[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3645 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 3645

To provide a tax credit for families, to provide certain tax incentives 
to encourage investment and increase savings, and to place limitations 
                       on the growth of spending.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 22, 1993

Mr. Grams (for himself, Mr. Hutchinson, Mr. Hastert, Mr. Gingrich, Mr. 
 Armey, Mr. McCollum, Mr. DeLay, Mr. Hyde, Mr. Hunter, Mr. Paxon, Mr. 
   Solomon, Mr. Kasich, Mr. Istook, Mr. Knollenberg, Mr. Talent, Mr. 
 Crapo, Mr. Manzullo, Ms. Dunn, Mr. Bachus of Alabama, Mr. Bartlett of 
  Maryland, Mr. Dickey, Mr. Kingston, Mr. Kim, Ms. Pryce of Ohio, Mr. 
Hoekstra, Mr. Levy, Mr. Pombo, Mr. McKeon, Mr. Baker of California, Mr. 
   Collins of Georgia, Mr. Inglis of South Carolina, Mr. Quinn, Mr. 
 Canady, Mr. Hoke, Mr. Torkildsen, Mr. Linder, Mr. Blute, Mr. McInnis, 
 Mr. King, Mr. Smith of Michigan, Mrs. Fowler, Mr. McHugh, Mr. Royce, 
Mr. Doolittle, Mr. Barton of Texas, Mr. Burton of Indiana, Mr. Ramstad, 
 Mr. Cox, Mr. Smith of Oregon, Mr. Dornan, Mr. Herger, Mr. Hefley, Mr. 
 Goss, Mr. Kyl, Mr. Zimmer, Mr. Stearns, Mr. Rohrabacher, Mr. Baker of 
  Louisiana, Mr. Inhofe, Mrs. Vucanovich, Mr. Boehner, Mr. Ewing, Mr. 
   Stump, Mr. Sam Johnson of Texas, Mr. Moorhead, Ms. Molinari, Mr. 
Santorum, Mr. Packard, Mr. Shays, Mr. Spence, Mr. Hancock, Mr. Emerson, 
   Mr. Smith of Texas, Mr. Saxton, Mr. Ravenel, Mr. Hobson, and Mr. 
Gallegly) introduced the following bill; which was referred jointly to 
   the Committees on Ways and Means, Government Operations, and Rules

_______________________________________________________________________

                                 A BILL


 
To provide a tax credit for families, to provide certain tax incentives 
to encourage investment and increase savings, and to place limitations 
                       on the growth of spending.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Family, 
Investment, Retirement, Savings, and Tax Fairness Act of 1993''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--

Sec. 1. Short title; amendment of 1986 Code; table of contents.
                       TITLE I--FAMILY TAX CREDIT

Sec. 101. Family tax credit.
 TITLE II--REDUCING THE COST OF CAPITAL BY REDUCING CAPITAL GAINS TAX 
             RATES AND INDEXING THE BASIS OF CERTAIN ASSETS

Sec. 201. Reduction in individual capital gains rate.
Sec. 202. Reduction in corporate capital gains rate.
Sec. 203. Reduction of minimum tax rate on capital gains.
Sec. 204. Indexing of certain assets for purposes of determining gain 
                            or loss.
Sec. 205. Indexing of limitation on capital losses of individuals.
Sec. 206. Effective dates.
                    TITLE III--NEUTRAL COST RECOVERY

Sec. 301. Depreciation adjustment for certain property placed in 
                            service in taxable years beginning after 
                            December 31, 1993.
Sec. 302. Special depreciation rules applicable under the adjusted 
                            current earnings provisions of the minimum 
                            tax.
  TITLE IV--INCREASING NATIONAL SAVINGS THROUGH INDIVIDUAL RETIREMENT 
PLUS ACCOUNTS, INDEXING FOR INFLATION THE INCOME THRESHOLDS FOR TAXING 
                     SOCIAL SECURITY BENEFITS, ETC.

Sec. 401. Establishment of individual retirement plus accounts.
Sec. 402. Inflation adjustment of income thresholds for taxation of 
                            social security benefits; income from 
                            individual retirement plans excluded.
Sec. 403. Inflation adjustment of maximum amount of IRA deduction.
  TITLE V--CAP ON FEDERAL SPENDING AND ESTABLISHMENT OF COMMISSION TO 
                        REDUCE FEDERAL SPENDING

Sec. 501. Establishment.
Sec. 502. Duties of Commission.
Sec. 503. Membership.
Sec. 504. Director and staff of Commission.
Sec. 505. Powers of Commission.
Sec. 506. Termination.
Sec. 507. Payment of expenses.
Sec. 508. Consideration of Commission's proposal.
Sec. 509. Advisory council.
Sec. 510. Amendments to the Balanced Budget and Emergency Deficit 
                            Control Act of 1985 to limit Federal 
                            spending.
         TITLE VI--ELIMINATION OF SOCIAL SECURITY EARNINGS TEST

Sec. 601. Elimination of social security earnings test.

                       TITLE I--FAMILY TAX CREDIT

SEC. 101. FAMILY TAX CREDIT.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
is amended by redesignating section 35 as section 36 and by inserting 
after section 34 the following new section:

``SEC. 35. FAMILY TAX CREDIT.

    ``(a) General Rule.--In the case of an eligible individual, there 
shall be allowed as a credit against the tax imposed by this subtitle 
for the taxable year an amount equal to $500 multiplied by the number 
of qualifying children of the taxpayer who have not attained the age of 
18 as of the close of the calendar year in which the taxable year of 
the taxpayer begins.
    ``(b) Limitation Based on Amount of Tax.--The credit allowed by 
subsection (a) for a taxable year shall not exceed the excess (if any) 
of--
            ``(1) the sum of--
                    ``(A) the tax imposed by this subtitle for the 
                taxable year (reduced by the credits allowable against 
                such tax other than the credits allowable under this 
                subpart), and
                    ``(B) the taxes imposed by sections 3101 and 3111 
                on wages received by the taxpayer during such taxable 
                year, over
            ``(2) the credit allowable for the taxable year under 
        section 32.
    ``(c) Inflation Adjustments.--
            ``(1) In general.--In the case of a taxable year beginning 
        in a calendar year after 1993, the $500 amount contained in 
        subsection (a) shall be increased by an amount equal to--
                    ``(A) $500, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins.
            ``(2) Rounding.--If any increase determined under paragraph 
        (1) is not a multiple of $5, such increase shall be rounded to 
        the next higher multiple of $5.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Eligible individual.--The term `eligible individual' 
        has the meaning given to such term by section 32(c)(1) 
        (determined without regard to subparagraph (B) thereof).
            ``(2) Qualifying child.--The term `qualifying child' has 
        the meaning given to such term by section 32(c)(3) (determined 
        without regard to subparagraphs (C) and (E) thereof).
            ``(3) Certain other rules apply.--Subsections (d) and (e) 
        of section 32 shall apply.''
    (b) Denial of Double Benefit.--Subparagraph (A) of section 21(b)(1) 
(defining qualifying individual) is amended by inserting ``(other than 
an individual described in section 35(a))'' after ``taxpayer''.
    (c) Conforming Amendment.--The table of sections for such subpart C 
is amended by striking the item relating to section 35 and inserting 
the following new items:

                              ``Sec. 35. Family tax credit.
                              ``Sec. 36. Overpayments of tax.''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1993.

 TITLE II--REDUCING THE COST OF CAPITAL BY REDUCING CAPITAL GAINS TAX 
             RATES AND INDEXING THE BASIS OF CERTAIN ASSETS

SEC. 201. REDUCTION IN INDIVIDUAL CAPITAL GAINS RATE.

    (a) General Rule.--Subsection (h) of section 1 (relating to maximum 
capital gains rate) is amended to read as follows:
    ``(h) Maximum Capital Gains Rate.--
            ``(1) In general.--If a taxpayer has a net capital gain for 
        any taxable year, then the tax imposed by this section shall 
        not exceed the sum of--
                    ``(A) a tax computed at the rates and in the same 
                manner as if this subsection had not been enacted on 
                the taxable income reduced by the net capital gain, 
                plus
                    ``(B) a tax equal to the sum of--
                            ``(i) 7.5 percent of so much of the net 
                        capital gain as does not exceed--
                                    ``(I) the maximum amount of taxable 
                                income to which the 15-percent rate 
                                applies under the table applicable to 
                                the taxpayer, reduced by
                                    ``(II) the taxable income to which 
                                subparagraph (A) applies, plus
                            ``(ii) 15 percent of the net capital gain 
                        in excess of the net capital gain to which 
                        clause (i) applies.
        For purposes of the preceding sentence, the net capital gain 
        for any taxable year shall be reduced (but not below zero) by 
        the amount which the taxpayer elects to take into account as 
        investment income for the taxable year under section 
        163(d)(4)(B)(iii).
            ``(2) Transitional rule.--In the case of a taxable year 
        which includes January 1, 1994, the amount of the net capital 
        gain for purposes of paragraph (1) shall not exceed the net 
        capital gain determined by only taking into account gains and 
        losses properly taken into account for the portion of the 
        taxable year on or after such date.''
    (b) Phase-Out of Personal Exemptions and Limitation on Deduction of 
Itemized Deductions Not To Result From Net Capital Gain.--
            (1)(A) Subparagraphs (A) and (B) of section 151(d)(3) 
        (relating to phaseout of exemption amount) are each amended by 
        inserting ``modified'' before ``adjusted gross income''.
            (B) Paragraph (3) of section 151(d) is amended by 
        redesignating subparagraph (D) as subparagraph (E) and by 
        inserting after subparagraph (C) the following new 
        subparagraph:
                    ``(D) Modified adjusted gross income.--For purposes 
                of this paragraph--
                            ``(i) In general.--The term `modified 
                        adjusted gross income' means adjusted gross 
                        income reduced by net capital gain.
                            ``(ii) Transitional rule.--In the case of a 
                        taxable year which includes January 1, 1994, 
                        the amount of the net capital gain for purposes 
                        of clause (i) shall not exceed the net capital 
                        gain determined by only taking into account 
                        gains and losses properly taken into account 
                        for the portion of the taxable year on or after 
                        such date.''
            (2) Subsection (a) of section 68 (relating to overall 
        limitation on itemized deductions) is amended by adding at the 
        end the following new sentence:
``For purposes of paragraph (1), adjusted gross income shall be 
computed without regard to net capital gain (determined after 
application of the rule of section 151(d)(3)(D)(ii)).''
    (c) Technical Amendments.--
            (1) Paragraph (1) of section 170(e) is amended by striking 
        ``the amount of gain'' in the material following subparagraph 
        (B)(ii) and inserting ``24.6/39.6 (20/35 in the case of a 
        corporation) of the amount of gain''.
            (2)(A) The second sentence of section 7518(g)(6)(A) is 
        amended by striking ``28 percent (34 percent in the case of a 
        corporation)'' and inserting ``15 percent''.
            (B) The second sentence of section 607(h)(6)(A) of the 
        Merchant Marine Act, 1936, is amended by striking ``28 percent 
        (34 percent in the case of a corporation)'' and inserting ``15 
        percent''.

SEC. 202. REDUCTION IN CORPORATE CAPITAL GAINS RATE.

    (a) General Rule.--Section 1201 (relating to alternative tax for 
corporations) is amended by redesignating subsection (b) as subsection 
(c), and by striking subsection (a) and inserting the following:
    ``(a) General Rule.--If for any taxable year a corporation has a 
net capital gain, then, in lieu of the tax imposed by section 11, 511, 
or 831(a) (whichever applies), there is hereby imposed a tax (if such 
tax is less than the tax imposed by such section) which shall consist 
of the sum of--
            ``(1) a tax computed on the taxable income reduced by the 
        net capital gain, at the same rates and in the same manner as 
        if this subsection had not been enacted, plus
            ``(2) a tax of 15 percent of the net capital gain.
    ``(b) Transitional Rule.--In the case of a taxable year which 
includes January 1, 1994, the amount of the net capital gain for 
purposes of subsection (a) shall not exceed the net capital gain 
determined by only taking into account gains and losses properly taken 
into account for the portion of the taxable year on or after such 
date.''
    (b) Technical Amendments.--
            (1) Clause (iii) of section 852(b)(3)(D) is amended by 
        striking ``65 percent'' and inserting ``85 percent''.
            (2) Paragraphs (1) and (2) of section 1445(e) are each 
        amended by striking ``35 percent'' and inserting ``15 
        percent''.
            (3) Paragraph (1) of section 1445(e) is amended by striking 
        ``(or, to the extent provided in regulations, 28 percent)''.

SEC. 203. REDUCTION OF MINIMUM TAX RATE ON CAPITAL GAINS.

    Section 55(b)(1) (relating to tentative minimum tax) is amended by 
adding at the end the following new subparagraph:
                    ``(C) Special rule for capital gains.--If a 
                taxpayer has a net capital gain for any taxable year, 
                the tentative minimum tax for the taxable year is the 
                sum of--
                            ``(i) 15 percent of the lesser of--
                                    ``(I) the net capital gain 
                                (determined with the adjustments 
                                provided in this part and (to the 
                                extent applicable) the limitations of 
                                sections 1(h)(2) and 1201(b)), or
                                    ``(II) so much of the alternative 
                                minimum taxable income for the taxable 
                                year as exceeds the exemption amount, 
                                plus
                            ``(ii) a tax computed on the amount (if 
                        any) by which the excess referred to in clause 
                        (i)(II) exceeds the net capital gain (as so 
                        determined), at the same rates and in the same 
                        manner as if this subparagraph had not been 
                        enacted.''

SEC. 204. INDEXING OF CERTAIN ASSETS FOR PURPOSES OF DETERMINING GAIN 
              OR LOSS.

    (a) In General.--Part II of subchapter O of chapter 1 (relating to 
basis rules of general application) is amended by inserting after 
section 1021 the following new section:

``SEC. 1022. INDEXING OF CERTAIN ASSETS FOR PURPOSES OF DETERMINING 
              GAIN OR LOSS.

    ``(a) General Rule.--
            ``(1) Indexed basis substituted for adjusted basis.--Except 
        as provided in paragraph (2), if an indexed asset which has 
        been held for more than 1 year is sold or otherwise disposed 
        of, then, for purposes of this title, the indexed basis of the 
        asset shall be substituted for its adjusted basis.
            ``(2) Exception for depreciation, etc.--The deduction for 
        depreciation, depletion, and amortization shall be determined 
        without regard to the application of paragraph (1) to the 
        taxpayer or any other person.
    ``(b) Indexed Asset.--
            ``(1) In general.--For purposes of this section, the term 
        `indexed asset' means--
                    ``(A) stock in a corporation, and
                    ``(B) tangible property (or any interest therein), 
                which is a capital asset or property used in the trade 
                or business (as defined in section 1231(b)).
            ``(2) Certain property excluded.--For purposes of this 
        section, the term `indexed asset' does not include--
                    ``(A) Creditor's interest.--Any interest in 
                property which is in the nature of a creditor's 
                interest.
                    ``(B) Options.--Any option or other right to 
                acquire an interest in property.
                    ``(C) Net lease property.--In the case of a lessor, 
                net lease property (within the meaning of subsection 
                (h)(1)).
                    ``(D) Certain preferred stock.--Stock which is 
                preferred as to dividends and does not participate in 
                corporate growth to any significant extent.
                    ``(E) Stock in certain corporations.--Stock in--
                            ``(i) an S corporation (within the meaning 
                        of section 1361),
                            ``(ii) a personal holding company (as 
                        defined in section 542), and
                            ``(iii) a foreign corporation.
            ``(3) Exception for stock in foreign corporation which is 
        regularly traded on national or regional exchange.--Clause 
        (iii) of paragraph (2)(E) shall not apply to stock in a foreign 
        corporation the stock of which is listed on the New York Stock 
        Exchange, the American Stock Exchange, or any domestic regional 
        exchange for which quotations are published on a regular basis 
        other than--
                    ``(A) stock of a foreign investment company (within 
                the meaning of section 1246(b)), and
                    ``(B) stock in a foreign corporation held by a 
                United States person who meets the requirements of 
                section 1248(a)(2).
    ``(c) Indexed Basis.--For purposes of this section--
            ``(1) Indexed basis.--The indexed basis for any asset is--
                    ``(A) the adjusted basis of the asset, multiplied 
                by
                    ``(B) the applicable inflation ratio.
            ``(2) Applicable inflation ratio.--The applicable inflation 
        ratio for any asset is the percentage arrived at by dividing--
                    ``(A) the gross national product deflator for the 
                calendar quarter in which the disposition takes place, 
                by
                    ``(B) the gross national product deflator for the 
                calendar quarter in which the asset was acquired by the 
                taxpayer (or, if later, the calendar quarter ending 
                December 31, 1993).
        The applicable inflation ratio shall not be taken into account 
        unless it is greater than 1. The applicable inflation ratio for 
        any asset shall be rounded to the nearest one-tenth of 1 
        percent.
            ``(3) Gross national product deflator.--The gross national 
        product deflator for any calendar quarter is the implicit price 
        deflator for the gross national product for such quarter (as 
        shown in the first revision thereof).
            ``(4) Secretary to publish tables.--The Secretary shall 
        publish tables specifying the applicable inflation ratios for 
        each calendar quarter.
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Treatment as separate asset.--In the case of any 
        asset, the following shall be treated as a separate asset:
                    ``(A) a substantial improvement to property,
                    ``(B) in the case of stock of a corporation, a 
                substantial contribution to capital, and
                    ``(C) any other portion of an asset to the extent 
                that separate treatment of such portion is appropriate 
                to carry out the purposes of this section.
            ``(2) Assets which are not indexed assets throughout 
        holding period.--
                    ``(A) In general.--The applicable inflation ratio 
                shall be appropriately reduced for calendar months at 
                any time during which the asset was not an indexed 
                asset.
                    ``(B) Certain short sales.--For purposes of 
                applying subparagraph (A), an asset shall be treated as 
                not an indexed asset for any short sale period during 
                which the taxpayer or the taxpayer's spouse sells short 
                property substantially identical to the asset. For 
                purposes of the preceding sentence, the short sale 
                period begins on the day after the substantially 
                identical property is sold and ends on the closing date 
                for the sale.
            ``(3) Treatment of certain distributions.--A distribution 
        with respect to stock in a corporation which is not a dividend 
        shall be treated as a disposition.
            ``(4) Section cannot increase ordinary loss.--To the extent 
        that (but for this paragraph) this section would create or 
        increase a net ordinary loss to which section 1231(a)(2) 
        applies or an ordinary loss to which any other provision of 
        this title applies, such provision shall not apply. The 
        taxpayer shall be treated as having a long-term capital loss in 
        an amount equal to the amount of the ordinary loss to which the 
        preceding sentence applies.
            ``(5) Acquisition date where there has been prior 
        application of subsection (a)(1) with respect to the 
        taxpayer.--If there has been a prior application of subsection 
        (a)(1) to an asset while such asset was held by the taxpayer, 
        the date of acquisition of such asset by the taxpayer shall be 
        treated as not earlier than the date of the most recent such 
        prior application.
            ``(6) Collapsible corporations.--The application of section 
        341(a) (relating to collapsible corporations) shall be 
        determined without regard to this section.
    ``(e) Certain Conduit Entities.--
            ``(1) Regulated investment companies; real estate 
        investment trusts; common trust funds.--
                    ``(A) In general.--Stock in a qualified investment 
                entity shall be an indexed asset for any calendar month 
                in the same ratio as the fair market value of the 
                assets held by such entity at the close of such month 
                which are indexed assets bears to the fair market value 
                of all assets of such entity at the close of such 
                month.
                    ``(B) Ratio of 90 percent or more.--If the ratio 
                for any calendar month determined under subparagraph 
                (A) would (but for this subparagraph) be 90 percent or 
                more, such ratio for such month shall be 100 percent.
                    ``(C) Ratio of 10 percent or less.--If the ratio 
                for any calendar month determined under subparagraph 
                (A) would (but for this subparagraph) be 10 percent or 
                less, such ratio for such month shall be zero.
                    ``(D) Valuation of assets in case of real estate 
                investment trusts.--Nothing in this paragraph shall 
                require a real estate investment trust to value its 
                assets more frequently than once each 36 months (except 
                where such trust ceases to exist). The ratio under 
                subparagraph (A) for any calendar month for which there 
                is no valuation shall be the trustee's good faith 
                judgment as to such valuation.
                    ``(E) Qualified investment entity.--For purposes of 
                this paragraph, the term `qualified investment entity' 
                means--
                            ``(i) a regulated investment company 
                        (within the meaning of section 851),
                            ``(ii) a real estate investment trust 
                        (within the meaning of section 856), and
                            ``(iii) a common trust fund (within the 
                        meaning of section 584).
            ``(2) Partnerships.--In the case of a partnership, the 
        adjustment made under subsection (a) at the partnership level 
        shall be passed through to the partners.
            ``(3) Subchapter s corporations.--In the case of an 
        electing small business corporation, the adjustment under 
        subsection (a) at the corporate level shall be passed through 
        to the shareholders.
    ``(f) Dispositions Between Related Persons.--
            ``(1) In general.--This section shall not apply to any sale 
        or other disposition of property between related persons except 
        to the extent that the basis of such property in the hands of 
        the transferee is a substituted basis.
            ``(2) Related persons defined.--For purposes of this 
        section, the term `related persons' means--
                    ``(A) persons bearing a relationship set forth in 
                section 267(b), and
                    ``(B) persons treated as single employer under 
                subsection (b) or (c) of section 414.
    ``(g) Transfers To Increase Indexing Adjustment or Depreciation 
Allowance.--If any person transfers cash, debt, or any other property 
to another person and the principal purpose of such transfer is--
            ``(1) to secure or increase an adjustment under subsection 
        (a), or
            ``(2) to increase (by reason of an adjustment under 
        subsection (a)) a deduction for depreciation, depletion, or 
        amortization,
the Secretary may disallow part or all of such adjustment or increase.
    ``(h) Definitions.--For purposes of this section--
            ``(1) Net lease property defined.--The term `net lease 
        property' means leased real property where--
                    ``(A) the term of the lease (taking into account 
                options to renew) was 50 percent or more of the useful 
                life of the property, and
                    ``(B) for the period of the lease, the sum of the 
                deductions with respect to such property which are 
                allowable to the lessor solely by reason of section 162 
                (other than rents and reimbursed amounts with respect 
                to such property) is 15 percent or less of the rental 
                income produced by such property.
            ``(2) Stock includes interest in common trust fund.--The 
        term `stock in a corporation' includes any interest in a common 
        trust fund (as defined in section 584(a)).
    ``(i) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section.''
    (b) Clerical Amendment.--The table of sections for part II of 
subchapter O of such chapter 1 is amended by inserting after the item 
relating to section 1021 the following new item:

                              ``Sec. 1022. Indexing of certain assets 
                                        for purposes of determining 
                                        gain or loss.''
    (c) Adjustment To Apply for Purposes of Determining Earnings and 
Profits.--Subsection (f) of section 312 (relating to effect on earnings 
and profits of gain or loss and of receipt of tax-free distributions) 
is amended by adding at the end thereof the following new paragraph:
            ``(3) Effect on earnings and profits of indexed basis.--

                                For substitution of indexed basis for 
adjusted basis in the case of the disposition of certain assets after 
December 31, 1993, see section 1022(a)(1).''

SEC. 205. INDEXING OF LIMITATION ON CAPITAL LOSSES OF INDIVIDUALS.

    Section 1211 (relating to limitation on capital losses) is amended 
by adding at the end thereof the following new subsection:
    ``(c) Indexation of Limitation on Noncorporate Taxpayers.--
            ``(1) In general.--In the case of any taxable year 
        beginning in a calendar year after 1993, the $3,000 and $1,500 
        amounts under subsection (b)(1) shall be increased by an amount 
        equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the applicable inflation adjustment for the 
                calendar year in which the taxable year begins.
            ``(2) Applicable inflation adjustment.--For purposes of 
        paragraph (1), the applicable inflation adjustment for any 
        calendar year is the percentage (if any) by which--
                    ``(A) the gross national product deflator for the 
                last calendar quarter of the preceding calendar year, 
                exceeds
                    ``(B) the gross national product deflator for the 
                last calendar quarter of 1992.
        For purposes of this paragraph, the term `gross national 
        product deflator' has the meaning given such term by section 
        1022(c)(3).''

SEC. 206. EFFECTIVE DATES.

    (a) In General.--Except as provided in subsection (b), the 
amendments made by this title shall apply to sales or exchanges 
occurring after December 31, 1993, in taxable years ending after such 
date.
    (b) Indexing of Loss Limitation.--The amendments made by section 
205 shall apply to taxable years beginning after December 31, 1993.

                    TITLE III--NEUTRAL COST RECOVERY

SEC. 301. DEPRECIATION ADJUSTMENT FOR CERTAIN PROPERTY PLACED IN 
              SERVICE IN TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 
              1993.

    (a) In General.--Section 168 (relating to accelerated cost recovery 
system) is amended by adding at the end the following new subsection:
    ``(k) Deduction Adjustment To Allow Equivalent of Expensing for 
Certain Property Placed in Service in Taxable Years Beginning After 
December 31, 1993.--
            ``(1) In general.--In the case of tangible property placed 
        in service in a taxable year beginning after December 31, 1993, 
        the deduction allowable under this section with respect to such 
        property for any taxable year (after the taxable year during 
        which the property is placed in service) shall be--
                    ``(A) the amount so allowable for such taxable year 
                without regard to this subsection, multiplied by
                    ``(B) the applicable neutral cost recovery ratio 
                for such taxable year.
        For purposes of subparagraph (A), paragraphs (1) and (2) of 
        subsection (b) shall be applied by substituting `150 percent' 
        for `200 percent'.
            ``(2) Applicable neutral cost recovery ratio.--For purposes 
        of paragraph (1), the applicable neutral cost recovery ratio 
        for any taxable year is the number determined by--
                    ``(A) dividing--
                            ``(i) the gross national product deflator 
                        for the calendar quarter ending in such taxable 
                        year which corresponds to the calendar quarter 
                        during which the property was placed in service 
                        by the taxpayer, by
                            ``(ii) the gross national product deflator 
                        for the calendar quarter during which the 
                        property was placed in service by the taxpayer, 
                        and
                    ``(B) then multiplying the number determined under 
                subparagraph (A) by the number equal to 1.035 to the 
                nth power where `n' is the number of full years in the 
                period beginning on the 1st day of the calendar quarter 
                during which the property was placed in service by the 
                taxpayer and ending on the day before the beginning of 
                the corresponding calendar quarter ending during such 
                taxable year.
        The applicable neutral cost recovery ratio shall not be taken 
        into account unless it is greater than 1. The applicable 
        neutral cost recovery ratio shall be rounded to the nearest 
        one-tenth of 1 percent.
            ``(3) Gross national product deflator.--For purposes of 
        paragraph (2), the gross national product deflator for any 
        calendar quarter is the implicit price deflator for the gross 
        national product for such quarter (as shown in the first 
        revision thereof).
            ``(4) Election not to have subsection apply.--This 
        subsection shall not apply to any property if the taxpayer 
        elects not to have this subsection apply to such property. Such 
        an election, once made, shall be irrevocable.''
    (b) Minimum Tax Treatment.--Paragraph (1) of section 56(a) is 
amended by adding at the end the following new subparagraph:
                    ``(E) Use of neutral cost recovery ratio.--In the 
                case of tangible property placed in service in a 
                taxable year beginning after December 31, 1993, the 
                deduction allowable under this paragraph with respect 
                to such property for any taxable year (after the 
                taxable year during which the property is placed in 
                service) shall be--
                            ``(i) the amount so allowable for such 
                        taxable year without regard to this 
                        subparagraph, multiplied by
                            ``(ii) the applicable neutral cost recovery 
                        ratio for such taxable year (as determined 
                        under section 168(k)).
                This subparagraph shall not apply to any property with 
                respect to which there is an election in effect not to 
                have section 168(k) apply.''
    (c) Disallowance of Interest Deduction To Ensure Equity Financing 
Receives Same Treatment as Debt Financing.--Section 163 (relating to 
deduction for interest) is amended by redesignating subsection (k) as 
subsection (l) and by inserting after subsection (j) the following new 
subsection:
    ``(k) Disallowance of Deduction for Property Subject to Neutral 
Cost Recovery.--No deduction shall be allowed for any amount otherwise 
allowable as a deduction for interest on indebtedness incurred or 
continued to purchase or carry tangible property with respect to which 
an election is made under section 168(k) (relating to neutral cost 
recovery).''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1993.

SEC. 302. SPECIAL DEPRECIATION RULES APPLICABLE UNDER THE ADJUSTED 
              CURRENT EARNINGS PROVISIONS OF THE MINIMUM TAX.

    (a) In General.--Subparagraph (A) of section 56(g)(4) (relating to 
adjustments) is amended by adding at the end the following new clauses:
                            ``(vi) Special basis rules for 1994.--
                                    ``(I) In general.--Notwithstanding 
                                clause (i), the adjusted basis of any 
                                depreciable property held by the 
                                taxpayer as of the beginning of the 
                                taxpayer's first taxable year beginning 
                                after December 31, 1993, shall be 
                                determined as if the provisions of the 
                                last sentence of clause (i) had also 
                                applied to taxable years beginning in 
                                1990, 1991, 1992, or 1993.
                                    ``(II) Lost basis recovered over 5 
                                years.--The amount determined under 
                                clause (vii) shall be allowed as a 
                                deduction ratably over the 60-month 
                                period beginning with the first month 
                                of the taxpayer's first taxable year 
                                beginning after December 31, 1993.
                            ``(vii) Amount of lost basis.--For purposes 
                        of clause (vi)(II), the amount determined under 
                        this clause is the excess of--
                                    ``(I) the aggregate adjusted bases 
                                of depreciable property held by the 
                                taxpayer as of the beginning of the 
                                taxpayer's first taxable year beginning 
                                after December 31, 1993, which would 
                                have been determined (as of such time) 
                                under clause (i) without regard to 
                                clause (vi), over
                                    ``(II) the aggregate adjusted bases 
                                of such property (as of such time) as 
                                determined under the rules of clause 
                                (vi).''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 1993.

  TITLE IV--INCREASING NATIONAL SAVINGS THROUGH INDIVIDUAL RETIREMENT 
PLUS ACCOUNTS, INDEXING FOR INFLATION THE INCOME THRESHOLDS FOR TAXING 
                     SOCIAL SECURITY BENEFITS, ETC.

SEC. 401. ESTABLISHMENT OF INDIVIDUAL RETIREMENT PLUS ACCOUNTS.

    (a) In General.--Subpart A of part I of subchapter D of chapter 1 
(relating to pension, profit-sharing, stock bonus plans, etc.) is 
amended by inserting after section 408 the following new section:

``SEC. 408A. INDIVIDUAL RETIREMENT PLUS ACCOUNTS.

    ``(a) General Rule.--Except as provided in this section, an 
individual retirement plus account shall be treated for purposes of 
this title in the same manner as an individual retirement plan.
    ``(b) Individual Retirement Plus Account.--For purposes of this 
title, the term `individual retirement plus account' means an 
individual retirement plan which is designated at the time of the 
establishment of the plan as an individual retirement plus account. 
Such designation shall be made in such manner as the Secretary may 
prescribe.
    ``(c) Contribution Rules.--
            ``(1) No deduction allowed.--No deduction shall be allowed 
        under section 219 for a contribution to an individual 
        retirement plus account.
            ``(2) Contribution limit.--
                    ``(A) In general.--Except in the case of rollover 
                contributions, the aggregate amount which may be 
                accepted as contributions to an individual retirement 
                plus account shall not be greater than the excess (if 
                any) of--
                            ``(i) the nondeductible limit with respect 
                        to the individual for the taxable year under 
                        section 408(o) (after application of 
                        subparagraph (B)(ii) thereof), over
                            ``(ii) the designated nondeductible 
                        contributions made by the individual for such 
                        taxable year to 1 or more individual retirement 
                        plans.
                    ``(B) $1,000 increase after 1995.--
                            ``(i) In general.--In the case of any 
                        taxable year beginning after December 31, 1995, 
                        the amount determined under subparagraph (A)(i) 
                        (without regard to this subparagraph) shall be 
                        increased by $1,000.
                            ``(ii) Adjustment for inflation.--In the 
                        case of any taxable year beginning in a 
                        calendar year after 1997, the $1,000 amount in 
                        clause (i) shall be increased by an amount 
                        equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment under section 1(f)(3) for 
                                the calendar year in which the taxable 
                                year begins, determined by substituting 
                                `calendar year 1996' for `calendar year 
                                1992' in subparagraph (B) thereof.
                            ``(iii) Rounding.--If any amount as 
                        adjusted under clause (ii) is not a multiple of 
                        $50, such amount shall be rounded to the 
                        nearest multiple of $50 (or, if such amount is 
                        a multiple of $25, such amount shall be rounded 
                        to the next highest multiple of $50).
                    ``(C) Special rule for married individuals.--The 
                nondeductible limits under subparagraph (A) for an 
                individual or for such individual's spouse shall be an 
                amount equal to the excess (if any) of--
                            ``(i) the amount determined under 
                        subparagraph (A)(i) (after application of 
                        subparagraph (B)), over
                            ``(ii) the sum of the amount allowed as a 
                        deduction under section 219 for contributions 
                        on behalf of such individual or such spouse, 
                        plus the amount determined under subparagraph 
                        (A)(ii) with respect to each.
                In no event shall the sum of such limits exceed an 
                amount equal to the sum of the compensation includible 
                in the individual's and spouse's gross income for the 
                taxable year, reduced by the sum of the amounts 
                determined under clause (ii).
            ``(3) Contributions after age 70\1/2\.--Contributions may 
        be made by an individual to an individual retirement plus 
        account after such individual has attained the age of 70\1/2\.
            ``(4) Limitations on rollover contributions.--No rollover 
        contributions may be made to an individual retirement plus 
        account unless such rollover contribution is a contribution of 
        a distribution or payment out of--
                    ``(A) another individual retirement plus account, 
                or
                    ``(B) an individual retirement plan which is not 
                allocable to any amount transferred to such plan which 
                represented any portion of the balance to the credit of 
                an employee in a qualified trust (or any income 
                allocable to such portion).
    ``(d) Distribution Rules.--For purposes of this title--
            ``(1) In general.--Except in the case of a qualified 
        distribution, the rules of paragraphs (1) and (2) of section 
        408(d) shall apply to any distribution from an individual 
        retirement plus account.
            ``(2) Treatment of qualified distribution.--In the case of 
        a qualified distribution from an individual retirement plus 
        account--
                    ``(A) the amount of such distribution shall not be 
                includible in gross income, and
                    ``(B) section 72(t) shall not apply.
            ``(3) Qualified distribution.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified 
                distribution' means any distribution--
                            ``(i) made on or after the date on which 
                        the individual attains age 59\1/2\,
                            ``(ii) made to a beneficiary (or to the 
                        estate of an individual) on or after the death 
                        of the individual,
                            ``(iii) attributable to the employee's 
                        being disabled (within the meaning of section 
                        72(m)(7)), or
                            ``(iv) which is a qualified special purpose 
                        distribution (within the meaning of subsection 
                        (e)).
                    ``(B) Distributions within 5 years.--No 
                distribution shall be treated as a qualified 
                distribution if--
                            ``(i) it is made within the 5-taxable year 
                        period beginning with the 1st taxable year in 
                        which the individual made a contribution to an 
                        individual retirement plus account, or
                            ``(ii) in the case of a distribution 
                        properly allocable to a rollover contribution 
                        (or income allocable thereto), it is made 
                        within 5 years of the date on which such 
                        rollover contribution was made.
            ``(4) Special rules relating to rollovers from regular 
        individual retirement accounts.--
                    ``(A) In general.--Except as provided in this 
                paragraph, any amount paid or distributed out of an 
                individual retirement plan on or before the earlier 
                of--
                            ``(i) the date on which the individual 
                        attains age 55, or
                            ``(ii) January 1, 1995,
                shall not be included in gross income (and section 
                72(t) shall not apply to such amount) if the individual 
                receiving such amount transfers, within 60 days of 
                receipt, the entire amount received to an individual 
                retirement plus account.
                    ``(B) Treatment of tax-favored amounts.--
                            ``(i) In general.--Notwithstanding 
                        subparagraph (A), there shall be included in 
                        gross income (but section 72(t) shall not apply 
                        to) the portion of any amount transferred which 
                        bears the same ratio to such amount as--
                                    ``(I) the aggregate amount of 
                                contributions to individual retirement 
                                plans with respect to which a deduction 
                                was allowable under section 219, bears 
                                to
                                    ``(II) the aggregate balance of 
                                such plans.
                            ``(ii) Time for inclusion.--Any amount 
                        described in clause (i) shall be included in 
                        gross income ratably over the 4-taxable year 
                        period beginning with the taxable year in which 
                        the amount was paid or distributed out of the 
                        individual retirement plan.
    ``(e) Qualified Special Purpose Distribution.--For purposes of this 
section--
            ``(1) In general.--The term `qualified special purpose 
        distribution' means--
                    ``(A) a qualified first-time homebuyer 
                distribution, or
                    ``(B) an applicable medical or educational 
                distribution.
            ``(2) 25 percent account limit.--A distribution shall not 
        be treated as a qualified special purpose distribution to the 
        extent it exceeds the amount (if any) by which--
                    ``(A) 25 percent of the sum of--
                            ``(i) the aggregate balance of individual 
                        retirement plus accounts established on behalf 
                        of an individual, plus
                            ``(ii) the aggregate amounts previously 
                        treated as qualified special purpose 
                        distributions, exceeds
                    ``(B) the amount determined under subparagraph 
                (A)(ii).
            ``(3) Distributions used to purchase a home by first-time 
        homebuyer.--For purposes of paragraph (1)--
                    ``(A) In general.--The term `qualified first-time 
                homebuyer distribution' means any payment or 
                distribution received by a first-time homebuyer from an 
                individual retirement plan to the extent such payment 
                or distribution is used by the individual before the 
                close of the 60th day after the day on which such 
                payment or distribution is received to pay qualified 
                acquisition costs with respect to a principal residence 
                for such individual.
                    ``(B) Basis reduction.--The basis of any principal 
                residence described in subparagraph (A) shall be 
                reduced by any amount excluded from the gross income of 
                such first-time homebuyer by reason of this section.
                    ``(C) Recognition of gain as ordinary income.--
                            ``(i) In general.--Notwithstanding any 
                        other provision of this subtitle, except as 
                        provided in clause (ii)--
                                    ``(I) gain (if any) on the sale or 
                                exchange of a principal residence to 
                                which subparagraph (A) applies shall, 
                                to the extent of the amount excluded 
                                from gross income under this section, 
                                be treated as ordinary income by such 
                                individual, and
                                    ``(II) section 72(t) shall apply to 
                                such amount.
                            ``(ii) Exception.--Clause (i) shall not 
                        apply to any taxable year to the extent of any 
                        amount which, before the due date (without 
                        extensions) for filing the return for such 
                        year, the taxpayer contributes to an individual 
                        retirement plus account. Such amount shall not 
                        be taken into account for purposes of any 
                        provision of this title relating to excess 
                        contributions.
                            ``(iii) Coordination with other 
                        provisions.--In the event all or part of the 
                        gain referred to in clause (i) is treated as 
                        ordinary income under any other provision of 
                        this subtitle, such provision shall be applied 
                        before clause (i).
                    ``(D) Special rule where delay in acquisition.--
                If--
                            ``(i) any amount is paid or distributed 
                        from an individual retirement plus account to 
                        an individual for purposes of being used as 
                        provided in subparagraph (A), and
                            ``(ii) by reason of a delay in the 
                        acquisition of the residence, such amount 
                        cannot be so used,
                the amount so paid or distributed may be paid into an 
                individual retirement plus account as provided in 
                section 408(d)(3)(A)(i) without regard to section 
                408(d)(3)(B), and, if so paid into such other plan, 
                such amount shall not be taken into account in 
                determining whether section 408(d)(3)(A)(i) applies to 
                any other amount.
                    ``(E) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Qualified acquisition costs.--The 
                        term `qualified acquisition costs' means the 
                        costs of acquiring, constructing, or 
                        reconstructing a residence. Such term includes 
                        any usual or reasonable settlement, financing, 
                        or other closing costs.
                            ``(ii) First-time homebuyer.--The term 
                        `first-time homebuyer' means any individual if 
                        such individual (and if married, such 
                        individual's spouse) had no present ownership 
                        interest in a principal residence during the 3-
                        year period ending on the date of acquisition 
                        of the principal residence to which this 
                        paragraph applies.
                            ``(iii) Principal residence.--The term 
                        `principal residence' has the same meaning as 
                        when used in section 1034.
                            ``(iv) Date of acquisition.--The term `date 
                        of acquisition' means the date--
                                    ``(I) on which a binding contract 
                                to acquire the principal residence to 
                                which subparagraph (A) applies is 
                                entered into, or
                                    ``(II) on which construction or 
                                reconstruction of such a principal 
                                residence is commenced.
            ``(4) Applicable medical distributions.--For purposes of 
        paragraph (1), the term `applicable medical distributions' 
        means any distributions made to an individual (not otherwise 
        taken into account under this subsection) to the extent such 
        distributions do not exceed the amount allowable as a deduction 
        under section 213 for amounts paid during the taxable year for 
        medical care (without regard to whether the individual itemized 
        deductions for the taxable year).
            ``(5) Distributions from individual retirement plus 
        accounts for educational expenses.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the term `applicable educational distributions' means 
                distributions to an individual to the extent that the 
                amount of such distributions (not otherwise treated as 
                qualified special purpose distributions, determined 
                after application of paragraph (4)) does not exceed the 
                qualified higher education expenses of the individual 
                for the taxable year.
                    ``(B) Qualified higher education expenses.--For 
                purposes of subparagraph (A)--
                            ``(i) In general.--The term `qualified 
                        higher education expenses' means tuition, fees, 
                        books, supplies, and equipment required for the 
                        enrollment or attendance of--
                                    ``(I) the taxpayer,
                                    ``(II) the taxpayer's spouse, or
                                    ``(III) the taxpayer's child (as 
                                defined in section 151(c)(3)) or 
                                grandchild,
                        at an eligible educational institution (as 
                        defined in section 135(c)(3)).
                            ``(ii) Coordination with savings bond 
                        provisions.--The amount of qualified higher 
                        education expenses for any taxable year shall 
                        be reduced by any amount excludable from gross 
                        income under section 135.
    ``(f) Rollover Contributions.--For purposes of this section, the 
term `rollover contributions' means contributions described in sections 
402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8), and 408(d)(3).
    ``(g) Determinations.--For purposes of this section, any 
determinations with respect to aggregate contributions to, or the 
balance of, individual retirement plus accounts shall be made as of the 
close of the calendar year preceding the calendar year in which the 
taxable year begins.''
    (b) Conforming Amendment.--The table of sections for subpart A of 
part I of subchapter D of chapter 1 is amended by inserting after the 
item relating to section 408 the following new item:

                              ``Sec. 408A. Individual retirement plus 
                                        accounts.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1993.

SEC. 402. INFLATION ADJUSTMENT OF INCOME THRESHOLDS FOR TAXATION OF 
              SOCIAL SECURITY BENEFITS; INCOME FROM INDIVIDUAL 
              RETIREMENT PLANS EXCLUDED.

    (a) Adjustment of Income Thresholds for Inflation.--Subsection (c) 
of section 86 (relating to social security and tier 1 railroad 
retirement benefits) is amended by adding at the end the following new 
paragraph:
            ``(3) Adjustment of income thresholds for inflation.--
                    ``(A) In general.--In the case of any taxable year 
                beginning in a calendar year after 1996, each dollar 
                amount contained in paragraphs (1) and (2) shall be 
                increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment under 
                        section 1(f)(3) for the calendar year in which 
                        the taxable year begins, determined by 
                        substituting `calendar year 1995' for `calendar 
                        year 1992' in subparagraph (B) thereof.
                    ``(B) Rounding.--If any amount as adjusted under 
                subparagraph (A) is not a multiple of $50, such amount 
                shall be rounded to the nearest multiple of $50 (or, if 
                such amount is a multiple of $25, such amount shall be 
                rounded to the next highest multiple of $50).''
    (b) Income From Individual Retirement Plans Excluded.--Paragraph 
(2) of section 86(b) is amended by striking ``and'' at the end of 
subparagraph (A), by striking the period at the end of subparagraph (B) 
and inserting ``, and'', and by adding at the end thereof the following 
new subparagraph:
                    ``(C) decreased by the portion of such income which 
                is attributable to a distribution or payment from an 
                individual retirement plan.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1996.

SEC. 403. INFLATION ADJUSTMENT OF MAXIMUM AMOUNT OF IRA DEDUCTION.

    (a) In General.--Section 219 (relating to retirement savings) is 
amended by redesignating subsection (h) as subsection (i) and by 
inserting after subsection (g) the following new subsection:
    ``(h) Adjustment of Maximum Deduction for Inflation.--
            ``(1) In general.--In the case of any taxable year 
        beginning in a calendar year after 1996, each applicable dollar 
        amount shall be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment under section 
                1(f)(3) for the calendar year in which the taxable year 
                begins, determined by substituting `calendar year 1995' 
                for `calendar year 1992' in subparagraph (B) thereof.
            ``(2) Applicable dollar amount.--For purposes of paragraph 
        (1), the term `applicable dollar amount' means--
                    ``(A) the $2,000 amount in subsections (b)(1)(A) 
                and (c)(2) of this section, in subsections (a)(1), (b), 
                and (j) of section 408, and in section 408A(c)(2)(C), 
                and
                    ``(B) the $2,250 amount in subsection (c)(2) of 
                this section and in section 408(d)(5).
            ``(3) Rounding.--If any amount as adjusted under paragraph 
        (1) is not a multiple of $50, such amount shall be rounded to 
        the nearest multiple of $50 (or, if such amount is a multiple 
        of $25, such amount shall be rounded to the next highest 
        multiple of $50).''
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1996.

  TITLE V--CAP ON FEDERAL SPENDING AND ESTABLISHMENT OF COMMISSION TO 
                        REDUCE FEDERAL SPENDING

SEC. 501. ESTABLISHMENT.

    There is established a commission to be known as the ``Commission 
on Reduction of Federal Spending'' (hereinafter referred to as the 
``Commission'').

SEC. 502. DUTIES OF COMMISSION.

    The Commission is authorized and directed to--
            (1) review all Federal spending, including entitlement 
        programs, in order to identify and recommend specific 
        reductions in any Federal project, program, or activity to 
        assure that aggregate Federal spending does not grow at a rate 
        in excess of 2 percent per annum through fiscal year 1998; and
            (2)(A) not later than 6 months after the adoption of this 
        resolution, report to the House of Representatives and to the 
        Senate, by bill, any changes in law necessary to carry out 
        paragraph (1); and
            (B) if either House of Congress rejects the bill referred 
        to in paragraph (2), report to the House of Representatives and 
        the Senate within 10 legislative days of that rejection another 
        bill containing any changes in law necessary to carry out 
        paragraph (1).

SEC. 503. MEMBERSHIP.

    (a) Number and Appointment.--The Commission shall be composed of 20 
Members of the House of Representatives appointed by the Speaker, of 
whom 10 shall be members of the minority party appointed after 
consultation with the minority leader of the House and 20 Senators 
appointed by the President pro tempore of the Senate, of whom 10 shall 
be members of the minority party, appointed after consultation with the 
minority leader of the Senate. The appointments shall be made within 30 
days after the adoption of this resolution and shall be for the 
duration of the One Hundred Third Congress.
    (b) Quorum.--Twenty-one members of the Commission shall constitute 
a quorum but a lesser number may hold hearings.
    (c) Chairperson; Vice Chairperson.--The Chairperson and Vice 
Chairperson of the Commission shall be elected by the members.
    (d) Meetings.--The Commission shall meet at the call of the 
Chairperson or a majority of its members.

SEC. 504. DIRECTOR AND STAFF OF COMMISSION.

    (a) Director.--The Commission shall have a Director who shall be 
appointed by the Chairperson. The Director shall be paid at the rate of 
basic pay payable for level V of the Executive Schedule.
    (b) Staff.--The Commission may appoint and fix the pay of 
additional personnel as it considers appropriate.

SEC. 505. POWERS OF COMMISSION.

    The Commission may, for the purpose of carrying out this 
resolution, hold hearings, sit and act at times and places, take 
testimony, and receive evidence as the Commission considers 
appropriate.

SEC. 506. TERMINATION.

    The Commission shall terminate at the close of the One Hundred 
Fourth Congress.

SEC. 507. PAYMENT OF EXPENSES.

    One-half of the expenses of the Commission shall be paid from the 
contingent fund of the House of Representatives and one-half from the 
contingent fund of the Senate.

SEC. 508. CONSIDERATION OF COMMISSION'S PROPOSAL.

    (a) Upon the reporting of a bill by the Commission in either House 
of Congress, the bill shall be placed on the appropriate calendar of 
that House.
    (b) A vote on final passage of the bill shall be taken in that 
House on or before the close of the 7th legislative day of that House 
after the date the bill is reported to that House. If the bill is 
agreed to, the Clerk of the House of Representatives (in the case of a 
bill agreed to in the House of Representatives) or the Secretary of the 
Senate (in the case of a bill agreed to in the Senate) shall cause the 
bill to be engrossed, certified, and transmitted to the other House of 
Congress within one calendar day after the bill is agreed to.
    (c)(1) A bill transmitted to the House of Representatives or the 
Senate pursuant to subsection (b) shall be placed upon the appropriate 
calendar.
    (2) A vote on final passage of a bill transmitted to that House 
shall be taken on or before the close of the 7th legislative day in 
that House after the date on which the bill is transmitted. If the bill 
is agreed to in that House, the Clerk of the House of Representatives 
(in the case of a bill agreed to in the House of Representatives) or 
the Secretary of the Senate (in the case of a bill agreed to in the 
Senate) shall cause the engrossed bill to be returned to the House.
    (d)(1) A motion in the House of Representatives to proceed to the 
consideration of a bill under this section shall be highly privileged 
and not debatable. An amendment to the motion shall not be in order, 
nor shall it be in order to move to reconsider the vote by which the 
motion is agreed to or disagreed to.
    (2) Debate in the House of Representatives on a bill under this 
section shall not exceed 4 hours, which shall be divided equally 
between those favoring and those opposing the bill. A motion further to 
limit debate shall not be debatable. It shall not be in order to move 
to recommit a bill under this section or to move to reconsider the vote 
by which the bill is agreed to or disagreed to.
    (3) Appeals from decisions of the Chair relating to the application 
of the Rules of the House of Representatives to the procedure relating 
to a bill under this section shall be decided without debate.
    (4) Except to the extent specifically provided in the preceding 
provisions of this section, consideration of a bill under this section 
shall be governed by the Rules of the House of Representatives.
    (e)(1) A motion in the Senate to proceed to the consideration of a 
bill under this section shall be privileged and not debatable. An 
amendment to the motion shall not be in order, nor shall it be in order 
to move to reconsider the vote by which the motion is agreed to or 
disagreed to.
    (2) Debate in the Senate on a bill under this section, and all 
debatable motions and appeals in connection therewith, shall not exceed 
10 hours. The time shall be equally divided between, and controlled by, 
the majority leader and the minority leader or their designees.
    (3) Debate in the Senate on any debatable motion or appeal in 
connection with a bill under this section shall be limited to not more 
than 1 hour, to be equally divided between, and controlled by, the 
mover and the manager of the bill, except that in the event the manager 
of the bill is in favor of any such motion or appeal, the time in 
opposition thereto, shall be controlled by the minority leader or his 
designee. Such leaders, or either of them, may, from time under their 
control on the passage of a bill, allot additional time to any Senator 
during the consideration of any debatable motion or appeal.
    (4) A motion in the Senate to further limit debate on a bill under 
this section is not debatable. A motion to recommit a bill under this 
section is not in order.
    (f) No amendment to a bill considered under this section shall be 
in order in either the House of Representatives or the Senate. No 
motion to suspend the application of this subsection shall be in order 
in either House, nor shall it be in order in either House to suspend 
the application of this subsection by unanimous consent.
    (g) For purposes of this resolution, the term ``legislative day'' 
means, with respect to either House of Congress, any calendar day 
during which that House is in session.

SEC. 509. ADVISORY COUNCIL.

    (a) There is established an advisory council to assist the 
Commission in carrying out its duties.
    (b) The advisory council shall be composed of 150 private citizens 
appointed as follows:
            (1) Twenty individuals shall be selected randomly by the 
        Director of the Internal Revenue Service from among individual 
        taxpayers who are willing to serve.
            (2) Thirty-four individuals shall be appointed by the 
        Speaker of the House of Representatives.
            (3) Thirty-two individuals shall be appointed by the 
        minority party leader of the House of Representatives.
            (4) Thirty-two individuals shall be appointed by the 
        majority party leader of the Senate.
            (5) Thirty-two individuals shall be appointed by the 
        minority party leader of the Senate.
    (c) Members of the advisory council shall receive travel expenses, 
including per diem in lieu of subsistence, in accordance with sections 
5702 and 5703 of title 5, United States Code.
    (d) The advisory council shall terminate at the close of the One 
Hundred Fourth Congress.

SEC. 510. AMENDMENTS TO THE BALANCED BUDGET AND EMERGENCY DEFICIT 
              CONTROL ACT OF 1985 TO LIMIT FEDERAL SPENDING.

    The Balanced Budget and Emergency Deficit Control Act of 1985 is 
amended by adding after section 252 the following new section:

``SEC. 252A. LIMITATIONS ON DIRECT SPENDING.

    ``(a) Enforcement.--The purpose of this section is to assure that 
any increase in the annual amount of total Federal spending exceeding 
the amount resulting from an annual rate of inflation of 2 percent will 
trigger an offsetting sequestration.
    ``(b) Sequestration.--Within 15 calendar days after Congress 
adjourns to end a session and on the same day as a sequestration (if 
any) under sections 251 and 252, and prior to any sequestration under 
section 253, there shall be a sequestration to offset the amount of any 
excess Federal spending in that fiscal year. The amount of excess 
Federal spending for a fiscal year shall be the amount by which OMB 
projects total Federal spending for that year to exceed the direct 
spending limit for that year set forth in the following table:

  

------------------------------------------------------------------------
                                                    Outlay limits (in   
                  Fiscal Year                     billions of dollars)  
------------------------------------------------------------------------
1995..........................................           1512.66        
1996..........................................           1542.91        
1997..........................................           1573.77        
1998..........................................           1605.25        
1999..........................................           1637.35        
------------------------------------------------------------------------

    ``(c) Eliminating Excess Federal Spending.--The amount required to 
be sequestered in a fiscal year under subsection (b) shall be obtained 
from all non-exempt accounts. Each non-exempt account shall be reduced 
by the uniform percentage necessary to make the required reduction in 
Federal spending. The uniform reduction required shall be made without 
application of the exemptions, except for the following: interest on 
the debt, (with respect to social security benefits), and prior legal 
obligations of the Government.
    ``(d) Reports.--The requirements of section 254 for reports and 
orders that are applicable to section 252 shall also apply to this 
section except that such reports and orders for this section shall 
refer to and apply the requirements, calculations and sequestrations of 
this section.
    ``(e) Reconciliation Process to Avoid Sequestration.--Whenever an 
update report for this section indicates that a sequester would be 
necessary to eliminate excess Federal spending, the special 
reconciliation process set forth in section 258C shall apply for 
consideration of alternatives to the order envisioned by such report.
    ``(f) Trigger.--This section shall only be effective if the 
recommendations of the Commission on Reduction of Federal Spending are 
not enacted into law.''

         TITLE VI--ELIMINATION OF SOCIAL SECURITY EARNINGS TEST

SEC. 601. ELIMINATION OF SOCIAL SECURITY EARNINGS TEST.

    (a) In General.--Section 203 of the Social Security Act is 
amended--
            (1) in paragraph (1) of subsection (c) and paragraphs 
        (1)(A) and (2) of subsection (d), by striking ``the age of 
        seventy'' and inserting ``retirement age (as defined in section 
        216(l))'';
            (2) in subsection (f)(1)(B), by striking ``was age seventy 
        or over'' and inserting ``was at or above retirement age (as 
        defined in section 216(l))'';
            (3) in subsection (f)(3), by striking ``33\1/3\ percent'' 
        and all that follows through ``any other individual,'' and 
        inserting ``50 percent of such individual's earnings for such 
        year in excess of the product of the exempt amount as 
        determined under paragraph (8),'' and by striking ``age 70'' 
        and inserting ``retirement age (as defined in section 
        216(l))'';
            (4) in subsection (h)(1)(A), by striking ``age 70'' each 
        place it appears and inserting ``retirement age (as defined in 
        section 216(l))''; and
            (5) in subsection (j), by striking ``Age Seventy'' in the 
        heading and inserting ``Retirement Age'', and by striking 
        ``seventy years of age'' and inserting ``having attained 
        retirement age (as defined in section 216(l))''.
    (b) Conforming Amendments Eliminating the Special Exempt Amount for 
Individuals Who Have Attained Retirement Age.--
            (1) Uniform exempt amount.--Section 203(f)(8)(A) of such 
        Act is amended by striking ``the new exempt amounts (separately 
        stated for individuals described in subparagraph (D) and for 
        other individuals) which are to be applicable'' and inserting 
        ``a new exempt amount which shall be applicable''.
            (2) Conforming amendments.--Section 203(f)(8)(B) of such 
        Act is amended--
                    (A) in the matter preceding clause (i), by striking 
                ``Except'' and all that follows through ``whichever'' 
                and inserting ``The exempt amount which is applicable 
                for each month of a particular taxable year shall be 
                whichever'';
                    (B) in clause (i), by striking ``corresponding''; 
                and
                    (C) in the last sentence, by striking ``an exempt 
                amount'' and inserting ``the exempt amount''.
            (3) Repeal of basis for computation of special exempt 
        amount.--Section 203(f)(8)(D) of such Act is repealed.
    (c) Elimination of Redundant References to Retirement Age.--Section 
203 of such Act is amended--
            (1) in the last sentence of subsection (c), by striking 
        ``nor shall any deduction'' and all that follows and inserting 
        ``nor shall any deduction be made under this subsection from 
        any widow's or widower's insurance benefit if the widow, 
        surviving divorced wife, widower, or surviving divorced husband 
        involved became entitled to such benefit prior to attaining age 
        60.''; and
            (2) in subsection (f)(1), by striking clause (D) and 
        inserting the following: ``(D) for which such individual is 
        entitled to widow's or widower's insurance benefits if such 
        individual became so entitled prior to attaining age 60, or''.
    (d) Conforming Amendment to Provisions for Determining Amount of 
Increase on Account of Delayed Retirement.--Section 202(w)(2)(B)(ii) of 
such Act is amended--
            (1) by striking ``either''; and
            (2) by striking ``or suffered deductions under section 
        203(b) or 203(c) in amounts equal to the amount of such 
        benefit''.
    (e) Continued Application of Rule Governing Entitlement of Blind 
Beneficiaries.--The second sentence of section 223(d)(4) of such Act is 
amended by inserting after ``subparagraph (D) thereof'' where it first 
appears the following: ``(or would be applicable to such individuals 
but for the amendments made by the Revenue Reconciliation Act of 
1993)''.
    (f) Effective Date.--The amendments made by this section shall 
apply with respect to taxable years beginning after December 31, 1993.

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