I

105TH CONGRESS

2D SESSION H. R. 4824

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

OCTOBER 13, 1998

Mr. KOLBE (for himself and Mr. STENHOLM) 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. Coverage of newly hired State and local employees.

Sec. 7. Gradual increase in number of benefit computation years; use of all

years in computation.

Sec. 8. Actuarial adjustment for retirement.

Sec. 9. Improvements in process for cost-of-living adjustments.

Sec. 10. Phased reduction in spousal benefits other than survivor’s benefits to

33 percent of primary insurance amount.

Sec. 11. Adjustment to upper 2 benefit formula factors.

Sec. 12. Phased-in increase in social security retirement ages.

Sec. 13. 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 follow8 ing:

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)
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1 with respect to an eligible individual, shall establish

2 in the name of such individual an individual security

3 account. The individual security account shall be

4 identified to the account holder by means of the ac5 count holder’s Social Security account number.

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

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

8 individual born after December 31, 1944.

9 ‘‘(b) CONTRIBUTIONS.—The Secretary of the Treas10 ury shall transfer from the Federal Old-Age and Survivors

11 Insurance Trust Fund, for crediting by the Commissioner

12 of Social Security to an individual security account of an

13 eligible individual, an amount equal to the sum of any

14 amount received by such Secretary on behalf of such indi15 vidual under section 3101(a)(2) or 1401(a)(2) of the In16 ternal Revenue Code of 1986.

17 ‘‘(c) DESIGNATION OF INVESTMENT TYPE OF INDI18 VIDUAL SECURITY ACCOUNT.—

19 ‘‘(1) DESIGNATION.—Each eligible individual

20 who is employed or self-employed shall designate the

21 investment type of individual security account to

22 which the contributions described in subsection (b)

23 on behalf of such individual are to be credited.

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

25 described in paragraph (1) shall be made in such
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1 manner and at such intervals as the Commissioner

2 of Social Security may prescribe in order to ensure

3 ease of administration and reductions in burdens on

4 employers.

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

6 January 1, 2000, any eligible individual that is em7 ployed or self-employed as of such date shall execute

8 the designation required under paragraph (1).

9 ‘‘(4) DESIGNATION IN ABSENCE OF DESIGNA10 TION BY ELIGIBLE INDIVIDUAL.—In any case in

11 which no designation of the individual security ac12 count is made, the Commissioner of Social Security

13 shall make the designation of the individual security

14 account in accordance with regulations that take

15 into account the competing objectives of maximizing

16 returns on investments and minimizing the risk in17 volved with such investments.

18 ‘‘DEFINITION OF INDIVIDUAL SECURITY ACCOUNT;

19 TREATMENT OF ACCOUNTS

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

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

22 any individual security account in the Individual Security

23 Fund (established under section 254) which is adminis24 tered by the Individual Security Fund Board.

25 ‘‘(b) TREATMENT OF ACCOUNT.—Except as other26 wise provided in this part, any individual security account
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1 described in paragraph (1)(A) shall be treated in the same

2 manner as an individual account in the Thrift Savings

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

4 States Code.

5 ‘‘INDIVIDUAL SECURITY ACCOUNT DISTRIBUTIONS

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

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

8 only be made from an individual security account of an

9 eligible individual on and after the earliest of—

10 ‘‘(1) the date the eligible individual attains nor11 mal retirement age, as determined under section 216

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

13 by such individual), or

14 ‘‘(2) the date on which funds in the eligible in15 dividual’s individual security account are sufficient

16 to provide a monthly payment over the life expect17 ancy of the eligible individual (determined under rea18 sonable actuarial assumptions) which, when added to

19 the eligible individual’s monthly benefit under part A

(if any), is at least equal to an amount equal to 1 20 ⁄12

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

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

23 9902(2) and determined on such date for a family

24 of the size involved) and adjusted annually there25 after by the adjustment determined under section

26 215(i).
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1 ‘‘(b) FORMS OF DISTRIBUTION.—

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

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

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

5 an individual security account available to provide

6 monthly payments not in excess of the amount de7 scribed in subsection (a)(2) shall be paid, as elected

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

9 shall be prescribed in regulations of the Individual

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

11 annuities or equal monthly payments over the life

12 expectancy of the eligible individual (determined

13 under reasonable actuarial assumptions) in accord14 ance with requirements (which shall be provided in

15 regulations of the Board) similar to the require16 ments applicable to payments of benefits under sub17 chapter III of chapter 84 of title 5, United States

18 Code, and providing for indexing for inflation.

19 ‘‘(2) PAYMENT OF EXCESS FUNDS.—To the ex20 tent funds remain in an eligible individual’s individ21 ual security account after the application of para22 graph (1), such funds shall be payable to the eligible

23 individual in such manner and in such amounts as

24 determined by the eligible individual, subject to the
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1 provisions of subchapter III of chapter 84 of title 5,

2 United States Code.

3 ‘‘(c) DISTRIBUTION IN THE EVENT OF DEATH BE4 FORE THE DATE OF INITIAL DISTRIBUTION.—If the eligi5 ble individual dies before the date determined under sub6 section (a), the balance in such individual’s individual se7 curity account shall be distributed in a lump sum, under

8 rules established by the Individual Security Fund Board,

9 to the employee’s heirs.

10 ‘‘INDIVIDUAL SECURITY FUND

11 ‘‘SEC. 254. (a) ESTABLISHMENT.—There is estab12 lished and maintained in the Treasury of the United

13 States an Individual Security Fund in the same manner

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

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

16 Code.

17 ‘‘(b) INDIVIDUAL SECURITY FUND BOARD.—

18 ‘‘(1) IN GENERAL.—There is established and

19 operated in the Social Security Administration an

20 Individual Security Fund Board in the same manner

21 as the Federal Retirement Thrift Investment Board

22 under subchapter VII of chapter 84 of title 5,

23 United States Code.

24 ‘‘(2) SPECIFIC INVESTMENT AND REPORTING

25 DUTIES.—
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1 ‘‘(A) IN GENERAL.—The Individual Secu2 rity Fund Board shall manage and report on

3 the activities of the Individual Security Fund

4 and the individual security accounts of such

5 Fund in the same manner as the Federal Re6 tirement Thrift Investment Board manages and

7 reports on the Thrift Savings Fund and the in8 dividual accounts of such Fund under sub9 chapter VII of chapter 84 of title 5, United

10 States Code.

11 ‘‘(B) STUDY AND REPORT ON INCREASED

12 INVESTMENT OPTIONS.—

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

14 Fund Board shall conduct a study regard15 ing ways to increase an eligible individual’s

16 investment options with respect to such in17 dividual’s individual security account and

18 with respect to rollovers or distributions

19 from such account.

20 ‘‘(ii) REPORT.—Not later than 2

21 years after the date of enactment of the

22 Strengthening Social Security Act of 1998,

23 the Individual Security Fund Board shall

24 submit a report to the President and Con25 gress that contains a detailed statement of
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1 the results of the study conducted pursu2 ant to clause (i), together with the Board’s

3 recommendations for such legislative ac4 tions as the Board considers appropriate.

5 ‘‘BUDGETARY TREATMENT OF INDIVIDUAL SECURITY

6 FUND AND ACCOUNTS

7 ‘‘SEC. 255. The receipts and disbursements of the In8 dividual Security Fund and any accounts within such fund

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

10 United States Government as submitted by the President

11 or of the congressional budget and shall be exempt from

12 any general budget limitation imposed by statute on ex13 penditures and net lending (budget outlays) of the United

14 States Government.’’.

15 (b) MODIFICATION OF FICA RATES.—

16 (1) EMPLOYEES.—Section 3101(a) of the Inter17 nal Revenue Code of 1986 (relating to tax on em18 ployees) is amended to read as follows:

19 ‘‘(a) OLD-AGE, SURVIVORS, AND DISABILITY INSUR20 ANCE.—

21 ‘‘(1) IN GENERAL.—

22 ‘‘(A) INDIVIDUALS COVERED UNDER PART

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

24 In addition to other taxes, there is hereby im25 posed on the income of every individual who is

26 not a part B eligible individual a tax equal to
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1 6.2 percent of the wages (as defined in section

2 3121(a)) received by him with respect to em3 ployment (as defined in section 3121(b)).

4 ‘‘(B) INDIVIDUALS COVERED UNDER PART

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

6 In addition to other taxes, there is hereby im7 posed on the income of every part B eligible in8 dividual a tax equal to 4.2 percent of the wages

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

10 individual with respect to employment (as de11 fined in section 3121(b)).

12 ‘‘(2) CONTRIBUTION OF OASDI TAX REDUCTION

13 TO INDIVIDUAL SECURITY ACCOUNTS.—

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

15 taxes, there is hereby imposed on the income of

16 every part B eligible individual an individual se17 curity account contribution equal to the sum

18 of—

19 ‘‘(i) 2 percent of the wages (as so de20 fined) received by such individual with re21 spect to employment (as so defined), plus

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

23 exceed $2,000) as designated by the indi24 vidual in the same manner as described in

25 section 251(c) of the Social Security Act.
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1 ‘‘(B) INFLATION ADJUSTMENT.—

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

3 calendar year beginning after 2000, the

4 dollar amount in subparagraph (A)(ii)

5 shall be increased by an amount equal to—

6 ‘‘(I) such dollar amount, multi7 plied by

8 ‘‘(II) the cost-of-living adjust9 ment determined under section 1(f)(3)

10 for the calendar year, determined by

11 substituting ‘calendar year 1999’ for

12 ‘calendar year 1992’ in subparagraph

13 (B) thereof.

14 ‘‘(ii) ROUNDING.—If any dollar

15 amount after being increased under clause

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

17 amount shall be rounded to the nearest

18 multiple of $10.’’.

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

20 Internal Revenue Code of 1986 (relating to tax on

21 self-employment income) is amended to read as fol22 lows:

23 ‘‘(a) OLD-AGE, SURVIVORS, AND DISABILITY INSUR24 ANCE.—

25 ‘‘(1) IN GENERAL.—
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1 ‘‘(A) INDIVIDUALS COVERED UNDER PART

2 A OF THE SOCIAL SECURITY ACT.—In addition

3 to other taxes, there shall be imposed for each

4 taxable year, on the self-employment income of

5 every individual who is not a part B eligible in6 dividual for the calendar year ending with or

7 during such taxable year, a tax equal to 12.40

8 percent of the amount of the self-employment

9 income for such taxable year.

10 ‘‘(B) INDIVIDUALS COVERED UNDER PART

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

12 In addition to other taxes, there is hereby im13 posed for each taxable year, on the self-employ14 ment income of every part B eligible individual,

15 a tax equal to 10.4 percent of the amount of

16 the self-employment income for such taxable

17 year.

18 ‘‘(2) CONTRIBUTION OF OASDI TAX REDUCTION

19 TO INDIVIDUAL SECURITY ACCOUNTS.—

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

21 taxes, there is hereby imposed for each taxable

22 year, on the self-employment income of every

23 individual, an individual security account con24 tribution equal to the sum of—
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1 ‘‘(i) 2 percent of the amount of the

2 self-employment income for each individual

3 for such taxable year; and

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

5 income (not to exceed $2,000) as des6 ignated by the individual in the same man7 ner as described in section 251(c) of the

8 Social Security Act.

9 ‘‘(B) INFLATION ADJUSTMENT.—

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

11 taxable year beginning after 2000, the dol12 lar amount in subparagraph (A)(ii) shall

13 be increased by an amount equal to—

14 ‘‘(I) such dollar amount, multi15 plied by

16 ‘‘(II) the cost-of-living adjust17 ment determined under section 1(f)(3)

18 for the calendar year in which the tax19 able year begins, determined by sub20 stituting ‘calendar year 1999’ for ‘cal21 endar year 1992’ in subparagraph (B)

22 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 (3) PART B ELIGIBLE INDIVIDUAL.—

4 (A) TAXES ON EMPLOYEES.—Section 3121

5 of such Code (relating to definitions) is amend6 ed by inserting after subsection (s) the follow7 ing new subsection:

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

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

10 for any calendar year, an individual who is an eligible indi11 vidual (as defined in section 251(a)(2) of the Social Secu12 rity Act) for such calendar year.’’.

13 (B) SELF-EMPLOYMENT TAX.—Section

14 1402 of such Code (relating to definitions) is

15 amended by adding at the end the following

16 new subsection:

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

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

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

20 section 251(a)(2) of the Social Security Act) for such cal21 endar year.’’.

22 (4) EFFECTIVE DATES.—

23 (A) EMPLOYEES.—The amendments made

24 by paragraphs (1) and (3)(A) apply to remu25 neration paid after December 31, 1999.
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1 (B) SELF-EMPLOYED INDIVIDUALS.—The

2 amendments made by paragraphs (2) and

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

4 December 31, 1999.

5 SEC. 3. MINIMUM SOCIAL SECURITY BENEFIT.

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

7 415) is amended by adding at the end the following:

8 ‘‘Minimum Monthly Insurance Benefit

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

10 this section—

11 ‘‘(A) the primary insurance amount of a quali12 fied individual shall be equal to the greater of—

13 ‘‘(i) the primary insurance amount deter14 mined under this section (without regard to this

15 subsection), or

‘‘(ii) 1 16 ⁄12 of the applicable percentage of

17 the applicable amount, and

18 ‘‘(B) any recomputation of the primary insur19 ance amount of a qualified individual shall not result

20 in a primary insurance amount less than the pri21 mary insurance amount as in effect immediately

22 prior to such recomputation.

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

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

25 individual—
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1 ‘‘(i) who initially becomes eligible for old2 age or disability insurance benefits, or dies (be3 fore becoming eligible for such benefits) for a

4 month beginning after December 31, 2005, and

5 ‘‘(ii) who has at least twice the minimum

6 number of quarters required to be fully insured.

7 ‘‘(B) The term ‘applicable amount’ means, in

8 connection with an individual, $7,992 adjusted an9 nually—

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

11 initial month of eligibility occurs in a year prior

12 to 2011, by the CPI increase percentage deter13 mined under section 215(i) for 1996 through

14 the year prior to such year of eligibility; and

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

16 initial month of eligibility occurs in a year after

17 2010, by the CPI increase percentage deter18 mined under such section for 1996 through

19 2009, and by the wage increase percentage de20 termined under such section for 2009 through

21 the second year prior to the year of such eligi22 bility; and

23 ‘‘(ii) by the CPI increase percentage deter24 mined under such section for all years begin-
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1 ning with the year of an individual’s initial eli2 gibility.

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

4 for computations and recomputations of a qualified

5 individual’s primary insurance amount under this

6 section whose initial eligibility occurs in any calendar

7 year specified in the table under clause (ii), the sum

8 of—

9 ‘‘(I) the applicable base percentage speci10 fied in such table in connection with such year,

11 plus

12 ‘‘(II) the product derived by multiplying

13 the applicable percentage increment specified in

14 such table in connection with such year by the

15 ratio of the number of such individual’s quar16 ters of coverage (if any) in excess of the mini17 mum number of quarters required to be fully

18 insured but not in excess of twice such mini19 mum, to such minimum.

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

21 base percentages and applicable percentage incre22 ments are set forth in connection with calendar

23 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
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2008 ............................ 36 percent ................... 24 percent

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

After 2009 .................. 60 percent ................... 40 percent.’’

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 particu2 lar 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 individ3 ual 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. COVERAGE OF NEWLY HIRED STATE AND LOCAL

19 EMPLOYEES.

20 (a) AMENDMENTS TO THE SOCIAL SECURITY ACT.—

21 (1) IN GENERAL.—Paragraph (7) of section

22 210(a) of the Social Security Act (42 U.S.C.

23 410(a)(7)) is amended to read as follows:

24 ‘‘(7) Excluded State or local government em25 ployment (as defined in subsection (s));’’.
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1 (2) EXCLUDED STATE OR LOCAL GOVERNMENT

2 EMPLOYMENT.—

3 (A) IN GENERAL.—Section 210 of such

4 Act (42 U.S.C. 410) is amended by adding at

5 the end the following:

6 ‘‘Excluded State or Local Government Employment

7 ‘‘(s)(1) IN GENERAL.—The term ‘excluded State or

8 local government employment’ means any service per9 formed in the employ of a State, of any political subdivi10 sion thereof, or of any instrumentality of any 1 or more

11 of the foregoing which is wholly owned thereby, if—

12 ‘‘(A)(i) such service would be excluded from the

13 term ‘employment’ for purposes of this title if the

14 preceding provisions of this section as in effect on

15 December 31, 1999, had remained in effect, and (ii)

16 the requirements of paragraph (2) are met with re17 spect to such service, or

18 ‘‘(B) the requirements of paragraph (3) are met

19 with respect to such service.

20 ‘‘(2) EXCEPTION FOR CURRENT EMPLOYMENT

21 WHICH CONTINUES.—

22 ‘‘(A) IN GENERAL.—The requirements of this

23 paragraph are met with respect to service for any

24 employer if—
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1 ‘‘(i) such service is performed by an indi2 vidual—

3 ‘‘(I) who was performing substantial

4 and regular service for remuneration for

5 that employer before January 1, 2000,

6 ‘‘(II) who is a bona fide employee of

7 that employer on December 31, 1999, and

8 ‘‘(III) whose employment relationship

9 with that employer was not entered into

10 for purposes of meeting the requirements

11 of this subparagraph, and

12 ‘‘(ii) the employment relationship with that

13 employer has not been terminated after Decem14 ber 31, 1999.

15 ‘‘(B) TREATMENT OF MULTIPLE AGENCIES AND

16 INSTRUMENTALITIES.—For purposes of subpara17 graph (A), under regulations (consistent with regula18 tions established under section 3121(t)(2)(B) of the

19 Internal Revenue Code of 1986)—

20 ‘‘(i) all agencies and instrumentalities of a

21 State (as defined in section 218(b)) or of the

22 District of Columbia shall be treated as a single

23 employer, and

24 ‘‘(ii) all agencies and instrumentalities of a

25 political subdivision of a State (as so defined)
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1 shall be treated as a single employer and shall

2 not be treated as described in clause (i).

3 ‘‘(3) EXCEPTION FOR CERTAIN SERVICES.—

4 ‘‘(A) IN GENERAL.—The requirements of this

5 paragraph are met with respect to service if such

6 service is performed—

7 ‘‘(i) by an individual who is employed by a

8 State or political subdivision thereof to relieve

9 such individual from unemployment,

10 ‘‘(ii) in a hospital, home, or other institu11 tion by a patient or inmate thereof as an em12 ployee of a State or political subdivision thereof

13 or of the District of Columbia,

14 ‘‘(iii) by an individual, as an employee of

15 a State or political subdivision thereof or of the

16 District of Columbia, serving on a temporary

17 basis in case of fire, storm, snow, earthquake,

18 flood, or other similar emergency,

19 ‘‘(iv) by any individual as an employee in20 cluded under section 5351(2) of title 5, United

21 States Code (relating to certain interns, student

22 nurses, and other student employees of hos23 pitals of the District of Columbia Government),

24 other than as a medical or dental intern or a

25 medical or dental resident in training,
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•HR 4824 IH

1 ‘‘(v) by an election official or election

2 worker if the remuneration paid in a calendar

3 year for such service is less than $1,000 with

4 respect to service performed during 2000, and

5 the adjusted amount determined under sub6 paragraph (C) for any subsequent year with re7 spect to service performed during such subse8 quent year, except to the extent that service by

9 such election official or election worker is in10 cluded in employment under an agreement

11 under section 218, or

12 ‘‘(vi) by an employee in a position com13 pensated solely on a fee basis which is treated

14 pursuant to section 211(c)(2)(E) as a trade or

15 business for purposes of inclusion of such fees

16 in net earnings from self-employment.

17 ‘‘(B) DEFINITIONS.—As used in this para18 graph, the terms ‘State’ and ‘political subdivision’

19 have the meanings given those terms in section

20 218(b).

21 ‘‘(C) ADJUSTMENTS TO DOLLAR AMOUNT FOR

22 ELECTION OFFICIALS AND ELECTION WORKERS.—

23 For each year after 2000, the Secretary shall adjust

24 the amount referred to in subparagraph (A)(v) at

25 the same time and in the same manner as is pro-
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•HR 4824 IH

1 vided under section 215(a)(1)(B)(ii) with respect to

2 the amounts referred to in section 215(a)(1)(B)(i),

3 except that—

4 ‘‘(i) for purposes of this subparagraph,

5 1997 shall be substituted for the calendar year

6 referred to in section 215(a)(1)(B)(ii)(II), and

7 ‘‘(ii) such amount as so adjusted, if not a

8 multiple of $50, shall be rounded to the nearest

9 multiple of $50.

10 The Commissioner of Social Security shall determine

11 and publish in the Federal Register each adjusted

12 amount determined under this subparagraph not

13 later than November 1 preceding the year for which

14 the adjustment is made.’’.

15 (B) CONFORMING AMENDMENTS.—

16 (i) Subsection (k) of section 210 of

17 such Act (42 U.S.C. 410(k)) (relating to

18 covered transportation service) is repealed.

19 (ii) Section 210(p) of such Act (42

20 U.S.C. 410(p)) is amended—

21 (I) in paragraph (2), by striking

22 ‘‘service is performed’’ and all that

23 follows and inserting ‘‘service is serv24 ice described in subsection (s)(3)(A).’’;

25 and
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1 (II) in paragraph (3)(A), by in2 serting ‘‘under subsection (a)(7) as in

3 effect on December 31, 1999’’ after

4 ‘‘section’’.

5 (iii) Section 218(c)(6) of such Act (42

6 U.S.C. 418(c)(6)) is amended—

7 (I) by striking subparagraph (C);

8 (II) by redesignating subpara9 graphs (D) and (E) as subparagraphs

10 (C) and (D), respectively; and

11 (III) by striking subparagraph

12 (F) and inserting the following:

13 ‘‘(E) service which is included as employment

14 under section 210(a).’’.

15 (b) AMENDMENTS TO THE INTERNAL REVENUE

16 CODE OF 1986.—

17 (1) IN GENERAL.—Paragraph (7) of section

18 3121(b) of the Internal Revenue Code of 1986 (re19 lating to employment) is amended to read as follows:

20 ‘‘(7) excluded State or local government em21 ployment (as defined in subsection (t));’’.

22 (2) EXCLUDED STATE OR LOCAL GOVERNMENT

23 EMPLOYMENT.—Section 3121 of such Code is

24 amended by inserting after subsection (s) the follow25 ing:
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•HR 4824 IH

1 ‘‘(t) EXCLUDED STATE OR LOCAL GOVERNMENT EM2 PLOYMENT.—

3 ‘‘(1) IN GENERAL.—For purposes of this chap4 ter, the term ‘excluded State or local government

5 employment’ means any service performed in the

6 employ of a State, of any political subdivision there7 of, or of any instrumentality of any 1 or more of the

8 foregoing which is wholly owned thereby, if—

9 ‘‘(A)(i) such service would be excluded

10 from the term ‘employment’ for purposes of this

11 chapter if the provisions of subsection (b)(7) as

12 in effect on December 31, 1999, had remained

13 in effect, and (ii) the requirements of para14 graph (2) are met with respect to such service,

15 or

16 ‘‘(B) the requirements of paragraph (3)

17 are met with respect to such service.

18 ‘‘(2) EXCEPTION FOR CURRENT EMPLOYMENT

19 WHICH CONTINUES.—

20 ‘‘(A) IN GENERAL.—The requirements of

21 this paragraph are met with respect to service

22 for any employer if—

23 ‘‘(i) such service is performed by an

24 individual—
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•HR 4824 IH

1 ‘‘(I) who was performing sub2 stantial and regular service for remu3 neration for that employer before Jan4 uary 1, 2000,

5 ‘‘(II) who is a bona fide employee

6 of that employer on December 31,

7 1999, and

8 ‘‘(III) whose employment rela9 tionship with that employer was not

10 entered into for purposes of meeting

11 the requirements of this subpara12 graph, and

13 ‘‘(ii) the employment relationship with

14 that employer has not been terminated

15 after December 31, 1999.

16 ‘‘(B) TREATMENT OF MULTIPLE AGENCIES

17 AND INSTRUMENTALITIES.—For purposes of

18 subparagraph (A), under regulations—

19 ‘‘(i) all agencies and instrumentalities

20 of a State (as defined in section 218(b) of

21 the Social Security Act) or of the District

22 of Columbia shall be treated as a single

23 employer, and

24 ‘‘(ii) all agencies and instrumentalities

25 of a political subdivision of a State (as so
31

•HR 4824 IH

1 defined) shall be treated as a single em2 ployer and shall not be treated as de3 scribed in clause (i).

4 ‘‘(3) EXCEPTION FOR CERTAIN SERVICES.—

5 ‘‘(A) IN GENERAL.—The requirements of

6 this paragraph are met with respect to service

7 if such service is performed—

8 ‘‘(i) by an individual who is employed

9 by a State or political subdivision thereof

10 to relieve such individual from unemploy11 ment,

12 ‘‘(ii) in a hospital, home, or other in13 stitution by a patient or inmate thereof as

14 an employee of a State or political subdivi15 sion thereof or of the District of Columbia,

16 ‘‘(iii) by an individual, as an employee

17 of a State or political subdivision thereof

18 or of the District of Columbia, serving on

19 a temporary basis in case of fire, storm,

20 snow, earthquake, flood, or other similar

21 emergency,

22 ‘‘(iv) by any individual as an employee

23 included under section 5351(2) of title 5,

24 United States Code (relating to certain in25 terns, student nurses, and other student
32

•HR 4824 IH

1 employees of hospitals of the District of

2 Columbia Government), other than as a

3 medical or dental intern or a medical or

4 dental resident in training,

5 ‘‘(v) by an election official or election

6 worker if the remuneration paid in a cal7 endar year for such service is less than

8 $1,000 with respect to service performed

9 during 2000, and the adjusted amount de10 termined under section 210(s)(3)(C) of the

11 Social Security Act for any subsequent

12 year with respect to service performed dur13 ing such subsequent year, except to the ex14 tent that service by such election official or

15 election worker is included in employment

16 under an agreement under section 218 of

17 the Social Security Act, or

18 ‘‘(vi) by an employee in a position

19 compensated solely on a fee basis which is

20 treated pursuant to section 1402(c)(2)(E)

21 as a trade or business for purposes of in22 clusion of such fees in net earnings from

23 self-employment.

24 ‘‘(B) DEFINITIONS.—As used in this para25 graph, the terms ‘State’ and ‘political subdivi-
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1 sion’ have the meanings given those terms in

2 section 218(b) of the Social Security Act.’’.

3 (3) CONFORMING AMENDMENTS.—

4 (A) Subsection (j) of section 3121 of such

5 Code (relating to covered transportation serv6 ice) is repealed.

7 (B) Paragraph (2) of section 3121(u) of

8 such Code (relating to application of hospital

9 insurance tax to Federal, State, and local em10 ployment) is amended—

11 (i) in subparagraph (B), by striking

12 ‘‘service is performed’’ in clause (ii) and all

13 that follows through the end of such sub14 paragraph and inserting ‘‘service is service

15 described in subsection (t)(3)(A).’’; and

16 (ii) in subparagraph (C)(i), by insert17 ing ‘‘under subsection (b)(7) as in effect

18 on December 31, 1999’’ after ‘‘chapter’’.

19 (c) EFFECTIVE DATE.—Except as otherwise provided

20 in this section, the amendments made by this section shall

21 apply with respect to service performed after December

22 31, 1999.
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1 SEC. 7. GRADUAL INCREASE IN NUMBER OF BENEFIT COM2 PUTATION YEARS; USE OF ALL YEARS IN

3 COMPUTATION.

4 (a) IN GENERAL.—Section 215(b)(2)(A) of the Social

5 Security Act (42 U.S.C. 415(b)(2)(A)) is amended—

6 (1) in clause (i), by striking ‘‘5 years’’ and in7 serting ‘‘the applicable number of years for purposes

8 of this clause’’; and

9 (2) by striking ‘‘Clause (ii),’’ in the matter fol10 lowing clause (ii) and inserting the following:

11 ‘‘For purposes of clause (i), the applicable number of years

12 is the number of years specified in connection with the

13 year in which such individual reaches early retirement age

14 (as defined in section 216(l)(2)), or, if earlier, the calendar

15 year in which such individual dies, as set forth in the fol16 lowing table:

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

is:

2002 ................................................................................................... 4.

2003 ................................................................................................... 4.

2004 ................................................................................................... 3.

2005 ................................................................................................... 3.

2006 ................................................................................................... 2.

2007 ................................................................................................... 2.

2008 ................................................................................................... 1.

2009 ................................................................................................... 1.

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

17 Clause (ii),’’.

18 (b) USE OF ALL YEARS IN COMPUTATION.—

19 (1) IN GENERAL.—Section 215(b)(2)(B) of the

20 Social Security Act (42 U.S.C. 415(b)(2)(B)) is
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•HR 4824 IH

1 amended by striking clauses (i) and (ii) and insert2 ing the following:

3 ‘‘(i)(I) for calendar years after 2001 and before

4 2010, the term ‘benefit computation years’ means

5 those computation base years equal in number to the

6 number determined under subparagraph (A) plus

7 the applicable number of years determined under

8 subclause (III), for which the total of such individ9 ual’s wages and self-employment income, after ad10 justment under paragraph (3), is the largest;

11 ‘‘(II) for calendar years after 2009, the term

12 ‘benefit computation years’ means all of the com13 putation base years; and

14 ‘‘(III) for purposes of subclause (I), the applica15 ble number of years is the number of years specified

16 in connection with the year in which such individual

17 reaches early retirement age (as defined in section

18 216(l)(2)), or, if earlier, the calendar year in which

19 such individual dies, as set forth in the following

20 table:

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

is:

Before 2002 ....................................................................................... 0.

2002 ................................................................................................... 1.

2003 ................................................................................................... 1.

2004 ................................................................................................... 2.

2005 ................................................................................................... 2.

2006 ................................................................................................... 3.

2007 ................................................................................................... 3.

2008 ................................................................................................... 4.

2009 ................................................................................................... 4.
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•HR 4824 IH

1 ‘‘(ii) the term ‘computation base years’ means

2 the calendar years after 1950, except that such term

3 excludes any calendar year entirely included in a pe4 riod of disability; and’’.

5 (2) CONFORMING AMENDMENT.—Section

6 215(b)(1)(B) of the Social Security Act (42 U.S.C.

7 415(b)(1)(B)) is amended by striking ‘‘in those

8 years’’ and inserting ‘‘in an individual’s computation

9 base years determined under paragraph (2)(A)’’.

10 (c) EFFECTIVE DATE.—

11 (1) SUBSECTION (a).—The amendments made

12 by subsection (a) shall apply with respect to individ13 uals attaining early retirement age (as defined in

14 section 216(l)(2) of the Social Security Act) after

15 December 31, 2001.

16 (2) SUBSECTION (b).—The amendment made

17 by subsection (b) shall apply to benefit computation

18 years beginning after December 31, 1999.

19 SEC. 8. ACTUARIAL ADJUSTMENT FOR RETIREMENT.

20 (a) EARLY RETIREMENT.—

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

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

(A) in paragraph (1)(A), by striking ‘‘5 23 ⁄9’’

24 and inserting ‘‘the applicable fraction (deter25 mined under paragraph (12))’’; and
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•HR 4824 IH

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

2 ‘‘(12) For purposes of paragraph (1)(A), the ‘applica3 ble fraction’ for an individual who attains the age of 62

4 in—

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

‘‘(B) 2001, is 7 6 ⁄12;

‘‘(C) 2002, is 11 7 ⁄18;

‘‘(D) 2003, is 23 8 ⁄36;

‘‘(E) 2004, is 2 9 ⁄3; and

‘‘(F) 2005 or any succeeding year, is 25 10 ⁄36.’’.

11 (2) MONTHS BEYOND FIRST 36 MONTHS.—Sec12 tion 202(q) of such Act (42 U.S.C. 402(q)(9)) (as

13 amended by paragraph (1)) is amended—

14 (A) in paragraph (9)(A), by striking ‘‘five15 twelfths’’ and inserting ‘‘the applicable fraction

16 (determined under paragraph (13))’’; and

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

18 ‘‘(13) For purposes of paragraph (9)(A), the ‘applica19 ble fraction’ for an individual who attains the age of 62

20 in—

‘‘(A) any year before 2001, is 5 21 ⁄12;

‘‘(B) 2001, is 16 22 ⁄36;

‘‘(C) 2002, is 16 23 ⁄36;

‘‘(D) 2003, is 17 24 ⁄36;

‘‘(E) 2004, is 17 25 ⁄36; and
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‘‘(F) 2005 or any succeeding year, is 1 1 ⁄2.’’.

2 (3) EFFECTIVE DATE.—The amendments made

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

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

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

6 the Social Security Act (42 U.S.C. 402(w)(6)) is amend7 ed—

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

9 the end;

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

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

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

‘‘(E) 17 13 ⁄24 of 1 percent in the case of an individ14 ual who attains the age of 62 in a calendar year

15 after 2006 and before 2009;

‘‘(F) 3 16 ⁄4 of 1 percent in the case of an individ17 ual who attains the age of 62 in a calendar year

18 after 2008 and before 2011;

‘‘(G) 19 19 ⁄24 of 1 percent in the case of an individ20 ual who attains the age of 62 in a calendar year

21 after 2010 and before 2013; and

‘‘(H) 5 22 ⁄6 of 1 percent in the case of an individ23 ual who attains the age of 62 in a calendar year

24 after 2012.’’.
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1 SEC. 9. IMPROVEMENTS IN PROCESS FOR COST-OF-LIVING

2 ADJUSTMENTS.

3 (a) ANNUAL DECLARATIONS OF ACHIEVED SUBSTI4 TUTION BIAS CORRECTION AND PERSISTING UPPER

5 LEVEL SUBSTITUTION BIAS.—

6 (1) ACHIEVED SUBSTITUTION BIAS CORREC7 TION.—Not later than October 1, 1998, and annu8 ally thereafter, the Commissioner of the Bureau of

9 Labor Statistics shall publish in the Federal Reg10 ister an estimate of the number of percentage points

11 by which the annual rate of change in the Consumer

12 Price Index is reduced below the rate it would other13 wise have attained by reason of adjustments in the

14 determination of such index instituted by the Bu15 reau after December 31, 1997.

16 (2) UPPER LEVEL SUBSTITUTION BIAS.—Not

17 later than August 1, 1999, and annually thereafter,

18 the Commissioner of the Bureau of Labor Statistics

19 shall publish in the Federal Register an estimate of

20 the upper level substitution bias retained in the Con21 sumer Price Index, expressed in terms of a percent22 age point effect on the annual rate of change in the

23 Consumer Price Index determined through the use

24 of a superlative index that accounts for changes that

25 consumers make in the quantities of goods and serv26 ices consumed.
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1 (b) FUNDING FOR CPI IMPROVEMENTS.—

2 (1) IN GENERAL.—There is hereby appro3 priated to the Bureau of Labor Statistics in the De4 partment of Labor, for each of fiscal years 1998,

5 1999, and 2000, $30,000,000 for use by the Bureau

6 for the following purposes:

7 (A) Research, evaluation, and implementa8 tion of a superlative index to estimate upper

9 level substitution bias in the Consumer Price

10 Index.

11 (B) Expansion of the Consumer Expendi12 ture Survey and the Point of Purchase Survey.

13 (C) Implementation of revisions to the

14 Consumer Price Index with respect to programs

15 under title II of the Social Security Act (42

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

17 (2) REPORTS.—The Commissioner of the Bu18 reau of Labor Statistics shall submit reports regard19 ing the use of appropriations made under paragraph

20 (1) to the Committee on Appropriations of the

21 House of Representative and the Committee on Ap22 propriations of the Senate upon the request of each

23 Committee.

24 (c) INFORMATION SHARING.—The Commissioner of

25 the Bureau of Labor Statistics may secure directly from
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1 the Secretary of Commerce information necessary for pur2 poses of calculating the Consumer Price Index. Upon re3 quest of the Commissioner of the Bureau of Labor Statis4 tics, the Secretary of Commerce shall furnish that infor5 mation to the Commissioner.

6 (d) ADMINISTRATIVE ADVISORY COMMITTEE.—The

7 Bureau of Labor Statistics shall, in consultation with the

8 National Bureau of Economic Research, the American

9 Economic Association, and the National Academy of Stat10 isticians, establish an administrative advisory committee.

11 The advisory committee shall periodically advise the Bu12 reau of Labor Statistics regarding revisions of the Con13 sumer Price Index and conduct research and experimen14 tation with alternative data collection and estimating ap15 proaches.

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

17 OF BENEFITS.—Section 215(i)(1) of the Social Security

18 Act (42 U.S.C. 415(i)(1)) is amended—

19 (1) by striking ‘‘Consumer Price Index’’ each

20 place it occurs and inserting ‘‘Social Security Con21 sumer Price Index’’;

22 (2) in subparagraph (D), by striking ‘‘(as pre23 pared by the Department of Labor)’’; and

24 (3) in subparagraph (G), by striking the period

25 at the end and inserting ‘‘; and’’;
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1 (4) by adding at the end the following:

2 ‘‘(H) the term ‘Social Security Consumer Price

3 Index’, for a month in any year after 1999, means

4 the Consumer Price Index for such month (as pre5 pared by the Department of Labor), reflecting ad6 justments to the annual rate of growth in such index

7 equal to the greater of—

8 ‘‘(i) the excess of 0.5 percentage points

9 over the achieved bias correction (as last pub10 lished by the Secretary of Labor pursuant to

11 section 211(a)(1) of the Strengthening Social

12 Security Act of 1998), or

13 ‘‘(ii) the upper level substitution bias (as

14 last published by the Secretary of Labor pursu15 ant to section 211(a)(2) of the Strengthening

16 Social Security Act of 1998).’’.

17 SEC. 10. PHASED REDUCTION IN SPOUSAL BENEFITS

18 OTHER THAN SURVIVOR’S BENEFITS TO 33

19 PERCENT OF PRIMARY INSURANCE AMOUNT.

20 (a) WIFE’S INSURANCE BENEFITS.—Section

21 202(b)(2) of the Social Security Act (42 U.S.C. 402(b)(2))

22 is amended to read as follows:

23 ‘‘(2)(A) Except as provided in subsection (q) and

24 paragraph (4) of this subsection, such wife’s insurance

25 benefit for each month shall be equal to the applicable per-
43

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1 centage of the primary insurance amount of her husband

2 (or, in the case of a divorced wife, her former husband)

3 for the calendar year in which such individual becomes eli4 gible for such benefit.

5 ‘‘(B) For purposes of subparagraph (A), the applica6 ble percentage for any calendar year shall be equal to 50

7 percent, reduced (but not below 33 percent) by 1 percent8 age point for each year after 1999.

9 ‘‘(C) For purposes of subparagraph (A)—

10 ‘‘(i) an individual shall be treated as eligible for

11 a wife’s insurance benefit if such individual meets

12 the requirements of subparagraphs (B), (C), and

13 (D) of paragraph (1), and

14 ‘‘(ii) in determining when an individual becomes

15 eligible for a wife’s insurance benefit, any break in

16 eligibility of less than 12 consecutive months shall

17 not be taken into account.’’.

18 (b) HUSBAND’S INSURANCE BENEFITS.—Section

19 202(c)(3) of the Social Security Act (42 U.S.C. 402(c)(3))

20 is amended to read as follows:

21 ‘‘(3)(A) Except as provided in subsection (q) and

22 paragraph (2) of this subsection, such husband’s insur23 ance benefit for each month shall be equal to the applica24 ble percentage (as determined under subsection (b)(2)(B))

25 of the primary insurance amount of his wife (or, in the
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1 case of a divorced husband, his former wife) for the cal2 endar year in which such individual becomes eligible for

3 such benefit.

4 ‘‘(B) For purposes of subparagraph (A)—

5 ‘‘(i) an individual shall be treated as eligible for

6 a husband’s insurance benefit if such individual

7 meets the requirements of subparagraphs (B), (C),

8 and (D) of paragraph (1), and

9 ‘‘(ii) in determining when an individual becomes

10 eligible for a husband’s insurance benefit, any break

11 in eligibility of less than 12 consecutive months shall

12 not be taken into account.’’.

13 SEC. 11. ADJUSTMENT TO UPPER 2 BENEFIT FORMULA

14 FACTORS.

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

16 U.S.C. 415(a)(1)(B)) is amended—

17 (1) by redesignating clause (iii) as clause (iv);

18 and

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

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

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

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

23 after 2002, each of the amounts otherwise established for

24 purposes of clauses (ii) and (iii) of subparagraph (A)

25 under this subparagraph shall be multiplied the applicable
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1 number of times by .98. For purposes of the preceding

2 sentence, the term ‘applicable number of times’ means a

3 number equal to the lesser of 20 or the number of years

4 beginning with 2003 and ending with the year of initial

5 eligibility or death.’’

6 SEC. 12. PHASED-IN INCREASE IN SOCIAL SECURITY RE7 TIREMENT AGES.

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

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

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

11 (B), (C), (D), and (E) and inserting the following:

12 ‘‘(B)(i) with respect to an individual who

13 attains 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, 2029,

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 bene21 fit, age 60),

22 ‘‘(ii) 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, 2028, 70 years of age, and
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1 ‘‘(iii) 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, 2029, 70 years of age plus 1 4 ⁄18 of

5 the number of months in the period beginning

6 with January 2030 and ending with December

7 of the year in which the individual attains age

8 62 (or in the case of a widow’s or widower’s in9 surance benefit, age 60) (rounded down to a

10 full month).’’; and

11 (2) by striking paragraph (3).

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

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

14 to read as follows:

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

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

17 husband’s insurance benefit, except as provided

18 in subparagraph (B), age 62, and

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

20 insurance benefit, age 60;

21 ‘‘(B)(i) with respect to an individual who

22 attains age 62 after December 31, 2011, and

23 before January 1, 2029, 62 years of age plus

2 24 ⁄12 of the number of months in the period be25 ginning with January 2012 and ending with
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1 December of the year in which the individual

2 attains age 62,

3 ‘‘(ii) with respect to an individual who at4 tains age 62 after December 31, 2028, 65 years

5 of age, and

6 ‘‘(iii) with respect to an individual who at7 tains age 62 after December 31, 2029, 65 years

of age plus 1 8 ⁄18 of the number of months in the

9 period beginning with January 2030 and ending

10 with December of the year in which the individ11 ual attains age 62 (rounded down to a full

12 month); and

13 SEC. 13. MECHANISM FOR REMEDYING UNFORESEEN DETE14 RIORATION IN SOCIAL SECURITY SOLVENCY.

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

16 Act (42 U.S.C. 910) is amended—

17 (1) by redesignating subsection (b) as sub18 section (c); and

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

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

21 Trust Fund’’ and inserting the following:

22 ‘‘SEC. 709. (a)(1)(A) If the Board of Trustees of the

23 Federal Old-Age and Survivors Insurance Trust Fund and

24 the Federal Disability Insurance Trust Fund determines

25 at any time, using intermediate actuarial assumptions,
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1 that the balance ratio of either such Trust Fund for any

2 calendar year during the succeeding period of 75 calendar

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

4 House of the Congress and to the President a report set5 ting forth its recommendations for statutory adjustments

6 affecting the receipts and disbursements of such Trust

7 Fund necessary to maintain the balance ratio of such

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

9 to the economic conditions which created such inadequacy

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

11 alleviate such inadequacy in a prudent manner. The report

12 shall set forth specifically the extent to which benefits

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

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

15 to be increased, or a combination thereof, in order to ob16 tain the objectives referred to in the preceding sentence.

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

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

19 and submit to Congress and the President recommenda20 tions for statutory adjustments to the disability insurance

21 program under title II of this Act to modify the changes

22 in disability benefits under the Strengthening Social Secu23 rity Act of 1998 without reducing the balance ratio of the

24 Federal Disability Insurance Trust Fund. The Board shall

25 develop such recommendations in consultation with the
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1 National Council on Disability, taking into consideration

2 the adequacy of benefits under the program, the relation3 ship of such program with old age benefits under such

4 title, and changes in the process for determining initial

5 eligibility and reviewing continued eligibility for benefits

6 under such program.

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

8 after the submission of the report to the President, trans9 mit to the Board and to the Congress a report containing

10 the President’s approval or disapproval of the Board’s rec11 ommendations.

12 ‘‘(B) If the President approves all the recommenda13 tions of the Board, the President shall transmit a copy

14 of such recommendations to the Congress as the Presi15 dent’s recommendations, together with a certification of

16 the President’s adoption of such recommendations.

17 ‘‘(C) If the President disapproves the recommenda18 tions of the Board, in whole or in part, the President shall

19 transmit to the Board and the Congress the reasons for

20 that disapproval. The Board shall then transmit to the

21 Congress and the President, no later than 60 days after

22 the date of the submission of the original report to the

23 President, a revised list of recommendations.

24 ‘‘(D) If the President approves all of the revised rec25 ommendations of the Board transmitted to the President
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1 under subparagraph (C), the President shall transmit a

2 copy of such revised recommendations to the Congress as

3 the President’s recommendations, together with a certifi4 cation of the President’s adoption of such recommenda5 tions.

6 ‘‘(E) If the President disapproves the revised rec7 ommendations of the Board, in whole or in part, the Presi8 dent shall transmit to the Board and the Congress the

9 reasons for that disapproval, together with such revisions

10 to such recommendations as the President determines are

11 necessary to bring such recommendations within the

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

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

14 the Congress as the President’s recommendations, to15 gether with a certification of the President’s adoption of

16 such recommendations.

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

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

19 the Senate and the House of Representatives, re20 spectively, and as such it is deemed a part of the

21 rules of each House, respectively, but applicable only

22 with respect to the procedure to be followed in that

23 House in the case of a joint resolution described in

24 subparagraph (B), and it supersedes other rules only
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1 to the extent that it is inconsistent with such rules;

2 and

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

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

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

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

7 the case of any other rule of that House.

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

9 resolution’ means only a joint resolution which is intro10 duced within the 10-day period beginning on the date on

11 which the President transmits the President’s rec12 ommendations, together with the President’s certification,

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

14 paragraph (2), and—

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

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

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

18 recommendations of the President as transmitted on

19 ll pursuant to section 709(a) of the Social Secu20 rity Act, as follows: llll’, the first blank space

21 being filled in with the appropriate date and the sec22 ond blank space being filled in with the statutory ad23 justments contained in the recommendations; and
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1 ‘‘(iii) the title of which is as follows: ‘Joint reso2 lution approving the recommendations of the Presi3 dent regarding social security.’.

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

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

6 shall be referred to the Committee on Ways and Means

7 of the House of Representatives. A joint resolution de8 scribed in subparagraph (B) introduced in the Senate

9 shall be referred to the Committee on Finance of the Sen10 ate.

11 ‘‘(D) If the committee to which a joint resolution de12 scribed in subparagraph (B) is referred has not reported

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

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

15 which the President transmits the recommendation to the

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

17 at the end of such period, discharged from further consid18 eration of such joint resolution, and such joint resolution

19 shall be placed on the appropriate calendar of the House

20 involved.

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

22 which the committee to which such a joint resolution is

23 referred has reported, or has been discharged (under sub24 paragraph (D)) from further consideration of, such a joint

25 resolution, it is in order (even though a previous motion
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1 to the same effect has been disagreed to) for any Member

2 of the respective House to move to proceed to the consider3 ation of the joint resolution. A Member may make the mo4 tion only on the day after the calendar day on which the

5 Member announces to the House concerned the Member’s

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

7 the House of Representatives, the motion may be made

8 without such prior announcement if the motion is made

9 by direction of the committee to which the joint resolution

10 was referred. All points of order against the joint resolu11 tion (and against consideration of the joint resolution) are

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

13 Representatives and is privileged in the Senate and is not

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

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

16 consideration of other business. A motion to reconsider the

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

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

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

20 shall immediately proceed to consideration of the joint res21 olution without intervening motion, order, or other busi22 ness, and the joint resolution shall remain the unfinished

23 business of the respective House until disposed of.

24 ‘‘(ii) Debate on the joint resolution, and on all debat25 able motions and appeals in connection therewith, shall be
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1 limited to not more than 2 hours, which shall be divided

2 equally between those favoring and those opposing the

3 joint resolution. An amendment to the joint resolution is

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

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

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

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

8 to reconsider the vote by which the joint resolution is

9 agreed to or disagreed to is not in order.

10 ‘‘(iii) Immediately following the conclusion of the de11 bate on a joint resolution described in subparagraph (B)

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

13 if requested in accordance with the rules of the appro14 priate House, the vote on final passage of the joint resolu15 tion shall occur.

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

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

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

19 relating to a joint resolution described in subparagraph

20 (B) shall be decided without debate.

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

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

23 that House receives from the other House a joint resolu24 tion described in subparagraph (B), then the following

25 procedures shall apply:
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1 ‘‘(I) The joint resolution of the other House

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

3 considered in the House receiving it except in the

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

5 ‘‘(II) With respect to a joint resolution de6 scribed in subparagraph (B) of the House receiving

7 the joint resolution, the procedure in that House

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

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

10 passage shall be on the joint resolution of the other

11 House.

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

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

14 consider the joint resolution that originated in the receiv15 ing House.

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

17 Insurance Trust Fund or the Federal Supplementary

18 Medical Insurance Trust Fund determines as any time

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

20 (b) CONFORMING AMENDMENTS.—

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

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

23 ‘‘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)’’.

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