Social Security and Medicare Lock-Box Act

SECTION 1. SHORT TITLE; FINDINGS.

    (a) Short Title.--This Act may be cited as the ``Social Security 
and Medicare Lock-Box Act''.
    (b) Findings Regarding Social Security and Medicare Part A.--The 
Congress finds the following:
            (1)(A) Long term projections show serious problems facing 
        the fiscal health of the trust funds associated with Social 
        Security and Medicare Hospital Insurance.
            (B) According to the 2012 Annual Report of the Board of 
        Trustees of the Federal Old-Age and Survivors Insurance and 
        Federal Disability Insurance Trust Funds, the assets of the 
        combined Federal Old Age and Survivors Insurance Trust Fund and 
        the Federal Disability Insurance Trust Fund will be exhausted 
        by 2033, and the Disability Insurance Trust Fund alone will be 
        depleted by 2016.
            (C) According to the 2012 Annual Report of the Board of 
        Trustees of the Federal Hospital Insurance and Federal 
        Supplementary Medical Insurance Trust Funds, the assets of the 
        Federal Hospital Insurance Trust Fund will be exhausted by 
        2024.
            (2)(A) The Trustees of these trust funds strongly encourage 
        action to protect the solvency of the trust funds.
            (B) In their message to the public, included in the 2012 
        Annual Reports, the Social Security and Medicare Boards of 
        Trustees wrote, ``Lawmakers should not delay addressing the 
        long-run financial challenges facing Social Security and 
        Medicare. If they take action sooner rather than later, more 
        options and more time will be available to phase in changes so 
        that the public has adequate time to prepare.''.
            (3) Social Security and Medicare are meant to provide a 
        secure and stable base so that older Americans can live in 
        dignity.
            (4) Protecting the future surpluses of these trust funds 
        can only occur when meaningful reform has been enacted by 
        Congress. Any path to solvency must include the protection of 
        future surpluses.

SEC. 2. INTERIM PROTECTIONS FOR SOCIAL SECURITY TRUST FUND SURPLUS.

    Section 201(d) of the Social Security Act (42 U.S.C. 402(d)) is 
amended--
            (1) by striking ``It shall be the duty'' and inserting 
        ``(1) Except as provided in paragraph (2), it shall be the 
        duty''; and
            (2) by striking ``(1) on original issue at the issue price, 
        or (2)'' and inserting ``(A) on original issue at the issue 
        price, or (B)''; and
            (3) by adding at the end the following new paragraph:
    ``(2)(A) There is established in the Federal Old-Age and Survivors 
Insurance Trust Fund a Social Security Surplus Protection Account. As 
soon as practicable after each fiscal year after fiscal year 2013, the 
Managing Trustee shall transfer to the Account, from amounts otherwise 
available in the Trust Fund, amounts equivalent to the social security 
surplus for such fiscal year. Such amounts shall be transferred from 
time to time to the Account, such amounts to be determined on the basis 
of estimates by the Managing Trustee, and proper adjustments shall be 
made in amounts subsequently transferred to the extent prior estimates 
were in excess of or were less than the correct amount.
    ``(B) For purposes of subparagraph (A), the term `social security 
surplus' means, for any fiscal year, the excess, if any, of--
            ``(i) the sum of--
                    ``(I) the taxes imposed for such fiscal year by 
                chapter 21 (other than sections 3101(b) and 3111(b)) of 
                the Internal Revenue Code of 1986 with respect to wages 
                (as defined in section 3121 of such Code) reported to 
                the Secretary of the Treasury or his delegates pursuant 
                to subtitle F of such Code, as determined by the 
                Secretary of the Treasury by applying the applicable 
                rates of tax under such chapter 21 (other than sections 
                3101(b) and 3111(b)) to such wages, less the amounts 
                specified in clause (1) of subsection (b) of this 
                section for such fiscal year,
                    ``(II) the taxes imposed by chapter 2 (other than 
                section 1401(b)) of the Internal Revenue Code of 1986 
                with respect to self-employment income (as defined in 
                section 1402 of such Code) reported to the Secretary of 
                the Treasury on tax returns under subtitle F of such 
                Code, as determined by the Secretary of the Treasury by 
                applying the applicable rate of tax under such chapter 
                (other than section 1401(b)) to such self-employment 
                income, less the amounts specified in clause (2) of 
                subsection (b) of this section for such fiscal year, 
                and
                    ``(III) the amount equivalent to the aggregate 
                increase in tax liabilities under chapter 1 of the 
                Internal Revenue Code of 1986 which is attributable to 
                the application of sections 86 and 871(a)(3) of such 
                Code to payments from the Trust Fund, over
            ``(ii) the sum of--
                    ``(I) benefits paid from the Trust Fund during the 
                fiscal year, and
                    ``(II) amounts authorized to be made available from 
                the Trust Fund under subsection (g) of this section 
                which are paid from the Trust Fund during such fiscal 
                year.
    ``(C) Notwithstanding paragraph (1), the balance in the Account 
shall not be available for investment by the Managing Trustee.
    ``(D)(i) The preceding provisions of this paragraph shall not apply 
with respect to fiscal years commencing with or after the first fiscal 
year, after fiscal year 2013, for which a provision of Federal law 
takes effect and authorizes, for amounts in the Trust Fund, an 
investment vehicle other than obligations of the United States 
resulting in the transfer of Trust Fund assets to the general fund of 
the Treasury.
    ``(ii) A provision of Federal law shall be deemed to meet the 
requirements of clause (i) if such provision includes the following: 
`This Act shall be considered to be a provision of Federal law meeting 
the requirements of section 201(d)(2)(D)(i) of the Social Security 
Act.'.''.

SEC. 3. INTERIM PROTECTIONS FOR MEDICARE PART A TRUST FUND SURPLUS.

    (a) In General.--Section 1817(c) of the Social Security Act (42 
U.S.C. 1395i(c)) is amended--
            (1) by striking ``It shall be the duty'' and inserting 
        ``(1) Except as provided in paragraph (2), it shall be the 
        duty'';
            (2) by striking ``(1) on original issue at the issue price, 
        or (2)'' and inserting ``(A) on original issue at the issue 
        price, or (B)''; and
            (3) by adding at the end the following new paragraph:
    ``(2)(A) There is established in the Federal Hospital Insurance 
Trust Fund a Medicare Surplus Protection Account (in this paragraph 
referred to as the `Account'). As soon as practicable after each fiscal 
year after fiscal year 2013, the Managing Trustee shall transfer to the 
Account, from amounts otherwise available in the Trust Fund, amounts 
equivalent to the Medicare part A surplus for such fiscal year. Such 
amounts shall be transferred from time to time to the Account, such 
amounts to be determined on the basis of estimates by the Managing 
Trustee, and proper adjustments shall be made in amounts subsequently 
transferred to the extent prior estimates were in excess of or were 
less than the correct amount.
    ``(B) For purposes of subparagraph (A), the term `Medicare part A 
surplus' means, for any fiscal year, the excess, if any, of--
            ``(i) the sum of--
                    ``(I) the taxes imposed for such fiscal year by 
                sections 3101(b) and 3111(b) of the Internal Revenue 
                Code of 1986 with respect to wages (as defined in 
                section 3121 of such Code) reported to the Secretary of 
                the Treasury or his delegates pursuant to subtitle F of 
                such Code, as determined by the Secretary of the 
                Treasury by applying the applicable rates of tax under 
                such sections to such wages; and
                    ``(II) the taxes imposed by section 1401(b) of the 
                Internal Revenue Code of 1986 with respect to self-
                employment income (as defined in section 1402 of such 
                Code) reported to the Secretary of the Treasury on tax 
                returns under subtitle F of such Code, as determined by 
                the Secretary of the Treasury by applying the 
                applicable rate of tax under such section 1401(b) to 
                such self-employment income; over
            ``(ii) the sum of--
                    ``(I) benefits paid from the Trust Fund during the 
                fiscal year; and
                    ``(II) amounts authorized to be made available from 
                the Trust Fund under subsection (f) of this section (or 
                section 201(g)) which are paid from the Trust Fund 
                during such fiscal year.
    ``(C) Notwithstanding paragraph (1), the balance in the Account 
shall not be available for investment by the Managing Trustee.
    ``(D)(i) The preceding provisions of this paragraph shall not apply 
with respect to fiscal years commencing with or after the first fiscal 
year, after fiscal year 2013, for which a provision of Federal law 
takes effect and authorizes, for amounts in the Trust Fund, an 
investment vehicle other than obligations of the United States 
resulting in the transfer of Trust Fund assets to the general fund of 
the Treasury.
    ``(ii) A provision of Federal law shall be deemed to meet the 
requirements of clause (i) if such provision includes the following: 
`This Act shall be considered to be a provision of Federal law meeting 
the requirements of section 1817(c)(2)(D)(i) of the Social Security 
Act.'.''.

SEC. 4. SOCIAL SECURITY AND MEDICARE PART A INVESTMENT COMMISSION.

    (a) Establishment.--There is established in the executive branch of 
the Government a Social Security and Medicare Part A Investment 
Commission (in this section referred to as the ``Commission'').
    (b) Study and Report.--As soon as practicable after the date of the 
enactment of this Act, the Commission shall conduct a study to 
ascertain the most effective vehicles for investment of the Federal 
Old-Age and Survivors Insurance Trust Fund and the Federal Hospital 
Insurance Trust Fund, other than investment in the form of obligations 
of the United States resulting in the transfer of Trust Fund assets to 
the general fund of the Treasury. Not later than October 1, 2014, the 
Commission shall submit a report to the President and to each House of 
the Congress setting forth its recommendations for such vehicles for 
investment, together with proposals for such administrative and 
legislative changes as the Commission determines necessary to authorize 
and implement such recommendations.
    (c) Composition.--The Commission shall be composed of--
            (1) 3 members appointed by the President, of whom 1 shall 
        be designated by the President as Chairman;
            (2) 2 members appointed by the Speaker of the House of 
        Representatives;
            (3) 1 member appointed by the minority leader of the House 
        of Representatives;
            (4) 2 members appointed by the majority leader of the 
        Senate; and
            (5) 1 member appointed by the minority leader of the 
        Senate.
    (d) Membership Requirements.--Members of the Commission shall have 
substantial experience, training, and expertise in the management of 
financial investments and pension benefit plans.
    (e) Length of Appointments.--Members of the Commission shall serve 
for the life of the Commission. A vacancy on the Commission shall be 
filled in the manner in which the original appointment was made and 
shall be subject to any conditions that applied with respect to the 
original appointment.
    (f) Administrative Provisions.--
            (1) Meetings.--The Commission shall meet--
                    (A) not less than once during each month; and
                    (B) at additional times at the call of the 
                Chairman.
            (2) Exercise of powers.--
                    (A) In general.--The Commission shall perform the 
                functions and exercise the powers of the Commission on 
                a majority vote of a quorum of the Commission. Three 
                members of the Commission shall constitute a quorum for 
                the transaction of business.
                    (B) Vacancies.--A vacancy on the Commission shall 
                not impair the authority of a quorum of the Commission 
                to perform the functions and exercise the powers of the 
                Commission.
    (g) Compensation.--
            (1) In general.--Each member of the Commission who is not 
        an officer or employee of the Federal Government shall be 
        compensated at the daily rate of basic pay for level IV of the 
        Executive Schedule for each day during which such member is 
        engaged in performing a function of the Commission.
            (2) Expenses.--A member of the Commission shall be paid 
        travel, per diem, and other necessary expenses under subchapter 
        I of chapter 57 of title 5, United States Code, while traveling 
        away from such member's home or regular place of business in 
        the performance of the duties of the Commission.
    (h) Termination.--The Commission shall terminate 90 days after the 
date of the submission of its report pursuant to subsection (b).

Summary: Social Security and Medicare Lock-Box Act - Amends title II (Old Age, Survivors and Disability Insurance) (OASDI) of the Social Security Act to establish in the Federal Old-Age and Survivors Insurance Trust Fund a Social Security Surplus Protection Account to hold the Social Security surplus for the fiscal year of the sum of Social Security taxes collected, as well as the aggregate increase in certain tax liabilities, over the sum of benefits paid. Establishes in the Federal Hospital Insurance Trust Fund a Medicare Surplus Protection Account to hold amounts equivalent to the Medicare part A surplus for the fiscal year of the sum of hospital insurance taxes collected over the sum of Medicare part A benefits paid. Denies the availability of the balance in either Account for investment by the Managing Trustee. Establishes in the executive branch a Social Security and Medicare Part A Investment Commission to study the most effective vehicles for investment of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Hospital Insurance Trust Fund (other than investment in the form of U.S. obligations resulting in the transfer of Trust Fund assets to the general fund of the Treasury).