I
107TH CONGRESS
1ST SESSION
H. R. 3315
To improve the solvency of the Social Security Program, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
NOVEMBER 16, 2001
Mr. DEFAZIO introduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To improve the solvency of the Social Security Program,
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 AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Social Security Stabilization and Enhancement Act of
2001’’.
(b) TABLE OF CONTENTS.—The table of contents is
as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Investment of the social security trust funds.
Sec. 3. Rules governing investment of Federal Old-Age and Survivors Insurance
Trust Fund in common stock.
Sec. 4. Establishment of the Independent Social Security Investment Oversight
Board.
Sec. 5. Repeal of limitation on social security wage base for FICA and SECA
taxes.
Sec. 6. Basic exemption from employee social security taxes.
Sec. 7. Increase in benefits at age 85.
Sec. 8. Years of low earnings while providing child care disregarded in deter-
mining benefit computation years.
Sec. 9. Phased-in increase in number of benefit computation years to 38.
SEC. 2. INVESTMENT OF THE SOCIAL SECURITY TRUST
FUNDS.
(a) IN GENERAL.—Section 201(d) of the Social Secu-
rity Act (42 U.S.C. 401(d)) is amended to read as follows:
‘‘(d)(1) It shall be the duty of the Managing Trustee
to invest such portion of each of the Trust Funds as is
not, in his judgment, required to meet current with-
drawals. Subject to paragraph (2), such investments may
be made only in interest-bearing obligations of the United
States or in obligations guaranteed as to both principal
and interest by the United States. For such purpose such
obligations may be acquired (A) on original issue at the
issue price, or (B) by purchase of outstanding obligations
at the market price.
‘‘(2)(A) The Independent Social Security Investment
Oversight Board shall establish in the Federal Old-Age
and Survivors Insurance Trust Fund—
‘‘(i) a Government Securities Investment Fund
under which sums in the Trust Fund are invested in
securities of the United States Government issued as
provided in paragraph (3);
‘‘(ii) a Fixed Income Investment Fund under
which sums in the Trust Fund are invested in—
‘‘(I) insurance contracts,
‘‘(II) certificates of deposit, or
‘‘(III) other instruments or obligations se-
lected by qualified professional asset managers,
which return the amount invested and pay interest,
at a specified rate or rates, on that amount during
a specified period of time;
‘‘(iii) a Common Stock Index Investment Fund
as provided in section 234(a); and
‘‘(iv) such other investment fund or funds as
the Board may provide by regulation.
‘‘(B) Upon receipt by the Federal Old-Age and Sur-
vivors Insurance Trust Fund of any amount appropriated
under subsection (a), the Managing Trustee shall deposit
a portion of such amount into the investment funds de-
scribed in subparagraph (A)—
‘‘(i) in accordance with the policies and require-
ments set forth in section 713, and
‘‘(ii) in a manner sufficient to maintain compli-
ance with the requirement under subparagraph (C).
‘‘(C) The portion of the total amount within the Fed-
eral Old-Age and Survivors Insurance Trust Fund which
is maintained in the investment funds described in sub-
paragraph (A) shall, in the aggregate, remain as close as
practicable at the end of each target year (specified in the
following table) to the applicable percentage (specified in
such table) for that target year of the total amount held
in such Trust Fund at the end of such target year.
‘‘For each target year
The applicable
consisting of:
percentage is:
2004 .............................................................................................
8 percent.
2007 ............................................................................................. 16 percent.
2010 ............................................................................................. 24 percent.
2013 ............................................................................................. 32 percent.
2016 and each year thereafter ..................................................... 40 percent.
‘‘(3)(A) The purposes for which obligations of the
United States may be issued under chapter 31 of title 31,
United States Code, are hereby extended to authorize the
issuance at par of public-debt obligations for purchase—
‘‘(i) by the Trust Funds under paragraph (1);
and
‘‘(ii) by the Federal Old-Age and Survivors In-
surance Trust Fund for purposes of paragraph
(2)(A)(i).
‘‘(B) 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 a rate equal to the average market yield (computed by
the Managing Trustee on the basis of market quotations
as of the end of the calendar month next preceding the
date of such issue) on all marketable interest-bearing obli-
gations of the United States then forming a part of the
public debt which are not due or callable until after the
expiration of four years from the end of such calendar
month; except that where such average market yield is not
a multiple of one-eighth of 1 per centum, the rate of inter-
est of such obligations shall be the multiple of one-eighth
of 1 per centum nearest such market yield.
‘‘(C) Each obligation issued for purchase by the
Trust Funds under subparagraph (A) shall be evidenced
by a paper instrument in the form of a bond, note, or
certificate of indebtedness issued by the Secretary of the
Treasury setting forth the principal amount, date of matu-
rity, and interest rate of the obligation, and stating on
its face that the obligation shall be incontestable in the
hands of the Trust Funds, that the obligation is supported
by the full faith and credit of the United States, and that
the United States is pledged to the payment of the obliga-
tion with respect to both principal and interest.
‘‘(D) The Managing Trustee may purchase interest-
bearing obligations of the United States or obligations
guaranteed as to both principal and interest by the United
States, other than obligations issued for purchase by the
Trust Funds, on original issue or at the market price, for
purposes of investment of the amounts held in the Trust
Funds only where he determines that the purchase of such
other obligations is in the public interest.’’.
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply with respect to fiscal years be-
ginning on or after October 1, 2001.
SEC. 3. RULES GOVERNING INVESTMENT OF FEDERAL OLD-
AGE AND SURVIVORS INSURANCE TRUST
FUND IN COMMON STOCK.
(a) IN GENERAL.—Title II of the Social Security Act
is amended by adding at the end the following new section:
‘‘INVESTMENT OF FEDERAL OLD-AGE AND SURVIVORS
INSURANCE TRUST FUND IN COMMON STOCK
‘‘SEC. 234. (a) COMMON STOCK INDEX INVESTMENT
FUND.—
‘‘(1) SELECTION OF INDEX.—The Independent
Social Security Investment Oversight Board shall se-
lect, for purposes of investment of amounts held in
the Common Stock Investment Fund of the Federal
Old-Age and Survivors Insurance Trust Fund, an
index which is a commonly recognized index com-
prised of common stock the aggregate market value
of which is a reasonably complete representation of
the United States equity markets.
‘‘(2) PORTFOLIO DESIGN.—Amounts held in the
Common Stock Investment Fund of the Federal Old-
Age and Survivors Insurance Trust Fund shall be
invested in a portfolio designed to replicate the per-
formance of the index selected under paragraph (1).
The portfolio shall be designed such that, to the ex-
tent practicable, the percentage of the balance in
such Account that is invested in each stock is the
same as the percentage determined by dividing the
aggregate market value of all shares of that stock by
the aggregate market value of all shares of all stocks
included in such index.
‘‘(b) NO VOTING RIGHTS IN SECURITIES.—The Inde-
pendent Social Security Investment Oversight Board and
the Managing Trustee of the Federal Old-Age and Sur-
vivors Insurance Trust Fund may not exercise voting
rights associated with the ownership of securities by the
Trust Fund.
‘‘(c) ENGAGEMENT
OF
QUALIFIED
PUBLIC
AC-
COUNTANT.—
‘‘(1) IN GENERAL.—The Independent Social Se-
curity Investment Oversight Board shall annually
engage, on behalf of the Federal Old-Age and Sur-
vivors Insurance Trust Fund, an independent quali-
fied public accountant, who shall conduct an exam-
ination of all accounts and other books and records
maintained in the administration of this section as
the public accountant considers necessary to enable
the public accountant to make the determination re-
quired by paragraph (2). The examination shall be
conducted in accordance with generally accepted au-
diting standards and shall involve such tests of the
accounts, books, and records as the public account-
ant considers necessary.
‘‘(2) EXAMINATION AND REPORT.—The public
accountant conducting an examination under para-
graph (1) shall determine whether the accounts,
books, and records referred to in paragraph (1) have
been maintained in conformity with generally accept-
ed accounting principles applied on a basis con-
sistent with the manner in which such principles
were applied during the examination conducted
under paragraph (1) during each preceding year
after 2002. The public accountant shall transmit to
the Board, the Comptroller General of the United
States, and each House of the Congress a report on
his examination, including his determination under
this paragraph. The Board shall make publicly avail-
able, by posting on the Internet and such other
means as the Board may determine, each report re-
ceived under the preceding sentence.
‘‘(3) DEFINITION.—For the purposes of this
subsection, the term ‘qualified public accountant’
shall have the same meaning as is provided in sec-
tion 103(a)(3)(D) of the Employee Retirement In-
come 
Security 
Act 
of 
1974 
(29 
U.S.C.
1023(a)(3)(D)).
‘‘(d) FIDUCIARY RESPONSIBILITIES.—
‘‘(1) IN GENERAL.—Under regulations of the
Secretary of Labor, the provisions of sections 8477
and 8478 of title 5, United States Code, shall apply
in connection with the amounts maintained in the
Common Stock Investment Fund of the Federal Old-
Age and Survivors Insurance Trust Fund in the
same manner and to the same extent as such provi-
sions apply in connection with the Thrift Savings
Fund.
‘‘(2) INVESTIGATIVE AUTHORITY.—Any author-
ity available to the Secretary of Labor under section
504 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1134) is hereby made avail-
able to the Secretary of Labor, and any officer des-
ignated by the Secretary of Labor, to determine
whether any person has violated, or is about to vio-
late, any provision applicable under paragraph (1).
‘‘(3) EXCULPATORY PROVISIONS; INSURANCE.—
‘‘(A) IN GENERAL.—Any provision in an
agreement or instrument which purports to re-
lieve a fiduciary from responsibility or liability
for any responsibility, obligation, or duty under
this section shall be void.
‘‘(B) INSURANCE.—Amounts held in the
Federal Old-Age and Survivors Insurance Trust
Fund available for administrative expenses shall
be available and may be used at the discretion
of the Independent Social Security Investment
Oversight Board to purchase insurance to cover
potential liability of persons who serve in a fi-
duciary capacity with respect to amounts main-
tained in the Common Stock Investment Fund
of such Trust Fund, without regard to whether
a policy of insurance permits recourse by the
insurer against the fiduciary in the case of a
breach of a fiduciary obligation.’’.
(b) CLERICAL AMENDMENT.—The analysis for title
II of the Social Security Act is amended by adding at the
end the following new item:
‘‘Sec. 234. Investment of Federal Old-Age and Survivors Insurance Trust Fund
in common stock.’’.
SEC. 4. ESTABLISHMENT OF THE INDEPENDENT SOCIAL SE-
CURITY INVESTMENT OVERSIGHT BOARD.
(a) IN GENERAL.—Title VII of the Social Security
Act is amended by adding after section 712 (42 U.S.C.
913) the following new section:
‘‘INDEPENDENT SOCIAL SECURITY INVESTMENT
OVERSIGHT BOARD
‘‘SEC. 713. (a) There is established in the Social Se-
curity Administration an Independent Social Security In-
vestment Oversight Board.
‘‘(b) The Board shall be composed of a Chairman and
four additional members. The Chairman and each addi-
tional member shall be appointed by the President, by and
with the advice and consent of the Senate.
‘‘(c) Members of the Board shall have substantial ex-
perience, training, and expertise in the management of fi-
nancial investments and service in a fiduciary capacity.
‘‘(d)(1) A member of the Board shall be appointed
for a term of 10 years, except that of the members first
appointed—
‘‘(A) the member appointed as Chairman shall
be appointed for a term of 10 years;
‘‘(B) one member shall be appointed for a term
of 8 years;
‘‘(C) one member shall be appointed for a term
of 6 years;
‘‘(D) one member shall be appointed for a term
of 4 years; and
‘‘(E) one member shall be appointed for a term
of 2 years,
as designated by the President at the time of appointment.
‘‘(2)(A) A vacancy on the Board shall be filled in the
manner in which the original appointment was made and
shall be subject to any conditions which applied with re-
spect to the original appointment.
‘‘(B) An individual chosen to fill a vacancy shall be
appointed for the unexpired term of the member replaced.
‘‘(C) The term of any member shall not expire before
the date on which the member’s successor takes office.
‘‘(3) An individual appointed as a member of the
Board may be removed from office only pursuant to a
finding by the President of neglect of duty or malfeasance
in office.
‘‘(e) The member of the Board designated by the
President as Chairman shall serve as Chairman for a term
of 4 years (or until the expiration of his term as member
of the Board, if earlier). A member serving as Chairman
may be reappointed as Chairman.
‘‘(f) The Board shall—
‘‘(1) establish policies for the investment and
management of the funds described in section
201(d)(2), including policies to provide for—
‘‘(A) prudent investments suitable for ac-
cumulating funds for payment of retirement in-
come, and
‘‘(B) low administrative costs;
‘‘(2) review bids from, and managers for, the
funds described in section 201(d)(2);
‘‘(3) annually review the performance of each
fund described in section 201(d)(2) and provide for
reallocation of investments among them by the Man-
aging Trustee of the Federal Old-Age and Survivors
Insurance Trust Fund as appropriate;
‘‘(4)(A) report annually to each House of the
Congress and to the President regarding the earn-
ings on such investments; and
‘‘(B) make each such report publicly available
by publication in the Federal Register, posting on
the Internet, and such other means as the Board
may determine; and
‘‘(5) review and approve the budget of the
Board.
‘‘(g)(1) The Board may—
‘‘(A) adopt, alter, and use a seal;
‘‘(B) establish policies with which the Managing
Trustee of the Federal Old-Age and Survivors Insur-
ance Trust Fund is required to comply under section
201(d)(2); and
‘‘(C) take such other actions as may be nec-
essary to carry out the functions of the Board.
‘‘(2) The policies of the Board may not require the
Managing Trustee of the Federal Old-Age and Survivors
Insurance Trust Fund to invest or to cause to be invested
any sums in such Trust Fund in a specific asset or to
dispose of or cause to be disposed of any specific asset
of such Trust Fund.
‘‘(h)(1) The Board shall meet—
‘‘(A) not less than once during each month; and
‘‘(B) at additional times at the call of the
Chairman.
‘‘(2)(A) The Board shall perform the functions and
exercise the powers of the Board on a majority vote of
a quorum of the Board.
‘‘(B) A vacancy on the Board shall not impair the
authority of a quorum of the Board to perform the func-
tions and exercise the powers of the Board.
‘‘(3) Three members of the Board shall constitute a
quorum for the transaction of business.
‘‘(4)(A) Each member of the Board who is not an
officer or employee of the Federal Government shall be
compensated at the daily rate of basic pay payable for level
IV of the Executive Schedule for each day during which
such member is engaged in performing a function of the
Board.
‘‘(B) A member of the Board shall be paid travel,
per diem, and other necessary expenses under subchapter
I of chapter 57 of title 5, United States Code, while trav-
eling away from such member’s home or regular place of
business in the performance of the duties of the Board.
‘‘(5) The accrued annual leave of any officer or em-
ployee of the Federal Government who is a member of the
Board shall not be charged for any time used in per-
forming services for the Board.
‘‘(i) The members of the Board shall discharge their
responsibilities solely in the interest of the Federal Old-
Age and Survivors Insurance Trust Fund in connection
with investments of amounts in funds under section
201(d)(2).
‘‘(j) The Board shall prepare and submit to the Presi-
dent, and, at the same time, to the appropriate committees
of Congress, an annual budget of the expenses and other
items relating to the Board which shall be included as a
separate item in the budget required to be transmitted to
the Congress under section 1105 of title 31, United States
Code.
‘‘(k) The Board may submit to the President, and,
at the same time, shall submit to each House of Congress,
any legislative recommendations of the Board relating to
any of its functions under this section.
‘‘(l) There are hereby made available from Federal
Old-Age and Survivors Insurance Trust Fund such sums
as are necessary to carry out the provisions of this section
and to administer the provisions of section 234, in accord-
ance with certifications which shall be made from time to
time by the Board to the Secretary of the Treasury.’’.
(b) CLERICAL AMENDMENT.—The analysis for title
VII of the Social Security Act is amended by adding at
the end the following new item:
‘‘Sec. 713. Independent Social Security Investment Oversight Board.’’.
SEC. 5. REPEAL OF LIMITATION ON SOCIAL SECURITY
WAGE BASE FOR FICA AND SECA TAXES.
(a) FICA TAX.—Paragraph (1) of section 3121(a)
of the Internal Revenue Code of 1986 (defining wages)
is hereby repealed.
(b) SECA TAX.—Subsection (b) of section 1402 of
such Code (relating to definitions) is amended to read as
follows:
‘‘(b) SELF-EMPLOYMENT INCOME.—
‘‘(1) IN GENERAL.—The term ‘self-employment
income’ means the net earnings from self-employ-
ment derived by an individual (other than a non-
resident alien individual, except as provided by an
agreement under section 233 of the Social Security
Act) during any taxable year.
‘‘(2) EXCEPTION
FOR
MINIMUM
NET
EARN-
INGS.—
‘‘(A) IN GENERAL.—The term ‘self-employ-
ment income’ shall not include the net earnings
from self-employment, if such net earnings for
the taxable year are less than $400.
‘‘(B) APPLICATION OF SPECIAL RULES.—
In the case of church employee income, the spe-
cial rules of subsection (j)(2) shall apply for
purposes of subparagraph (A).
‘‘(3) DETERMINATION OF NONRESIDENT ALIEN
STATUS.—An individual who is not a citizen of the
United States but who is a resident of the Common-
wealth of Puerto Rico, the Virgin Islands, Guam, or
American Samoa shall not, for purposes of this
chapter, be considered to be a nonresident alien indi-
vidual.’’.
(c) CONFORMING AMENDMENTS.—
(1) Subsection (b) of section 31 of the Internal
Revenue Code of 1986 is hereby repealed.
(2) Subparagraph (A) of section 51(h)(1) of
such Code is amended by striking ‘‘so much’’ and all
the follows through the period and inserting ‘‘the
lesser of—
‘‘(i) so much of such remuneration as
constitutes ‘wages’ within the meaning of
section 3121(a), or
‘‘(ii) $6,000.’’.
(3) Subsection (s) of section 3121 of such Code
is amended by striking ‘‘sections 3102, 3111, and
3121(a)(1)’’ and inserting ‘‘sections 3102 and
3111’’.
(4) Section 3122 of such Code is amended by
striking the fourth sentence.
(5) Subsections (a), (b), (c), and (d) of section
3125 of such Code are each amended by striking the
last sentence.
(6) Subsection (c) of section 6413 of such Code
is hereby repealed.
(7) Subsection (c) of section 230 of the Social
Security Act is amended by striking ‘‘and sections
1402, 3121, 3122, 3125, 6413, and 6654 of the In-
ternal Revenue Code of 1986’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 2002.
SEC. 6. BASIC EXEMPTION FROM EMPLOYEE SOCIAL SECU-
RITY TAXES.
(a) WAGES.—Subsection (a) of section 3121 of the
Internal Revenue Code of 1986 is amended by inserting
before paragraph (2) the following new paragraph:
‘‘(1) in the case of tax imposed by section
3101(a), so much of the wages (determined without
regard to this paragraph) paid to an individual dur-
ing the calendar year as does not exceed the basic
exemption (as defined in subsection (k)) unless such
individual designates a lower amount with respect to
the employer;’’.
(b) BASIC EXEMPTION.—Section 3121 of such Code
is amended further by inserting after subsection (j) the
following new subsection:
‘‘(k) BASIC EXEMPTION.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a)(1) and this subsection, the term ‘basic exemp-
tion’ for a taxable year means $4,000 for the taxable
year ending with or during calendar year 2002 and
the amount determined under paragraph (2) for tax-
able years ending with or during calendar years
after 2002.
‘‘(2) ANNUAL
ADJUSTMENT.—The Secretary
shall, on or before November 1 of 2002 and of every
year thereafter, determine and publish in the Fed-
eral Register the basic exemption for taxable years
ending with or during the succeeding calendar year.
The amount of the basic exemption determined
under this paragraph shall be the larger of—
‘‘(A) the amount of the basic exemption in
effect for taxable years ending with or during
the calendar year in which the determination
under this subsection is made, or
‘‘(B) the product of the amount prescribed
in paragraph (1) in effect for the taxable year
ending with or during calendar year 2002 and
the ratio of the national average wage index (as
defined in section 209(k)(1) of the Social Secu-
rity Act) for taxable years ending with or dur-
ing the calendar year before the calendar year
in which the determination under this para-
graph is made to the national average wage
index (as so defined) for 2000,
with such product, if not a multiple of $10, being
rounded to the next higher multiple of $10 where
such amount is a multiple of $5 but not of $10 and
to the nearest multiple of $10 in any other case.’’.
(c) SELF-EMPLOYMENT INCOME.—Section 1401 of
such Code is amended by redesignating subsection (c) as
subsection (d) and by inserting after subsection (b) the
following new subsection:
‘‘(c) COORDINATION WITH BASIC EXEMPTION FROM
EMPLOYEE FICA TAX.—
‘‘(1) IN GENERAL.—Notwithstanding subsection
(a), the rate of tax imposed by subsection (a) shall
be 1⁄2 the otherwise applicable rate but only with re-
spect to so much of the self-employment income for
the calendar year beginning with or during the tax-
able year as does not exceed an amount equal to—
‘‘(A) the basic exemption (as defined in
section 3121(k)) for the calendar year begin-
ning with or during such taxable year, reduced
(but not below zero) by
‘‘(B) the amount of remuneration received
during such year which would (but for section
3121(a)(1)) be treated as wages (as defined in
section 3121(a)).
‘‘(2) RECONCILIATION
OF
BASIC
EXEMPTION
WITH AMOUNT EXEMPTED DURING YEAR.—
‘‘(A) APPLICABLE
TAX
RATE.—The tax
imposed by this section on the amount deter-
mined under subparagraph (B) shall be at a
rate equal to 1⁄2 of the otherwise applicable rate
of tax under subsection (a).
‘‘(B) DETERMINATION OF EXCESS AMOUNT
EXEMPTED
FROM
EMPLOYMENT
TAXES.—The
amount determined under this subparagraph is
the excess (if any) of the amount referred to in
paragraph (1)(B) over the basic exemption (as
defined in section 3121(k)) for the calendar
year beginning with or during such taxable
year.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.’’.
SEC. 7. INCREASE IN BENEFITS AT AGE 85.
Section 202 of the Social Security Act (42 U.S.C.
402) is amended by adding at the end the following new
subsection:
‘‘(z)(1) Notwithstanding the preceding provisions of
this section, the amount of an individual’s monthly insur-
ance benefit under this section for any month ending after
December 2002 and after such individual has attained age
85 shall be the sum of—
‘‘(A) the amount of such benefit (determined
before the application of this subsection), plus
‘‘(B) the applicable increase for monthly bene-
fits for months in the calendar year in which such
month occurs.
‘‘(2)(A) For purposes of paragraph (1), the applica-
ble increase for monthly benefits for months in any cal-
endar year in connection with the monthly insurance ben-
efit of any individual under this section is the product de-
rived by multiplying—
‘‘(i) the amount of such benefit (determined be-
fore the application of this subsection), by
‘‘(ii) the applicable percentage for such indi-
vidual for such year.
‘‘(B) For purposes of subparagraph (A), the applica-
ble percentage for an individual for a calendar year is the
product derived by multiplying—
‘‘(i) 0.25 percent, by
‘‘(ii) 1 plus the number of calendar years end-
ing before such year and after such individual at-
tained age 85,
except that such percentage shall not exceed 5.00 per-
cent.’’.
SEC. 8. YEARS OF LOW EARNINGS WHILE PROVIDING
CHILD CARE DISREGARDED IN DETERMINING
BENEFIT COMPUTATION YEARS.
(a) IN GENERAL.—Section 215(b)(2) of the Social
Security Act (42 U.S.C. 415(b)(2)) is amended—
(1) by striking the period at the end of clause
(ii) of subparagraph (A) and inserting a comma;
(2) by striking ‘‘Clause (ii), once’’ after and
below clause (ii) of subparagraph (A) and inserting
the following:
‘‘and reduced further to the extent provided in sub-
paragraph (B). Clause (ii), once’’;
(3) by striking ‘‘If an individual’’ in the matter
following clause (ii) of subparagraph (A) and all that
follows through the end of the next to last sentence
of subparagraph (A);
(4) by redesignating subparagraph (B) as sub-
paragraph (F); and
(5) by inserting after subparagraph (A) the fol-
lowing new subparagraphs:
‘‘(B) Subject to subparagraph (D), in any case in
which—
‘‘(i) in any calendar year which is included in
an individual’s computation base years, such indi-
vidual is living with a child (of such individual or his
or her spouse) under the age of 12,
‘‘(ii) such calendar year is not disregarded pur-
suant to subparagraphs (A) and (F) (in determining
such individual’s benefit computation years) by rea-
son of any reduction in the number of such individ-
ual’s elapsed years under subparagraph (A),
‘‘(iii) the total of such individual’s earnings as
described in section 203(f)(5) in such calendar year
does not exceed the allowable maximum amount for
such year determined under subparagraph (E), and
‘‘(iv) at any time during or after such calendar
year and on or before the date of the application by
such individual for benefits based on such individ-
ual’s wages and self-employment income, such indi-
vidual submits to the Commissioner of Social Secu-
rity, in such form as the Commissioner shall pre-
scribe by regulations, a written statement that the
requirements of clause (i) are met with respect to
such calendar year,
then the number by which such elapsed years are reduced
under this paragraph pursuant to subparagraph (A) shall
be increased by one (up to the maximum number applica-
ble under subparagraph (C)) for each such calendar year.
‘‘(C) For purposes of subparagraph (B), the max-
imum number by which elapsed years may be reduced pur-
suant to such subparagraph is the number of years speci-
fied in connection with the calendar year in which such
individual first meets all requirements for entitlement to
old-age insurance benefits or disability insurance benefits
(other than filing application therefor), or dies (before
first meeting such requirements), as set forth in the fol-
lowing table:
‘‘If such calendar year is:
The applicable maximum num-
ber of years is:
After 2006 and before 2009 ..............................................................
1.
After 2008 and before 2011 ..............................................................
2.
After 2010 ..........................................................................................
3.
‘‘(D)(i) No calendar year shall be disregarded by rea-
son of subparagraph (B) (in determining such individual’s
benefit computation years) in connection with a child un-
less the individual was living with the child substantially
throughout the period in such year in which the child was
alive and under the age of 12 in such year and the indi-
vidual had no earnings as described in section 203(f)(5)
in such year in excess of the maximum amount for such
year determined under subparagraph (E).
‘‘(ii) The particular calendar years to be disregarded
under subparagraph (B) (in determining such benefit
computation years) shall be those years (not otherwise dis-
regarded under subparagraph (A)) which, before the appli-
cation of subsection (f), meet the conditions of clause (i).
‘‘(iii) Subparagraph (B) shall apply only to the extent
that its application would not result in a lower primary
insurance amount.
‘‘(E)(i) The maximum amount allowable under sub-
paragraph (B)(iii) for calendar year 2007 is $3,000.
‘‘(ii) The Commissioner of Social Security shall, on
or before November 1 of 2006, determine and publish in
the Federal Register the maximum amount allowable
under subparagraph (B)(iii) for each calendar year after
1967 and before 2007. The maximum amount allowable
for each such calendar year shall be the amount which
bears the same ratio to $3,000 as the national average
wage index (as defined in section 209(k)(1)) for the first
of the 2 calendar years preceding such calendar year to
the national average wage index (as so defined) for 2005.
‘‘(iii) The Commissioner of Social Security shall, on
or before November 1 of 2007 and of every year there-
after, determine and publish in the Federal Register the
maximum amount allowable under subparagraph (B)(iii)
for the succeeding calendar year. The maximum amount
allowable for each such calendar year shall be the amount
which bears the same ratio to $3,000 as the national aver-
age wage index (as defined in section 209(k)(1)) for the
calendar year before the year in which the determination
under this clause is made to the national average wage
index (as so defined) for 2005.
‘‘(iv) Each amount determined under clause (ii) or
(iii), if not a multiple of $10, shall be rounded to the next
higher multiple of $10 where such amount is a multiple
of $5 but not of $10 and to the nearest multiple of $10
in any other case.’’.
(b) CONFORMING AMENDMENT.—Section 209(k)(1)
of such Act (42 U.S.C. 409(k)(1)) is amended by inserting
‘‘215(b)(2)(E),’’ after ‘‘215(a)(1)(D),’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply only with respect to individuals
first meeting all requirements for entitlement to old-age
insurance benefits or disability insurance benefits (other
than filing application therefor), or dying (before first
meeting such requirements), after December 31, 2006.
SEC. 9. PHASED-IN INCREASE IN NUMBER OF BENEFIT
COMPUTATION YEARS TO 38.
(a) IN GENERAL.—Section 215(b)(2) of the Social
Security Act (42 U.S.C. 415(b)(2)) (as amended by sec-
tion 8) is amended further—
(1) in subparagraph (A)(i), by striking ‘‘by 5
years’’ and inserting ‘‘to the extent provided in sub-
paragraph (F)’’; and
(2) by adding at the end of paragraph (2) the
following new subparagraph:
‘‘(F) For purposes of clause (i) of subparagraph (A),
the number of elapsed years shall be reduced pursuant to
such clause by the number of years specified in connection
with the calendar year in which such individual becomes
eligible for old-age insurance benefits, or dies (before be-
coming eligible for such benefits), as set forth in the fol-
lowing table:
‘‘If such calendar year is:
The applicable number of years
is:
After 2006 and before 2009 ..............................................................
4.
After 2008 and before 2011 ..............................................................
3.
After 2010 ..........................................................................................
2.’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to individuals attain-
ing early retirement age (as defined in section 216(l)(2)
of the Social Security Act), or dying (before attaining such
age), after December 31, 2006.
Æ