTRIBUTABLE TO INDIVIDUAL

12 SECURITY ACCOUNT CREDIT.—In the case of any over13 payment described in section 6401(b)(3) with respect to

14 any individual, the Secretary shall transfer for crediting

15 by the Commissioner of Social Security to the individual

16 security account of an such individual, an amount equal

17 to the amount of such overpayment.’’.

18 (4) NOTICE TO EITC RECIPIENTS OF MATCHING

19 CONTRIBUTIONS TO INDIVIDUAL SECURITY AC20 COUNTS.—In connection with information and tax

21 forms relating to the credit allowed under section 32

22 of the Internal Revenue Code of 1986, the Secretary

23 of the Treasury shall provide notice of the avail24 ability of matching contributions pursuant to section

25 54 of such Code (as added by subsection (a) of this
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1 section) to individual security accounts under part

2 B of title II of the Social Security Act.

3 (5) CONFORMING AMENDMENTS.—

4 (A) Section 1324(b)(2) of title 31, United

5 States Code, is amended by inserting before the

6 period at the end ‘‘, or enacted by the 21st

7 Century Retirement Act’’.

8 (B) The table of subparts for part IV of

9 subchapter A of chapter 1 of the Internal Rev10 enue Code of 1986 is amended by adding at the

11 end the following new item:

‘‘Subpart H. Individual Security Account Credits.’’.

12 (6) EFFECTIVE DATE.—The amendments made

13 by this subsection shall apply to refunds payable

14 after December 31, 1999.

15 (d) TAX TREATMENT OF INDIVIDUAL SECURITY AC16 COUNTS.—

17 (1) IN GENERAL.—Subchapter F of chapter 1

18 of the Internal Revenue Code of 1986 (relating to

19 exempt organizations) is amended by adding at the

20 end the following new part:

21 ‘‘PART IX—INDIVIDUAL SECURITY FUND AND

22 ACCOUNTS

‘‘Sec. 531. Individual Security Fund and Accounts.
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1 ‘‘SEC. 531. INDIVIDUAL SECURITY FUND AND ACCOUNTS.

2 ‘‘(a) GENERAL RULE.—The Individual Security

3 Fund and individual security accounts shall be exempt

4 from taxation under this subtitle.

5 ‘‘(b) INDIVIDUAL SECURITY FUND AND ACCOUNTS

6 DEFINED.—For purposes of this section, the terms ‘Indi7 vidual Security Fund’ and ‘individual security account’

8 means the fund and account established under sections

9 254 and 251, respectively, of part B of title II of the So10 cial Security Act.

11 ‘‘(c) CONTRIBUTIONS.—

12 ‘‘(1) IN GENERAL.—No deduction shall be al13 lowed for contributions credited to an individual se14 curity account under section 251 of the Social Secu15 rity Act or section 6402(l).

16 ‘‘(2) ROLLOVER OF INHERITANCE.—Any por17 tion of a distribution to an heir from an individual

18 security account made by reason of the death of the

19 beneficiary of such account may be rolled over to the

20 individual security account of the heir.

21 ‘‘(d) DISTRIBUTIONS.—

22 ‘‘(1) IN GENERAL.—Any distribution from an

23 individual security account under section 253 of the

24 Social Security Act shall be included in gross income

25 under section 72.
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1 ‘‘(2) PERIOD IN WHICH DISTRIBUTIONS MUST

2 BE MADE FROM ACCOUNT OF DECEDENT.—In the

3 case of amounts remaining in an individual security

4 account from which distributions began before the

5 death of the beneficiary, rules similar to the rules of

6 section 401(a)(9)(B) shall apply to distributions of

7 such remaining amounts.

8 ‘‘(3) ROLLOVERS.—Paragraph (1) shall not

9 apply to amounts rolled over under subsection (c)(2)

10 in a direct transfer by the Commissioner of Social

11 Security, under regulations which the Commissioner

12 shall prescribe.’’.

13 (2) CLERICAL AMENDMENT.—The table of

14 parts for subchapter F of chapter 1 of the Internal

15 Revenue Code of 1986 is amended by adding after

16 the item relating to part VIII the following new

17 item:

‘‘Part IX. Individual security fund and accounts.’’.

18 (3) EFFECTIVE DATE.—The amendments made

19 by this subsection shall apply to taxable years begin20 ning after December 31, 1999.

21 SEC. 3. MINIMUM SOCIAL SECURITY BENEFIT.

22 Section 215 of the Social Security Act (42 U.S.C.

23 415) is amended by adding at the end the following:
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1 ‘‘Minimum Monthly Insurance Benefit

2 ‘‘(j)(1) Notwithstanding the preceding provisions of

3 this section—

4 ‘‘(A) the primary insurance amount of a quali5 fied individual shall be equal to the greater of—

6 ‘‘(i) the primary insurance amount deter7 mined under this section (without regard to this

8 subsection), or

‘‘(ii) 1 9 ⁄12 of the applicable percentage of

10 the applicable amount, and

11 ‘‘(B) any recomputation of the primary insur12 ance amount of a qualified individual shall not result

13 in a primary insurance amount less than the pri14 mary insurance amount as in effect immediately

15 prior to such recomputation.

16 ‘‘(2) For purposes of this subsection—

17 ‘‘(A) The term ‘qualified individual’ means an

18 individual—

19 ‘‘(i) who initially becomes eligible for old20 age or disability insurance benefits, or dies (be21 fore becoming eligible for such benefits) for a

22 month beginning after December 31, 2005, and

23 ‘‘(ii) who has at least 80 quarters of cov24 erage.
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1 ‘‘(B) The term ‘applicable amount’ means, in

2 connection with an individual, $7,992 adjusted

3 annually—

4 ‘‘(i)(I) with respect to an individual whose

5 initial month of eligibility occurs in a year prior

6 to 2011, by the CPI increase percentage deter7 mined under section 215(i) for 1996 through

8 the year prior to such year of eligibility; and

9 ‘‘(II) with respect to an individual whose

10 initial month of eligibility occurs in a year after

11 2010, by the CPI increase percentage deter12 mined under such section for 1996 through

13 2009, and by the wage increase percentage de14 termined under such section for 2009 through

15 the second year prior to the year of such eligi16 bility; and

17 ‘‘(ii) by the CPI increase percentage deter18 mined under such section for all years begin19 ning with the year of an individual’s initial eli20 gibility.

21 ‘‘(C)(i) The term ‘applicable percentage’ means,

22 for computations and recomputations of a qualified

23 individual’s primary insurance amount under this

24 section whose initial eligibility occurs in any calendar
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1 year specified in the table under clause (ii), the sum

2 of—

3 ‘‘(I) the applicable base percentage speci4 fied in such table in connection with such year,

5 plus

6 ‘‘(II) the product derived by multiplying

7 the applicable percentage increment specified in

8 such table in connection with such year by the

9 ratio of the number of such individual’s quar10 ters of coverage (if any) in excess of the min11 imum number of quarters required under sub12 paragraph (A)(ii) but not in excess of twice

13 such minimum, to such minimum.

14 ‘‘(ii) For purposes of clause (i), the applicable

15 base percentages and applicable percentage incre16 ments are set forth in connection with calendar

17 years in the following table:

‘‘If the calendar

year is:

The applicable

base percentage

is:

And the applicable

percentage increment is:

2006 ............................ 12 percent ................... 8 percent

2007 ............................ 24 percent ................... 16 percent

2008 ............................ 36 percent ................... 24 percent

2009 ............................ 48 percent ................... 32 percent

After 2009 .................. 60 percent ................... 40 percent.’’
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1 SEC. 4. ELIMINATION OF EARNINGS TEST FOR INDIVID2 UALS WHO HAVE ATTAINED RETIREMENT

3 AGE.

4 (a) IN GENERAL.—Section 203 of the Social Security

5 Act (42 U.S.C. 403) is amended—

6 (1) in subsection (c)(1), by striking ‘‘the age of

7 seventy’’ and inserting ‘‘retirement age (as defined

8 in section 216(l))’’;

9 (2) in paragraphs (1)(A) and (2) of subsection

10 (d), by striking ‘‘the age of seventy’’ each place it

11 appears and inserting ‘‘retirement age (as defined in

12 section 216(l))’’;

13 (3) in subsection (f)(1)(B), by striking ‘‘was

14 age seventy or over’’ and inserting ‘‘was at or above

15 retirement age (as defined in section 216(l))’’;

16 (4) in subsection (f)(3)—

(A) by striking ‘‘331 17 ⁄3 percent’’ and all

18 that follows through ‘‘any other individual,’’

19 and inserting ‘‘50 percent of such individual’s

20 earnings for such year in excess of the product

21 of the exempt amount as determined under

22 paragraph (8),’’; and

23 (B) by striking ‘‘age 70’’ and inserting

24 ‘‘retirement age (as defined in section 216(l))’’;
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1 (5) in subsection (h)(1)(A), by striking ‘‘age

2 70’’ each place it appears and inserting ‘‘retirement

3 age (as defined in section 216(l))’’; and

4 (6) in subsection (j)—

5 (A) in the heading, by striking ‘‘Age Sev6 enty’’ and inserting ‘‘Retirement Age’’; and

7 (B) by striking ‘‘seventy years of age’’ and

8 inserting ‘‘having attained retirement age (as

9 defined in section 216(l))’’.

10 (b) CONFORMING AMENDMENTS ELIMINATING THE

11 SPECIAL EXEMPT AMOUNT FOR INDIVIDUALS WHO HAVE

12 ATTAINED RETIREMENT AGE.—

13 (1) UNIFORM EXEMPT AMOUNT.—Section

14 203(f)(8)(A) of the Social Security Act (42 U.S.C.

15 403(f)(8)(A)) is amended by striking ‘‘the new ex16 empt amounts (separately stated for individuals de17 scribed in subparagraph (D) and for other individ18 uals) which are to be applicable’’ and inserting ‘‘a

19 new exempt amount which shall be applicable’’.

20 (2) CONFORMING AMENDMENTS.—Section

21 203(f)(8)(B) of such Act (42 U.S.C. 403(f)(8)(B))

22 is amended—

23 (A) in the matter preceding clause (i), by

24 striking ‘‘Except’’ and all that follows through

25 ‘‘whichever’’ and inserting ‘‘The exempt amount
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1 which is applicable for each month of a par2 ticular taxable year shall be whichever’’;

3 (B) in clauses (i) and (ii), by striking ‘‘cor4 responding’’ each place it appears; and

5 (C) in the last sentence, by striking ‘‘an

6 exempt amount’’ and inserting ‘‘the exempt

7 amount’’.

8 (3) REPEAL OF BASIS FOR COMPUTATION OF

9 SPECIAL EXEMPT AMOUNT.—Section 203(f)(8)(D) of

10 such Act (42 U.S.C. 403(f)(8)(D)) is repealed.

11 (c) ADDITIONAL CONFORMING AMENDMENTS.—

12 (1) ELIMINATION OF REDUNDANT REFERENCES

13 TO RETIREMENT AGE.—Section 203 of the Social

14 Security Act (42 U.S.C. 403) is amended—

15 (A) in subsection (c), in the last sentence,

16 by striking ‘‘nor shall any deduction’’ and all

17 that follows and inserting ‘‘nor shall any deduc18 tion be made under this subsection from any

19 widow’s or widower’s insurance benefit if the

20 widow, surviving divorced wife, widower, or sur21 viving divorced husband involved became enti22 tled to such benefit prior to attaining age 60.’’;

23 and

24 (B) in subsection (f)(1), by striking sub25 paragraph (D) and inserting the following: ‘‘(D)
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1 for which such individual is entitled to widow’s

2 or widower’s insurance benefits if such indi3 vidual became so entitled prior to attaining age

4 60,’’.

5 (2) CONFORMING AMENDMENT TO PROVISIONS

6 FOR DETERMINING AMOUNT OF INCREASE ON AC7 COUNT OF DELAYED RETIREMENT.—Section

8 202(w)(2)(B)(ii) of such Act (42 U.S.C.

9 402(w)(2)(B)(ii)) is amended—

10 (A) by striking ‘‘either’’; and

11 (B) by striking ‘‘or suffered deductions

12 under section 203(b) or 203(c) in amounts

13 equal to the amount of such benefit’’.

14 (3) PROVISIONS RELATING TO EARNINGS

15 TAKEN INTO ACCOUNT IN DETERMINING SUBSTAN16 TIAL GAINFUL ACTIVITY OF BLIND INDIVIDUALS.—

17 The second sentence of section 223(d)(4) of such

18 Act (42 U.S.C. 423(d)(4)) is amended by striking

19 ‘‘if section 102 of the Senior Citizens’ Right to

20 Work Act of 1996 had not been enacted’’ and insert21 ing the following: ‘‘if the amendments to section 203

22 made by section 102 of the Senior Citizens’ Right to

23 Work Act of 1996 and by the Strengthening Social

24 Security Act of 1998 had not been enacted’’.
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1 (d) EFFECTIVE DATE.—The amendments and re2 peals made by this section shall apply with respect to tax3 able years ending after December 31, 1999.

4 SEC. 5. REDUCTION IN THE AMOUNT OF CERTAIN TRANS5 FERS TO MEDICARE TRUST FUND.

6 Subparagraph (A) of section 121(e)(1) of the Social

7 Security Amendments of 1983 (42 U.S.C. 401 note), as

8 amended by section 13215(c)(1) of the Omnibus Budget

9 Reconciliation Act of 1993, is amended—

10 (1) in clause (ii), by striking ‘‘the amounts’’

11 and inserting ‘‘the applicable percentage of the

12 amounts’’; and

13 (2) by adding at the end the following: ‘‘For

14 purposes of clause (ii), the applicable percentage for

15 a year is equal to 100 percent, reduced (but not

16 below zero) by 10 percentage points for each year

17 after 2009.’’.

18 SEC. 6. INCREASE IN NUMBER OF YEARS TAKEN INTO AC19 COUNT IN DETERMINING AVERAGE INDEXED

20 MONTHLY EARNINGS.

21 (a) IN GENERAL.—Section 215(b) of the Social Secu22 rity Act (42 U.S.C. 415(b)(1)) is amended—

23 (1) by striking subparagraph (B) of paragraph

24 (1) and inserting the following:

25 ‘‘(B) the product derived by multiplying—
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1 ‘‘(i) the number of elapsed years, reduced

2 (in any case to which paragraph (2)(A)(i) ap3 plies) to the extent provided in paragraph

4 (2)(C), by

5 ‘‘(ii) 12.’’;

6 (2) in subparagraph (A) of paragraph (2), by

7 striking all of such subparagraph as precedes

8 ‘‘Clause (ii),’’ and inserting the following:

9 ‘‘(2)(A) The number of an individual’s benefit com10 putation years equals—

11 ‘‘(i) in the case of an individual who is entitled

12 to old-age insurance benefits (except as provided in

13 the second sentence of this subparagraph), or who

14 has died, the number of his computation base years,

15 and

16 ‘‘(ii) in the case of an individual who is entitled

17 to disability insurance benefits, the number of

18 elapsed years reduced by the number of years equal

19 to one-fifth of the number of elapsed years (dis20 regarding any resulting fractional part of a year),

21 but not by more than 5 years.’’; and

22 (3) by adding at the end of paragraph (2) the

23 following new subparagraph:

24 ‘‘(C)(i) For purposes of clause (i) of paragraph

25 (1)(B), the number of elapsed years shall be reduced pur-
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1 suant to such clause by the number of years specified in

2 connection with the calendar year in which such individual

3 becomes eligible for old-age insurance benefits, or dies (be4 fore becoming eligible for such benefits), as set forth in

5 the following table:

‘‘If such calendar year is: The applicable number of years

is:

2000 or 2001 ..................................................................................... 5.

2002 or 2003 ..................................................................................... 4.

2004 or 2005 ..................................................................................... 3.

2006 or 2007 ..................................................................................... 2.

2008 or 2009 ..................................................................................... 1.

After 2009 .......................................................................................... 0.

6 ‘‘(ii) The reduction provided in clause (i) of

7 paragraph (1)(B) shall not apply in any case in

8 which—

9 ‘‘(I) the individual is married at the time

10 the individual becomes eligible for old-age insur11 ance benefits or dies (before becoming eligible

12 for such benefits), and

13 ‘‘(II) the total of the wages paid in and

14 self-employment income credited to the pre15 ceding calendar year with respect to the indi16 vidual is less than the total of the wages paid

17 in and self-employment income credited to such

18 year with respect to the individual’s spouse.’’.

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

20 this section shall apply with respect to individuals attain21 ing early retirement age (as defined in section 216(l)(2)
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1 of the Social Security Act) or dying after December 31,

2 1999.

3 SEC. 7. ACTUARIAL ADJUSTMENT FOR RETIREMENT.

4 (a) EARLY RETIREMENT.—

5 (1) IN GENERAL.—Section 202(q) of the Social

6 Security Act (42 U.S.C. 402(q)) is amended—

(A) in paragraph (1)(A), by striking ‘‘5 7 ⁄9’’

8 and inserting ‘‘the applicable fraction (deter9 mined under paragraph (12))’’; and

10 (B) by adding at the end the following:

11 ‘‘(12) For purposes of paragraph (1)(A), the ‘applica12 ble fraction’ for an individual who attains the age of 62

13 in—

‘‘(A) any year before 2001, is 5 14 ⁄9;

‘‘(B) 2001, is 7 15 ⁄12;

‘‘(C) 2002, is 11 16 ⁄18;

‘‘(D) 2003, is 23 17 ⁄36;

‘‘(E) 2004, is 2 18 ⁄3; and

‘‘(F) 2005 or any succeeding year, is 25 19 ⁄36.’’.

20 (2) MONTHS BEYOND FIRST 36 MONTHS.—Sec21 tion 202(q) of such Act (42 U.S.C. 402(q)(9)) (as

22 amended by paragraph (1)) is amended—

23 (A) in paragraph (9)(A), by striking ‘‘five24 twelfths’’ and inserting ‘‘the applicable fraction

25 (determined under paragraph (13))’’; and
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1 (B) by adding at the end the following:

2 ‘‘(13) For purposes of paragraph (9)(A), the ‘applica3 ble fraction’ for an individual who attains the age of 62

4 in—

‘‘(A) any year before 2001, is 5 5 ⁄12;

‘‘(B) 2001, is 16 6 ⁄36;

‘‘(C) 2002, is 16 7 ⁄36;

‘‘(D) 2003, is 17 8 ⁄36;

‘‘(E) 2004, is 17 9 ⁄36; and

‘‘(F) 2005 or any succeeding year, is 1 10 ⁄2.’’.

11 (3) EFFECTIVE DATE.—The amendments made

12 by paragraphs (1) and (2) shall apply to individuals

13 who attain the age of 62 in years after 1999.

14 (b) DELAYED RETIREMENT.—Section 202(w)(6) of

15 the Social Security Act (42 U.S.C. 402(w)(6)) is

16 amended—

17 (1) in subparagraph (C), by striking ‘‘and’’ at

18 the end;

19 (2) in subparagraph (D), by striking ‘‘2004.’’

20 and inserting ‘‘2004 and before 2007;’’; and

21 (3) by adding at the end the following:

‘‘(E) 17 22 ⁄24 of 1 percent in the case of an indi23 vidual who attains the age of 62 in a calendar year

24 after 2006 and before 2009;
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‘‘(F) 3 1 ⁄4 of 1 percent in the case of an indi2 vidual who attains the age of 62 in a calendar year

3 after 2008 and before 2011;

‘‘(G) 19 4 ⁄24 of 1 percent in the case of an indi5 vidual who attains the age of 62 in a calendar year

6 after 2010 and before 2013; and

‘‘(H) 5 7 ⁄6 of 1 percent in the case of an indi8 vidual who attains the age of 62 in a calendar year

9 after 2012.’’.

10 SEC. 8. IMPROVEMENTS IN PROCESS FOR COST-OF-LIVING

11 ADJUSTMENTS.

12 (a) ANNUAL DECLARATIONS OF ACHIEVED SUBSTI13 TUTION BIAS CORRECTION AND RETAINED UPPER LEVEL

14 SUBSTITUTION BIAS.—

15 (1) ACHIEVED SUBSTITUTION BIAS CORREC16 TION.—Not later than October 1, 1999, and annu17 ally thereafter, the Commissioner of the Bureau of

18 Labor Statistics shall publish in the Federal Reg19 ister an estimate of the number of percentage points

20 by which the annual rate of change in the Consumer

21 Price Index is reduced below the rate it would other22 wise have attained by reason of adjustments in the

23 determination of such index instituted by the Bu24 reau after December 31, 1998.
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1 (2) UPPER LEVEL SUBSTITUTION BIAS.—Not

2 later than August 1, 2000, and annually thereafter,

3 the Commissioner of the Bureau of Labor Statistics

4 shall publish in the Federal Register an estimate of

5 the upper level substitution bias retained in the Con6 sumer Price Index, expressed in terms of a percent7 age point effect on the annual rate of change in the

8 Consumer Price Index for the preceding calendar

9 year determined through the use of a superlative

10 index that accounts for changes that consumers

11 make in the quantities of goods and services con12 sumed.

13 (b) FUNDING FOR CPI IMPROVEMENTS.—

14 (1) IN GENERAL.—There is hereby appro15 priated to the Bureau of Labor Statistics in the De16 partment of Labor, for each of fiscal years 1999,

17 2000, and 2001, $30,000,000 for use by the Bureau

18 for the following purposes:

19 (A) Research, evaluation, and implementa20 tion of a superlative index to estimate upper

21 level substitution bias in the Consumer Price

22 Index.

23 (B) Expansion of the Consumer Expendi24 ture Survey and the Point of Purchase Survey.
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1 (C) Implementation of revisions to the

2 Consumer Price Index with respect to programs

3 under title II of the Social Security Act (42

4 U.S.C. 401 et seq.).

5 (2) REPORTS.—The Commissioner of the Bu6 reau of Labor Statistics shall submit reports regard7 ing the use of appropriations made under paragraph

8 (1) to the Committee on Appropriations of the

9 House of Representative and the Committee on Ap10 propriations of the Senate upon the request of each

11 Committee.

12 (c) INFORMATION SHARING.—The Commissioner of

13 the Bureau of Labor Statistics may secure directly from

14 the Secretary of Commerce information necessary for pur15 poses of calculating the Consumer Price Index. Upon re16 quest of the Commissioner of the Bureau of Labor Statis17 tics, the Secretary of Commerce shall furnish that infor18 mation to the Commissioner.

19 (d) ADMINISTRATIVE ADVISORY COMMITTEE.—The

20 Bureau of Labor Statistics shall, in consultation with the

21 National Bureau of Economic Research, the American

22 Economic Association, and the National Academy of Stat23 isticians, establish an administrative advisory committee.

24 The advisory committee shall periodically advise the Bu25 reau of Labor Statistics regarding revisions of the Con-
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1 sumer Price Index and conduct research and experimen2 tation with alternative data collection and estimating ap3 proaches.

4 (e) MODIFICATIONS TO COST-OF-LIVING INDEXING

5 OF BENEFITS.—

6 (1) IN GENERAL.—Section 215(i)(1)(D) of the

7 Social Security Act (42 U.S.C. 415(i)(1)(D)) is

8 amended to to read as follows:

9 ‘‘(D) the term ‘CPI increase percentage’, with

10 respect to a base quarter or cost-of-living computa11 tion quarter in any calendar year, means—

12 ‘‘(i) the percentage (rounded to the nearest

13 one-hundredth of 1 percent) by which the Con14 sumer Price Index for that quarter (as prepared

15 by the Department of Labor) exceeds such

16 index for the most recent prior calendar quarter

17 which was a base quarter under subparagraph

18 (A)(ii) or, if later, the most recent cost-of-living

19 computation quarter under subparagraph (B),

20 ‘‘(ii) reduced (but not below zero) by the

21 upper level substitution bias (rounded to the

22 nearest one-hundredth of 1 percent) retained in

23 such index (as published by the Secretary of

24 Labor pursuant to section 8(a)(2) of the 21st

25 Century Retirement Act of 1999 in connection
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1 with the annual rate of change in the Consumer

2 Price Index for the preceding calendar year), to

3 the extent applicable to such percentage, and

4 ‘‘(iii) reduced further (but not below zero)

5 by the excess (if any) of 0.33 percentage points

6 over the sum of—

7 ‘‘(I) the reduction in percentage

8 points undergone by the percentage de9 scribed in clause (i) pursuant to clause (ii),

10 and

11 ‘‘(II) the reduction in percentage

12 points undergone by the percentage de13 scribed in clause (i) (rounded to the near14 est one-hundredth of 1 percent) attrib15 utable to the achieved substitution bias

16 correction (as last published by the Sec17 retary of Labor pursuant to section 8(a)(1)

18 of the 21st Century Retirement Act of

19 1999), to the extent applicable to such per20 centage.’’.

21 (2) EFFECTIVE DATE.—The amendment made

22 by paragraph (1) shall apply with respect to in23 creases under section 215(i) of the Social Security

24 Act effective with the month of December of years

25 after 1999.
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1 (f) CONSUMER PRICE INDEX ADJUSTMENTS APPLI2 CABLE TO INTERNAL REVENUE CODE PROVISIONS.—

3 (1) IN GENERAL.—Paragraph (3) of section

4 1(f) of the Internal Revenue Code of 1986 (defining

5 cost-of-living adjustment) is amended by striking the

6 period at the end and inserting a comma and by in7 serting at the end the following flush material:

8 ‘‘reduced (but not below zero) by the number of

9 percentage points determined under paragraph

10 (8) for the calendar year for which such adjust11 ment is being determined.’’.

12 (2) LIMITATION ON INCREASES.—Subsection (f)

13 of section 1 of such Code is amended by adding at

14 the end the following new paragraph:

15 ‘‘(8) LIMITATION ON INCREASES IN CPI.—

16 ‘‘(A) IN GENERAL.—The number of per17 centage points determined under this paragraph

18 for any calendar year is—

19 ‘‘(i) the upper level substitution bias,

20 to the extent applicable to the percentage

21 adjustment under paragraph (3), plus

22 ‘‘(ii) the excess (if any) of 0.33 per23 centage points over the sum of—

24 ‘‘(I) such upper level substitution

25 bias, and
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1 ‘‘(II) the achieved substitution

2 bias correction, to the extent applica3 ble to the percentage adjustment

4 under paragraph (3).

5 ‘‘(B) COMPUTATION OF BASE TO REFLECT

6 LIMITATION.—The Secretary shall adjust the

7 number taken into account under paragraph

8 (3)(B) so that any increase which is not taken

9 into account by reason of subparagraph (A)

10 shall not be taken into account at any time so

11 as to allow such increase for any period.

12 ‘‘(C) DEFINITIONS.—For purposes of this

13 paragraph, the terms ‘achieved substitution bias

14 correction’ and ‘upper level substitution bias’

15 mean, with respect to any 12-month period end16 ing on August 31 of a calendar year, the

17 achieved substitution bias correction and upper

18 level substitution bias most recently published

19 by the Secretary of Labor pursuant to section

20 8(a) of the 21st Century Retirement Act of

21 1999 for a period ending on or before August

22 31 of such calendar year.’’.

23 (g) CORRESPONDING AMENDMENTS TO OTHER PRO24 VISIONS UTILIZING THE CONSUMER PRICE INDEX.—
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1 (1) IN GENERAL.—For purposes of determining

2 the amount of any cost-of-living adjustment which

3 takes effect for benefits payable after December 31,

4 1999, with respect to any benefit described in para5 graph (5)—

6 (A) any increase in the relevant index (de7 termined without regard to this subsection)

8 shall be reduced by the number of percentage

9 points determined under paragraph (2), and

10 (B) the amount of the increase in such

11 benefit shall be equal to the product of—

12 (i) the increase in the relevant index

13 (as reduced under subparagraph (A)), and

14 (ii) the average such benefit for the

15 preceding calendar year under the program

16 described in paragraph (5) which provides

17 such benefit.

18 (2) LIMITATION ON INCREASES.—

19 (A) IN GENERAL.—The number of percent20 age points determined under this paragraph for

21 any calendar year is—

22 (i) the upper level substitution bias, to

23 the extent applicable to the percentage ad24 justment under the relevant index, plus
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1 (ii) the excess (if any) of 0.33 per2 centage points over the sum of—

3 (I) such upper level substitution

4 bias, and

5 (II) the achieved substitution

6 bias correction, to the extent applica7 ble to the percentage adjustment

8 under the relevant index,.

9 (B) COMPUTATION OF BASE TO REFLECT

10 LIMITATION.—Any increase which is not taken

11 into account by reason of subparagraph (A)

12 shall not be taken into account at any time so

13 as to allow such increase for any period.

14 (3) PARAGRAPH (1) TO APPLY ONLY TO COM15 PUTATION OF BENEFIT AMOUNTS.—Paragraph (1)

16 shall apply only for purposes of determining the

17 amount of benefits and not for purposes of

18 determining—

19 (A) whether a threshold increase in the rel20 evant index has been met, or

21 (B) increases in amounts under other pro22 visions of law not described in paragraph (5)

23 which operate by reference to increases in such

24 benefits.
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1 (4) DEFINITIONS.—For purposes of this

2 subsection—

3 (A) COST-OF-LIVING ADJUSTMENT.—The

4 term ‘‘cost-of-living adjustment’’ means any ad5 justment in the amount of benefits described in

6 paragraph (5) which is determined by reference

7 to changes in an index.

8 (B) INDEX.—

9 (i) INDEX.—The term ‘‘index’’ means

10 the Consumer Price Index and any other

11 index of price or wages.

12 (ii) RELEVANT INDEX.—The term

13 ‘‘relevant index’’ means the index on the

14 basis of which the amount of the cost-of15 living adjustment is determined.

16 (C) ACHIEVED SUBSTITUTION BIAS COR17 RECTION; UPPER LEVEL SUBSTITUTION BIAS.—

18 The terms ‘achieved substitution bias correc19 tion’ and ‘upper level substitution bias’ mean,

20 with respect to the applicable 12-month period

21 preceding a cost-of-living adjustment, the

22 achieved substitution bias correction and upper

23 level substitution bias most recently published

24 by the Secretary of Labor pursuant to section
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1 8(a) of the 21st Century Retirement Act of

2 1999.

3 (5) BENEFITS TO WHICH SUBSECTION AP4 PLIES.—For purposes of this subsection, the benefits

5 described in this paragraph are—

6 (A) retired and retainer pay subject to ad7 justment under section 1401a of title 10,

8 United States Code;

9 (B) civil service retirement benefits under

10 section 8340 of title 5, United States Code, for11 eign service retirement benefits under section

12 826 of the Foreign Service Act of 1980, Central

13 Intelligence Agency retirement benefits under

14 part J of the Central Intelligence Agency Re15 tirement Act of 1964 for certain employees, and

16 any other benefits under any similar provision

17 under any retirement system for employees of

18 the government of the United States;

19 (C) Federal workers’ compensation under

20 section 8146a of title 5, United States Code;

21 (D) benefits under section 3(a), 4(a), or

22 4(f) of the Railroad Retirement Act of 1974;

23 and

24 (E) benefits and expenditure limits under

25 title XVIII or XIX of the Social Security Act.
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1 (6) BENEFIT.—For purposes of this section,

2 the term ‘‘benefit’’ includes a payment.

3 (h) RECAPTURE TO FEDERAL OLD-AGE AND SUR4 VIVORS INSURANCE TRUST FUND.—Section 201 of the

5 Social Security Act (42 U.S.C. 401) is amended by adding

6 at the end the following new subsection:

7 ‘‘(n) On July 1 of each calendar year specified in the

8 following table, the Secretary of the Treasury shall trans9 fer, from the general fund of the Treasury to the Federal

10 Old-Age and Survivors Insurance Trust Fund, an amount

11 equal to the applicable percentage for such year, specified

12 in such table, of the total wages paid in and self-employ13 ment income credited to such year.

‘‘For a calendar year— The applicable percentage for

the year is—

After 1999 and before 2001 .......... 0.03 percent.

After 2000 and before 2002 .......... 0.07 percent.

After 2001 and before 2003 .......... 0.13 percent.

After 2002 and before 2004 .......... 0.15 percent.

After 2003 and before 2005 .......... 0.20 percent.

After 2004 and before 2006 .......... 0.24 percent.

After 2005 and before 2007 .......... 0.28 percent.

After 2006 and before 2008 .......... 0.32 percent.

After 2007 and before 2009 .......... 0.35 percent.

After 2008 and before 2010 .......... 0.38 percent.

After 2009 and before 2016 .......... 0.47 percent.

After 2015 and before 2040 .......... 0.55 percent.

After 2039 and before 2060 .......... 0.66 percent.

After 2059 ..................................... 0.80 percent.’’.

14 SEC. 9. ADJUSTMENT TO UPPER 2 BENEFIT FORMULA FAC15 TORS.

16 Section 215(a)(1)(B) of the Social Security Act (42

17 U.S.C. 415(a)(1)(B)) is amended—
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1 (1) by redesignating clause (iii) as clause (vi);

2 and

3 (2) by inserting after clause (ii) the following:

4 ‘‘(iii) For an individual who initially becomes eligible

5 for old-age or disability insurance benefits, or who dies

6 (before becoming eligible for such benefits), in any cal7 endar year after 2005, each of the amounts otherwise es8 tablished for purposes of clauses (ii) and (iii) of subpara9 graph (A) under this subparagraph shall be substituted

10 with the product derived by successively multiplying, once

11 for each year of the factoring period for such individual

12 commencing with 2006—

13 ‘‘(I) such amount (after applying this clause for

14 earlier years of the factoring period), by

15 ‘‘(II) the designated factor for such year.

16 ‘‘(iv) For purposes of clause (iii), the term ‘factoring

17 period’ means, for an individual, the period beginning with

18 2006 and ending with the earlier of—

19 ‘‘(I) the year of the individual’s initial eligibility

20 or death, or

21 ‘‘(II) 2030.

22 ‘‘(v) For purposes of clause (iii), the term ‘designated

23 factor’ means—

24 ‘‘(I) for a year prior to 2011, 0.985, and

25 ‘‘(II) for a year after 2010, 0.980.’’.
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1 SEC. 10. PHASED-IN INCREASE IN SOCIAL SECURITY RE2 TIREMENT AGES.

3 (a) NORMAL RETIREMENT AGE.—Section 216(l) of

4 the Social Security Act (42 U.S.C. 416(l) is amended—

5 (1) in paragraph (1), by striking subparagraphs

6 (A), (B), (C), (D), and (E) and inserting the fol7 lowing:

8 ‘‘(A) with respect to an individual who at9 tains age 62 (or in the case of a widow’s or

10 widower’s insurance benefit, age 60) before

11 January 1, 2000, 65 years of age;

12 ‘‘(B) with respect to an individual who at13 tains age 62 (or in the case of a widow’s or

14 widower’s insurance benefit, age 60) after De15 cember 31, 1999 and before January 1, 2011,

65 years of age plus 2 16 ⁄12 of the number of

17 months in the period beginning with January

18 2000 and ending with December of the year in

19 which the individual attains age 62 (or in the

20 case of a widow’s or widower’s insurance ben21 efit, age 60);

22 ‘‘(C) with respect to an individual who at23 tains age 62 (or in the case of a widow’s or

24 widower’s insurance benefit, age 60) after De25 cember 31, 2010, and before January 1, 2012,

26 67 years of age; and
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1 ‘‘(D) with respect to an individual who at2 tains age 62 (or in the case of a widow’s or

3 widower’s insurance benefit, age 60) after December 31, 2011, 67 years of age plus 1 4 ⁄24 of

5 the number of months in the period beginning

6 with January 2012 and ending with December

7 of the year in which the individual attains age

8 62 (rounded down to a full month).’’; and

9 (2) by striking paragraph (3).

10 (b) EARLY RETIREMENT AGE.—Section 216(l)(2) of

11 the Social Security Act (42 U.S.C. 416(l)(2)) is amended

12 to read as follows:

13 ‘‘(2) The term ‘early retirement age’ means—

14 ‘‘(A)(i) in the case of an old-age, wife’s, or

15 husband’s insurance benefit, except as provided

16 in subparagraph (B), age 62, and

17 ‘‘(ii) in the case of a widow’s or widower’s

18 insurance benefit, age 60; and

19 ‘‘(B) in the case of an old-age, wife’s, or

20 husband’s insurance benefit with respect to an

21 individual who attains age 62 after December

31, 2011, 62 years of age plus 1 22 ⁄18 of the num23 ber of whole months elapsing since such date.’’.
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1 SEC. 11. MODIFICATION OF PIA FORMULA TO REFLECT

2 CHANGES IN LIFE EXPECTANCY.

3 (a) MODIFICATION OF FORMULA.—Section 215(a)(1)

4 of the Social Security Act (42 U.S.C. 415(a)(1)(B)) is

5 amended by redesignating subparagraph (D) as subpara6 graph (E) and by inserting after subparagraph (C) the

7 following new subparagraph:

8 ‘‘(D)(i) For individuals who initially become eligible

9 for old-age insurance benefits (or who die before becoming

10 eligible for such benefits) in any calendar year after 2011,

11 the primary insurance amount computed under this para12 graph shall be the product derived by multiplying such

13 amount as computed under the preceding subparagraphs

14 of this paragraph the applicable number of times by 0.995.

15 ‘‘(ii) For purposes of the clause (i), the term ‘applica16 ble number of times’ means a number equal to the number

17 of years beginning with 2012 and ending with the earlier

18 of the year of initial eligibility (or death) or 2045.’’.

19 (b) STUDY OF THE EFFECT OF INCREASES IN LIFE

20 EXPECTANCY.—

21 (1) STUDY PLAN.—Not later than February 15,

22 2001, the Commissioner of Social Security shall sub23 mit to Congress a detailed study plan for evaluating

24 the effects of increases in life expectancy on the ex25 pected level of retirement income from social secu26 rity, pensions, and other sources. The study plan
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1 shall include a description of the methodology, data,

2 and funding that will be required in order to provide

3 to the Congress not later than February 15, 2006—

4 (A) an evaluation of trends in mortality

5 and their relationship to trends in health sta6 tus, among individuals approaching eligibility

7 for old-age insurance benefits under title II of

8 the Social Security Act;

9 (B) an evaluation of trends in labor force

10 participation among individuals approaching eli11 gibility for such benefits and among individuals

12 receiving such benefits, and of the factors that

13 influence the choice between retirement and

14 participation in the labor force;

15 (C) an evaluation of changes, if any, in the

16 disability insurance program under title II of

17 the Social Security Act that would reduce the

18 impact of changes in the retirement income of

19 workers in poor health or physically demanding

20 occupations;

21 (D) an evaluation of the methodology used

22 to develop projections for trends in mortality,

23 health status, and labor force participation

24 among individuals approaching eligibility for
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1 old-age insurance benefits and among individ2 uals receiving such benefits; and

3 (E) an evaluation of such other matters as

4 the Commissioner deems appropriate for evalu5 ating the effects of increases in life expectancy.

6 (2) REPORT ON RESULTS OF STUDY.—Not later

7 than February 15, 2006, the Commissioner of Social

8 Security shall provide to the Congress an evaluation

9 of the implications of the trends studied under para10 graph (1), along with recommendations, if any, of

11 the extent to which the conclusions of such evalua12 tions indicate that projected increases in life expect13 ancy require modification in the disability insurance

14 program under title II of the Social Security Act

15 and other income support programs.

16 SEC. 12. MECHANISM FOR REMEDYING UNFORESEEN DETE17 RIORATION IN SOCIAL SECURITY SOLVENCY.

18 (a) IN GENERAL.—Section 709 of the Social Security

19 Act (42 U.S.C. 910) is amended—

20 (1) by redesignating subsection (b) as sub21 section (c); and

22 (2) by striking ‘‘SEC. 709. (a) If the Board of

23 Trustees’’ and all that follows through ‘‘any such

24 Trust Fund’’ and inserting the following:
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1 ‘‘SEC. 709. (a)(1)(A) If the Board of Trustees of the

2 Federal Old-Age and Survivors Insurance Trust Fund and

3 the Federal Disability Insurance Trust Fund determines

4 at any time, using intermediate actuarial assumptions,

5 that the balance ratio of either such Trust Fund for any

6 calendar year during the succeeding period of 75 calendar

7 years will be zero, the Board shall promptly submit to each

8 House of the Congress and to the President a report set9 ting forth its recommendations for statutory adjustments

10 affecting the receipts and disbursements of such Trust

11 Fund necessary to maintain the balance ratio of such

12 Trust Fund at not less than 20 percent, with due regard

13 to the economic conditions which created such inadequacy

14 in the balance ratio and the amount of time necessary to

15 alleviate such inadequacy in a prudent manner. The report

16 shall set forth specifically the extent to which benefits

17 would have to be reduced, taxes under section 1401, 3101,

18 or 3111 of the Internal Revenue Code of 1986 would have

19 to be increased, or a combination thereof, in order to ob20 tain the objectives referred to in the preceding sentence.

21 ‘‘(B) In addition to any reports under subparagraph

22 (A), the Board shall, not later than May 30, 2001, prepare

23 and submit to Congress and the President recommenda24 tions for statutory adjustments to the disability insurance

25 program under title II of this Act to modify the changes
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1 in disability benefits under the Strengthening Social Secu2 rity Act of 1998 without reducing the balance ratio of the

3 Federal Disability Insurance Trust Fund. The Board shall

4 develop such recommendations in consultation with the

5 National Council on Disability, taking into consideration

6 the adequacy of benefits under the program, the relation7 ship of such program with old age benefits under such

8 title, and changes in the process for determining initial

9 eligibility and reviewing continued eligibility for benefits

10 under such program.

11 ‘‘(2)(A) The President shall, no later than 30 days

12 after the submission of the report to the President, trans13 mit to the Board and to the Congress a report containing

14 the President’s approval or disapproval of the Board’s rec15 ommendations.

16 ‘‘(B) If the President approves all the recommenda17 tions of the Board, the President shall transmit a copy

18 of such recommendations to the Congress as the Presi19 dent’s recommendations, together with a certification of

20 the President’s adoption of such recommendations.

21 ‘‘(C) If the President disapproves the recommenda22 tions of the Board, in whole or in part, the President shall

23 transmit to the Board and the Congress the reasons for

24 that disapproval. The Board shall then transmit to the

25 Congress and the President, no later than 60 days after
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1 the date of the submission of the original report to the

2 President, a revised list of recommendations.

3 ‘‘(D) If the President approves all of the revised rec4 ommendations of the Board transmitted to the President

5 under subparagraph (C), the President shall transmit a

6 copy of such revised recommendations to the Congress as

7 the President’s recommendations, together with a certifi8 cation of the President’s adoption of such recommenda9 tions.

10 ‘‘(E) If the President disapproves the revised rec11 ommendations of the Board, in whole or in part, the Presi12 dent shall transmit to the Board and the Congress the

13 reasons for that disapproval, together with such revisions

14 to such recommendations as the President determines are

15 necessary to bring such recommendations within the

16 President’s approval. The President shall transmit a copy

17 of such recommendations, as so revised, to the Board and

18 the Congress as the President’s recommendations, to19 gether with a certification of the President’s adoption of

20 such recommendations.

21 ‘‘(3)(A) This paragraph is enacted by Congress—

22 ‘‘(i) as an exercise of the rulemaking power of

23 the Senate and the House of Representatives, re24 spectively, and as such it is deemed a part of the

25 rules of each House, respectively, but applicable only
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1 with respect to the procedure to be followed in that

2 House in the case of a joint resolution described in

3 subparagraph (B), and it supersedes other rules only

4 to the extent that it is inconsistent with such rules;

5 and

6 ‘‘(ii) with full recognition of the constitutional

7 right of either House to change the rules (so far as

8 relating to the procedure of that House) at any time,

9 in the same manner, and to the same extent as in

10 the case of any other rule of that House.

11 ‘‘(B) For purposes of this paragraph, the term ‘joint

12 resolution’ means only a joint resolution which is intro13 duced within the 10-day period beginning on the date on

14 which the President transmits the President’s rec15 ommendations, together with the President’s certification,

16 to the Congress under subparagraph (B), (D), or (E) of

17 paragraph (2), and—

18 ‘‘(i) which does not have a preamble;

19 ‘‘(ii) the matter after the resolving clause of

20 which is as follows: ‘That the Congress approves the

21 recommendations of the President as transmitted on

22 ll pursuant to section 709(a) of the Social Secu23 rity Act, as follows: llll’, the first blank space

24 being filled in with the appropriate date and the sec-
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1 ond blank space being filled in with the statutory ad2 justments contained in the recommendations; and

3 ‘‘(iii) the title of which is as follows: ‘Joint reso4 lution approving the recommendations of the Presi5 dent regarding social security.’.

6 ‘‘(C) A joint resolution described in subparagraph

7 (B) that is introduced in the House of Representatives

8 shall be referred to the Committee on Ways and Means

9 of the House of Representatives. A joint resolution de10 scribed in subparagraph (B) introduced in the Senate

11 shall be referred to the Committee on Finance of the Sen12 ate.

13 ‘‘(D) If the committee to which a joint resolution de14 scribed in subparagraph (B) is referred has not reported

15 such joint resolution (or an identical joint resolution) by

16 the end of the 20-day period beginning on the date on

17 which the President transmits the recommendation to the

18 Congress under paragraph (2), such committee shall be,

19 at the end of such period, discharged from further consid20 eration of such joint resolution, and such joint resolution

21 shall be placed on the appropriate calendar of the House

22 involved.

23 ‘‘(E)(i) On or after the third day after the date on

24 which the committee to which such a joint resolution is

25 referred has reported, or has been discharged (under sub-
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1 paragraph (D)) from further consideration of, such a joint

2 resolution, it is in order (even though a previous motion

3 to the same effect has been disagreed to) for any Member

4 of the respective House to move to proceed to the consider5 ation of the joint resolution. A Member may make the mo6 tion only on the day after the calendar day on which the

7 Member announces to the House concerned the Member’s

8 intention to make the motion, except that, in the case of

9 the House of Representatives, the motion may be made

10 without such prior announcement if the motion is made

11 by direction of the committee to which the joint resolution

12 was referred. All points of order against the joint resolu13 tion (and against consideration of the joint resolution) are

14 waived. The motion is highly privileged in the House of

15 Representatives and is privileged in the Senate and is not

16 debatable. The motion is not subject to amendment, or

17 to a motion to postpone, or to a motion to proceed to the

18 consideration of other business. A motion to reconsider the

19 vote by which the motion is agreed to or disagreed to shall

20 not be in order. If a motion to proceed to the consideration

21 of the joint resolution is agreed to, the respective House

22 shall immediately proceed to consideration of the joint res23 olution without intervening motion, order, or other busi24 ness, and the joint resolution shall remain the unfinished

25 business of the respective House until disposed of.
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1 ‘‘(ii) Debate on the joint resolution, and on all debat2 able motions and appeals in connection therewith, shall be

3 limited to not more than 2 hours, which shall be divided

4 equally between those favoring and those opposing the

5 joint resolution. An amendment to the joint resolution is

6 not in order. A motion further to limit debate is in order

7 and not debatable. A motion to postpone, or a motion to

8 proceed to the consideration of other business, or a motion

9 to recommit the joint resolution is not in order. A motion

10 to reconsider the vote by which the joint resolution is

11 agreed to or disagreed to is not in order.

12 ‘‘(iii) Immediately following the conclusion of the de13 bate on a joint resolution described in subparagraph (B)

14 and a single quorum call at the conclusion of the debate

15 if requested in accordance with the rules of the appro16 priate House, the vote on final passage of the joint resolu17 tion shall occur.

18 ‘‘(iv) Appeals from the decisions of the Chair relating

19 to the application of the rules of the Senate or the House

20 of Representatives, as the case may be, to the procedure

21 relating to a joint resolution described in subparagraph

22 (B) shall be decided without debate.

23 ‘‘(F)(i) If, before the passage by one House of a joint

24 resolution of that House described in subparagraph (B),

25 that House receives from the other House a joint resolu-
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1 tion described in subparagraph (B), then the following

2 procedures shall apply:

3 ‘‘(I) The joint resolution of the other House

4 shall not be referred to a committee and may not be

5 considered in the House receiving it except in the

6 case of final passage as provided in subclause (II).

7 ‘‘(II) With respect to a joint resolution de8 scribed in subparagraph (B) of the House receiving

9 the joint resolution, the procedure in that House

10 shall be the same as if no joint resolution had been

11 received from the other House, but the vote on final

12 passage shall be on the joint resolution of the other

13 House.

14 ‘‘(ii) Upon disposition of the joint resolution received

15 from the other House, it shall no longer be in order to

16 consider the joint resolution that originated in the receiv17 ing House.

18 ‘‘(b) If the Board of Trustees of the Federal Hospital

19 Insurance Trust Fund or the Federal Supplementary

20 Medical Insurance Trust Fund determines at any time

21 that the balance ratio of either such Trust Fund’’.

22 (b) CONFORMING AMENDMENTS.—

23 (1) Section 709(b) of such Act (as amended by

24 subsection (a) of this section) is amended by striking

25 ‘‘any such’’ and inserting ‘‘either such’’.
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1 (2) Section 709(c) of such Act (as redesignated

2 by subsection (a) of this section) is amended by in3 serting ‘‘or (b)’’ after ‘‘subsection (a)’’.

Æ