I
107TH CONGRESS
1ST SESSION
H. R. 1320
To amend title II of the Social Security Act to establish an effective real
annual rate of interest at 6 percent for special obligations issued to
the Social Security trust funds.
IN THE HOUSE OF REPRESENTATIVES
MARCH 29, 2001
Mr. SABO introduced the following bill; which was referred to the Committee
on Ways and Means
A BILL
To amend title II of the Social Security Act to establish
an effective real annual rate of interest at 6 percent
for special obligations issued to the Social Security trust
funds.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Preserving Social Se-
curity Act of 2001.’’
SEC. 2. INTEREST BORNE BY, AND INCREASES IN PAR
VALUE OF, SPECIAL OBLIGATIONS ISSUED TO
THE SOCIAL SECURITY TRUST FUNDS.
Section 201(d) of the Social Security Act (42 U.S.C.
401(d)) is amended—
(1) by inserting ‘‘(1)’’ after ‘‘(d)’’;
(2) by striking the fifth sentence and inserting
the following new sentences: ‘‘Such obligations
issued for purchase by the Trust Funds shall have
maturities fixed with due regard for the needs of the
Trust Funds and shall bear interest at an effective
annual rate equal to 6 percent, which shall be paid
to the Trust Funds semiannually. On June 30 and
December 31 of each calendar year, and (with re-
spect to each obligation) on its date of maturity (or
date of redemption, if prior to maturity), the Man-
aging Trustee shall adjust (subject to paragraph
(2)) the par value of each obligation then held by ei-
ther of the Trust Funds and issued for purchase by
such Trust Fund so as to equal the product derived
by multiplying the current par value as of imme-
diately before the applicable date by the CPI adjust-
ment factor (defined in paragraph (3)(A)) for the
obligation in connection with the month in which the
applicable date occurs (rounded, if not a multiple of
$0.01, to the nearest multiple of $0.01).’’; and
(3) by adding at the end the following new
paragraphs:
‘‘(2)(A) In any case in which the number of days in
the actual adjustment period (defined in subparagraph
(B)(i)) for an obligation differs from the number of days
in the computation period (defined in subparagraph
(B)(ii)) for the obligation, the amount by which the par
value of an obligation is adjusted pursuant to paragraph
(1) shall be an amount which bears the same ratio to the
amount that would otherwise apply under paragraph (1)
as the number of days in the actual adjustment period
bears to the number of days in the computation period.
‘‘(B) For purposes of subparagraph (A)—
‘‘(i) The term ‘actual adjustment period’ for an
obligation means the period beginning with—
‘‘(I) the date following the date of the last
previous adjustment in the par value of the ob-
ligation under paragraph (1), or
‘‘(II) if no such adjustment in the par
value of the obligation has occurred, the date of
the issuance of the obligation,
and ending with the date of the increase in par value
to be determined under paragraph (1).
‘‘(ii) The term ‘computation period’ for an obli-
gation means the period beginning with the date fol-
lowing the adjustment reference month (defined in
paragraph (3)(C)) for the obligation and ending with
the last date of the adjustment computation month
(defined in paragraph (3)(B)) for the obligation.
‘‘(3) For purposes of this subsection—
‘‘(A) The term ‘CPI adjustment factor’, for an
obligation in connection with any calendar month,
means the ratio (expressed as a percentage) of—
‘‘(i) the Consumer Price Index for the ad-
justment computation month for the obligation
in connection with such calendar month to
‘‘(ii) the Consumer Price Index for the ad-
justment reference month for the obligation in
connection with such calendar month.
‘‘(B) The term ‘adjustment computation month’
for an obligation means, in connection with a month
in which occurs the date of an adjustment in par
value of the obligation to be determined under para-
graph (1), the first of the 2 preceding calendar
months.
‘‘(C) The term ‘adjustment reference month’
for an obligation means, in connection with a month
in which occurs the date of an adjustment in par
value of the obligation to be determined under para-
graph (1)—
‘‘(i) the last adjustment computation
month with respect to which an adjustment in
par value of the obligation under paragraph (1)
has occurred, or
‘‘(ii) if no such adjustment in the par value
of the obligation has occurred, the first of the
2 months preceding the month in which such
obligation was issued.
‘‘(D) The term ‘Consumer Price Index’ means
the Consumer Price Index for Urban Wage Earners
and Clerical Workers (CPI-W), issued by the Bureau
of Labor Statistics of the Department of Labor.’’.
SEC. 3. EFFECTIVE DATE AND TRANSITIONAL RULE.
(a) EFFECTIVE DATE.—The amendments made by
this Act shall apply with respect to special obligations
issued on or after January 1, 2002.
(b) TRANSITIONAL RULE.—On January 1, 2002, the
Secretary of the Treasury shall redeem all obligations
which are held on such date by the Federal Old-Age and
Survivors Insurance Trust Fund and the Federal Dis-
ability Insurance Trust Fund and which were issued for
purchase by the Trust Funds pursuant to section 201(d)
of the Social Security Act. Upon the redemption of each
such obligation, such Secretary shall immediately issue an
obligation of the type authorized to be issued for purchase