I

103D CONGRESS

1ST SESSION H. R. 2512

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

JUNE 23, 1993

Mr. SOLOMON introduced the following bill; which was referred jointly to the

Committees on Ways and Means and Energy and Commerce

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.

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

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

3 Funds Integrity Act of 1993’’.

4 SEC. 2. INDEPENDENT MANAGING TRUSTEE AND BOARD OF

5 TRUSTEES.

6 (a) IN GENERAL.—Section 201(c) of the Social Secu7 rity Act is amended—

8 (1) in the seventh sentence, by redesignating

9 paragraphs (1), (2), (3), (4), and (5) as subpara10 graphs (A), (B), (C), (D), and (E), respectively, and

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

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

13 seventh sentence and inserting the following:

14 ‘‘(c)(1) With respect to the Federal Old-Age and Sur15 vivors Insurance Trust Fund and the Federal Disability

16 Insurance Trust Fund (hereinafter in this title referred

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

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

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

20 The Board of Trustees shall be composed of—

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

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

23 as follows:

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

25 account recommendations by the Speaker of the

26 House of Representatives;
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1 ‘‘(ii) 2 shall be appointed after taking into

2 account recommendations by the President pro

3 tempore of the Senate;

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

5 account recommendations by the Minority

6 Leader of the House of Representatives;

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

8 account recommendations by the Minority

9 Leader of the Senate; and

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

11 account recommendations by private organiza12 tions determined by the President to consist of

13 the 5 largest such organizations representing

14 the interests of senior citizens in the United

15 States; and

16 ‘‘(B) the Managing Trustee of the Social Secu17 rity Trust Funds appointed under paragraph (3)

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

19 Trustee’).

20 The Managing Trustee shall serve as Chair of the Board

21 of Trustees. The Commissioner of Social Security shall

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

23 of Trustees shall meet not less frequently than once each

24 calendar year.
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1 ‘‘(2)(A) Of the members of the Board of Trustees ap2 pointed under paragraph (1)(A), not more than 5 shall

3 be of the same political party.

4 ‘‘(B) The members of the Board of Trustees ap5 pointed under paragraph (1)(A) shall serve for a term of

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

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

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

9 ending December 31, 1996, and the other individual ap10 pointed under each of such clauses shall serve for a term

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

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

13 such a member of the Board of Trustees after the expira14 tion of his or her term until his or her successor has taken

15 office. An individual appointed to fill a vacancy occurring

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

17 appointed only for the unexpired term of the individual

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

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

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

21 Speaker of the House of Representatives and the Presi22 dent pro tempore of the Senate.

23 ‘‘(C) Each member of the Board of Trustees ap24 pointed under paragraph (1)(A) shall receive compensa25 tion at the daily equivalent of the rate payable for level
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1 IV of the Executive Schedule under section 5314 of title

2 5, United States Code, for each day on which such mem3 ber is engaged in the performance of his or her duties on

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

5 for the actual and necessary expenses incurred by him or

6 her in the performance of his or her duties.

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

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

9 Senate.

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

11 of four years, except that the first individual appointed

12 as Managing Trustee under this paragraph shall serve for

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

14 serve as Managing Trustee after the expiration of his or

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

16 Managing Trustee. An individual appointed to fill a va17 cancy occurring other than by the expiration of a term

18 of office shall be appointed only for the unexpired term

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

20 be removed as Managing Trustee only for cause and only

21 after such cause has been reported in writing to the

22 Speaker of the House of Representatives and the Presi23 dent pro tempore of the Senate.

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

25 other business, vocation, or employment. Any individual
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1 who is engaging in any other business, vocation, or em2 ployment at the time of his or her appointment as Manag3 ing Trustee shall terminate or liquidate such activity no

4 later than 90 days after such appointment.

5 ‘‘(D) The Managing Trustee shall receive compensa6 tion at the rate payable for level III of the Executive

7 Schedule under section 5314 of title 5, United States

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

9 and necessary expenses incurred by him or her in the per10 formance of his or her duties.

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

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

13 their integrity, impartiality, and good judgment, from

14 among individuals who, by reason of their education, expe15 rience, and attainments, are exceptionally qualified to per16 form their duties prescribed under this Act and who have

17 no conflicting interest which would hinder the performance

18 of disinterested public service either in the investment of

19 either of the Trust Funds, the Federal Hospital Insurance

20 Trust Fund, or the Federal Supplementary Medical Insur21 ance Trust Fund or in the other functions and duties

22 vested in them under this Act.

23 ‘‘(5)(A) The Secretary of Health and Human Serv24 ices shall make available to the Managing Trustee and the

25 Board of Trustees, from the personnel, facilities, and serv-
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1 ices of the Department of Health and Human Services,

2 such secretarial, clerical, technical, and other assistance

3 as may be necessary or appropriate to the performance

4 of their duties.

5 ‘‘(B) The Secretary of Health and Human Services

6 and the Secretary of the Treasury shall make available

7 to the Managing Trustee and the Board of Trustees such

8 information and data held by their Departments as may

9 be necessary or appropriate to the performance of the du10 ties of the Managing Trustee and the Board of Trustees.

11 ‘‘(6) It shall be the duty’’.

12 (b) CONFORMING AMENDMENTS.—

13 (1) FEDERAL HOSPITAL INSURANCE TRUST

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

15 (A) in the seventh sentence, by redesignat16 ing paragraphs (1), (2), (3), and (4) as sub17 paragraphs (A), (B), (C), and (D), respectively,

18 and

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

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

21 in the seventh sentence and inserting the follow22 ing:

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

24 hereby created a body to be known as the Board of Trust25 ees of the Trust Fund (hereinafter in this section referred
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1 to as the ‘Board of Trustees’). The Board of Trustees

2 shall be composed of—

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

4 Board of Trustees of the Federal Old-Age and Sur5 vivors Insurance Trust Fund and the Federal Dis6 ability Insurance Trust Fund under section

7 201(c)(1)(A), and

8 ‘‘(B) the Managing Trustee of the Social Secu9 rity Trust Funds (hereinafter in this section referred

10 to as the ‘Managing Trustee’) appointed under sec11 tion 201(c)(2).

12 The Managing Trustee shall serve as Chair of the Board

13 of Trustees. The Commissioner of Social Security shall

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

15 of Trustees shall meet not less frequently than once each

16 calendar year. The Managing Trustee and the other mem17 bers of the Board of Trustees shall serve under this sub18 section without compensation in addition to compensation

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

20 ‘‘(3) It shall be the duty’’.

21 (2) FEDERAL SUPPLEMENTARY MEDICAL IN22 SURANCE TRUST FUND.—Section 1841(b) of such

23 Act is amended—

24 (A) in the seventh sentence, by redesignat25 ing paragraphs (1), (2), (3), and (4) as sub-
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1 paragraphs (A), (B), (C), and (D), respectively,

2 and

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

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

5 in the seventh sentence and inserting the follow6 ing:

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

8 hereby created a body to be known as the Board of Trust9 ees of the Trust Fund (hereinafter in this section referred

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

11 shall be composed of—

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

13 Board of Trustees of the Federal Old-Age and Sur14 vivors Insurance Trust Fund and the Federal Dis15 ability Insurance Trust Fund under section

16 201(c)(1)(A), and

17 ‘‘(B) the Managing Trustee of the Social Secu18 rity Trust Funds (hereinafter in this section referred

19 to as the ‘Managing Trustee’) appointed under sec20 tion 201(c)(2).

21 The Managing Trustee shall serve as Chair of the Board

22 of Trustees. The Commissioner of Social Security shall

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

24 of Trustees shall meet not less frequently than once each

25 calendar year. The Managing Trustee and the other mem-
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1 bers of the Board of Trustees shall serve under this sub2 section without compensation in addition to compensation

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

4 ‘‘(3) It shall be the duty’’.

5 (c) EFFECTIVE DATE AND TRANSITIONAL RULES.—

6 The amendments made by this section shall take effect

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

8 Secretary of the Treasury shall continue to serve as Man9 aging Trustee of the Social Security Trust Funds and the

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

11 1817(b), and 1841(b) of the Social Security Act (as in

12 effect immediately before such date) shall continue to

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

14 which all individuals initially appointed under section

15 201(c) of such Act (as amended by this section) take

16 office.

17 SEC. 3. INVESTMENT OF THE SOCIAL SECURITY TRUST

18 FUNDS PURSUANT TO ANNUAL INVESTMENT

19 PLAN.

20 (a) FEDERAL OLD-AGE AND SURVIVORS INSURANCE

21 TRUST FUND AND FEDERAL DISABILITY INSURANCE

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

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

24 that follows through ‘‘Such investments’’ and inserting the

25 following:
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1 ‘‘(d)(1)(A) It shall be the duty of the Managing

2 Trustee to invest amounts in the Trust Funds in such

3 manner and to such extent as is determined by the Manag4 ing Trustee to be in accordance with the annual invest5 ment plan submitted by the Board of Trustees pursuant

6 to this paragraph.

7 ‘‘(B) The Board of Trustees shall conduct a continu8 ing study and actuarial analysis of the status of the invest9 ments made by the Managing Trustee pursuant to this

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

11 shall, on or before August 1 of each calendar year, formu12 late and submit to the President and each House of the

13 Congress an investment plan to govern the investments

14 of the Trust Funds during the fiscal year beginning with

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

16 may, from time to time thereafter, submit amendments

17 to the annual investment plan in the manner in which

18 original annual investment plans are submitted, except

19 that each such amendment shall not be effective before

20 60 days after its submission.

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

22 standards governing the investment and disinvestment of

23 the Trust Funds which are appropriate to ensure that the

24 insurance program under this title will to the maximum

25 extent possible fulfill its intended purposes and meet the
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1 needs for which it is designed in a fiscally and actuarially

2 sound manner, without being influenced or characterized

3 by budgetary or fiscal considerations irrelevant to the

4 Trust Funds or by partisan or political considerations.

5 Such plan shall be accompanied by any recommendations

6 of the Board of Trustees regarding the investment of the

7 Trust Funds, including appropriate technical legislative

8 language for any necessary modifications in the provisions

9 of this title relating to matters covered by such

10 recommendations.

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

12 House of the Congress (and any amendment thereto), to13 gether with accompanying recommendations of the Board

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

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

16 of the House of Representatives if the House of Rep17 resentatives is not in session and to the Secretary of the

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

19 shall be printed as a document for each House.

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

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

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

23 obligations at the market price.

24 ‘‘(2) The purposes for which’’.
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1 (b) FEDERAL HOSPITAL INSURANCE TRUST

2 FUND.—Section 1817(c) of such Act is amended by strik3 ing ‘‘(c) It shall be the duty’’ and all that follows through

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

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

6 Trustee to invest amounts in the Trust Fund in such man7 ner and to such extent as is determined by the Managing

8 Trustee to be in accordance with the annual investment

9 plan submitted by the Board of Trustees pursuant to this

10 paragraph.

11 ‘‘(B) The Board of Trustees shall conduct a continu12 ing study and actuarial analysis of the status of the invest13 ments made by the Managing Trustee pursuant to this

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

15 shall, on or before August 1 of each calendar year, formu16 late and submit to the President and each House of the

17 Congress an investment plan to govern the investments

18 of the Trust Fund during the fiscal year beginning with

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

20 may, from time to time thereafter, submit amendments

21 to the annual investment plan in the manner in which

22 original annual investment plans are submitted, except

23 that each such amendment shall not be effective before

24 60 days after its submission.
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1 ‘‘(C) Each annual investment plan shall set forth

2 standards governing the investment and disinvestment of

3 the Trust Fund which are appropriate to ensure that the

4 insurance program under this title will to the maximum

5 extent possible fulfill its intended purposes and meet the

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

7 sound manner, without being influenced or characterized

8 by budgetary or fiscal considerations irrelevant to the

9 Trust Fund or by partisan or political considerations.

10 Such plan shall be accompanied by any recommendations

11 of the Board of Trustees regarding the investment of the

12 Trust Fund, including appropriate technical legislative

13 language for any necessary modifications in the provisions

14 of this title relating to matters covered by such rec15 ommendations.

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

17 House of the Congress (and any amendment thereto), to18 gether with accompanying recommendations of the Board

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

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

21 of the House of Representatives if the House of Rep22 resentatives is not in session and to the Secretary of the

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

24 shall be printed as a document for each House.
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1 ‘‘(E) For purposes of making investments under this

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

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

4 obligations at the market price.

5 ‘‘(2) The purposes for which’’.

6 (c) FEDERAL SUPPLEMENTARY MEDICAL INSUR7 ANCE TRUST FUND.—Section 1841(c) of such Act is

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

9 that follows through ‘‘The purposes for which’’ and insert10 ing the following:

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

12 Trustee to invest amounts in the Trust Fund in such man13 ner and to such extent as is determined by the Managing

14 Trustee to be in accordance with the annual investment

15 plan submitted by the Board of Trustees pursuant to this

16 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 Fund during the fiscal year beginning with

25 October 1 of such calendar year. The Board of Trustees
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1 may, from time to time thereafter, submit amendments

2 to the annual investment plan in the manner in which

3 original annual investment plans are submitted, except

4 that each such amendment shall not be effective before

5 60 days after its submission.

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

7 standards governing the investment and disinvestment of

8 the Trust Fund which are appropriate to ensure that the

9 insurance program under this title will to the maximum

10 extent possible fulfill its intended purposes and meet the

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

12 sound manner, without being influenced or characterized

13 by budgetary or fiscal considerations irrelevant to the

14 Trust Fund or by partisan or political considerations.

15 Such plan shall be accompanied by any recommendations

16 of the Board of Trustees regarding the investment of the

17 Trust Fund, including appropriate technical legislative

18 language for any necessary modifications in the provisions

19 of this title relating to matters covered by such rec20 ommendations.

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

22 House of the Congress (and any amendment thereto), to23 gether with accompanying recommendations of the Board

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

25 each House. Such message shall be delivered to the Clerk
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1 of the House of Representatives if the House of Rep2 resentatives is not in session and to the Secretary of the

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

4 shall be printed as a document for each House.

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

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

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

8 obligations at the market price.

9 ‘‘(2) The purposes for which’’.

10 SEC. 4. GREATER DISCRETION IN INVESTMENT OF THE SO11 CIAL SECURITY TRUST FUNDS.

12 (a) FEDERAL OLD-AGE AND SURVIVORS INSURANCE

13 TRUST FUND AND FEDERAL DISABILITY INSURANCE

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

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

16 by striking the last sentence and inserting the following:

17 ‘‘The Managing Trustee may purchase such obligations

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

19 at the market price, and sell such obligations, if the Man20 aging Trustee determines that such purchase or sale is

21 in the public interest and in accordance with the annual

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

23 (b) FEDERAL HOSPITAL INSURANCE TRUST

24 FUND.—Section 1817(c) of such Act (as amended by sec25 tion 3 of this Act) is further amended by striking the last
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1 sentence and inserting the following: ‘‘The Managing

2 Trustee may purchase such obligations and other interest3 bearing obligations, on original issue or at the market

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

5 determines that such purchase or sale is in the public in6 terest and in accordance with the annual investment plan

7 of the Board of Trustees.’’.

8 (c) FEDERAL SUPPLEMENTARY MEDICAL INSUR9 ANCE TRUST FUND.—Section 1841(c) of such Act (as

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

11 striking the last sentence and inserting in lieu thereof the

12 following: ‘‘The Managing Trustee may purchase such ob13 ligations and other interest-bearing obligations, on original

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

15 the Managing Trustee determines that such purchase or

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

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

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

19 this section shall take effect October 1, 1993.

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