I
107TH CONGRESS
1ST SESSION
H. R. 3497
To amend the Social Security Act and the Internal Revenue Code of 1986
to preserve and strengthen the Social Security program through the
creation of personal Social Security guarantee accounts ensuring full
benefits for all workers and their families, restoring long-term Social
Security solvency, to make certain benefit improvements, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
DECEMBER 13, 2001
Mr. SHAW (for himself, Mr. WELLER, Mr. FOLEY, and Mr. LEWIS of Ken-
tucky) introduced the following bill; which was referred to the Committee
on Ways and Means
A BILL
To amend the Social Security Act and the Internal Revenue
Code of 1986 to preserve and strengthen the Social
Security program through the creation of personal Social
Security guarantee accounts ensuring full benefits for
all workers and their families, restoring long-term Social
Security solvency, to make certain benefit improvements,
and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Social Security Guarantee Plus Act of 2001’’.
(b) TABLE OF CONTENTS.—The table of contents is
as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings and Statement of purpose.
TITLE I—SOCIAL SECURITY GUARANTEE PROGRAM
Sec. 101. Social security guarantee refundable credit.
Sec. 102. Establishment of the social security guarantee program.
‘‘PART B—SOCIAL SECURITY GUARANTEE PROGRAM
‘‘Sec. 251. Definitions.
‘‘Sec. 252. Establishment of program.
‘‘Sec. 253. Social Security guarantee accounts.
‘‘Sec. 254. Investment of accounts.
‘‘Sec. 255. Determination of monthly annuity amounts and use in deter-
mining account distribution supplements.
‘‘Sec. 256. Disposition of account assets.
‘‘Sec. 257. Administration of the program.
Sec. 103. Benefit increases.
Sec. 104. Tax treatment.
Sec. 105. Annual account Statements.
Sec. 106. Report on use of social security surpluses.
TITLE II—BENEFIT UPDATES
Sec. 201. Elimination of the social security earnings test for individuals who
have attained age 62 (age 60 in the case of widow’s and wid-
ower’s insurance benefits).
Sec. 202. Increase in widow’s and widower’s insurance benefits.
Sec. 203. Benefits for disabled widows and widowers without regard to age.
Sec. 204. Repeal of 7-year restriction on eligibility for widow’s and widower’s
insurance benefits based on disability.
Sec. 205. Exemption from two-year waiting period for divorced spouse’s bene-
fits upon other spouse’s remarriage.
Sec. 206. Increase in amount of wages and self-employment income credited to
years taken into account in determining average indexed
monthly earnings for beneficiaries precluded from remunerative
work occasioned by need to provide child care.
Sec. 207. Government pension offset reduced from two-thirds to one-third of
the government pension.
Sec. 208. Guarantee of full social security benefits with accurate annual cost-
of-living adjustment.
SEC. 2. FINDINGS AND STATEMENT OF PURPOSE.
(a) FINDINGS.—The Congress makes the following
findings:
(1) The Social Security program provides essen-
tial income security through retirement, disability,
and survivor benefits for over 45,000,000 Americans
of all ages, without which nearly 50 percent of sen-
iors would live in poverty.
(2) Social Security is of particular importance
for low earners, especially widows and women caring
for children, without which nearly 53 percent of el-
derly women would live in poverty.
(3) The Board of Trustees of the Social Secu-
rity Trust Funds project that the approaching re-
tirement of the baby boom generation will result in
the Social Security program’s benefit costs exceeding
its tax revenues beginning in 2016; by 2038 the So-
cial Security Trust Funds will be fully depleted and
the program is projected to be able to honor only 73
percent of benefit commitments.
(4) Each payday, American workers send their
hard-earned payroll taxes to Social Security and in
return are promised protection for themselves and
their families upon retirement, disability, or death,
and that commitment must be kept.
(5) Changes to Social Security’s benefit struc-
ture to maintain solvency (such as reductions in
cost-of-living adjustments or COLAs and increases
in the Social Security ‘‘normal retirement age’’
which is currently increasing from age 65 to age 67)
may weaken public support for Social Security.
(6) Workers who are in more need of earlier re-
tirement, such as police officers, firefighters, and
manual laborers, would be especially harmed by in-
creases in the age of eligibility for Social Security
benefits.
(7) Inasmuch as payroll taxes already con-
stitute the single largest tax burden for most Amer-
ican families, further tax increases would not result
in a sustainable program, would contribute to an
erosion in public support for Social Security, and
would further burden employers, especially small
businesses, harming job creation.
(8) Allowing the Federal Government to invest
workers’ payroll taxes in private financial assets in-
vites political interference in investment decisions
and may reduce economic efficiency.
(9) Workers’ ability to save and invest for their
own retirement will continue to be particularly im-
portant, especially for younger workers, to enhance
their own retirement security.
(10) Therefore, in light of Social Security’s fi-
nancial challenges, the options available to address
these challenges, and the Nation’s interest in pre-
serving and strengthening Social Security for the
coming 75 years and beyond, expanding personal re-
tirement savings through the creation of Social Se-
curity guarantee accounts as provided for in this Act
is a critical goal.
(b) STATEMENT OF PURPOSE.—The purpose of this
Act is to preserve and strengthen the Social Security pro-
gram through the creation of Social Security guarantee
accounts that will—
(1) ensure the payment of Social Security bene-
fits promised under current law or greater benefits
to all eligible workers and their families;
(2) provide for the long-run solvency and sus-
tainability of the Social Security program; and
(3) provide personal account assets to be used
exclusively for the financial security of the account
holder and his or her family, which assets future
Congresses cannot redirect for any other purpose.
TITLE I—SOCIAL SECURITY
GUARANTEE PROGRAM
SEC. 101. SOCIAL SECURITY GUARANTEE REFUNDABLE
CREDIT.
(a) IN GENERAL.—Chapter 25 of the Internal Rev-
enue Code of 1986 (relating to general provisions relating
to employment taxes) is amended by adding at the end
the following new section:
‘‘SEC. 3511. SOCIAL SECURITY GUARANTEE REFUNDABLE
CREDIT.
‘‘(a) IN GENERAL.—The Social Security guarantee
account established under section 253 of the Social Secu-
rity Act for each individual who has filed an election under
section 253(b) of such Act shall receive for each calendar
year following such election, during which such individual
has earned wages or to which self-employment income of
such individual is credited, a payment equal to the sum
of—
‘‘(1) the credit amount determined under sub-
section (b) for the individual for such calendar year,
and
‘‘(2) the credit amount (if any) determined
under subsection (c) for the individual for such cal-
endar year.
‘‘(b) SUBSECTION (b) CREDIT AMOUNT.—For pur-
poses of subsection (a)(1), the credit amount determined
under this subsection for an individual for a calendar year
is an amount equal to 3 percent of the lesser of—
‘‘(1) the sum of—
‘‘(A) wages (as defined in section 3121(a))
received by such individual during such year on
which tax is imposed by section 3101, and
‘‘(B) self-employment income (as defined
in 1402(b)) of such individual for the taxable
year of such individual ending in such calendar
year on which tax is imposed by section 1401,
or
‘‘(2) 21 percent of the contribution and benefit
base (as defined in section 230 of the Social Secu-
rity Act) as in effect for such calendar year.
‘‘(c) SUBSECTION (c) CREDIT AMOUNT.—For pur-
poses of subsection (a)(2), the credit amount determined
under this subsection for an individual for a calendar year
is an amount equal to 2 percent of the excess (if any)
of—
‘‘(1) the sum described in subsection (b)(1),
over
‘‘(2) the amount described in subsection (b)(2).
‘‘(d) SPECIAL RULES.—
‘‘(1) AGREEMENTS BY AMERICAN EMPLOYERS
OF FOREIGN AFFILIATES.—Any amounts paid pur-
suant to an agreement under section 3121(l) (relat-
ing to agreements entered into by American employ-
ers with respect to foreign affiliates) which are
equivalent to the taxes referred to in subsection
(b)(1)(A) shall be treated as taxes referred to in
such subsection.
‘‘(2) COORDINATION WITH SPECIAL REFUND OF
SOCIAL
SECURITY
TAXES.—For purposes of sub-
section (b)(1)(A), tax imposed by section 3101 shall
not include any taxes to the extent the individual is
entitled to a special refund of such taxes under sec-
tion 6413(c).
‘‘(e) PAYMENT.—Notwithstanding any other provi-
sion of this title, the payment under subsection (a) shall
be paid only as provided in section 253 of the Social Secu-
rity Act.’’.
(b) CONFORMING AMENDMENT.—The table of sec-
tions for chapter 25 of such Code is amended by adding
at the end the following new item:
‘‘Sec. 3511. Social Security guarantee refundable credit.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to remuneration received, and net
earnings for self-employment for services performed, in
calendar years ending after the date of the enactment of
this Act.
SEC. 102. ESTABLISHMENT OF THE SOCIAL SECURITY
GUARANTEE PROGRAM.
(a) IN GENERAL.—Title II of the Social Security Act
is amended—
(1) by inserting before section 201 the fol-
lowing:
‘‘PART A—INSURANCE BENEFITS’’;
and
(2) by adding at the end of such title the fol-
lowing new part:
‘‘PART B—SOCIAL SECURITY GUARANTEE PROGRAM
‘‘DEFINITIONS
‘‘SEC. 251. For purposes of this part—
‘‘(1) COVERED
INDIVIDUAL.—The term ‘cov-
ered individual’ means an individual who has filed
an election under section 253(b).
‘‘(2) ACCOUNT ASSETS.—The term ‘account as-
sets’ means, with respect to a Social Security guar-
antee account, the total amount transferred to such
account, increased by earnings credited under this
part and reduced by losses and administrative ex-
penses under this part.
‘‘(3) CERTIFIED
ACCOUNT
MANAGER.—The
term ‘certified account manager’ means a person
who is certified under section 257(b).
‘‘(4) BOARD.—The term ‘Board’ means the So-
cial Security Guarantee Board established under sec-
tion 257(a).
‘‘(5) 
COMMISSIONER.—The 
term 
‘Commis-
sioner’ means the Commissioner of Social Security.
‘‘(6) PROGRAM.—The term ‘Program’ means
the Social Security Guarantee Program established
under this part.
‘‘(7) COVERED
MONTHLY
INSURANCE
BEN-
EFIT.—The term ‘covered monthly insurance benefit’
means a monthly insurance benefit under section
202 or 223, other than a child’s insurance benefit
under section 202(d) of a child who has not attained
age 18 (or who is a full-time elementary or sec-
ondary school student (as defined in section
202(d)(7)(A)) and has not attained age 19).
‘‘ESTABLISHMENT OF PROGRAM
‘‘SEC. 252. There is hereby established a Social Secu-
rity Guarantee Program. The Program shall be governed
by regulations which shall be prescribed by the Social Se-
curity Guarantee Board. The Board, the Executive Direc-
tor appointed by the Board, the Commissioner, and the
Secretary of the Treasury shall consult with each other
in issuing regulations relating to their respective duties
under this part. Such regulations shall provide for appro-
priate exchange of information to assist them in per-
forming their duties under this part.
‘‘SOCIAL SECURITY GUARANTEE ACCOUNTS
‘‘SEC. 253. (a) ESTABLISHMENT OF ACCOUNTS.—
Under regulations which shall be prescribed by the Board
in consultation with the Secretary of the Treasury—
‘‘(1) the Board shall establish a Social Security
guarantee account for each covered individual (for
whom a Social Security guarantee account has not
otherwise been established under this part) upon ini-
tial receipt of a transfer under subsection (c) with
respect to such covered individual, and
‘‘(2) in any case described in paragraph (2) of
section 256(d), the Board shall establish a Social
Security guarantee account for the divorced spouse
referred to in such paragraph (2).
‘‘(b) ELECTION
OF STATUS
AS COVERED INDI-
VIDUAL.—
‘‘(1) IN GENERAL.—Any individual who has at-
tained age 18 and has been assigned a social secu-
rity account number under section 205(c) may elect
to be a covered individual under this part upon filing
an election under this subsection in a form and man-
ner which shall be prescribed in regulations of the