[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1043 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 1043

 To amend title II of the Social Security Act to strengthen the Social 
      Security system to meet the challenges of the next century.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 9, 1999

Mr. Nadler (for himself and Ms. Pelosi) introduced the following bill; 
         which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend title II of the Social Security Act to strengthen the Social 
      Security system to meet the challenges of the next century.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Social Security Amendments of 
1999''.

SEC. 2. ADDITIONAL APPROPRIATION TO FEDERAL OLD-AGE AND SURVIVORS 
              INSURANCE TRUST FUND.

    Section 201 of the Social Security Act (42 U.S.C. 401) is amended 
by adding at the end the following new subsection:
    ``(n)(1) There is hereby appropriated to the Federal Old-Age and 
Survivors Insurance Trust Fund, in addition to amounts appropriated 
under subsection (a), for each fiscal year beginning on or after 
October 1, 1999, and ending on or before September 30, 2014, amounts 
equal in the aggregate to the applicable percentage of wages paid, and 
self-employment income derived, in such fiscal year, as specified in 
the following table:

``Fiscal year:                                   Applicable percentage:
    2000..........................................                2.20 
    2001..........................................                1.75 
    2002..........................................                2.20 
    2003..........................................                2.08 
    2004..........................................                2.41 
    2005..........................................                2.55 
    2006..........................................                3.07 
    2007..........................................                3.43 
    2008..........................................                3.79 
    2009..........................................                4.12 
    2010..........................................                4.32 
    2011..........................................                4.49 
    2012..........................................                4.58 
    2013..........................................                4.61 
    2014..........................................                4.51.
    ``(2) The amounts appropriated by paragraph (1) shall be 
transferred from time to time from the general fund in the Treasury to 
the Federal Old-Age and Survivors Insurance Trust Fund, such amounts to 
be determined on the basis of estimates by the Secretary of the 
Treasury; and proper adjustments shall be made in amounts subsequently 
transferred to the extent prior estimates were in excess of or were 
less than the required amounts. All amounts transferred to the Trust 
Fund under the preceding sentence shall be invested by the Managing 
Trustee in the same manner and to the same extent as the other assets 
of the Trust Fund.''.

SEC. 2. INVESTMENT OF THE SOCIAL SECURITY TRUST FUNDS.

    (a) In General.--Section 201(d) of the Social Security Act (42 
U.S.C. 401(d)) is amended to read as follows:
    ``(d)(1) It shall be the duty of the Managing Trustee to invest 
such portion of each of the Trust Funds as is not, in his judgment, 
required to meet current withdrawals. Subject to paragraph (2), such 
investments may be made only in interest-bearing obligations of the 
United States or in obligations guaranteed as to both principal and 
interest by the United States. For such purpose such obligations may be 
acquired (A) on original issue at the issue price, or (B) by purchase 
of outstanding obligations at the market price.
    ``(2)(A) The Managing Trustee of the Federal Old-Age and Survivors 
Insurance Trust Fund shall establish in such Trust Fund a Common Stock 
Investment Account. Such Account shall hold such amounts in such Trust 
Fund as are deposited into such Account pursuant to this paragraph, 
together with any dividends and capital gain derived from the 
investment in accordance with this paragraph of amounts maintained in 
such Account. For each fiscal year, amounts held in such Account shall 
be invested in common stock in accordance with the investment policies 
and other policies established by the Independent Social Security 
Investment Oversight Board for such fiscal year.
    ``(B) Subject to subparagraph (C), upon receipt by the Federal Old-
Age and Survivors Insurance Trust Fund of any amount appropriated under 
subsection (n), the Managing Trustee shall deposit 40 percent of such 
amount into the Common Stock Investment Account of the Trust Fund.
    ``(C) The Managing Trustee shall limit deposits into the Common 
Stock Investment Account pursuant to subparagraph (B), and shall 
provide for withdrawals from such Account, to the extent necessary to 
ensure that the portion of the total amount held in the Federal Old-Age 
and Survivors Insurance Trust Fund which is maintained in such Account 
does not exceed 30 percent of the total amount held in such Trust Fund.
    ``(3)(A) The purposes for which obligations of the United States 
may be issued under chapter 31 of title 31, United States Code, are 
hereby extended to authorize the issuance at par of public-debt 
obligations for purchase by the Trust Funds under paragraph (1).
    ``(B) Such obligations issued for purchase by the Trust Funds shall 
have maturities fixed with due regard for the needs of the Trust Funds 
and shall bear interest at a rate equal to the average market yield 
(computed by the Managing Trustee on the basis of market quotations as 
of the end of the calendar month next preceding the date of such issue) 
on all marketable interest-bearing obligations of the United States 
then forming a part of the public debt which are not due or callable 
until after the expiration of four years from the end of such calendar 
month; except that where such average market yield is not a multiple of 
one-eighth of 1 per centum, the rate of interest of such obligations 
shall be the multiple of one-eighth of 1 per centum nearest such market 
yield.
    ``(C) Each obligation issued for purchase by the Trust Funds under 
subparagraph (A) shall be evidenced by a paper instrument in the form 
of a bond, note, or certificate of indebtedness issued by the Secretary 
of the Treasury setting forth the principal amount, date of maturity, 
and interest rate of the obligation, and stating on its face that the 
obligation shall be incontestable in the hands of the Trust Funds, that 
the obligation is supported by the full faith and credit of the United 
States, and that the United States is pledged to the payment of the 
obligation with respect to both principal and interest.
    ``(D) The Managing Trustee may purchase interest-bearing 
obligations of the United States or obligations guaranteed as to both 
principal and interest by the United States, other than obligations 
issued for purchase by the Trust Funds, on original issue or at the 
market price, for purposes of investment of the amounts held in the 
Trust Funds only where he determines that the purchase of such other 
obligations is in the public interest.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply with respect to fiscal years beginning on or after October 1, 
1999.

SEC. 3. RULES GOVERNING INVESTMENT OF FEDERAL OLD-AGE AND SURVIVORS 
              INSURANCE TRUST FUND IN COMMON STOCK.

    Title II of the Social Security Act is amended by adding at the end 
the following new section:

 ``investment of federal old-age and survivors insurance trust fund in 
                              common stock

    ``Sec. 231. (a) Selection of Index and Portfolio Design.--
            ``(1) Selection of index.--The Independent Social Security 
        Investment Oversight Board shall select, for purposes of 
        investment of amounts held in the Common Stock Investment 
        Account of the Federal Old-Age and Survivors Insurance Trust 
        Fund, an index which is a commonly recognized index comprised 
        of common stock the aggregate market value of which is a 
        reasonably complete representation of the United States equity 
        markets.
            ``(2) Portfolio design.--Amounts held in the Common Stock 
        Investment Account of the Federal Old-Age and Survivors 
        Insurance Trust Fund shall be invested in a portfolio designed 
        to replicate the performance of the index selected under 
        paragraph (1). The portfolio shall be designed such that, to 
        the extent practicable, the percentage of the balance in such 
        Account that is invested in each stock is the same as the 
        percentage determined by dividing the aggregate market value of 
        all shares of that stock by the aggregate market value of all 
        shares of all stocks included in such index.
    ``(c) No Voting Rights in Securities.--The Independent Social 
Security Investment Oversight Board and the Managing Trustee of the 
Federal Old-Age and Survivors Insurance Trust Fund may not exercise 
voting rights associated with the ownership of securities by the Trust 
Fund.
    ``(d) Engagement of Qualified Public Accountant.--
            ``(1) In general.--The Independent Social Security 
        Investment Oversight Board shall annually engage, on behalf of 
        the Federal Old-Age and Survivors Insurance Trust Fund, an 
        independent qualified public accountant, who shall conduct an 
        examination of all accounts and other books and records 
        maintained in the administration of this section as the public 
        accountant considers necessary to enable the public accountant 
        to make the determination required by paragraph (2). The 
        examination shall be conducted in accordance with generally 
        accepted auditing standards and shall involve such tests of the 
        accounts, books, and records as the public accountant considers 
        necessary.
            ``(2) Examination and report.--The public accountant 
        conducting an examination under paragraph (1) shall determine 
        whether the accounts, books, and records referred to in such 
        paragraph have been maintained in conformity with generally 
        accepted accounting principles applied on a basis consistent 
        with the manner in which such principles were applied during 
        the examination conducted under such paragraph during the 
        preceding year. The public accountant shall transmit to the 
        Board and the Comptroller General of the United States a report 
        on his examination, including his determination under this 
        paragraph.
            ``(3) Definition.--For the purposes of this subsection, the 
        term `qualified public accountant' shall have the same meaning 
        as is provided in section 103(a)(3)(D) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 
        1023(a)(3)(D)).
    ``(e) Fiduciary Responsibilities.--
            ``(1) In general.--Under regulations of the Secretary of 
        Labor, the provisions of sections 8477 and 8478 of title 5, 
        United States Code, shall apply in connection with the amounts 
        maintained in the Common Stock Investment Account of the 
        Federal Old-Age and Survivors Insurance Trust Fund in the same 
        manner and to the same extent as such provisions apply in 
        connection with the Thrift Savings Fund.
            ``(2) Investigative authority.--Any authority available to 
        the Secretary of Labor under section 504 of the Employee 
        Retirement Income Security Act of 1974 is hereby made available 
to the Secretary of Labor, and any officer designated by the Secretary 
of Labor, to determine whether any person has violated, or is about to 
violate, any provision applicable under paragraph (1).
            ``(3) Exculpatory provisions; insurance.--
                    ``(A) In general.--Any provision in an agreement or 
                instrument which purports to relieve a fiduciary from 
                responsibility or liability for any responsibility, 
                obligation, or duty under this section shall be void.
                    ``(B) Insurance.--Amounts held in the Federal Old-
                Age and Survivors Insurance Trust Fund available for 
                administrative expenses shall be available and may be 
                used at the discretion of the Independent Social 
                Security Investment Oversight Board to purchase 
                insurance to cover potential liability of persons who 
                serve in a fiduciary capacity with respect to amounts 
                maintained in the Common Stock Investment Account of 
                such Trust Fund, without regard to whether a policy of 
                insurance permits recourse by the insurer against the 
                fiduciary in the case of a breach of a fiduciary 
                obligation.''.

SEC. 4. ESTABLISHMENT OF THE INDEPENDENT SOCIAL SECURITY INVESTMENT 
              OVERSIGHT BOARD.

    Title VII of the Social Security Act is amended by inserting after 
section 705 (42 U.S.C. 906) the following new section:

        ``independent social security investment oversight board

    ``Sec. 706. (a) There is established in the Social Security 
Administration an Independent Social Security Investment Oversight 
Board.
    ``(b) The Board shall be composed of a Chairman and four additional 
members. The Chairman and each additional member shall be appointed by 
the President, by and with the advice and consent to the Senate.
    ``(c) Members of the Board shall have substantial experience, 
training, and expertise in the management of financial investments and 
service in a fiduciary capacity.
    ``(d)(1) A member of the Board shall be appointed for a term of 10 
years, except that of the members first appointed--
            ``(A) the member appointed as Chairman shall be appointed 
        for a term of 10 years;
            ``(B) one member shall be appointed for a term of 8 years;
            ``(C) one member shall be appointed for a term of 6 years;
            ``(D) one member shall be appointed for a term of 4 years; 
        and
            ``(E) one member shall be appointed for a term of 2 years,
as designated by the President at the time of appointment.
    ``(2)(A) A vacancy on the Board shall be filled in the manner in 
which the original appointment was made and shall be subject to any 
conditions which applied with respect to the original appointment.
    ``(B) An individual chosen to fill a vacancy shall be appointed for 
the unexpired term of the member replaced.
    ``(C) The term of any member shall not expire before the date on 
which the member's successor takes office.
    ``(3) An individual appointed as a member of the Board may be 
removed from office only pursuant to a finding by the President of 
neglect of duty or malfeasance in office.
    ``(e) The member of the Board designated by the President as 
Chairman shall serve as Chairman for a term of 4 years (or until the 
expiration of his term as member of the Board, if earlier). A member 
serving as Chairman may be reappointed as Chairman.
    ``(f) The Board shall--
            ``(1) establish policies for investments in common stock of 
        amounts in the Common Stock Investment Account of the Federal 
        Old-Age and Survivors Insurance Trust Fund under section 
        201(d)(2), including--
                    ``(A) the risk and return parameters for such 
                investments; and
                    ``(B) the number and structure of the portfolios in 
                which such investments are maintained;
            ``(2) review bids from, and select managers for, such 
        investments;
            ``(3) annually review the performance of each investment 
        manager selected pursuant to paragraph (2) and provide for 
        reallocation of funds among them by the Managing Trustee as 
        appropriate;
            ``(4) report annually to each House of the Congress and to 
        the President regarding the earnings on such investments and 
        publish such reports annually in the Federal Register; and
            ``(5) review and approve the budget of the Board.
    ``(g)(1) The Board may--
            ``(A) adopt, alter, and use a seal;
            ``(B) establish policies with which the Managing Trustee of 
        the Federal Old-Age and Survivors Insurance Trust Fund is 
        required to comply under section 201(d)(2); and
            ``(C) take such other actions as may be necessary to carry 
        out the functions of the Board.
    ``(2) The policies of the Board may not require the Managing 
Trustee to invest or to cause to be invested any sums in the Federal 
Old-Age and Survivors Insurance Trust Fund in a specific asset or to 
dispose of or cause to be disposed of any specific asset of such Trust 
Fund.
    ``(h)(1) The Board shall meet--
            ``(A) not less than once during each month; and
            ``(B) at additional times at the call of the Chairman.
    ``(2)(A) The Board shall perform the functions and exercise the 
powers of the Board on a majority vote of a quorum of the Board.
    ``(B) A vacancy on the Board shall not impair the authority of a 
quorum of the Board to perform the functions and exercise the powers of 
the Board.
    ``(3) Three members of the Board shall constitute a quorum for the 
transaction of business.
    ``(4)(A) Each member of the Board who is not an officer or employee 
of the Federal Government shall be compensated at the daily rate of 
basic pay payable for level IV of the Executive Schedule for each day 
during which such member is engaged in performing a function of the 
Board.
    ``(B) A member of the Board shall be paid travel, per diem, and 
other necessary expenses under subchapter I of chapter 57 of title 5, 
United States Code, while traveling away from such member's home or 
regular place of business in the performance of the duties of the 
Board.
    ``(C) Payments authorized under this paragraph shall be paid from 
the Federal Old-Age and Survivors Insurance Trust Fund.
    ``(5) The accrued annual leave of any officer or employee of the 
Federal Government who is a member of the Board shall not be charged 
for any time used in performing services for the Board.
    ``(i) The members of the Board shall discharge their 
responsibilities solely in the interest of the Federal Old-Age and 
Survivors Insurance Trust Fund in connection with investments of 
amounts in the Common Stock Investment Account of such Trust Fund under 
section 201(d)(2).
    ``(j) 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 the Congress under section 1105 of title 31, United 
States Code.
    ``(k) The Board may submit to the President, and, at the same time, 
shall submit to each House of Congress, any legislative recommendations 
of the Board relating to any of its functions under this section.''.

SEC. 5. ADJUSTMENTS TO CONTRIBUTION AND BENEFIT BASE.

    (a) In General.--So much of section 230 of the Social Security Act 
(42 U.S.C. 430) as precedes subsection (d) is amended to read as 
follows:

                    ``contribution and benefit base

    ``Sec. 230. (a) The amount of the contribution and benefit base 
with respect to remuneration paid (and taxable years beginning) in 
calendar year 2000 shall be $99,600.
    ``(b) The Commissioner of Social Security shall determine and 
publish in the Federal Register on or before November 1 of each 
calendar year (after 1999) the contribution and benefit base determined 
under subparagraph (c) which shall be effective with respect to 
remuneration paid after such calendar year and taxable years beginning 
after such year.
    ``(c)(1) Subject to paragraph (2), the amount of the contribution 
and benefit base referred to in subsection (b) shall be the amount of 
the contribution and benefit base in effect in the year in which the 
determination is made or, if larger, the amount determined under 
paragraph (2).
    ``(2)(A) In advance of determining and publishing, in each calendar 
year consisting of calendar year 2001 or any calendar year thereafter, 
the contribution and benefit base which shall be effective with respect 
to remuneration paid after such calendar year and taxable years 
beginning after such year, the Commissioner shall estimate as 
accurately as practicable the minimum contribution and benefit base 
which would be necessary to have in effect with respect to remuneration 
paid in the next calendar year and taxable years beginning in such next 
calendar year to ensure that 90 percent of the total of all 
remuneration paid in such next calendar year and all net earnings from 
self-employment derived during such taxable years would consist of 
wages and self-employment income.
    ``(B) In any case in which a minimum contribution and benefit base 
estimated under subparagraph (A) is greater than the corresponding 
contribution and benefit base which would otherwise be in effect under 
subsection (b), such estimated contribution and benefit base shall be 
deemed the contribution and benefit base so in effect, in lieu of such 
corresponding contribution and benefit base.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply with respect to remuneration paid, and taxable years beginning, 
after 1999.
                                 <all>