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graph (2)) after December 31, 1999, and before
January 1, 2029, 65 years of age plus 2⁄12 of the
number of months in the period beginning with Jan-
uary 2000 and ending with December of the year in
which the individual attains early retirement age (as
so determined); and
‘‘(C) with respect to an individual who attains
early retirement age (as so determined) after De-
cember 31, 2028, 70 years of age.; and
(2) by striking paragraph (3).
SEC. 606. LIMITATION IN COST-OF-LIVING ADJUSTMENTS.
(a) REDUCTION IN INCREASES APPLIED TO HIGHER
PRIMARY INSURANCE AMOUNTS.—
(1) IN GENERAL.—Section 215(i)(2)(A) of the
Social Security Act (42 U.S.C. 415(i)(2)(A)) is
amended—
(A) by redesignating clause (iii) as clause
(vii); and
(B) in clause (ii), by striking ‘‘The in-
crease shall’’ in the matter following subclause
(III) and all that follows through ‘‘Any in-
crease’’ and inserting the following:
‘‘(iii) With respect to the amounts described in sub-
clauses (I) and (III) of clause (ii) and primary insurance
amounts described in subclause (II) of clause (ii) of indi-
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viduals initially becoming entitled to monthly insurance
benefits based on their own wages and self-employment
income as disability insurance benefits, the increase shall
be derived by multiplying each of such amounts (including
each of those amounts as previously increased under this
subparagraph) by the applicable increase percentage.
‘‘(iv) With respect to primary insurance amounts de-
scribed in subclause (II) of clause (ii) (other than primary
insurance amounts described in clause (iii) of this sub-
paragraph), the increase shall be derived by—
‘‘(I) multiplying each of such amounts (includ-
ing each such amount as previously increased under
this subparagraph) by the applicable increase per-
centage,
‘‘(II) determining among all such amounts as
increased under subclause (I) the primary insurance
amount which is at the 30th percentile of such
amounts, and
‘‘(III) reducing each primary insurance amount
as increased under subclause (I) to the sum of such
amount determined as if there had been no reduc-
tion in such amount under this subclause in any pre-
ceding year and the amount of the increase under
subclause (I) in the primary insurance amount de-
scribed in subclause (II).
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‘‘(V) Any amount increased under clause (iii) or
clause (iv) which is not a multiple of $0.10 shall be de-
creased to the next lower multiple of $0.10.
‘‘(vi) Any increase’’.
(2) CONFORMING AMENDMENT.—The last sen-
tence of section 215(a)(4) of such Act (42 U.S.C.
415(a)(4)) is amended, in subclause (I), by striking
‘‘clause (iii) of subsection (i)(2)(A)’’ and inserting
‘‘clause (vii) of subsection (i)(2)(A)’’.
(3) CONFORMING AMENDMENTS TO MAINTAIN
CURRENT LEVELS OF COST-OF-LIVING ADJUSTMENT
UNDER OTHER PROGRAMS.—
(A) SUPPLEMENTAL
SECURITY
INCOME
FOR THE AGED, BLIND, AND DISABLED.—Sec-
tion 1617(a)(2) of the Social Security Act (42
U.S.C. 1382f(a)(2)) is amended by striking ‘‘by
the same percentage’’ and all that follows
through ‘‘percentage,’’ and inserting the follow-
ing: ‘‘by the applicable increase percentage
(within the meaning of section 215(i)(1)(C))
used in determining the amount by which bene-
fit amounts under title II are increased for such
month’’.
(B) SUPPLEMENTARY
MEDICAL
INSUR-
ANCE.—Section 1839(a)(3)(B) of such act (42
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U.S.C. 1395r(a)(3)(B)) is amended by striking
‘‘by a percentage’’ and all that follows through
‘‘November 1’’ and inserting the following: ‘‘by
the applicable increase percentage (within the
meaning of section 215(i)(1)(C)) used in deter-
mining the amount by which benefit amounts
under title II are increased for the month of
December preceding the year of the promulga-
tion’’.
(C) CERTAIN VETERAN’S BENEFITS.—Sec-
tion 3112 of title 38, United States Code, is
amended—
(i) in subsection (a), by striking ‘‘by
the same percentage by which such benefit
amounts are increased’’ and inserting ‘‘by
the applicable increase percentage (within
the meaning of section 215(i)(1)(C) of
such Act) used in determining the amount
by which such benefit amounts are in-
creased’’, and
(ii) in subsection (b)(1), by striking
‘‘by the same percentage as the percentage
by which such benefit amounts are in-
creased’’ and inserting ‘‘by the applicable
increase percentage (within the meaning of
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section 215(i)(1)(C) of such Act) used in
determining the amount by which such
benefit amounts are increased’’.
(D) COST-OF-LIVING
ADJUSTMENTS
TO
LIMITATIONS
ON
BENEFITS
AND
CONTRIBU-
TIONS UNDER QUALIFIED PLANS.—Subsection
(d) of section 415 of the Internal Revenue Code
of 1986 (relating to cost-of-living adjustments)
is amended by striking ‘‘section 215(i)(2)(A)’’
and inserting ‘‘section 215(i)(2)(A)(iii)’’.
(4) AMENDMENT TO PRIOR APPLICABLE LAW.—
Section 215(i)(4) of the Social Security Act (42
U.S.C. 415(i)(4)) is amended by adding at the end
the following new sentence: ‘‘The Secretary shall
provide by regulation for the continued application
of this subsection as in effect in December 1978 as
provided by the preceding provisions of this para-
graph and the amendments referred to therein. Such
regulations shall provide for the application of the
amendments to the preceding provisions of this sub-
section made by section 606 of the Personal Retire-
ment Accounts Act of 1997 so as to have the same
effect on the corresponding provisions of this sub-
section as in effect in December 1978 and applicable
in accordance with this paragraph.’’.
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(b) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to adjustments effec-
tive with months after November 1999.
SEC. 607. MODIFICATION OF CPI CALCULATION FOR SO-
CIAL SECURITY COLAS.
For purposes of section 215(i) of the Social Security
Act, effective for cost-of-living computation quarters oc-
curring after 1997 and before the year following the year
in which there takes effect a revision by the Bureau of
Labor Statistics in the method of computing the Con-
sumer Price Index referred to in section 215(i)(1)(D) of
such Act, the Consumer Price Index referred to in such
section 215(i)(1)(D) shall be reduced by 0.5 percentage
points.
SEC. 608. PHASED REDUCTION IN SPOUSAL BENEFITS
OTHER THAN SURVIVOR’S BENEFITS TO 33
PERCENT OF PRIMARY INSURANCE AMOUNT.
(a) 
WIFE’S
INSURANCE
BENEFITS.—Section
202(b)(2) of the Social Security Act (42 U.S.C. 402(b)(2))
is amended to read as follows:
‘‘(2)(A) Except as provided in subsection (q) and
paragraph (4) of this subsection, such wife’s insurance
benefit for each month shall be equal to the applicable per-
centage of the primary insurance amount of her husband
(or, in the case of a divorced wife, her former husband)
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in connection with the calendar year in which such individ-
ual becomes eligible for such benefit, as specified in the
following table:
‘‘If 
the 
calendar 
year 
in
which the individual be-
comes eligible is:
The 
applicable 
percentage
shall be:
Before calendar year 2000 .................................................................
Calendar year 2000 ............................................................................
Calendar year 2001 ............................................................................
Calendar year 2002 ............................................................................
Calendar year 2003 ............................................................................
Calendar year 2004 ............................................................................
Calendar year 2005 ............................................................................
Calendar year 2006 ............................................................................
Calendar year 2007 ............................................................................
Calendar year 2008 ............................................................................
Calendar year 2009 ............................................................................
Calendar year 2010 ............................................................................
Calendar year 2011 ............................................................................
Calendar year 2012 ............................................................................
Calendar year 2013 ............................................................................
Calendar year 2014 ............................................................................
Calendar year 2015 ............................................................................
After calendar year 2015 ...................................................................
33.’’.
‘‘(B) For purposes of subparagraph (A)—
‘‘(i) an individual shall be treated as eligible for
a wife’s insurance benefit if such individual meets
the requirements of subparagraphs (B), (C), and
(D) of paragraph (1), and
‘‘(ii) in determining when an individual becomes
eligible for a wife’s insurance benefit, any break in
eligibility of less than 12 consecutive months shall
not be taken into account.’’.
(b) HUSBAND’S
INSURANCE
BENEFITS.—Section
202(c)(3) of such Act (42 U.S.C. 402(c)(3)) is amended
to read as follows:
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‘‘(3)(A) Except as provided in subsection (q) and
paragraph (2) of this subsection, such husband’s insur-
ance benefit for each month shall be equal to the applica-
ble percentage of the primary insurance amount of his wife
(or, in the case of a divorced husband, his former wife)
in connection with the calendar year in which such individ-
ual becomes eligible for such benefit, as specified in the
following table:
‘‘If 
the 
calendar 
year 
in
which the individual be-
comes eligible is:
The 
applicable 
percentage
shall be:
Before calendar year 2000 .................................................................
Calendar year 2000 ............................................................................
Calendar year 2001 ............................................................................
Calendar year 2002 ............................................................................
Calendar year 2003 ............................................................................
Calendar year 2004 ............................................................................
Calendar year 2005 ............................................................................
Calendar year 2006 ............................................................................
Calendar year 2007 ............................................................................
Calendar year 2008 ............................................................................
Calendar year 2009 ............................................................................
Calendar year 2010 ............................................................................
Calendar year 2011 ............................................................................
Calendar year 2012 ............................................................................
Calendar year 2013 ............................................................................
Calendar year 2014 ............................................................................
Calendar year 2015 ............................................................................
After calendar year 2015 ...................................................................
33.’’.
‘‘(B) For purposes of subparagraph (A)—
‘‘(i) an individual shall be treated as eligible for
a husband’s insurance benefit if such individual
meets the requirements of subparagraphs (B), (C),
and (D) of paragraph (1), and
‘‘(ii) in determining when an individual becomes
eligible for a husband’s insurance benefit, any break
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in eligibility of less than 12 consecutive months shall
not be taken into account.’’.
Sec. 609. COVERAGE OF NEWLY HIRED STATE AND LOCAL
EMPLOYEES.
(a) AMENDMENTS TO THE SOCIAL SECURITY ACT.—
(1) IN
GENERAL.—Paragraph (7) of section
210(a) of the Social Security Act (42 U.S.C.
410(a)(7)) is amended to read as follows:
‘‘(7) Excluded State or local government em-
ployment (as defined in subsection(s));’’.
(2) EXCLUDED STATE OR LOCAL GOVERNMENT
EMPLOYMENT.—
(A) IN
GENERAL.—Section 210 of such
Act (42 U.S.C. 410) is amended by adding at
the end the following new subsection:
‘‘Excluded State or Local Government Employment
‘‘(s)(1) IN GENERAL.—The term ‘excluded State or
local government’ means any service performed in the em-
ploy of a State, of any political subdivision thereof, or of
any instrumentality of any one or more of the foregoing
which is wholly owned thereby, if—
‘‘(A)(i) such service would be excluded from the
term ‘employment’ for purposes of this title if the
preceding provisions of this section as in effect in
October 1997 had remained in effect, and (ii) the
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requirements of paragraph (2) are met with respect
to such service, or
‘‘(B) the requirements of paragraph (3) are met
with respect to such service.
‘‘(2) EXCEPTION FOR CURRENT EMPLOYMENT WHICH
CONTINUES.—
‘‘(A) IN GENERAL.—Except as provided in sub-
paragraph (B), the requirements of this paragraph
are met with respect to service for any employer if—
‘‘(i) such service is performed by an
individual—
‘‘(I) who was performing substantial
and regular service for remuneration for
that employer before January 1, 2000,
‘‘(II) who is a bona fide employee of
that employer on December 31, 1999, and
‘‘(III) whose employment relationship
with that employer was not entered into
for purposes of meeting the requirements
of this subparagraph, and
‘‘(ii) the employment relationship with that
employer has not been terminated after Decem-
ber 31, 1999.
‘‘(B) ELECTIONS
FOR
INCLUSION.—The re-
quirements of this paragraph shall be deemed not
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met with respect to service performed by an individ-
ual if such individual elects in writing before Janu-
ary 1, 2000, in such form and manner as shall be
prescribed in regulations of the Commissioner of So-
cial Security, that the requirements of this para-
graph be deemed not to be met with respect to such
service.
‘‘(C) TREATMENT OF MULTIPLE AGENCIES AND
INSTRUMENTALITIES.—For purposes of subpara-
graph (A), under regulations (consistent with regula-
tions established under section 3121(t)(2)(B) of the
Internal Revenue Code of 1986)—
‘‘(i) all agencies and instrumentalities of a
State (as defined in section 218(b)) or of the
District of Columbia shall be treated as a single
employer, and
‘‘(ii) all agencies and instrumentalities of a
political subdivision of a State (as so defined)
shall be treated as a single employer and shall
not be treated as described in clause (i).
‘‘(3) EXCEPTION FOR CERTAIN SERVICES.—
‘‘(A) IN GENERAL.—The requirements of this
paragraph are met with respect to service if such
service is performed—
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year with respect to service performed during
such subsequent year, except to the extent that
service by such election official or election work-
er is included in employment under an agree-
ment under section 218, or
‘‘(vi) by an employee in a position com-
pensated solely on a fee basis which is treated
pursuant to section 211(c)(2)(E) as a trade or
business for purposes of inclusion of such fees
in net earnings from self-employment.
‘‘(B) DEFINITIONS.—As used in this para-
graph, the terms ‘State’ and ‘political subdivision’
have the meanings given those terms in section
218(b).
‘‘(C) ADJUSTMENTS TO DOLLAR AMOUNT FOR
ELECTION
OFFICIALS
AND
ELECTION
WORKERS.—
For each year after 2000, the Commissioner of So-
cial Security shall adjust the amount referred to in
subparagraph (A)(v) at the same time and in the
same 
manner 
as 
is 
provided 
under 
section
215(a)(1)(B)(ii) with respect to the amounts re-
ferred to in section 215(a)(1)(B)(i), except that—
‘‘(i) for purposes of this subparagraph,
1997 shall be substituted for the calendar year
referred to in section 215(a)(1)(B)(ii)(II), and
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‘‘(ii) such amount as so adjusted, if not a
multiple of $100, shall be rounded to the next
higher multiple of $100 where such amount is
a multiple of $50 and to the nearest multiple
of $100 in any other case. The Commissioner
of Social Security shall determine and publish
in the Federal Register each adjusted amount
determined under this subparagraph not later
than November 1 preceding the year for which
the adjustment is made.’’.
(B) CONFORMING AMENDMENTS.—
(i) Subsection (k) of section 210 of
such Act (42 U.S.C. 410(k)) (relating to
covered transportation service) is repealed.
(ii) Section 210(p) of such Act (42
U.S.C. 410(p)) is amended—
(I) in paragraph (2), by striking
‘‘service is performed’’ and all that
follows and inserting ‘‘service is serv-
ice described in subsection (s)(3)(A).’’;
and
(II) in paragraph (3)(A), by in-
serting ‘‘under subsection (a)(7) as in
effect in December 1999’’ after ‘‘sec-
tion.’’
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(iii) Section 218(c)(6) of such Act (42
U.S.C. 418(c)(6)) is amended—
(I) by striking subparagraph (C);
(II) by redesignating subpara-
graphs (D) and (E) as subparagraphs
(C) and (D), respectively; and
(III) by striking subparagraph
(F) and inserting the following:
‘‘(E) service which is included as employment
under section 210(a).’’
(b) AMENDMENTS
TO
THE INTERNAL REVENUE
CODE OF 1986.—
(1) IN
GENERAL.—Paragraph (7) of section
3121(b) of the Internal Revenue Code of 1986 (re-
lating to employment) is amended to read as follows:
‘‘(7) excluded State or local government em-
ployment (as defined in subsection (t));’’
(2) EXCLUDED STATE OR LOCAL GOVERNMENT
EMPLOYMENT.—Section 3121 of such Code is
amended by inserting after subsection (s) the follow-
ing new subsection:
‘‘(t) EXCLUDED STATE OF LOCAL GOVERNMENT EM-
PLOYMENT.—
‘‘(1) IN GENERAL.—For purposes of this chap-
ter, the term ‘excluded State or local government
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employment’ means any service performed in the
employ of a State, of any political subdivision there-
of, or of any instrumentality of any one or more of
the foregoing which is wholly owned thereby, if—
‘‘(A)(i) such service would be excluded
from the term ‘employment’ for purposes of this
chapter if the provisions of subsection (b)(7) as
in effect in December 1999 had remained in ef-
fect, and
‘‘(ii) the requirements of paragraph (2) are
met with respect to such service, or
‘‘(B) the requirements of paragraph (3)
are met with respect to such service.
‘‘(2) EXCEPTION FOR CURRENT EMPLOYMENT
WHICH CONTINUES.—
‘‘(A) IN GENERAL.—The requirements of
this paragraph are met with respect to service
for any employer if—
‘‘(i) such service is performed by an
individual—
‘‘(I) who was performing sub-
stantial and regular service for remu-
neration for that employer before Jan-
uary 1, 2000,
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‘‘(II) who is a bona fide employee
of that employer on December 31,
2000, and
‘‘(III) whose employment rela-
tionship with that employer was not
entered into for purposes of meeting
the requirements of this subpara-
graph, and
‘‘(ii) the employment relationship with
that employer has not been terminated
after December 31, 1999.
‘‘(B) TREATMENT OF MULTIPLE AGENCIES
AND
INSTRUMENTALITIES.—For purposes of
subparagraph (A), under regulations—
‘‘(i) all agencies and instrumentalities
of a State (as defined in section 218(b) of
the Social Security Act) or of the District
of Columbia shall be treated as a single
employer, and
‘‘(ii) all agencies and instrumentalities
of a political subdivision of a State (as so
defined) shall be treated as a single em-
ployer and shall not be treated as de-
scribed in clause (i).
‘‘(3) EXCEPTION FOR CERTAIN SERVICES.—
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on how to provide for the application of this Act with re-
spect to Federal civilian and military personnel.
(b) REQUIREMENTS.—The report—
(1) shall be prepared in consultation with the
Social Security Administration, the Securities and
Exchange Commission, and other appropriate agen-
cies; and
(2) shall be accompanied by draft legislation
which, if enacted, would carry out the recommenda-
tions contained in such report.
SEC. 702. PROVISIONS RELATING TO THE CONTINUED OP-
ERATION OF EXISTING RETIREMENT SYS-
TEMS.
To the extent that the report and draft legislation
relate to provisions of law in effect before the date of en-
actment of this Act, each shall address at least the follow-
ing:
(1) FEDERAL EMPLOYEES’ RETIREMENT SYS-
TEM.—
(A) Section 8401(11) of title 5, United
States Code (relating to the definition of an
‘‘employee’’), which includes the requirement
that the individual concerned be someone whose
civilian service is employment for the purposes