I

104TH CONGRESS

1ST SESSION H. R. 491

To amend titles II and XVIII of the Social Security Act to ensure the

integrity of the social security trust funds by reconstituting the Boards

of Trustees of such trust funds and the Managing Trustee of such

trust funds to increase their independence, by providing for annual investment plans to guide investment of amounts in such trust funds,

and by removing unnecessary restrictions on investment and disinvestment of amounts in such trust funds.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 11, 1995

Mr. SOLOMON introduced the following bill; which was referred to the Committee on Ways and Means and, in addition, to the Committee on Commerce,

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 titles II and XVIII of the Social Security Act

to ensure the integrity of the social security trust funds

by reconstituting the Boards of Trustees of such trust

funds and the Managing Trustee of such trust funds

to increase their independence, by providing for annual

investment plans to guide investment of amounts in such

trust funds, and by removing unnecessary restrictions

on investment and disinvestment of amounts in such

trust funds.
2

•HR 491 IH

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

3 SECTION 1. SHORT TITLE.

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

5 Funds Integrity Act of 1995’’.

6 SEC. 2. INDEPENDENT MANAGING TRUSTEE AND BOARD OF

7 TRUSTEES.

8 (a) IN GENERAL.—Section 201(c) of the Social Secu9 rity Act is amended—

10 (1) in the seventh sentence, by redesignating

11 paragraphs (1), (2), (3), (4), and (5) as subpara12 graphs (A), (B), (C), (D), and (E), respectively, and

13 (2) by striking ‘‘(c) With respect to’’ and all

14 that follows through ‘‘It shall be the duty’’ in the

15 seventh sentence and inserting the following:

16 ‘‘(c)(1) With respect to the Federal Old-Age and Sur17 vivors Insurance Trust Fund and the Federal Disability

18 Insurance Trust Fund (hereinafter in this title referred

19 to as the ‘Trust Funds’) there is hereby created a body

20 to be known as the Board of Trustees of the Trust Funds

21 (hereinafter in this title called the ‘Board of Trustees’).

22 The Board of Trustees shall be composed of—

23 ‘‘(A) 10 members appointed by the President,

24 by and with the advice and consent of the Senate,

25 as follows:
3

•HR 491 IH

1 ‘‘(i) 2 shall be appointed after taking into

2 account recommendations by the Speaker of the

3 House of Representatives;

4 ‘‘(ii) 2 shall be appointed after taking into

5 account recommendations by the President pro

6 tempore of the Senate;

7 ‘‘(iii) 2 shall be appointed after taking into

8 account recommendations by the Minority

9 Leader of the House of Representatives;

10 ‘‘(iv) 2 shall be appointed after taking into

11 account recommendations by the Minority

12 Leader of the Senate; and

13 ‘‘(v) 2 shall be appointed after taking into

14 account recommendations by private organiza15 tions determined by the President to consist of

16 the 5 largest such organizations representing

17 the interests of senior citizens in the United

18 States; and

19 ‘‘(B) the Managing Trustee of the Social Secu20 rity Trust Funds appointed under paragraph (3)

21 (hereinafter in this title referred to as the ‘Managing

22 Trustee’).

23 The Managing Trustee shall serve as Chair of the Board

24 of Trustees. The Commissioner of Social Security shall

25 serve as Secretary of the Board of Trustees. The Board
4

•HR 491 IH

1 of Trustees shall meet not less frequently than once each

2 calendar year.

3 ‘‘(2)(A) Of the members of the Board of Trustees ap4 pointed under paragraph (1)(A), not more than 5 shall

5 be of the same political party.

6 ‘‘(B) The members of the Board of Trustees ap7 pointed under paragraph (1)(A) shall serve for a term of

8 6 years, except that, of the first individuals appointed, one

9 individual appointed under each of clauses (i), (ii), (iii),

10 (iv), and (v) of paragraph (1)(A) shall serve for a term

11 ending December 31, 1996, and the other individual ap12 pointed under each of such clauses shall serve for a term

13 ending December 31, 1999, as designated by the President

14 at the time of appointment. An individual may serve as

15 such a member of the Board of Trustees after the expira16 tion of his or her term until his or her successor has taken

17 office. An individual appointed to fill a vacancy occurring

18 other than by the expiration of a term of office shall be

19 appointed only for the unexpired term of the individual

20 he or she succeeds. An individual may be removed as such

21 a member of the Board of Trustees only for cause and

22 only after such cause has been reported in writing to the

23 Speaker of the House of Representatives and the Presi24 dent pro tempore of the Senate.
5

•HR 491 IH

1 ‘‘(C) Each member of the Board of Trustees ap2 pointed under paragraph (1)(A) shall receive compensa3 tion at the daily equivalent of the rate payable for level

4 IV of the Executive Schedule under section 5314 of title

5 5, United States Code, for each day on which such mem6 ber is engaged in the performance of his or her duties on

7 the Board of Trustees, and shall in addition be reimbursed

8 for the actual and necessary expenses incurred by him or

9 her in the performance of his or her duties.

10 ‘‘(3)(A) The Managing Trustee shall be appointed by

11 the President, by and with the advice and consent of the

12 Senate.

13 ‘‘(B) The Managing Trustee shall serve for a term

14 of four years, except that the first individual appointed

15 as Managing Trustee under this paragraph shall serve for

16 a term ending December 31, 1997. An individual may

17 serve as Managing Trustee after the expiration of his or

18 her term until his or her successor has taken office as

19 Managing Trustee. An individual appointed to fill a va20 cancy occurring other than by the expiration of a term

21 of office shall be appointed only for the unexpired term

22 of the individual he or she succeeds. An individual may

23 be removed as Managing Trustee only for cause and only

24 after such cause has been reported in writing to the
6

•HR 491 IH

1 Speaker of the House of Representatives and the Presi2 dent pro tempore of the Senate.

3 ‘‘(C) The Managing Trustee shall not engage in any

4 other business, vocation, or employment. Any individual

5 who is engaging in any other business, vocation, or em6 ployment at the time of his or her appointment as Manag7 ing Trustee shall terminate or liquidate such activity no

8 later than 90 days after such appointment.

9 ‘‘(D) The Managing Trustee shall receive compensa10 tion at the rate payable for level III of the Executive

11 Schedule under section 5314 of title 5, United States

12 Code, and shall in addition be reimbursed for the actual

13 and necessary expenses incurred by him or her in the per14 formance of his or her duties.

15 ‘‘(4) The Managing Trustee and the other members

16 of the Board of Trustees shall be chosen, on the basis of

17 their integrity, impartiality, and good judgment, from

18 among individuals who, by reason of their education, expe19 rience, and attainments, are exceptionally qualified to per20 form their duties prescribed under this Act and who have

21 no conflicting interest which would hinder the performance

22 of disinterested public service either in the investment of

23 either of the Trust Funds, the Federal Hospital Insurance

24 Trust Fund, or the Federal Supplementary Medical Insur-
7

•HR 491 IH

1 ance Trust Fund or in the other functions and duties vest2 ed in them under this Act.

3 ‘‘(5)(A) The Commissioner of Social Security shall

4 make available to the Managing Trustee and the Board

5 of Trustees, from the personnel, facilities, and services of

6 the Social Security Administration, such secretarial, cleri7 cal, technical, and other assistance as may be necessary

8 or appropriate to the performance of their duties.

9 ‘‘(B) The Commissioner of Social Security and the

10 Secretary of the Treasury shall make available to the Man11 aging Trustee and the Board of Trustees such information

12 and data held by their respective agencies as may be nec13 essary or appropriate to the performance of the duties of

14 the Managing Trustee and the Board of Trustees.

15 ‘‘(6) It shall be the duty’’.

16 (b) CONFORMING AMENDMENTS.—

17 (1) FEDERAL HOSPITAL INSURANCE TRUST

18 FUND.—Section 1817(b) of such Act is amended—

19 (A) in the seventh sentence, by redesignat20 ing paragraphs (1), (2), (3), and (4) as sub21 paragraphs (A), (B), (C), and (D), respectively,

22 and

23 (B) by striking ‘‘(b) With respect to’’ and

24 all that follows through ‘‘It shall be the duty’’
8

•HR 491 IH

1 in the seventh sentence and inserting the follow2 ing:

3 ‘‘(b)(1) With respect to the Trust Fund, there is

4 hereby created a body to be known as the Board of Trust5 ees of the Trust Fund (hereinafter in this section referred

6 to as the ‘Board of Trustees’). The Board of Trustees

7 shall be composed of—

8 ‘‘(A) the individuals serving as members of the

9 Board of Trustees of the Federal Old-Age and Sur10 vivors Insurance Trust Fund and the Federal Dis11 ability Insurance Trust Fund under section

12 201(c)(1)(A), and

13 ‘‘(B) the Managing Trustee of the Social Secu14 rity Trust Funds (hereinafter in this section referred

15 to as the ‘Managing Trustee’) appointed under sec16 tion 201(c)(2).

17 The Managing Trustee shall serve as Chair of the Board

18 of Trustees. The Commissioner of Social Security shall

19 serve as Secretary of the Board of Trustees. The Board

20 of Trustees shall meet not less frequently than once each

21 calendar year. The Managing Trustee and the other mem22 bers of the Board of Trustees shall serve under this sub23 section without compensation in addition to compensation

24 received for their service under section 201(c).

25 ‘‘(3) It shall be the duty’’.
9

•HR 491 IH

1 (2) FEDERAL SUPPLEMENTARY MEDICAL IN2 SURANCE TRUST FUND.—Section 1841(b) of such

3 Act is amended—

4 (A) in the seventh sentence, by redesignat5 ing paragraphs (1), (2), (3), and (4) as sub6 paragraphs (A), (B), (C), and (D), respectively,

7 and

8 (B) by striking ‘‘(b) With respect to’’ and

9 all that follows through ‘‘It shall be the duty’’

10 in the seventh sentence and inserting the follow11 ing:

12 ‘‘(b)(1) With respect to the Trust Fund, there is

13 hereby created a body to be known as the Board of Trust14 ees of the Trust Fund (hereinafter in this section referred

15 to as the ‘Board of Trustees’). The Board of Trustees

16 shall be composed of—

17 ‘‘(A) the individuals serving as members of the

18 Board of Trustees of the Federal Old-Age and Sur19 vivors Insurance Trust Fund and the Federal Dis20 ability Insurance Trust Fund under section

21 201(c)(1)(A), and

22 ‘‘(B) the Managing Trustee of the Social Secu23 rity Trust Funds (hereinafter in this section referred

24 to as the ‘Managing Trustee’) appointed under sec25 tion 201(c)(2).
10

•HR 491 IH

1 The Managing Trustee shall serve as Chair of the Board

2 of Trustees. The Commissioner of Social Security shall

3 serve as Secretary of the Board of Trustees. The Board

4 of Trustees shall meet not less frequently than once each

5 calendar year. The Managing Trustee and the other mem6 bers of the Board of Trustees shall serve under this sub7 section without compensation in addition to compensation

8 received for their service under section 201(c).

9 ‘‘(3) It shall be the duty’’.

10 (c) EFFECTIVE DATE AND TRANSITIONAL RULES.—

11 The amendments made by this section shall take effect

12 on the date of the enactment of this Act, except that the

13 Secretary of the Treasury shall continue to serve as Man14 aging Trustee of the Social Security Trust Funds and the

15 members of the Board of Trustees under sections 201(c),

16 1817(b), and 1841(b) of the Social Security Act (as in

17 effect immediately before such date) shall continue to

18 serve as the members of such Boards, until the date on

19 which all individuals initially appointed under section

20 201(c) of such Act (as amended by this section) take of21 fice.
11

•HR 491 IH

1 SEC. 3. INVESTMENT OF THE SOCIAL SECURITY TRUST

2 FUNDS PURSUANT TO ANNUAL INVESTMENT

3 PLAN.

4 (a) FEDERAL OLD-AGE AND SURVIVORS INSURANCE

5 TRUST FUND AND FEDERAL DISABILITY INSURANCE

6 TRUST FUND.—Section 201(d) of the Social Security Act

7 is amended by striking ‘‘(d) It shall be the duty’’ and all

8 that follows through ‘‘The purposes for which’’ and insert9 ing the following:

10 ‘‘(d)(1)(A) It shall be the duty of the Managing

11 Trustee to invest such amounts in the Trust Funds as

12 are not necessary to meet current withdrawals in such

13 manner and to such extent as is determined by the Manag14 ing Trustee to be in accordance with the annual invest15 ment plan submitted by the Board of Trustees pursuant

16 to this paragraph.

17 ‘‘(B) The Board of Trustees shall conduct a continu18 ing study and actuarial analysis of the status of the invest19 ments made by the Managing Trustee pursuant to this

20 subsection, and, on the basis of such study and analysis

21 shall, on or before August 1 of each calendar year, formu22 late and submit to the President and each House of the

23 Congress an investment plan to govern the investments

24 of the Trust Funds during the fiscal year beginning with

25 October 1 of such calendar year. The Board of Trustees

26 may, from time to time thereafter, submit amendments
12

•HR 491 IH

1 to the annual investment plan in the manner in which

2 original annual investment plans are submitted, except

3 that each such amendment shall not be effective before

4 60 days after its submission.

5 ‘‘(C) Each annual investment plan shall set forth

6 standards governing the investment and disinvestment of

7 the Trust Funds which are appropriate to ensure that the

8 insurance program under this title will to the maximum

9 extent possible fulfill its intended purposes and meet the

10 needs for which it is designed in a fiscally and actuarially

11 sound manner, without being influenced or characterized

12 by budgetary or fiscal considerations irrelevant to the

13 Trust Funds or by partisan or political considerations.

14 Such plan shall be accompanied by any recommendations

15 of the Board of Trustees regarding the investment of the

16 Trust Funds, including appropriate technical legislative

17 language for any necessary modifications in the provisions

18 of this title relating to matters covered by such rec19 ommendations.

20 ‘‘(D) The annual investment plan submitted to each

21 House of the Congress (and any amendment thereto), to22 gether with accompanying recommendations of the Board

23 of Trustees, shall be incorporated in a special message to

24 each House. Such message shall be delivered to the Clerk

25 of the House of Representatives if the House of Rep-
13

•HR 491 IH

1 resentatives is not in session and to the Secretary of the

2 Senate if the Senate is not in session. Each such message

3 shall be printed as a document for each House.

4 ‘‘(E) For purposes of making investments under this

5 paragraph, obligations may be acquired (i) at original

6 issue at the issue price, or (ii) by purchase of outstanding

7 obligations at the market price.

8 ‘‘(2) The purposes for which’’.

9 (b) FEDERAL HOSPITAL INSURANCE TRUST

10 FUND.—Section 1817(c) of such Act is amended by strik11 ing ‘‘(c) It shall be the duty’’ and all that follows through

12 ‘‘The purposes for which’’ and inserting the following:

13 ‘‘(c)(1)(A) It shall be the duty of the Managing

14 Trustee to invest such amounts in the Trust Fund as are

15 not necessary to meet current withdrawals in such manner

16 and to such extent as is determined by the Managing

17 Trustee to be in accordance with the annual investment

18 plan submitted by the Board of Trustees pursuant to this

19 paragraph.

20 ‘‘(B) The Board of Trustees shall conduct a continu21 ing study and actuarial analysis of the status of the invest22 ments made by the Managing Trustee pursuant to this

23 subsection, and, on the basis of such study and analysis

24 shall, on or before August 1 of each calendar year, formu25 late and submit to the President and each House of the
14

•HR 491 IH

1 Congress an investment plan to govern the investments

2 of the Trust Fund during the fiscal year beginning with

3 October 1 of such calendar year. The Board of Trustees

4 may, from time to time thereafter, submit amendments

5 to the annual investment plan in the manner in which

6 original annual investment plans are submitted, except

7 that each such amendment shall not be effective before

8 60 days after its submission.

9 ‘‘(C) Each annual investment plan shall set forth

10 standards governing the investment and disinvestment of

11 the Trust Fund which are appropriate to ensure that the

12 insurance program under this title will to the maximum

13 extent possible fulfill its intended purposes and meet the

14 needs for which it is designed in a fiscally and actuarially

15 sound manner, without being influenced or characterized

16 by budgetary or fiscal considerations irrelevant to the

17 Trust Fund or by partisan or political considerations.

18 Such plan shall be accompanied by any recommendations

19 of the Board of Trustees regarding the investment of the

20 Trust Fund, including appropriate technical legislative

21 language for any necessary modifications in the provisions

22 of this title relating to matters covered by such rec23 ommendations.

24 ‘‘(D) The annual investment plan submitted to each

25 House of the Congress (and any amendment thereto), to-
15

•HR 491 IH

1 gether with accompanying recommendations of the Board

2 of Trustees, shall be incorporated in a special message to

3 each House. Such message shall be delivered to the Clerk

4 of the House of Representatives if the House of Rep5 resentatives is not in session and to the Secretary of the

6 Senate if the Senate is not in session. Each such message

7 shall be printed as a document for each House.

8 ‘‘(E) For purposes of making investments under this

9 paragraph, obligations may be acquired (i) at original

10 issue at the issue price, or (ii) by purchase of outstanding

11 obligations at the market price.

12 ‘‘(2) The purposes for which’’.

13 (c) FEDERAL SUPPLEMENTARY MEDICAL INSUR14 ANCE TRUST FUND.—Section 1841(c) of such Act is

15 amended by striking ‘‘(c) It shall be the duty’’ and all

16 that follows through ‘‘The purposes for which’’ and insert17 ing the following:

18 ‘‘(c)(1)(A) It shall be the duty of the Managing

19 Trustee to invest such amounts in the Trust Fund as are

20 not necessary to meet current withdrawals in such manner

21 and to such extent as is determined by the Managing

22 Trustee to be in accordance with the annual investment

23 plan submitted by the Board of Trustees pursuant to this

24 paragraph.
16

•HR 491 IH

1 ‘‘(B) The Board of Trustees shall conduct a continu2 ing study and actuarial analysis of the status of the invest3 ments made by the Managing Trustee pursuant to this

4 subsection, and, on the basis of such study and analysis

5 shall, on or before August 1 of each calendar year, formu6 late and submit to the President and each House of the

7 Congress an investment plan to govern the investments

8 of the Trust Fund during the fiscal year beginning with

9 October 1 of such calendar year. The Board of Trustees

10 may, from time to time thereafter, submit amendments

11 to the annual investment plan in the manner in which

12 original annual investment plans are submitted, except

13 that each such amendment shall not be effective before

14 60 days after its submission.

15 ‘‘(C) Each annual investment plan shall set forth

16 standards governing the investment and disinvestment of

17 the Trust Fund which are appropriate to ensure that the

18 insurance program under this title will to the maximum

19 extent possible fulfill its intended purposes and meet the

20 needs for which it is designed in a fiscally and actuarially

21 sound manner, without being influenced or characterized

22 by budgetary or fiscal considerations irrelevant to the

23 Trust Fund or by partisan or political considerations.

24 Such plan shall be accompanied by any recommendations

25 of the Board of Trustees regarding the investment of the
17

•HR 491 IH

1 Trust Fund, including appropriate technical legislative

2 language for any necessary modifications in the provisions

3 of this title relating to matters covered by such rec4 ommendations.

5 ‘‘(D) The annual investment plan submitted to each

6 House of the Congress (and any amendment thereto), to7 gether with accompanying recommendations of the Board

8 of Trustees, shall be incorporated in a special message to

9 each House. Such message shall be delivered to the Clerk

10 of the House of Representatives if the House of Rep11 resentatives is not in session and to the Secretary of the

12 Senate if the Senate is not in session. Each such message

13 shall be printed as a document for each House.

14 ‘‘(E) For purposes of making investments under this

15 paragraph, obligations may be acquired (i) at original

16 issue at the issue price, or (ii) by purchase of outstanding

17 obligations at the market price.

18 ‘‘(2) The purposes for which’’.

19 SEC. 4. GREATER DISCRETION IN INVESTMENT OF THE SO20 CIAL SECURITY TRUST FUNDS.

21 (a) FEDERAL OLD-AGE AND SURVIVORS INSURANCE

22 TRUST FUND AND FEDERAL DISABILITY INSURANCE

23 TRUST FUND.—Section 201(d) of the Social Security Act

24 (as amended by section 3 of this Act) is further amended

25 by striking the last sentence and inserting the following:
18

•HR 491 IH

1 ‘‘The Managing Trustee may purchase such obligations

2 and other interest-bearing obligations, on original issue or

3 at the market price, and sell such obligations, if the Man4 aging Trustee determines that such purchase or sale is

5 in the public interest and in accordance with the annual

6 investment plan of the Board of Trustees.’’.

7 (b) FEDERAL HOSPITAL INSURANCE TRUST

8 FUND.—Section 1817(c) of such Act (as amended by sec9 tion 3 of this Act) is further amended by striking the last

10 sentence and inserting the following: ‘‘The Managing

11 Trustee may purchase such obligations and other interest12 bearing obligations, on original issue or at the market

13 price, and sell such obligations, if the Managing Trustee

14 determines that such purchase or sale is in the public in15 terest and in accordance with the annual investment plan

16 of the Board of Trustees.’’.

17 (c) FEDERAL SUPPLEMENTARY MEDICAL INSUR18 ANCE TRUST FUND.—Section 1841(c) of such Act (as

19 amended by section 3 of this Act) is further amended by

20 striking the last sentence and inserting in lieu thereof the

21 following: ‘‘The Managing Trustee may purchase such ob22 ligations and other interest-bearing obligations, on original

23 issue or at the market price, and sell such obligations, if

24 the Managing Trustee determines that such purchase or
19

•HR 491 IH

1 sale is in the public interest and in accordance with the

2 annual investment plan of the Board of Trustees.’’.

3 (d) EFFECTIVE DATE.—The amendments made by

4 this section shall take effect October 1, 1995.

Æ

HR 491 IH——2