[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 2552 Introduced in Senate (IS)]







105th CONGRESS
  2d Session
                                S. 2552

To reform Social Security by creating personalized retirement accounts, 
                        and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

              October 6 (legislative day, October 2), 1998

   Mr. Grams introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To reform Social Security by creating personalized retirement accounts, 
                        and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Personal Security 
and Wealth in Retirement Act of 1998''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Sense of Congress.
Sec. 4. Reduction and elimination of social security taxes on 
                            individuals participating in individual 
                            retirement program.
Sec. 5. Personalized retirement accounts funded by individual 
                            retirement payroll deduction plans and 
                            contributions by self-employed individuals.
Sec. 6. Tax treatment of personalized retirement accounts.
Sec. 7. No coverage under OASDI of part B eligible individuals.
Sec. 8. Contribution recognition bonds.
Sec. 9. Administration of personalized retirement accounts.
Sec. 10. Dedication of on-budget surplus.
Sec. 11. Cap on increase in mandatory spending.
Sec. 12. Limitation on amounts expended by certain Government entities 
                            for overhead expenses.
Sec. 13. Reduction in Federal discretionary spending and 10 year 
                            freeze.
Sec. 14. Sale of assets.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) It is vitally important for this Nation to continue 
        providing retirement income security for every working American 
        and their families.
            (2) The social security retirement system based on a pay-
        as-you-go model has failed to meet the challenge of the 
        demographic changes undergoing this Nation, has produced a 
        diminishing return for today's workers, and is projected to go 
        bankrupt, causing financial hardship for millions of baby 
        boomers and destroying the American dream for future 
        generations.
            (3) A traditional approach of raising taxes or reducing 
        benefits to fix the social security retirement system will not 
        work because the magnitude of the current crisis makes these 
        bailout plans impossible, and fundamental reform is needed to 
        preserve social security.
            (4) Social security reform must protect current and future 
        beneficiaries, including the disadvantaged and disabled adults 
        or children, who choose to stay within the traditional social 
        security system.
            (5) Social security reform must give the American people 
        freedom of choice in pursuing retirement security, so that our 
        social policy will not penalize those Americans who are quite 
        able to stand on their own, while providing a safety net to 
        catch those who fall.
            (6) Social security reform must preserve a safety net for 
        disadvantaged Americans, so no covered person is forced to live 
        in poverty.
            (7) Social security reform must make every American better 
        off and no one worse off in retirement security than under the 
        current system.
            (8) Social security reform must enable workers to build 
        personal retirement savings, improve the rate of return on 
        their savings, increase capital ownership, and pass their 
        savings on to their children.
            (9) Social security reform must replace the current pay-as-
        you-go financing scheme with a fully funded system that will 
        not only reduce inequality among generations, but also will 
        greatly increase our Nation's savings and investment rates, and 
        therefore produce prosperity.
            (10) Social security reform must not increase the tax 
        burden of the American people and incur huge new national debt.
            (11) There is a growing national consensus that the best 
        solution to avoiding the imminent social security crisis is to 
        move from a social security retirement system that is based on 
        a pay-as-you-go model to a market-based, personalized 
        retirement program that is fully funded and that offers each 
        American improved retirement security.
            (12) A market-based personalized retirement system that is 
        fully funded will release unprecedented upward budget pressure, 
        reduce ballooning national debt, and ensure a sustainable, 
        healthy, and strong economy.
            (13) A market-based personalized retirement system can 
        greatly increase retirement income and build personal wealth 
        for all Americans, including low-income families, without 
        redistribution of private income.
            (14) The return on current social security investment is 
        quite disappointing for today's workers, and almost all workers 
        in 2-earner families receive real returns under social security 
of approximately 1 percent, with some actually receiving negative 
returns.
            (15) Over the 70-year period from 1926 through 1996, the 
        average real return on the Standard & Poors 500 stocks was 7.56 
        percent, and the historical data supports the conclusion that a 
        market-based, personalized retirement system will produce 
        overall positive returns.
            (16) Under a market-based, personalized retirement system, 
        the annual retirement benefits for 2 average-income, full-time 
        working spouses could exceed, in 1998 dollars, $200,000, 
        compared to $33,000 under the current social security program; 
        for 1 spouse earning an average income, the benefit could reach 
        $140,000, while the current social security program provides 
        only $29,000. Low-income families would also be better off, 
        with annual benefits as high as $100,000, while the current 
        social security program provides only $18,000 in annual 
        benefits.
            (17) No retirement investment, including social security, 
        is risk-free, but a well-structured and regulated market-based, 
        personalized retirement system can reduce the risk to a 
        minimum, so that it still provides workers of all income levels 
        greater retirement benefits than the current social security 
        system offers.
            (18) A market-based, personalized retirement system would 
        provide a better safety net for every working American and 
        their families.
            (19) A market-based, personalized retirement system would 
        allow Americans to control their funds and resources and better 
        plan for their retirement in accordance with their needs.
            (20) Although moving toward a market-based, personalized 
        retirement system may be costly, it is still far less costly 
        than allowing social security to continue on its current course 
        into disaster.

SEC. 3. SENSE OF CONGRESS.

    It is the sense of Congress that--
            (1) it is the right of American workers to choose to remain 
        in the current social security retirement system and to be 
        protected from that system becoming insolvent; and
            (2) the Federal Government should take all necessary 
        actions to guarantee that for those Americans that choose to 
        stay in the current social security retirement system--
                    (A) there shall be no increase in the normal 
                retirement age; and
                    (B) there shall be no reduction in the amount of 
                social security benefits that they will receive.

SEC. 4. REDUCTION AND ELIMINATION OF SOCIAL SECURITY TAXES ON 
              INDIVIDUALS PARTICIPATING IN INDIVIDUAL RETIREMENT 
              PROGRAM.

    (a) Tax on Employees.--Subsection (a) of section 3101 of the 
Internal Revenue Code of 1986 (relating to OASDI tax on employees) is 
amended to read as follows:
    ``(a) Old-Age, Survivors, and Disability Insurance.--
            ``(1) Individuals covered under part a of title ii of the 
        social security act.--In addition to other taxes, there is 
        hereby imposed on the income of every individual who is not a 
        part B eligible individual a tax equal to 6.2 percent of the 
        wages (as defined in section 3121(a)) received by him with 
        respect to employment (as defined in section 3121(b)).
            ``(2) Transitional tax for part b eligible individuals.--In 
        addition to other taxes, there is hereby imposed on the income 
        of every individual who is a part B eligible individual a tax 
        equal to 1.2 percent (reduced by .06 percentage point for each 
        calendar year beginning after 2000) with respect to wages (as 
        defined in section 3121(a)) received by him with respect to 
        employment (as defined in section 3121(b)).''
    (b) Tax on Employers.--Subsection (a) of section 3111 of the 
Internal Revenue Code of 1986 (relating to OASDI tax on employers) is 
amended to read as follows:
    ``(a) Old-Age, Survivors, and Disability Insurance.--
            ``(1) Individuals covered under part a of title ii of the 
        social security act.--In addition to other taxes, there is 
        hereby imposed on every employer, with respect to having in the 
        employer's employ individuals who are not part B eligible 
        individuals, an excise tax equal to 6.2 percent of the wages 
        (as defined in section 3121(a)) paid by him with respect to 
        employment (as defined in section 3121(b)).
            ``(2) Transitional tax for part b eligible individuals.--In 
        addition to other taxes, there is hereby imposed on every 
        employer an excise tax, with respect to having in the 
        employer's employ individuals who are part B eligible 
        individuals, equal to 1.2 percent (reduced by .06 percentage 
        point for each calendar year beginning after 2000) of the wages 
(as defined in section 3121(a)) paid by him with respect to employment 
(as defined in section 3121(b)).''
    (c) Self-Employment Tax.--Subsection (a) of section 1401 of such 
Code (relating to OASDI tax on self-employment income) is amended to 
read as follows:
    ``(a) Old-Age, Survivors, and Disability Insurance.--
            ``(1) Individuals covered under part a of the social 
        security act.--In addition to other taxes, there shall be 
        imposed for each taxable year, on the self-employment income of 
        every individual who is not a part B eligible individual for 
        the calendar year ending with or during such taxable year, a 
        tax equal to 12.40 percent of the amount of the self-employment 
        income for such taxable year.
            ``(2) Transitional tax for part b eligible individuals.--In 
        addition to other taxes, there shall be imposed for each 
        taxable year, on the self-employment income of every part B 
        eligible individual for the calendar year ending with or during 
        such taxable year, a tax equal to 2.40 percent (reduced by .12 
        percentage point for each calendar year beginning after 2000) 
        of the amount of the self-employment income for such taxable 
        year.''
    (d) Part B Eligible Individual.--
            (1) Taxes on employees.--Section 3121 of such Code 
        (relating to definitions) is amended by inserting after 
        subsection (s) the following new subsection:
    ``(t) Part B Eligible Individual.--For purposes of this chapter, 
the term `part B eligible individual' means, for any calendar year, an 
individual who is an eligible individual (as defined in section 257(3) 
of the Social Security Act) for such calendar year.''.
            (2) Self-employment tax.--Section 1402 of such Code 
        (relating to definitions) is amended by adding at the end the 
        following new subsection:
    ``(k) Part B Eligible Individual.--The term `part B eligible 
individual' means, for any calendar year, an individual who is an 
eligible individual (as defined in section 257(3) of the Social 
Security Act) for such calendar year.''.
    (e) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        remuneration paid after December 31, 1999.
            (2) Self-employment tax.--The amendments made by 
        subsections (c) and (d)(2) shall apply to taxable years ending 
        after December 31, 1999.

SEC. 5. PERSONALIZED RETIREMENT ACCOUNTS FUNDED BY INDIVIDUAL 
              RETIREMENT PAYROLL DEDUCTION PLANS AND CONTRIBUTIONS BY 
              SELF-EMPLOYED INDIVIDUALS.

    (a) In General.--Title II of the Social Security Act is amended--
            (1) by inserting before section 201 the following:

                    ``Part A--Insurance Benefits'';

        and
            (2) by adding at the end the following new part:

                ``Part B--Individual Retirement Program

            ``individual retirement payroll deduction plans

    ``Sec. 251. (a) In General.--Each person who is a covered employer 
for any calendar year shall have in effect throughout such calendar 
year an individual retirement payroll deduction plan for such person's 
employees who are eligible individuals and with respect to whose 
employment by such employer during such calendar year there is, or 
would be (but for the amendments made by section 4 of the Personal 
Security and Wealth in Retirement Act of 1998), imposed an excise tax 
under section 3111 of the Internal Revenue Code of 1986.
    ``(b) Requirements.--For purposes of this part, the term 
`individual retirement payroll deduction plan' means a written plan of 
a covered employer if--
            ``(1) under such plan, 5 percent of the employee's wages is 
        deducted by the employer and paid to the employee's 
        personalized retirement account within 10 business days after 
        the date of payment of such wages,
            ``(2) under such plan, not more than an additional 20 
        percent of the employee's wages (as designated by the employee) 
        is deducted by the employer and paid to the employee's 
        personalized retirement account or to the personalized 
        retirement account of the employee's spouse, child, or 
        grandchild (or any combination designated by the employee) 
        within 10 business days after the date of payment of such 
        wages,
            ``(3) under such plan, the covered employer pays to the 
        personalized retirement account, together with the contribution 
        paid pursuant to paragraphs (1) and (2), an additional amount 
        equal to 5 percent of the employee's wages,
            ``(4) under such plan, the employee may designate that no 
        contributions be deducted under paragraph (1) for pay periods 
        beginning after the date on which the balance in such 
        employee's personalized retirement account equals the minimum 
        retirement annuity amount (as defined in section 256(c)), and
            ``(5) the employer receives no compensation for the cost of 
        administering such plan.

                      ``self-employed individuals

    ``Sec. 252. Not later than 30 days after the close of any taxable 
year for which an eligible individual has self-employment income, such 
individual--
            ``(1) shall pay to a personalized retirement account 
        designated by such individual an amount equal to at least 10 
        percent of such income, and
            ``(2) may pay not more than an additional 20 percent of 
        such income to such account or to the personalized retirement 
        account of the individual's spouse, child, or grandchild (or 
        any combination designated by the individual).

           ``designation of personalized retirement accounts

    ``Sec. 253. (a) In General.--Except as otherwise provided in this 
section, the personalized retirement account to which contributions 
with respect to any eligible individual are required to be paid by a 
covered employer under section 251 shall be such an account designated 
by such individual to such employer not later than 10 business days 
after the date on which such individual becomes an employee of such 
employer. Each employer of an eligible individual shall require the 
individual to designate such account as provided under this subsection 
as a prerequisite for continued employment. Any such designation shall 
be made in such form and manner as shall be prescribed in regulations 
of the Commissioner of Social Security.
    ``(b) Designation of Account by Self-Employed Individuals.--The 
designation of a personalized retirement account for payment of 
contributions under section 252 shall be made in such form and manner 
as shall be prescribed in regulations of the Commissioner of Social 
Security.
    ``(c) Subsequent Designation of Other Accounts.--The Commissioner 
shall provide by regulation for subsequent designation from time to 
time of another personalized retirement account of an eligible 
individual in lieu of the account previously designated under this 
section.
    ``(d) Other Designations.--For purposes of contributions under 
section 251(b)(2), an eligible individual may designate a personalized 
retirement account, including an account for any non-working child of 
such individual. Any such designation shall be made in such form and 
manner as shall be prescribed in regulations of the Commissioner of 
Social Security.

              ``election to become an eligible individual

    ``Sec. 254. (a) In General.--An individual (other than an 
individual described in section 257(3)(A))--
            ``(1) who has not attained age 62, and
            ``(2) who is not entitled to disability insurance benefits 
        under section 223,
may elect to become an eligible individual for purposes of this part. 
An election under this section is an election filed in such form and 
manner as shall be prescribed in regulations of the Commissioner, 
consisting of a written and signed declaration of such individual's 
intention to become an eligible individual for purposes of this part.
    ``(b) Requirements.--Any election under subsection (a) may take 
effect for any calendar year after 1999 and must be so filed not later 
than December 15 preceding the calendar year for which the election is 
to take effect (or December 31 preceding such calendar year in the case 
of an individual attaining age 18 after such December 15 and before 
such calendar year).
    ``(c) Limited revocability.--
            ``(1) In general.--Except as provided in paragraph (2), any 
        election under subsection (a) shall be irrevocable and shall be 
        effective with respect to wages paid in calendar years 
        following the election and with respect to self-employment 
        income for taxable years ending during such calendar years.
            ``(2) Limited revocation.--
                    ``(A) In general.--Within 10 years of the date of 
                an election under subsection (a), an individual may 
                revoke such an election in favor of coverage under part 
                A in such form and manner as shall be prescribed in 
                regulations of the Commissioner and upon payment of the 
                amount described in subparagraph (B) from such 
                individual's personalized retirement account (or 
                otherwise) to the Commissioner for deposit in the trust 
                funds under part A.
                    ``(B) Amount of payment.--The amount described in 
                this subparagraph is equal to the sum of--
                            ``(i) the amount which would have been paid 
                        (without regard to an election under subsection 
                        (a)) by the individual and the individual's 
                        employer under sections 3101(a)(1) and 
                        3111(a)(1) or section 1401(a)(1) during the 
                        period of such an election, less the amount 
                        paid by such individual and such individual's 
employer under sections 3101(a)(2) and 3111(a)(2) or section 1401(a)(2) 
during such period, plus
                            ``(ii) interest on the amount determined 
                        under clause (i) at the rate of return earned 
                        by the trust funds under part A on such an 
                        amount during the period of such an election.
                    ``(C) Cancellation of contribution recognition 
                bond.--Upon the revocation of an election under 
                subsection (a), any contribution recognition bond 
                issued to the trustee of the individual's personalized 
                retirement account pursuant to section 8 of the 
                Personal Security and Wealth in Retirement Act of 1998 
                shall be canceled.
                    ``(D) No further elections allowed.--Upon the 
                revocation of an election under subsection (a), the 
                individual may not make any further elections under 
                subsection (a).

 ``disability insurance; preretirement survivor benefits; treatment in 
                          the event of divorce

    ``Sec. 255. (a) In General.--A trustee of a personalized retirement 
account shall purchase, from amounts available in the account, 
disability insurance and preretirement survivor benefits for each 
account holder in accordance with this section.
    ``(b) Disability Insurance.--Under regulations of the Commissioner 
of Social Security, any policy for disability insurance purchased 
pursuant to subsection (a) shall meet at least the same standards for 
eligibility and benefit levels for account holders and their spouses, 
surviving spouses, former spouses, and children, as are applicable for 
beneficiaries under the disability insurance program under part A, 
except that such benefits shall not terminate by reason of retirement.
    ``(c) Preretirement Survivor Benefits.--Under regulations of the 
Commissioner of Social Security, any policy for preretirement survivor 
benefits purchased pursuant to subsection (a) shall provide benefits to 
beneficiaries of the account holders in such form and in such amounts 
as are necessary, taking into account distributions from the account, 
to meet at least the same standards for eligibility and benefit levels 
applicable for widow's, widower's, and child's insurance benefits under 
part A.
    ``(d) Treatment in the Event of Divorce.--Notwithstanding any other 
provision of Federal or State law, all assets in an individual's 
personalized retirement account on the date of marriage and throughout 
such marriage shall be considered community property.

    ``entitlement to supplemental minimum benefit payment to account

    ``Sec. 256. (a) In General.--In any case in which--
            ``(1) an eligible individual attains normal retirement age,
            ``(2) as of the date on which the individual attains normal 
        retirement age, no distributions have been made by the 
        individual from any personalized retirement account, and
            ``(3) on such date, the balance in such individual's 
        personalized retirement account (before any distributions on 
        such date) is less than the minimum retirement annuity amount,
such individual, upon application to the Commissioner of Social 
Security filed on or after such date in such form and manner as shall 
be prescribed by the Commissioner, shall be entitled to a supplemental 
minimum benefit payment to such account. Upon receipt of such 
application, the Commissioner shall certify to the Secretary of the 
Treasury the amount of such payment, and the Secretary shall pay the 
amount of such payment to such account in accordance with such 
certification from funds otherwise available in the general fund of the 
Treasury.
    ``(b) Amount of Supplemental Minimum Benefit Payment.--The amount 
of a supplemental minimum benefit payment payable to an eligible 
individual's account under subsection (a) is the excess (if any) of--
            ``(1) the minimum retirement annuity amount, over
            ``(2) the balance in such account as of such date (taking 
        into account the present value of the future proceeds of any 
        contribution recognition bond issued to the trustee of the 
        individual's account pursuant to section 8 of the Personal 
        Security and Wealth in Retirement Act of 1998).
    ``(c) Definitions.--For purposes of this section--
            ``(1) Minimum retirement annuity amount.--The term `minimum 
        retirement annuity amount' means the amount (determined under 
        regulations of the Commissioner of Social Security) necessary 
        to purchase a minimum retirement annuity on the date of the 
        application filed pursuant to subsection (a).
            ``(2) Minimum retirement annuity.--The term `minimum 
        retirement annuity' means an immediate annuity making payments 
        over the life expectancy of the account holder which (on a 
        monthly basis) are equal to an amount equal to \1/12\ of 
150 percent of the poverty line determined on such date for a family of 
1 individual and adjusted annually thereafter by the adjustment 
determined under section 215(i).
            ``(3) Immediate annuity.--The term `immediate annuity' 
        means an annuity--
                    ``(A) which is purchased with a single premium, and
                    ``(B) the annuity starting date (as defined in 
                paragraph (4) of section 72(c) of the Internal Revenue 
                Code of 1986) of which commences on the 1st day of the 
                month beginning after the date of the purchase of the 
                annuity.
            ``(4) Poverty line.--The term `poverty line' has the 
        meaning given that term in section 673(2) of the Community 
        Services Block Grant Act (42 U.S.C. 9902(2), including any 
        revision required by such section.

                             ``definitions

    ``Sec. 257. For purposes of this part--
            ``(1) Personalized retirement account.--The term 
        `personalized retirement account' means any personalized 
        retirement account (as defined in section 408B of the Internal 
        Revenue Code of 1986).
            ``(2) Covered employer.--
                    ``(A) In general.--The term `covered employer' 
                means, for any calendar year, any person on whom an 
                excise tax is, or would be (but for the amendments made 
                by the Personal Security and Wealth in Retirement Act 
                of 1998), imposed under section 3111 of the Internal 
                Revenue Code of 1986 with respect to having an 
                individual in his employ to whom wages were paid by 
                such person during such calendar year.
                    ``(B) Governmental entities.--Under regulations of 
                the Commissioner of Social Security, in applying 
                subparagraph (A) with respect to employment by 
                governmental entities, each such governmental entity 
                shall be treated as a person described in subparagraph 
                (A) in the same manner and to the same extent as such 
                person is treated under chapter 21 of the Internal 
                Revenue Code of 1986 for purposes of section 3111 of 
                such Code.
            ``(3) Eligible individual.--The term `eligible individual' 
        means--
                    ``(A) an individual who attains age 25 in any 
                calendar year after 1999, or
                    ``(B) with respect to a calendar year, an 
                individual with respect to whom an election, filed with 
                the Commissioner of Social Security under section 254, 
                is in effect for such calendar year.
            ``(4) Business day.--The term `business day' means any day 
        other than a Saturday, Sunday, or legal holiday in the area 
        involved.

                              ``penalties

    ``Sec. 258. (a) Failure To Establish Individual Retirement Payroll 
Deduction Plan.--Any covered employer who fails to meet the 
requirements of section 251 or 253 for any calendar year shall be 
subject to a civil penalty of not to exceed the greater of--
            ``(1) $50,000, or
            ``(2) $1,000 for each eligible individual of such employer 
        as of the beginning of such calendar year.
    ``(b) Failure To Make Deductions Required Under Plan.--Any covered 
employer who fails to timely deduct in full the amount from the wages 
of an eligible individual required under an applicable individual 
retirement payroll deduction plan shall be subject to a civil penalty 
of not to exceed $50 for each such failure.
    ``(c) Failure To Pay Deducted Wages to Personalized Retirement 
Account.--If an amount deducted from the wages of an eligible 
individual under an individual retirement payroll deduction plan is not 
timely paid in full to the designated personalized retirement account 
in accordance with section 251--
            ``(1) the covered employer failing to make such payment 
        shall be subject to a civil penalty of not to exceed 20 percent 
        of the unpaid amount, in addition to any penalty under 
        subsection (a), and
            ``(2) shall be liable to the eligible individual for 
        interest on the unpaid amount at a rate equal to 133 percent of 
        the Federal short-term rate under section 1274(d)(1) of the 
        Internal Revenue Code of 1986, calculated from the last day by 
        which such amount was required to be so paid to the date on 
        which such amount is paid into the designated personalized 
        retirement account.
    ``(d) Failure by Self-Employed Individuals To Pay Contributions.--
Any individual failing to timely pay in full a prescribed individual 
retirement self-employment contribution to a designated personalized 
retirement account as required under section 252 shall be subject to a 
civil penalty of not to exceed 20 percent of the unpaid amount, plus 
interest on the unpaid amount at a rate equal to 133 percent of the 
Federal short-term rate under section 1274(d)(1) of the Internal 
Revenue Code of 1986, calculated from the last day by which such amount 
was required to be so paid to the date on which such amount is paid 
into the designated personalized retirement account.
    ``(e) Rules for Application of Section.--
            ``(1) Penalties assessed by commissioner of social 
        security.--Any civil penalty assessed by this section shall be 
        imposed by the Commissioner of Social Security and collected in 
        a civil action.
            ``(2) Compromises.--The Commissioner may compromise the 
        amount of any civil penalty imposed by this section.
            ``(3) Authority to waive penalty in certain cases.--The 
        Commissioner may waive the application of this section with 
        respect to any failure if the Commissioner determines that such 
        failure is due to reasonable cause and not to intentional 
        disregard of rules and regulations.''.
    (b) Amounts Deducted To Be Shown on W-2 Statements.--Subsection (a) 
of section 6051 of the Internal Revenue Code of 1986 (relating to 
receipts for employees) is amended--
            (1) by striking ``and'' at the end of paragraph (8),
            (2) by striking the period at the end of paragraph (9) and 
        inserting ``, and'', and
            (3) by inserting after paragraph (9) the following new 
        paragraph:
            ``(10) the total amount deducted from the employee's wages 
        under an individual retirement payroll deduction plan 
        established under part B of title II of the Social Security 
        Act.''.
    (c) Exemption From ERISA Requirements.--Subsection (b) of section 4 
of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1003(b)) is amended--
            (1) by striking ``or'' at the end of paragraph (4);
            (2) by striking the period at the end of paragraph (5) and 
        inserting ``; or''; and
            (3) by adding at the end the following new paragraph:
            ``(6) such plan is an individual retirement payroll 
        deduction plan established under part B of title II of the 
        Social Security Act.''.
    (d) Conforming Amendments.--Section 201(h) of such Act (42 U.S.C. 
401(h)) is amended--
            (1) by striking ``All other'' in the second sentence and 
        inserting ``Except as provided in section 256, all other''; and
            (2) by adding at the end the following new sentence: ``Any 
        reference in this part to benefits under this title shall be 
        deemed a reference to benefits entitlement to which arises 
        under this part.''.

SEC. 6. TAX TREATMENT OF PERSONALIZED RETIREMENT ACCOUNTS.

    (a) In General.--Subpart A of part I of subchapter D of chapter 1 
of the Internal Revenue Code of 1986 (relating to pension, profit-
sharing, stock bonus plans, etc.) is amended by inserting after section 
408A the following new section:

``SEC. 408B. PERSONALIZED RETIREMENT ACCOUNTS.

    ``(a) General Rule.--Gross income shall not include--
            ``(1) any amount paid to a personalized retirement account 
        as the employer's contribution under section 251(b)(3) of the 
        Social Security Act, or
            ``(2) \1/2\ of the amount paid to a personalized retirement 
        account under section 252(a) of the Social Security Act.
    ``(b) Personalized Retirement Account.--For purposes of this title, 
the term `personalized retirement account' means a trust created or 
organized in the United States for the exclusive benefit of an eligible 
individual (as defined in section 257(3) of the Social Security Act) or 
his beneficiaries, but only if the written governing instrument 
creating the trust meets the following requirements:
            ``(1) No contribution will be accepted, other than--
                    ``(A) a contribution under paragraph (1), (2), or 
                (3) of section 251(b), or subsection (a) of section 
                252, of the Social Security Act,
                    ``(B) a contribution recognition bond, and the 
                proceeds thereof, issued under section 8 of the 
                Personal Security and Wealth in Retirement Act of 1998, 
                and
                    ``(C) a supplemental minimum benefit payment under 
                section 256 of the Social Security Act.
            ``(2) Except as provided in paragraph (12), no amount may 
        be paid or distributed from such trust--
                    ``(A) before the earlier of the date on which the 
                account holder attains normal retirement age 
                (determined under section 216(l) of the Social Security 
                Act) or the date on which the account holder dies, or
                    ``(B) if the account holder has not attained normal 
                retirement age and the balance in the account 
                immediately after the payment or distribution of such 
amount would be less than the minimum retirement annuity amount (as 
defined in subsection (b)(2)).
            ``(3) The trustee is a qualified investment firm or 
        financial institution approved by the Federal Personal 
        Retirement Investment Board under section 9 of the Personal 
        Security and Wealth in Retirement Act of 1998.
            ``(4) No part of the trust fund is invested in life 
        insurance contracts.
            ``(5) The interest of an individual in the balance in his 
        account vests immediately and is nonforfeitable.
            ``(6) The assets of the trust will not be commingled with 
        other property except in a common trust fund or common 
        investment fund, which fund is comprised only of assets of 
        personalized retirement accounts.
            ``(7) Under the terms governing the account, contributions 
        will be accepted irrespective of the amount of the 
        contribution.
            ``(8) Except as otherwise required by the Personal Security 
        and Wealth in Retirement Act of 1998, the same requirements as 
        are applicable with respect to trusts under paragraph (9) of 
        section 401(a) (relating to required distributions) are met 
        with respect to the account.
            ``(9) Except as otherwise required by the Personal Security 
        and Wealth in Retirement Act of 1998, the same requirements as 
        are applicable with respect to trusts under paragraph (11) of 
        section 401(a) (relating to joint and survivor annuity and 
        preretirement survivor annuity) are met with respect to the 
        account (disregarding subparagraph (B) thereof), as if the 
        annuity starting date with respect to the account holder is the 
        earliest date on which amounts may be distributed under 
        paragraph (2).
            ``(10) The account holder certifies that such trust is the 
        only personalized retirement account of the holder.
            ``(11) Under terms governing the account, amounts may be 
        distributed from such trust to purchase disability insurance or 
        a policy providing for preretirement survivor benefits under 
        section 255 of the Social Security Act.
Paragraphs (1), (2), and (8) shall not apply to a direct trustee-to-
trustee transfer to a successor personalized retirement account of the 
same individual.
    ``(c) Requirements.--
            ``(1) Requirements relating to trustee.--Under the terms of 
        a personalized retirement account, the trustee of the account 
        shall, with respect to the account, have the status of a 
        fiduciary (within the meaning of the first sentence of section 
        3(21)(A) of the Employee Income Security in Retirement Act of 
        1974). The trustee shall, with respect to the account, be 
        treated as a fiduciary for purposes of section 4975(e) (as 
        applicable under subsection (e)(3)).
            ``(2) Minimum retirement annuity amount.--For purposes of 
        subsection (b)(2)--
                    ``(A) In general.--The term `minimum retirement 
                annuity amount' means the amount (determined under 
                regulations of the Commissioner of Social Security) 
                necessary to purchase a minimum retirement annuity on 
                the date of the payment or distribution referred to in 
                subsection (b)(2).
                    ``(B) Minimum retirement annuity.--For purposes of 
                subparagraph (A), the term `minimum retirement annuity' 
                means an immediate annuity making payments over the 
                life expectancy of the account holder which (on a 
                monthly basis) are equal to an amount equal to \1/12\ 
                of 150 percent of the poverty line determined on such 
                date for a family of 1 individual and adjusted annually 
                thereafter by the adjustment determined under section 
                215(i).
                    ``(C) Immediate annuity.--The term `immediate 
                annuity' means an annuity--
                            ``(i) which is purchased with a single 
                        premium, and
                            ``(ii) the annuity starting date (as 
                        defined in paragraph (4) of section 72(c)) of 
                        which commences on the 1st day of the month 
                        beginning after the date of the purchase of the 
                        annuity.
                    ``(D) Poverty line.--The term `poverty line' has 
                the meaning given that term in section 673(2) of the 
                Community Services Block Grant Act (42 U.S.C. 9902(2), 
                including any revision required by such section.
            ``(3) Investment in collectibles treated as a 
        distribution.--For purposes of this section, subsection (m) of 
        section 408 shall apply.
    ``(d) Account Exempt From Tax.--
            ``(1) General rule.--Except as provided in paragraph (2), 
        any personalized retirement account is exempt from taxation 
        under this title. Notwithstanding the preceding sentence, any 
        such account is subject to the taxes imposed by section 511 
(relating to imposition of tax on unrelated business income of 
charitable, etc. organizations).
            ``(2) Application of prohibited transactions rules, etc.--
        Rules similar to the rules of paragraphs (2), (3), and (4) of 
        section 408(e) shall apply to personalized retirement accounts.
    ``(e) Taxation of Distributions.--
            ``(1) In general.--No amount paid or distributed from a 
        personalized retirement account shall be includible in gross 
        income.
            ``(2) Treatment of rollovers.--No amount shall be 
        includible in gross income by reason of a direct trustee-to-
        trustee transfer from a personalized retirement account of an 
        individual to a successor personalized retirement account of 
        the same individual if such transfer is made in accordance with 
        section 408(d)(3)(A)(i).
            ``(3) Treatment of disability insurance and preretirement 
        benefit policy premiums.--No amount shall be includible in 
        gross income to the extent that such amount is a premium for 
        the purchase of disability insurance or a policy providing for 
        preretirement survivor benefits pursuant to section 255 of the 
        Social Security Act.
            ``(4) Treatment of collectibles.--Amounts treated as a 
        distribution under subsection (c)(3) shall be includible in 
        gross income and paragraph (1) of section 72(t) shall apply to 
        such amounts.
    ``(e) Certain Other Rules To Apply.--The following rules shall 
apply to personalized retirement accounts in the same manner that such 
rules apply to individual retirement accounts:
            ``(1) Section 408(h) (relating to custodial accounts).
            ``(2) Sections 408(i) and 6693 (relating to reports).
            ``(3) Section 4975 (relating to prohibited 
        transactions).''.
    (b) Excess Contributions.--
            (1) In general.--Subsection (a) of section 4973 of the 
        Internal Revenue Code of 1986 is amended by striking ``or'' at 
        the end of paragraph (3), by inserting ``or'' at the end of 
        paragraph (4), and by inserting after paragraph (4) the 
        following new paragraph:
            ``(5) a personalized retirement account (as defined in 
        section 408B),''.
            (2) Excess contributions defined.--Section 4973 of such 
        Code is amended by adding at the end the following new 
        subsection:
    ``(g) Excess Contributions to Personalized Retirement Accounts.--
For purposes of this section, in the case of contributions to a 
personalized retirement account (within the meaning of section 
408B(b)), the term `excess contributions' means with respect to a 
taxable year the sum of--
            ``(1) the excess (if any) of--
                    ``(A) the amount contributed for the taxable year 
                to such account (other than a qualified rollover 
                contribution described in section 408B(e)(2)), over
                    ``(B) the amount allowable as a contribution for 
                that taxable year under section 408B(b)(1), and
            ``(2) the amount determined under this subsection for the 
        preceding taxable year, reduced by the sum of--
                    ``(A) the distributions out of the account for such 
                taxable year, and
                    ``(B) the excess (if any) of the maximum amount 
                allowable as a contribution under section 408B(b)(1) 
                for such taxable year over the amount contributed to 
                the account for the taxable year.
For purposes of this subsection, any contribution which is distributed 
from a personalized retirement account in a distribution described in 
section 408(d)(4) shall be treated as an amount not contributed.''.
    (c) Clerical Amendment.--The table of sections for subpart A of 
part I of subchapter D of chapter 1 of such Code is amended by 
inserting after the item relating to section 408A the following new 
item:

                              ``Sec. 408B. Personalized retirement 
                                        accounts.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 7. NO COVERAGE UNDER OASDI OF PART B ELIGIBLE INDIVIDUALS.

    (a) Old-Age and Survivors Insurance Benefits.--Section 202 of the 
Social Security Act (42 U.S.C. 402) is amended by adding at the end the 
following new subsection:
    ``(y) Notwithstanding the preceding provisions of this section, an 
eligible individual under part B (within the meaning of section 257(3)) 
shall be deemed (except for purposes of sections 226 and 226A) not 
entitled to benefits under this section for any month ending after the 
date the individual becomes such an eligible individual, and (except 
for purposes of sections 226 and 226A) no other individual shall be 
deemed entitled to benefits under this section for any month ending 
after such date based on the wages or self-employment income of such 
eligible individual. The preceding sentence shall not apply to an 
individual who revokes an election under section 254(c)(2).''.
    (b) Disability Insurance Benefits.--Section 223 of such Act (42 
U.S.C. 423) is amended by adding at the end the following new 
subsection:
    ``(j) Notwithstanding the preceding provisions of this section, an 
eligible individual under part B (within the meaning of section 257(3)) 
shall be deemed (except for purposes of sections 226 and 226A) not 
entitled to benefits under this section for any month ending after the 
date the individual becomes such an eligible individual, and (except 
for purposes of sections 226 and 226A) no other individual shall be 
deemed entitled to benefits under section 202 for any month ending 
after such date based on the wages or self-employment income of such 
eligible individual. The preceding sentence shall not apply to an 
individual who revokes an election under section 254(c)(2).''.

SEC. 8. CONTRIBUTION RECOGNITION BONDS.

    (a) Certification of Credited Wages and Self-Employment Income.--
            (1) In general.--Subject to paragraph (2), not later than 
        July 1 of the first calendar year for which an individual is an 
        eligible individual (as defined in section 257(3) of the Social 
        Security Act), the Commissioner of Social Security shall 
        certify to the Secretary of the Treasury whether such 
        individual was, as of immediately before such first calendar 
        year, credited with wages and self-employment income under part 
        A of title II of the Social Security Act.
            (2) Nonapplication.--No eligible individual (as so defined) 
        who has not attained age 30 shall be eligible to be issued a 
        contribution recognition bond under this section.
    (b) Issuance of Bond.--
            (1) In general.--Immediately upon receipt of certification 
        under subsection (a) that such individual is so credited, the 
        Secretary of the Treasury shall issue a contribution 
        recognition bond to the trustee of the personalized retirement 
        account held by such individual. Such bond shall consist of an 
        obligation of the United States to pay each month into the 
        personalized retirement account held by such individual, 
        commencing with the applicable initial month, an amount, 
        subject to paragraph (2), equal to such individual's primary 
        insurance amount, determined under section 215 of the Social 
        Security Act as if section 202(y) of such Act did not apply and 
        such individual had applied for old-age insurance benefits 
        under section 202(a) of such Act for such month, and by taking 
        into account average indexed monthly earnings based solely on 
        those wages and self-employment income that were credited as 
        described in subsection (a).
            (2) Adjustments to amounts.--In the case of--
                    (A) an individual who has attained age 50, upon the 
                first day of the applicable initial month, the amount 
                determined under paragraph (1) shall be increased by an 
                amount equal to the interest accrued on such amount, at 
                a rate equal to the rate applicable for a United States 
                Treasury obligation with a 30-year term, during the 
                period that begins with the date the contribution 
                recognition bond is issued and ends with the first day 
                of the applicable initial month; and
                    (B) an individual who has attained age 30 but has 
                not attained age 50, upon the first day of the 
                applicable initial month, the amount determined under 
                paragraph (1) shall be increased by an amount equal to 
                the percentage change in the Consumer Price Index for 
                All-Urban Consumers during the period that begins with 
                the date the contribution recognition bond is issued 
                and ends with the first day of the applicable initial 
                month.
    (c) Applicable Initial Month.--For purposes of subsection (b), the 
applicable initial month in connection with any individual is the later 
of--
            (1) the month in which such individual attains age 62, or
            (2) the month in which such individual first commences 
        distributions from such individual's personalized retirement 
        account.
    (d) Additional Provisions.--The purposes for which obligations of 
the United States may be issued under chapter 31 of title 31, United 
States Code, are hereby extended to authorize the issuance of public 
debt obligations consisting of contribution recognition bonds issued 
under this section. Each such obligation shall be evidenced by a paper 
instrument in the form of a bond issued by the Secretary setting forth 
the terms specified in this subsection, and stating on its face that 
the obligation shall be incontestable in the hands of the trustee of 
such account, that the obligation is supported by the full faith and 
credit of the United States, and that the United States is pledged to 
the payment of the obligation, to the credit of such account, in 
accordance with the provisions of this section.

SEC. 9. ADMINISTRATION OF PERSONALIZED RETIREMENT ACCOUNTS.

    (a) Establishment of Federal Personal Retirement Investment 
Board.--
            (1) In general.--There is established as an independent 
        agency of the United States the Federal Personal Retirement 
        Investment Board (in this section referred to as the 
        ``Board'').
            (2) Composition.--The Board shall be composed of 9 members 
        appointed by the President, of whom 1 shall be designated by 
        the President as Chairman.
            (3) Advice and consent.--Appointments under paragraph (2) 
        shall be made by and with the advice and consent of the Senate.
            (4) Membership requirements.--
                    (A) Experience; geographical representation.--
                Members of the Board appointed under paragraph (2) 
                shall have substantial experience, training, and 
                expertise in finance, investments, or insurance and 
                shall be selected to represent each of the Federal 
                reserve districts created in accordance with section 2 
                of the Federal Reserve Act (12 U.S.C. 222).
                    (B) No government officers or employees.--No 
                individual who is an officer or employee of the United 
                States may be appointed to serve as a member of the 
                Board.
                    (C) No compensation.--Members of the Board shall 
                serve without compensation except that such members 
                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 Board.
            (5) Length of Appointments.--
                    (A) Terms.--A member of the Board appointed under 
                paragraph (2) shall be appointed for not more than 2 
                terms of 6 years each.
                    (B) Vacancies.--
                            (i) In general.--A vacancy on the Board 
                        shall be filled in the manner in which the 
                        original appointment was made and shall be 
                        subject to any conditions that applied with 
                        respect to the original appointment.
                            (ii) Completion of term.--An individual 
                        chosen to fill a vacancy shall be appointed for 
                        the unexpired term of the member replaced.
                    (C) Expiration.--The term of any member shall not 
                expire before the date on which the member's successor 
                takes office.
            (6) Duties.--The Board shall--
                    (A) establish requirements for the approval of 
                qualified investment firms and financial institutions 
                to serve as trustees of personalized retirement 
                accounts, including the requirements that--
                            (i) the firm or institution is in business 
                        exclusively as a trustee of personalized 
                        retirement accounts, and
                            (ii) the firm or institution is of good 
                        character and is a substantial concern, 
                        produces evidence of financial capability, 
                        demonstrates financial soundness, and provides 
                        appropriate surety;
                    (B) establish policies for the investment and 
                management of personalized retirement accounts, 
                including the requirement that any trustee shall 
                guarantee a minimum return of 2.5 percent per year for 
                each of the investment funds managed by the entity that 
                are eligible investment vehicles for personalized 
                retirement accounts (based on an average of the total 
                return on each such fund over any consecutive 3-year 
                period and determined according to rules and 
                regulations of the Securities and Exchange Commission 
                that apply to the calculation of minimum rates of 
                return);
                    (C) designate, through the Federal Personal 
                Retirement Deposit Corporation established in 
                accordance with subsection (b), a successor trustee, in 
                the case of a trustee of a personalized retirement 
                account with respect to which there is filed a 
                bankruptcy petition (or upon the initiation of a 
                similar judicial proceeding) against the trustee;
                    (D) maintain and disseminate to eligible 
                individuals, through such Corporation, a list of 
                approved qualified investment firms and financial 
institutions that may serve as trustees of personalized retirement 
accounts;
                    (E) provide, through such Corporation, an annual 
                open season during which an eligible individual may 
                select an approved qualified investment firm or 
                financial institution to serve as the trustee of the 
                individual's personalized retirement account; and
                    (F) provide, through such Corporation, guidance for 
                eligible individuals (as defined in section 257(3) of 
                the Social Security Act) regarding risk management for 
                the investment of personalized retirement accounts.
            (7) Administrative Provisions.--
                    (A) In general.--The Board may--
                            (i) adopt, alter, and use a seal;
                            (ii) direct the Executive Director to take 
                        such action as the Board considers appropriate 
                        to carry out the provisions of this part and 
                        the policies of the Board;
                            (iii) upon the concurring votes of 5 
                        members, remove the Executive Director from 
                        office for good cause shown; and
                            (iv) take such other actions as may be 
                        necessary to carry out the functions of the 
                        Board.
            (8) Meetings.--The Board shall meet--
                            (i) not less than once during each quarter; 
                        and
                            (ii) at additional times at the call of the 
                        Chairman.
            (9) Exercise of powers.--
                            (i) In general.--Except as provided in 
                        paragraph (7)(A)(iii), the Board shall perform 
                        the functions and exercise the powers of the 
                        Board on a majority vote of a quorum of the 
                        Board. 7 members of the Board shall constitute 
                        a quorum for the transaction of business.
                            (ii) Vacancies.--A vacancy on the Board 
                        shall not impair the authority of a quorum of 
                        the Board to perform the functions and exercise 
                        the powers of the Board.
            (10) Appointment of executive director.--
                    (A) In general.--The Board shall appoint, without 
                regard to the provisions of law governing appointments 
                in the competitive service, an Executive Director by 
                action agreed to by a majority of the members of the 
                Board.
                    (B) Requirements.--The Executive Director shall 
                have substantial experience, training, and expertise in 
                finance, investments, and insurance.
                    (C) Duties.--The Executive Director shall--
                            (i) carry out the policies established by 
                        the Board;
                            (ii) administer the provisions of this 
                        section; and
                            (iii) prescribe such regulations (other 
                        than regulations relating to fiduciary 
                        responsibilities) as may be necessary for the 
                        administration of this section.
                    (D) Administrative authority.--The Executive 
                Director may--
                            (i) appoint such personnel as may be 
                        necessary to carry out the provisions of this 
                        section;
                            (ii) subject to approval by the Board, 
                        procure the services of experts and consultants 
                        under section 3109 of title 5, United States 
                        Code;
                            (iii) secure directly from an Executive 
                        agency, the United States Postal Service, or 
                        the Postal Rate Commission any information 
                        necessary to carry out the provisions of this 
                        section and the policies of the Board;
                            (iv) make such payments out of amounts 
                        appropriated in accordance with paragraph (13) 
                        as the Executive Director determines are 
                        necessary to carry out the provisions of this 
                        section and the policies of the Board;
                            (v) accept and use the services of 
                        individuals employed intermittently in the 
                        Government service and reimburse such 
                        individuals for travel expenses, as authorized 
                        by section 5703 of title 5, United States Code, 
                        including per diem as authorized by section 
                        5702 of such title;
                            (vi) except as otherwise expressly 
                        prohibited by law or the policies of the Board, 
                        delegate any of the Executive Director's 
                        functions to such employees under the Board as 
                        the Executive Director may designate and 
                        authorize such successive redelegations of such 
functions to such employees under the Board as the Executive Director 
may consider to be necessary or appropriate; and
                            (vii) take such other actions as are 
                        appropriate to carry out the functions of the 
                        Executive Director.
            (11) Discharge of responsibilities.--The members of the 
        Board shall discharge their responsibilities solely in the 
        interest of personalized retirement account holders and 
        beneficiaries.
            (12) Annual independent audit.--The Board shall annually 
        engage an independent qualified public accountant to audit the 
        activities of the Board.
            (13) Authorization of appropriations.--There is authorized 
        to be appropriated such sums as may be necessary to carry out 
        this section.
            (14) Submission of budget to congress.--The Board shall 
        prepare and submit to the President, and, at the same time, to 
        the appropriate committees of Congress, an annual budget of the 
        expenses and other items relating to the Board which shall be 
        included as a separate item in the budget required to be 
        transmitted to Congress under section 1105 of title 31, United 
        States Code.
    (b) Plan for the Establishment of the Federal Personal Retirement 
Deposit Corporation.--
            (1) In general.--Not later than 90 days after the date of 
        enactment of this Act, the Board, in consultation with the 
        Commissioner of Social Security, shall submit to Congress a 
        legislative proposal for the establishment of an independent 
        corporation to be known as the ``Federal Personal Retirement 
        Deposit Corporation'' (in this subsection referred to as the 
        ``Corporation'').
            (2) Organization and structure.--The legislative proposal 
        required under paragraph (1) shall establish and organize the 
        Corporation in a manner similar to the establishment and 
        organization of the Federal Home Loan Mortgage Corporation 
        under the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 
        1451 et seq.).
            (3) Purposes.--The legislative proposal required under 
        paragraph (1) shall authorize the Corporation--
                    (A) to receive amounts received under an individual 
                retirement payroll deduction plan established in 
                accordance with section 251(b) of the Social Security 
                Act (as added by section 4 of the Personal Security and 
                Wealth in Retirement Act of 1998) and to quarterly 
                distribute such amounts to personalized retirement 
                accounts under the management and supervision of 
                approved qualified investment firms and financial 
                institutions; and
                    (B) to carry out the responsibilities described in 
                subparagraphs (C), (D), (E), and (F) of subsection 
                (a)(6).
            (4) Privatization of part of the social security 
        administration.--The legislative proposal required under 
        paragraph (1) shall provide--
                    (A) for the privatization of those divisions of the 
                Social Security Administration that the Board and the 
                Commissioner of Social Security determine would be best 
                suited to carry out the duties of the Corporation; and
                    (B) for the eventual dissolution of the retirement 
                benefits division of the Social Security Administration 
                after 100 percent of the population are eligible 
                individuals for purposes of part B of title II of the 
                Social Security Act (as added by section 4).

SEC. 10. DEDICATION OF ON-BUDGET SURPLUS.

    (a) Creation of Account.--There is established within the Treasury 
a special reserve account to be known as the ``Personalized Retirement 
Social Security Account'' (hereinafter in this section referred to as 
the ``account''). The Secretary of the Treasury shall transfer funds in 
the account to the Federal Old-Age and Survivors Insurance Trust Fund 
established under section 201 of the Social Security Act (42 U..S.C. 
401 et seq.) upon the request of the Managing Trustees of such Trust 
Fund.
    (b) Dedication of Surplus.--The Secretary of the Treasury shall pay 
into the account annually at the end of each fiscal year during the 
fiscal-year period beginning on October 1, 1998, and ending on 
September 30, 2008, amounts totalling, in the aggregate, the projected 
and actual surplus, if any, in the total budget of the United States 
Government for that fiscal-year period.
    (c) Definition of Total Budget of the United States Government.--As 
used in this section, the term ``total budget of the United States 
Government'' means all spending and receipt accounts of the United 
States Government that are designated as on-budget accounts.

SEC. 11. CAP ON INCREASE IN MANDATORY SPENDING.

    (a) In General.--Effective beginning with fiscal year 1999 and 
fiscal years thereafter, the growth of each individual mandatory 
program except Social Security shall not exceed a level that is 
adjusted for beneficiary and inflation growth.
    (b) Congressional Budget.--
            (1) Budget resolution.--The congressional budget resolution 
        for a fiscal year shall not provide mandatory funding levels 
        that exceed levels established in subsection (a).
            (2) Point of order.--It shall not be in order in the Senate 
        or the House of Representatives to consider any bill, 
        resolution, amendment, or conference report if such bill, 
        resolution, amendment, or conference report would cause 
        mandatory funding levels to exceed levels established in 
        subsection (a). This point of order may only be waived or 
        suspended by a vote of three-fifths of the Members, duly chosen 
        and sworn.
    (c) Implementation.--
            (1) President's report and recommendations.--If in any 
        fiscal year the President projects that the spending for any 
        mandatory program will exceed the level established under 
        subsection (a), the President shall, before April 15 of each 
        fiscal year, recommend to the Congress legislative changes, 
        including changes in eligibility for benefits, to address the 
        mandatory spending overages, if any, in the prior, current, or 
        budget year.
            (2) Congress acts.--Within 10 days after the President's 
        recommendations are submitted, the Congress shall make relevant 
        changes in laws to reduce the mandatory spending to the cap 
        levels as required under subsection (a).
            (3) Sequester.--Notwithstanding any other provision of law, 
        if the Congress fails to make such changes in laws, there shall 
        be a sequester in any fiscal year to reduce spending for 
        mandatory programs except Social Security if such an individual 
        program exceeded the cap levels established in subsection (a). 
        Such sequester shall institute pro rata reduction of all 
        benefit payments made under programs subject to the provisions 
        of this Act.
    (d) Definition.--For purposes of this section, the term 
``individual mandatory program'' means a program that makes payments to 
any person, business, or unit of government that seeks the payments and 
that meets eligibility criteria established by law. The term includes--
            (1) Farm Price Supports;
            (2) Family Social Services-Foster Care and Adoption 
        Assistance;
            (3) Guaranteed Student Loan Program;
            (4) Medicaid;
            (5) Hospital Insurance;
            (6) Supplemental Medical Insurance;
            (7) Railroad Retirement;
            (8) Civil Service Pensions;
            (9) Military Pensions;
            (10) Unemployment Compensation;
            (11) Child Nutrition Program;
            (12) Supplemental Security Income;
            (13) Family Support Pay;
            (14) Veteran's Compensation and Pensions;
            (15) Food Stamps;
            (16) Housing Assistance;
            (17) Vocational Rehabilitation;
            (18) Readjustment Benefits;
            (19) FDIC and FSLIC; and
            (20) other mandatory spending programs under categories 
        established by the Congressional Budget Office.

SEC 12. LIMITATION ON AMOUNTS EXPENDED BY CERTAIN GOVERNMENT ENTITIES 
              FOR OVERHEAD EXPENSES.

    (a) Definitions.--In this section:
            (1) Covered government entity.--The term ``covered 
        government entity'' means an entity of the executive or 
        judicial branch of Government.
            (2) Overhead expenses.--The term ``overhead expenses'' 
        means the items specified in the following object 
        classifications set forth in Circular No. A-11, Office of 
        Management and Budget, July 1990:
                    (A) Contractual services and supplies (object class 
                20):
                            (i) Travel and transportation of persons 
                        (object class 21.0).
                            (ii) Transportation of things (object class 
                        22.0).
                            (ii) Rental payments to GSA (object class 
                        23.1).
                            (iv) Rental payments to others (object 
                        class 23.2).
                            (v) Communications, utilities, and 
                        miscellaneous charges (object class 23.3).
                            (vi) Printing and reproduction (object 
                        class 24.0).
                            (vii) Other services (object class 25.0).
                            (viii) Supplies and materials (object class 
                        26.0).
                    (B) Acquisition of capital assets (object class 
                30.0):
                            (i) Equipment (object class 31.0), 
                        excluding funds for foreign assistance.
                            (ii) Land and structures (object class 
                        32.0).
                            (iii) Investments and loans (object class 
                        33.0), excluding funds for foreign assistance.
    (b) Rule for Fiscal Years 1999 Through 2010.--Notwithstanding any 
other provision of law, with respect to fiscal year 1999 and each of 
the 10 fiscal years thereafter, a covered government entity may not 
obligate or expend for overhead expenses an amount that exceeds the 
amounts obligated and expended by that entity for such expenses for 
fiscal year 1998, reduced by 15 percent.
    (c) Nonapplication of Rules.--The rule stated in subsections (b) 
shall not apply to the Department of Defense or the United States 
Postal Service.
    (d) Adjustments to Discretionary Caps.--The discretionary spending 
limits for fiscal years 1999 through 2010 shall be reduced for purposes 
of the Congressional Budget Act of 1974 and the Balanced Budget and 
Emergency Deficit Control Act of 1985 to take into account the 
requirements of this section.

SEC. 13. REDUCTION IN FEDERAL DISCRETIONARY SPENDING AND 10 YEAR 
              FREEZE.

    (a) President.--Not later than 5 days after the date of enactment 
of this Act, the President shall reduce the discretionary spending 
limits under section 251(c) of the Balanced Budget and Emergency 
Deficit Reduction Act of 1985 (2 U.S.C. 901(c))--
            (1) for fiscal year 1999 by 5 percent; and
            (2) for each of the fiscal years 2000 through 2009 to a 
        level equal to the levels provided for fiscal year 1999 after 
        the reduction required by paragraph (1).
    (b) Congressional Committees.--Not later than 5 days after the date 
of enactment of this Act, the chairs of the Committees on the Budget of 
the Senate and the House of Representatives shall revise levels under 
section 311(a) of the Congressional Budget Act of 1974 (2 U.S.C. 
642(a)) and adjust the committee allocations under section 302(a) of 
that Act (2 U.S.C. 633(a)) to reflect the amount referred to in 
subsection (a).

SEC. 14. SALE OF ASSETS.

    Not later than 120 days after the date of enactment of this Act, 
the President shall sell, redeem, or otherwise dispose of such 
Federally-owned lands, loans, and other Federal assets so as to yield 
an amount equal to $268,000,000,000 which shall then be deposited into 
the Personalized Retirement Social Security Account created under 
section 10.
                                 <all>