[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1793 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 1793

To amend title II of the Social Security Act to provide for individual 
   security accounts funded by employee and employer Social Security 
 payroll deductions, to extend the solvency of the old-age, survivors, 
       and disability insurance program, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 13, 1999

Mr. Kolbe (for himself, Mr. Stenholm, Mr. Smith of Michigan, Mr. Dooley 
     of California, Mr. Sanford, Ms. McCarthy of Missouri, and Mr. 
  Greenwood) introduced the following bill; which was referred to the 
Committee on Ways and Means, and in addition to the Committee on Rules, 
for a period to be subsequently determined by the Speaker, in each case 
for consideration of such provisions as fall within the jurisdiction of 
                        the committee concerned

_______________________________________________________________________

                                 A BILL


 
To amend title II of the Social Security Act to provide for individual 
   security accounts funded by employee and employer Social Security 
 payroll deductions, to extend the solvency of the old-age, survivors, 
       and disability insurance program, 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 ``21st Century 
Retirement Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Individual security accounts.
Sec. 3. Minimum social security benefit.
Sec. 4. Elimination of earnings test for individuals who have attained 
                            retirement age.
Sec. 5. Reduction in the amount of certain transfers to Medicare Trust 
                            Fund.
Sec. 6. Increase in number of years taken into account in determining 
                            average indexed monthly earnings.
Sec. 7. Actuarial adjustment for retirement.
Sec. 8. Improvements in process for cost-of-living adjustments.
Sec. 9. Adjustment to upper 2 benefit formula factors.
Sec. 10. Phased-in increase in social security retirement ages.
Sec. 11. Modifications in PIA formula to reflect changes in life 
                            expectancy.
Sec. 12. Mechanism for remedying unforeseen deterioration in social 
                            security solvency.

SEC. 2. INDIVIDUAL SECURITY ACCOUNTS.

    (a) Establishment and Maintenance of Individual Security 
Accounts.--Title II of the Social Security Act (42 U.S.C. 401 et seq.) 
is amended--
            (1) by inserting before section 201 the following:

                    ``Part A--Insurance Benefits'';

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

                 ``Part B--Individual Security Accounts

                     ``individual security accounts

    ``Sec. 251. (a) Establishment.--
            ``(1) In general.--The Commissioner of Social Security, 
        within 30 days of the receipt of the first contribution 
        received pursuant to subsection (b) with respect to an eligible 
        individual, shall establish in the name of such individual an 
        individual security account. The individual security account 
        shall be identified to the account holder by means of the 
        account holder's Social Security account number.
            ``(2) Definition of eligible individual.--In this part, the 
        term `eligible individual' means any individual born after 
        December 31, 1944.
    ``(b) Contributions.--
            ``(1) Amounts transferred from the trust fund.--The 
        Secretary of the Treasury shall transfer from the Federal Old-
        Age and Survivors Insurance Trust Fund, for crediting by the 
        Commissioner of Social Security to an individual security 
        account of an eligible individual, an amount equal to the sum 
        of any amount received by such Secretary on behalf of such 
        individual under section 3101(a)(2) or 1401(a)(2) of the 
        Internal Revenue Code of 1986.
            ``(2) Other contributions.--For provisions relating to 
        additional contributions credited to individual security 
        accounts, see sections 531(c)(2) and 6402(l) of the Internal 
        Revenue Code of 1986.
    ``(c) Designation of Investment Type of Individual Security 
Account.--
            ``(1) Designation.--Each eligible individual who is 
        employed or self-employed shall designate the investment type 
        of individual security account to which the contributions 
        described in subsection (b) on behalf of such individual are to 
        be credited.
            ``(2) Form of designation.--The designation described in 
        paragraph (1) shall be made in such manner and at such 
        intervals as the Commissioner of Social Security may prescribe 
        in order to ensure ease of administration and reductions in 
        burdens on employers.
            ``(3) Special rule for 2000.--Not later than January 1, 
        2000, any eligible individual that is employed or self-employed 
        as of such date shall execute the designation required under 
        paragraph (1).
            ``(4) Designation in absence of designation by eligible 
        individual.--In any case in which no designation of the 
        individual security account is made, the Commissioner of Social 
        Security shall make the designation of the individual security 
        account in accordance with regulations that take into account 
        the competing objectives of maximizing returns on investments 
        and minimizing the risk involved with such investments.

   ``definition of individual security account; treatment of accounts

    ``Sec. 252. (a) Individual Security Account.--In this part, the 
term `individual security account' means any individual security 
account in the Individual Security Fund (established under section 254) 
which is administered by the Individual Security Fund Board.
    ``(b) Treatment of Account.--Except as otherwise provided in this 
part and in section 531 of the Internal Revenue Code of 1986, any 
individual security account described in subsection (a) shall be 
treated in the same manner as an individual account in the Thrift 
Savings Fund under subchapter III of chapter 84 of title 5, United 
States Code.

              ``individual security account distributions

    ``Sec. 253. (a) Date of Initial Distribution.--Except as provided 
in subsection (c), distributions may only be made from an individual 
security account of an eligible individual on and after the earliest 
of--
            ``(1) the date the eligible individual attains normal 
        retirement age, as determined under section 216 (or early 
        retirement age (as so determined) if elected by such 
        individual), or
            ``(2) the date on which funds in the eligible individual's 
        individual security account are sufficient to provide a monthly 
        payment over the life expectancy of the eligible individual 
        (determined under reasonable actuarial assumptions) which, when 
        added to the eligible individual's monthly benefit under part A 
        (if any), is at least equal to an amount equal to \1/12\ of the 
        poverty line (as defined in section 673(2) of the Community 
        Services Block Grant Act (42 U.S.C. 9902(2) and determined on 
        such date for a family of the size involved) and adjusted 
        annually thereafter by the adjustment determined under section 
        215(i).
    ``(b) Forms of Distribution.--
            ``(1) Required monthly payments.--Except as provided in 
        paragraph (2), beginning with the date determined under 
        subsection (a), the balance in an individual security account 
        available to provide monthly payments not in excess of the 
        amount described in subsection (a)(2) shall be paid, as elected 
        by the account holder (in such form and manner as shall be 
        prescribed in regulations of the Individual Security Fund 
        Board), by means of the purchase of annuities or equal monthly 
        payments over the life expectancy of the eligible individual 
        (determined under reasonable actuarial assumptions) in 
        accordance with requirements (which shall be provided in 
        regulations of the Board) similar to the requirements 
        applicable to payments of benefits under subchapter III of 
        chapter 84 of title 5, United States Code, and providing for 
        indexing for inflation.
            ``(2) Payment of excess funds.--To the extent funds remain 
        in an eligible individual's individual security account after 
        the application of paragraph (1) and to the extent not 
        inconsistent with the provisions of subchapter III of chapter 
        84 of title 5, United States Code, such funds shall be payable 
        to the eligible individual in such manner and in such amounts 
        as determined by the eligible individual.
    ``(c) Distribution in the Event of Death Before the Date of Initial 
Distribution.--If the eligible individual dies before the date 
determined under subsection (a), the balance in such individual's 
individual security account shall be distributed in a lump sum, under 
rules established by the Individual Security Fund Board, to the 
individual's heirs.

                       ``individual security fund

    ``Sec. 254. (a) Establishment.--There is established and maintained 
in the Treasury of the United States an Individual Security Fund in the 
same manner as the Thrift Savings Fund under sections 8437, 8438, and 
8439 (but not section 8440) of title 5, United States Code.
    ``(b) Individual Security Fund Board.--
            ``(1) In general.--There is established and operated in the 
        Social Security Administration an Individual Security Fund 
        Board in the same manner as the Federal Retirement Thrift 
        Investment Board under subchapter VII of chapter 84 of title 5, 
        United States Code.
            ``(2) Specific investment and reporting duties.--
                    ``(A) In general.--The Individual Security Fund 
                Board shall manage and report on the activities of the 
                Individual Security Fund and the individual security 
                accounts of such Fund in the same manner as the Federal 
                Retirement Thrift Investment Board manages and reports 
                on the Thrift Savings Fund and the individual accounts 
                of such Fund under subchapter VII of chapter 84 of 
                title 5, United States Code.
                    ``(B) Study and report on increased investment 
                options.--
                            ``(i) Study.--The Individual Security Fund 
                        Board shall conduct a study regarding ways to 
                        increase an eligible individual's investment 
                        options with respect to such individual's 
                        individual security account and with respect to 
rollovers or distributions from such account.
                            ``(ii) Report.--Not later than 2 years 
                        after the date of enactment of the 21st Century 
                        Retirement Act of 1999, the Individual Security 
                        Fund Board shall submit a report to the 
                        President and Congress that contains a detailed 
                        statement of the results of the study conducted 
                        pursuant to clause (i), together with the 
                        Board's recommendations for such legislative 
                        actions as the Board considers appropriate.

     ``budgetary treatment of individual security fund and accounts

    ``Sec. 255. The receipts and disbursements of the Individual 
Security Fund and any accounts within such fund shall not be included 
in the totals of the budget of the United States Government as 
submitted by the President or of the congressional budget and shall be 
exempt from any general budget limitation imposed by statute on 
expenditures and net lending (budget outlays) of the United States 
Government.''.
    (b) Modification of FICA Rates.--
            (1) Employees.--Section 3101(a) of the Internal Revenue 
        Code of 1986 (relating to tax on employees) is amended to read 
        as follows:
    ``(a) Old-Age, Survivors, and Disability Insurance.--
            ``(1) In general.--
                    ``(A) 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)).
                    ``(B) Individuals covered under part b of title ii 
                of the social security act.--In addition to other 
                taxes, there is hereby imposed on the income of every 
                part B eligible individual a tax equal to 4.2 percent 
                of the wages (as defined in section 3121(a)) received 
                by such individual with respect to employment (as 
                defined in section 3121(b)).
            ``(2) Contribution of oasdi tax reduction to individual 
        security accounts.--
                    ``(A) In general.--In addition to other taxes, 
                there is hereby imposed on the income of every part B 
                eligible individual an individual security account 
                contribution equal to the sum of--
                            ``(i) 2 percent of the wages (as so 
                        defined) received by such individual with 
                        respect to employment (as so defined), plus
                            ``(ii) so much of such wages (not to exceed 
                        $2,000) as designated by the individual in the 
                        same manner as described in section 251(c) of 
                        the Social Security Act.
                    ``(B) Inflation adjustment.--
                            ``(i) In general.--In the case of any 
                        calendar year beginning after 2000, the dollar 
                        amount in subparagraph (A)(ii) shall be 
                        increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for the calendar year, 
                                determined by substituting `calendar 
                                year 1999' for `calendar year 1992' in 
                                subparagraph (B) thereof.
                            ``(ii) Rounding.--If any dollar amount 
                        after being increased under clause (i) is not a 
                        multiple of $10, such dollar amount shall be 
                        rounded to the nearest multiple of $10.''.
            (2) Self-employed.--Section 1401(a) of the Internal Revenue 
        Code of 1986 (relating to tax on self-employment income) is 
        amended to read as follows:
    ``(a) Old-Age, Survivors, and Disability Insurance.--
            ``(1) In general.--
                    ``(A) 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.
                    ``(B) Individuals covered under part b of title ii 
                of the social security act.--In addition to other 
                taxes, there is hereby imposed for each taxable year, 
                on the self-employment income of every part B eligible 
                individual, a tax equal to 10.4 percent of the amount 
                of the self-employment income for such taxable year.
            ``(2) Contribution of oasdi tax reduction to individual 
        security accounts.--
                    ``(A) In general.--In addition to other taxes, 
                there is hereby imposed for each taxable year, on the 
                self-employment income of every individual, an 
                individual security account contribution equal to the 
                sum of--
                            ``(i) 2 percent of the amount of the self-
                        employment income for each individual for such 
                        taxable year; and
                            ``(ii) so much of such self-employment 
                        income (not to exceed $2,000) as designated by 
                        the individual in the same manner as described 
                        in section 251(c) of the Social Security Act.
                    ``(B) Inflation adjustment.--
                            ``(i) In general.--In the case of any 
                        taxable year beginning after 2000, the dollar 
                        amount in subparagraph (A)(ii) shall be 
                        increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for the calendar year in which 
                                the taxable year begins, determined by 
                                substituting `calendar year 1999' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                            ``(ii) Rounding.--If any dollar amount 
                        after being increased under clause (i) is not a 
                        multiple of $10, such dollar amount shall be 
                        rounded to the nearest multiple of $10.''.
            (3) Part b eligible individual.--
                    (A) 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 
251(a)(2) of the Social Security Act) for such calendar year.''.
                    (B) 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 251(a)(2) of the Social 
Security Act) for such calendar year.''.
            (4) Effective dates.--
                    (A) Employees.--The amendments made by paragraphs 
                (1) and (3)(A) apply to remuneration paid after 
                December 31, 1999.
                    (B) Self-employed individuals.--The amendments made 
                by paragraphs (2) and (3)(B) apply to taxable years 
                beginning after December 31, 1999.
    (c) Matching Contributions.--
            (1) In general.--Part IV of subchapter A of chapter 1 of 
        the Internal Revenue Code of 1986 (relating to credits against 
        tax) is amended by adding at the end the following new subpart:

            ``Subpart H--Individual Security Account Credits

``Sec. 54. Individual security account credit.''.

``SEC. 54. INDIVIDUAL SECURITY ACCOUNT CREDIT.

    ``(a) Allowance of Credit.--Each part B eligible individual is 
entitled to a credit for the taxable year in an amount equal to the sum 
of--
            ``(1) $150,
            ``(2) 50 percent of the designated wages of such individual 
        for the taxable year,
            ``(3) 50 percent of the designated self-employment income 
        of such individual for the taxable year, and
            ``(4) 50 percent of the designated earned income credit.
    ``(b) Limitations.--
            ``(1) Amount.--The amount determined under subparagraphs 
        (A) and (B) of paragraph (1) with respect to such individual 
        for any taxable year may not exceed the excess (if any) of--
                    ``(A) $600, over
                    ``(B) the sum of the amounts received by the 
                Secretary on behalf of such individual under sections 
                3101(a)(2)(A)(i) and 1401(a)(2)(A)(i) for the taxable 
                year.
            ``(2) Failure to make voluntary contributions.--In the case 
        of a part B eligible individual with respect to whom the amount 
        of wages designated under section 3101(a)(2)(A)(ii) plus 
the amount self-employment income designated under section 
1401(a)(2)(A)(ii) for the taxable year is zero, the credit to which 
such individual is entitled under this section shall be equal to zero.
    ``(c) Definitions.--For purposes of this section--
            ``(1) 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 
        251(a)(2) of the Social Security Act) for such calendar year.
            ``(2) Designated wages.--The term `designated wages' means 
        with respect to any taxable year the amount designated under 
        section 3101(a)(2)(A)(ii).
            ``(3) Designated self-employment income.--The term 
        `designated self-employment income' means with respect to any 
        taxable year the amount designated under section 
        1401(a)(2)(A)(ii) for such taxable year.
            ``(4) Designated earned income credit.--The term 
        `designated earned income credit' means the amount of the 
        credit allowed under section 32 for the taxable year that is 
        designated by the part B eligible individual in the same manner 
        as described in section 251(c) of the Social Security Act.
    ``(d) Credit Used Only for Individual Security Account.--For 
purposes of this title, the credit allowed under this section with 
respect to any part B eligible individual--
            ``(1) shall not be treated as a credit allowed under this 
        part, but
            ``(2) shall be treated as an overpayment of tax under 
        section 6401(b)(3) which may, in accordance with section 
        6402(l), only be transferred to an individual security account 
        established under part B of title II of the Social Security Act 
        with respect to such individual.''.
            (2) Contribution of eitc amounts to individual security 
        accounts.--Section 32 of such Code (relating to earned income) 
        is amended by adding at the end the following new subsection:
    ``(o) Contribution to Individual Security Account.--
            ``(1) In general.--An eligible part B individual who is 
        allowed a credit under this section may designate all or a 
        portion of such credit as a contribution to the individual 
        security account established on behalf of such individual.
            ``(2) Credit used only for individual security account.--
        For purposes of this title, the amount designated under 
        paragraph (1) with respect to any part B eligible individual--
                    ``(A) shall not be treated as a credit allowed 
                under this section, but
                    ``(B) shall be treated as an overpayment of tax 
                under section 6401(b)(3) which may, in accordance with 
                section 6402(l), only be transferred to an individual 
                security account established under part B of title II 
                of the Social Security Act with respect to such 
                individual.''.
            (3) Contribution of credited amounts to individual security 
        account.--
                    (A) Credited amounts treated as overpayment of 
                tax.--Subsection (b) of section 6401 (relating to 
                excessive credits) is amended by adding at the end the 
                following new paragraph:
            ``(3) Special rule for credit under sections 32 and 54.--
        Subject to the provisions of section 6402(l), the following sum 
        shall be considered an overpayment--
                    ``(A) Section 54 credit.--The amount of any credit 
                allowed under section 54 for any taxable year, plus
                    ``(B) Section 32 designated earned income credit 
                contribution.--The amount of the earned income credit 
                designated as a contribution to an individual security 
                account under section 32(o) for the taxable year.''.
                    (B) Transfer of credit amount to individual 
                security account.--Section 6402 of such Code (relating 
                to authority to make credits or refunds) is amended by 
                adding at the end the following new subsection:
    ``(l) Overpayments Attributable to Individual Security Account 
Credit.--In the case of any overpayment described in section 6401(b)(3) 
with respect to any individual, the Secretary shall transfer for 
crediting by the Commissioner of Social Security to the individual 
security account of an such individual, an amount equal to the amount 
of such overpayment.''.
            (4) Notice to eitc recipients of matching contributions to 
        individual security accounts.--In connection with information 
        and tax forms relating to the credit allowed under section 32 
        of the Internal Revenue Code of 1986, the Secretary of the 
        Treasury shall provide notice of the availability of matching 
        contributions pursuant to section 54 of such Code (as added by 
        subsection (a) of this section) to individual security accounts 
under part B of title II of the Social Security Act.
            (5) Conforming amendments.--
                    (A) Section 1324(b)(2) of title 31, United States 
                Code, is amended by inserting before the period at the 
                end ``, or enacted by the 21st Century Retirement 
                Act''.
                    (B) The table of subparts for part IV of subchapter 
                A of chapter 1 of the Internal Revenue Code of 1986 is 
                amended by adding at the end the following new item:

``Subpart H. Individual Security Account Credits.''.
            (6) Effective date.--The amendments made by this subsection 
        shall apply to refunds payable after December 31, 1999.
    (d) Tax Treatment of Individual Security Accounts.--
            (1) In general.--Subchapter F of chapter 1 of the Internal 
        Revenue Code of 1986 (relating to exempt organizations) is 
        amended by adding at the end the following new part:

            ``PART IX--INDIVIDUAL SECURITY FUND AND ACCOUNTS

                              ``Sec. 531. Individual Security Fund and 
                                        Accounts.

``SEC. 531. INDIVIDUAL SECURITY FUND AND ACCOUNTS.

    ``(a) General Rule.--The Individual Security Fund and individual 
security accounts shall be exempt from taxation under this subtitle.
    ``(b) Individual Security Fund and Accounts Defined.--For purposes 
of this section, the terms `Individual Security Fund' and `individual 
security account' means the fund and account established under sections 
254 and 251, respectively, of part B of title II of the Social Security 
Act.
    ``(c) Contributions.--
            ``(1) In general.--No deduction shall be allowed for 
        contributions credited to an individual security account under 
        section 251 of the Social Security Act or section 6402(l).
            ``(2) Rollover of inheritance.--Any portion of a 
        distribution to an heir from an individual security account 
        made by reason of the death of the beneficiary of such account 
        may be rolled over to the individual security account of the 
        heir.
    ``(d) Distributions.--
            ``(1) In general.--Any distribution from an individual 
        security account under section 253 of the Social Security Act 
        shall be included in gross income under section 72.
            ``(2) Period in which distributions must be made from 
        account of decedent.--In the case of amounts remaining in an 
        individual security account from which distributions began 
        before the death of the beneficiary, rules similar to the rules 
        of section 401(a)(9)(B) shall apply to distributions of such 
        remaining amounts.
            ``(3) Rollovers.--Paragraph (1) shall not apply to amounts 
        rolled over under subsection (c)(2) in a direct transfer by the 
        Commissioner of Social Security, under regulations which the 
        Commissioner shall prescribe.''.
            (2) Clerical amendment.--The table of parts for subchapter 
        F of chapter 1 of the Internal Revenue Code of 1986 is amended 
        by adding after the item relating to part VIII the following 
        new item:

                              ``Part IX. Individual security fund and 
                                        accounts.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 1999.

SEC. 3. MINIMUM SOCIAL SECURITY BENEFIT.

    Section 215 of the Social Security Act (42 U.S.C. 415) is amended 
by adding at the end the following:

                  ``Minimum Monthly Insurance Benefit

    ``(j)(1) Notwithstanding the preceding provisions of this section--
            ``(A) the primary insurance amount of a qualified 
        individual shall be equal to the greater of--
                    ``(i) the primary insurance amount determined under 
                this section (without regard to this subsection), or
                    ``(ii) \1/12\ of the applicable percentage of the 
                applicable amount, and
            ``(B) any recomputation of the primary insurance amount of 
        a qualified individual shall not result in a primary insurance 
        amount less than the primary insurance amount as in effect 
        immediately prior to such recomputation.
    ``(2) For purposes of this subsection--
            ``(A) The term `qualified individual' means an individual--
                    ``(i) who initially becomes eligible for old-age or 
                disability insurance benefits, or dies (before becoming 
                eligible for such benefits) for a month beginning after 
                December 31, 2005, and
                    ``(ii) who has at least 80 quarters of coverage.
            ``(B) The term `applicable amount' means, in connection 
        with an individual, $7,992 adjusted annually--
                    ``(i)(I) with respect to an individual whose 
                initial month of eligibility occurs in a year prior to 
                2011, by the CPI increase percentage determined under 
                section 215(i) for 1996 through the year prior to such 
                year of eligibility; and
                    ``(II) with respect to an individual whose initial 
                month of eligibility occurs in a year after 2010, by 
                the CPI increase percentage determined under such 
                section for 1996 through 2009, and by the wage increase 
                percentage determined under such section for 2009 
                through the second year prior to the year of such 
                eligibility; and
                    ``(ii) by the CPI increase percentage determined 
                under such section for all years beginning with the 
                year of an individual's initial eligibility.
            ``(C)(i) The term `applicable percentage' means, for 
        computations and recomputations of a qualified individual's 
        primary insurance amount under this section whose initial 
        eligibility occurs in any calendar year specified in the table 
        under clause (ii), the sum of--
                    ``(I) the applicable base percentage specified in 
                such table in connection with such year, plus
                    ``(II) the product derived by multiplying the 
                applicable percentage increment specified in such table 
                in connection with such year by the ratio of the number 
                of such individual's quarters of coverage (if any) in 
                excess of the minimum number of quarters required under 
                subparagraph (A)(ii) but not in excess of twice such 
                minimum, to such minimum.
            ``(ii) For purposes of clause (i), the applicable base 
        percentages and applicable percentage increments are set forth 
        in connection with calendar years in the following table:


``If the calendar year is:             The applicable base      And the applicable percentage increment is:
                                        percentage is:
2006.................................  12 percent.............                      8 percent
2007.................................  24 percent.............                     16 percent
2008.................................  36 percent.............                     24 percent
2009.................................  48 percent.............                     32 percent
After 2009...........................  60 percent.............                    40 percent.''
 

SEC. 4. ELIMINATION OF EARNINGS TEST FOR INDIVIDUALS WHO HAVE ATTAINED 
              RETIREMENT AGE.

    (a) In General.--Section 203 of the Social Security Act (42 U.S.C. 
403) is amended--
            (1) in subsection (c)(1), by striking ``the age of 
        seventy'' and inserting ``retirement age (as defined in section 
        216(l))'';
            (2) in paragraphs (1)(A) and (2) of subsection (d), by 
        striking ``the age of seventy'' each place it appears and 
        inserting ``retirement age (as defined in section 216(l))'';
            (3) in subsection (f)(1)(B), by striking ``was age seventy 
        or over'' and inserting ``was at or above retirement age (as 
        defined in section 216(l))'';
            (4) in subsection (f)(3)--
                    (A) by striking ``33\1/3\ percent'' and all that 
                follows through ``any other individual,'' and inserting 
                ``50 percent of such individual's earnings for such 
                year in excess of the product of the exempt amount as 
                determined under paragraph (8),''; and
                    (B) by striking ``age 70'' and inserting 
                ``retirement age (as defined in section 216(l))'';
            (5) in subsection (h)(1)(A), by striking ``age 70'' each 
        place it appears and inserting ``retirement age (as defined in 
        section 216(l))''; and
            (6) in subsection (j)--
                    (A) in the heading, by striking ``Age Seventy'' and 
                inserting ``Retirement Age''; and
                    (B) by striking ``seventy years of age'' and 
                inserting ``having attained retirement age (as defined 
                in section 216(l))''.
    (b) Conforming Amendments Eliminating the Special Exempt Amount for 
Individuals Who Have Attained Retirement Age.--
            (1) Uniform exempt amount.--Section 203(f)(8)(A) of the 
        Social Security Act (42 U.S.C. 403(f)(8)(A)) is amended by 
        striking ``the new exempt amounts (separately stated for 
        individuals described in subparagraph (D) and for other 
        individuals) which are to be applicable'' and inserting ``a new 
        exempt amount which shall be applicable''.
            (2) Conforming amendments.--Section 203(f)(8)(B) of such 
        Act (42 U.S.C. 403(f)(8)(B)) is amended--
                    (A) in the matter preceding clause (i), by striking 
                ``Except'' and all that follows through ``whichever'' 
                and inserting ``The exempt amount which is applicable 
for each month of a particular taxable year shall be whichever'';
                    (B) in clauses (i) and (ii), by striking 
                ``corresponding'' each place it appears; and
                    (C) in the last sentence, by striking ``an exempt 
                amount'' and inserting ``the exempt amount''.
            (3) Repeal of basis for computation of special exempt 
        amount.--Section 203(f)(8)(D) of such Act (42 U.S.C. 
        403(f)(8)(D)) is repealed.
    (c) Additional Conforming Amendments.--
            (1) Elimination of redundant references to retirement 
        age.--Section 203 of the Social Security Act (42 U.S.C. 403) is 
        amended--
                    (A) in subsection (c), in the last sentence, by 
                striking ``nor shall any deduction'' and all that 
                follows and inserting ``nor shall any deduction be made 
                under this subsection from any widow's or widower's 
                insurance benefit if the widow, surviving divorced 
                wife, widower, or surviving divorced husband involved 
                became entitled to such benefit prior to attaining age 
                60.''; and
                    (B) in subsection (f)(1), by striking subparagraph 
                (D) and inserting the following: ``(D) for which such 
                individual is entitled to widow's or widower's 
                insurance benefits if such individual became so 
                entitled prior to attaining age 60,''.
            (2) Conforming amendment to provisions for determining 
        amount of increase on account of delayed retirement.--Section 
        202(w)(2)(B)(ii) of such Act (42 U.S.C. 402(w)(2)(B)(ii)) is 
        amended--
                    (A) by striking ``either''; and
                    (B) by striking ``or suffered deductions under 
                section 203(b) or 203(c) in amounts equal to the amount 
                of such benefit''.
            (3) Provisions relating to earnings taken into account in 
        determining substantial gainful activity of blind 
        individuals.--The second sentence of section 223(d)(4) of such 
        Act (42 U.S.C. 423(d)(4)) is amended by striking ``if section 
        102 of the Senior Citizens' Right to Work Act of 1996 had not 
        been enacted'' and inserting the following: ``if the amendments 
        to section 203 made by section 102 of the Senior Citizens' 
        Right to Work Act of 1996 and by the Strengthening Social 
        Security Act of 1998 had not been enacted''.
    (d) Effective Date.--The amendments and repeals made by this 
section shall apply with respect to taxable years ending after December 
31, 1999.

SEC. 5. REDUCTION IN THE AMOUNT OF CERTAIN TRANSFERS TO MEDICARE TRUST 
              FUND.

    Subparagraph (A) of section 121(e)(1) of the Social Security 
Amendments of 1983 (42 U.S.C. 401 note), as amended by section 
13215(c)(1) of the Omnibus Budget Reconciliation Act of 1993, is 
amended--
            (1) in clause (ii), by striking ``the amounts'' and 
        inserting ``the applicable percentage of the amounts''; and
            (2) by adding at the end the following: ``For purposes of 
        clause (ii), the applicable percentage for a year is equal to 
        100 percent, reduced (but not below zero) by 10 percentage 
        points for each year after 2009.''.

SEC. 6. INCREASE IN NUMBER OF YEARS TAKEN INTO ACCOUNT IN DETERMINING 
              AVERAGE INDEXED MONTHLY EARNINGS.

    (a) In General.--Section 215(b) of the Social Security Act (42 
U.S.C. 415(b)(1)) is amended--
            (1) by striking subparagraph (B) of paragraph (1) and 
        inserting the following:
            ``(B) the product derived by multiplying--
                    ``(i) the number of elapsed years, reduced (in any 
                case to which paragraph (2)(A)(i) applies) to the 
                extent provided in paragraph (2)(C), by
                    ``(ii) 12.'';
            (2) in subparagraph (A) of paragraph (2), by striking all 
        of such subparagraph as precedes ``Clause (ii),'' and inserting 
        the following:
    ``(2)(A) The number of an individual's benefit computation years 
equals--
            ``(i) in the case of an individual who is entitled to old-
        age insurance benefits (except as provided in the second 
        sentence of this subparagraph), or who has died, the number of 
        his computation base years, and
            ``(ii) in the case of an individual who is entitled to 
        disability insurance benefits, the number of elapsed years 
        reduced by the number of years equal to one-fifth of the number 
        of elapsed years (disregarding any resulting fractional part of 
        a year), but not by more than 5 years.''; and
            (3) by adding at the end of paragraph (2) the following new 
        subparagraph:
    ``(C)(i) For purposes of clause (i) of paragraph (1)(B), the number 
of elapsed years shall be reduced pursuant to such clause by the number 
of years specified in connection with the calendar year in which such 
individual becomes eligible for old-age insurance benefits, or dies 
(before becoming eligible for such benefits), as set forth in the 
following table:

``If such calendar year is:         The applicable number of years is:
        2000 or 2001...........................................      5.
        2002 or 2003...........................................      4.
        2004 or 2005...........................................      3.
        2006 or 2007...........................................      2.
        2008 or 2009...........................................      1.
        After 2009.............................................      0.
            ``(ii) The reduction provided in clause (i) of paragraph 
        (1)(B) shall not apply in any case in which--
                    ``(I) the individual is married at the time the 
                individual becomes eligible for old-age insurance 
                benefits or dies (before becoming eligible for such 
                benefits), and
                    ``(II) the total of the wages paid in and self-
                employment income credited to the preceding calendar 
                year with respect to the individual is less than the 
                total of the wages paid in and self-employment income 
                credited to such year with respect to the individual's 
                spouse.''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to individuals attaining early retirement age (as 
defined in section 216(l)(2) of the Social Security Act) or dying after 
December 31, 1999.

SEC. 7. ACTUARIAL ADJUSTMENT FOR RETIREMENT.

    (a) Early Retirement.--
            (1) In general.--Section 202(q) of the Social Security Act 
        (42 U.S.C. 402(q)) is amended--
                    (A) in paragraph (1)(A), by striking ``\5/9\'' and 
                inserting ``the applicable fraction (determined under 
                paragraph (12))''; and
                    (B) by adding at the end the following:
    ``(12) For purposes of paragraph (1)(A), the `applicable fraction' 
for an individual who attains the age of 62 in--
            ``(A) any year before 2001, is \5/9\;
            ``(B) 2001, is \7/12\;
            ``(C) 2002, is \11/18\;
            ``(D) 2003, is \23/36\;
            ``(E) 2004, is \2/3\; and
            ``(F) 2005 or any succeeding year, is \25/36\.''.
            (2) Months beyond first 36 months.--Section 202(q) of such 
        Act (42 U.S.C. 402(q)(9)) (as amended by paragraph (1)) is 
        amended--
                    (A) in paragraph (9)(A), by striking ``five-
                twelfths'' and inserting ``the applicable fraction 
                (determined under paragraph (13))''; and
                    (B) by adding at the end the following:
    ``(13) For purposes of paragraph (9)(A), the `applicable fraction' 
for an individual who attains the age of 62 in--
            ``(A) any year before 2001, is \5/12\;
            ``(B) 2001, is \16/36\;
            ``(C) 2002, is \16/36\;
            ``(D) 2003, is \17/36\;
            ``(E) 2004, is \17/36\; and
            ``(F) 2005 or any succeeding year, is \1/2\.''.
            (3) Effective date.--The amendments made by paragraphs (1) 
        and (2) shall apply to individuals who attain the age of 62 in 
        years after 1999.
    (b) Delayed Retirement.--Section 202(w)(6) of the Social Security 
Act (42 U.S.C. 402(w)(6)) is amended--
            (1) in subparagraph (C), by striking ``and'' at the end;
            (2) in subparagraph (D), by striking ``2004.'' and 
        inserting ``2004 and before 2007;''; and
            (3) by adding at the end the following:
            ``(E) \17/24\ of 1 percent in the case of an individual who 
        attains the age of 62 in a calendar year after 2006 and before 
        2009;
            ``(F) \3/4\ of 1 percent in the case of an individual who 
        attains the age of 62 in a calendar year after 2008 and before 
        2011;
            ``(G) \19/24\ of 1 percent in the case of an individual who 
        attains the age of 62 in a calendar year after 2010 and before 
        2013; and
            ``(H) \5/6\ of 1 percent in the case of an individual who 
        attains the age of 62 in a calendar year after 2012.''.

SEC. 8. IMPROVEMENTS IN PROCESS FOR COST-OF-LIVING ADJUSTMENTS.

    (a) Annual Declarations of Achieved Substitution Bias Correction 
and Retained Upper Level Substitution Bias.--
            (1) Achieved substitution bias correction.--Not later than 
        October 1, 1999, and annually thereafter, the Commissioner of 
        the Bureau of Labor Statistics shall publish in the Federal 
        Register an estimate of the number of percentage points by 
        which the annual rate of change in the Consumer Price Index is 
        reduced below the rate it would otherwise have attained by 
        reason of adjustments in the determination of such index 
        instituted by the Bureau after December 31, 1998.
            (2) Upper level substitution bias.--Not later than August 
        1, 2000, and annually thereafter, the Commissioner of the 
        Bureau of Labor Statistics shall publish in the Federal 
        Register an estimate of the upper level substitution bias 
        retained in the Consumer Price Index, expressed in terms of a 
        percentage point effect on the annual rate of change in the 
        Consumer Price Index for the preceding calendar year determined 
        through the use of a superlative index that accounts for 
        changes that consumers make in the quantities of goods and 
        services consumed.
    (b) Funding for CPI Improvements.--
            (1) In general.--There is hereby appropriated to the Bureau 
        of Labor Statistics in the Department of Labor, for each of 
        fiscal years 1999, 2000, and 2001, $30,000,000 for use by the 
        Bureau for the following purposes:
                    (A) Research, evaluation, and implementation of a 
                superlative index to estimate upper level substitution 
                bias in the Consumer Price Index.
                    (B) Expansion of the Consumer Expenditure Survey 
                and the Point of Purchase Survey.
                    (C) Implementation of revisions to the Consumer 
                Price Index with respect to programs under title II of 
                the Social Security Act (42 U.S.C. 401 et seq.).
            (2) Reports.--The Commissioner of the Bureau of Labor 
        Statistics shall submit reports regarding the use of 
        appropriations made under paragraph (1) to the Committee on 
        Appropriations of the House of Representative and the Committee 
        on Appropriations of the Senate upon the request of each 
        Committee.
    (c) Information Sharing.--The Commissioner of the Bureau of Labor 
Statistics may secure directly from the Secretary of Commerce 
information necessary for purposes of calculating the Consumer Price 
Index. Upon request of the Commissioner of the Bureau of Labor 
Statistics, the Secretary of Commerce shall furnish that information to 
the Commissioner.
    (d) Administrative Advisory Committee.--The Bureau of Labor 
Statistics shall, in consultation with the National Bureau of Economic 
Research, the American Economic Association, and the National Academy 
of Statisticians, establish an administrative advisory committee. The 
advisory committee shall periodically advise the Bureau of Labor 
Statistics regarding revisions of the Consumer Price Index and conduct 
research and experimentation with alternative data collection and 
estimating approaches.
    (e) Modifications to Cost-of-Living Indexing of Benefits.--
            (1) In general.--Section 215(i)(1)(D) of the Social 
        Security Act (42 U.S.C. 415(i)(1)(D)) is amended to to read as 
        follows:
            ``(D) the term `CPI increase percentage', with respect to a 
        base quarter or cost-of-living computation quarter in any 
        calendar year, means--
                    ``(i) the percentage (rounded to the nearest one-
                hundredth of 1 percent) by which the Consumer Price 
                Index for that quarter (as prepared by the Department 
                of Labor) exceeds such index for the most recent prior 
                calendar quarter which was a base quarter under 
                subparagraph (A)(ii) or, if later, the most recent 
                cost-of-living computation quarter under subparagraph 
                (B),
                    ``(ii) reduced (but not below zero) by the upper 
                level substitution bias (rounded to the nearest one-
                hundredth of 1 percent) retained in such index (as 
                published by the Secretary of Labor pursuant to section 
                8(a)(2) of the 21st Century Retirement Act of 1999 in 
                connection with the annual rate of change in the 
                Consumer Price Index for the preceding calendar year), 
                to the extent applicable to such percentage, and
                    ``(iii) reduced further (but not below zero) by the 
                excess (if any) of 0.33 percentage points over the sum 
                of--
                            ``(I) the reduction in percentage points 
                        undergone by the percentage described in clause 
                        (i) pursuant to clause (ii), and
                            ``(II) the reduction in percentage points 
                        undergone by the percentage described in clause 
                        (i) (rounded to the nearest one-hundredth of 1 
                        percent) attributable to the achieved 
                        substitution bias correction (as last published 
                        by the Secretary of Labor pursuant to section 
                        8(a)(1) of the 21st Century Retirement Act of 
                        1999), to the extent applicable to such 
                        percentage.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply with respect to increases under section 215(i) of 
        the Social Security Act effective with the month of December of 
        years after 1999.
    (f) Consumer Price Index Adjustments Applicable to Internal Revenue 
Code Provisions.--
            (1) In general.--Paragraph (3) of section 1(f) of the 
        Internal Revenue Code of 1986 (defining cost-of-living 
        adjustment) is amended by striking the period at the end and 
        inserting a comma and by inserting at the end the following 
        flush material:
                ``reduced (but not below zero) by the number of 
                percentage points determined under paragraph (8) for 
                the calendar year for which such adjustment is being 
                determined.''.
            (2) Limitation on increases.--Subsection (f) of section 1 
        of such Code is amended by adding at the end the following new 
        paragraph:
            ``(8) Limitation on increases in cpi.--
                    ``(A) In general.--The number of percentage points 
                determined under this paragraph for any calendar year 
                is--
                            ``(i) the upper level substitution bias, to 
                        the extent applicable to the percentage 
                        adjustment under paragraph (3), plus
                            ``(ii) the excess (if any) of 0.33 
                        percentage points over the sum of--
                                    ``(I) such upper level substitution 
                                bias, and
                                    ``(II) the achieved substitution 
                                bias correction, to the extent 
                                applicable to the percentage adjustment 
                                under paragraph (3).
                    ``(B) Computation of base to reflect limitation.--
                The Secretary shall adjust the number taken into 
                account under paragraph (3)(B) so that any increase 
                which is not taken into account by reason of 
                subparagraph (A) shall not be taken into account at any 
                time so as to allow such increase for any period.
                    ``(C) Definitions.--For purposes of this paragraph, 
                the terms `achieved substitution bias correction' and 
                `upper level substitution bias' mean, with respect to 
                any 12-month period ending on August 31 of a calendar 
                year, the achieved substitution bias correction and 
                upper level substitution bias most recently published 
                by the Secretary of Labor pursuant to section 8(a) of 
                the 21st Century Retirement Act of 1999 for a period 
                ending on or before August 31 of such calendar year.''.
    (g) Corresponding Amendments to Other Provisions Utilizing the 
Consumer Price Index.--
            (1) In general.--For purposes of determining the amount of 
        any cost-of-living adjustment which takes effect for benefits 
        payable after December 31, 1999, with respect to any benefit 
        described in paragraph (5)--
                    (A) any increase in the relevant index (determined 
                without regard to this subsection) shall be reduced by 
                the number of percentage points determined under 
                paragraph (2), and
                    (B) the amount of the increase in such benefit 
                shall be equal to the product of--
                            (i) the increase in the relevant index (as 
                        reduced under subparagraph (A)), and
                            (ii) the average such benefit for the 
                        preceding calendar year under the program 
                        described in paragraph (5) which provides such 
                        benefit.
            (2) Limitation on increases.--
                    (A) In general.--The number of percentage points 
                determined under this paragraph for any calendar year 
                is--
                            (i) the upper level substitution bias, to 
                        the extent applicable to the percentage 
                        adjustment under the relevant index, plus
                            (ii) the excess (if any) of 0.33 percentage 
                        points over the sum of--
                                    (I) such upper level substitution 
                                bias, and
                                    (II) the achieved substitution bias 
                                correction, to the extent applicable to 
                                the percentage adjustment under the 
                                relevant index,.
                    (B) Computation of base to reflect limitation.--Any 
                increase which is not taken into account by reason of 
                subparagraph (A) shall not be taken into account at any 
                time so as to allow such increase for any period.
            (3) Paragraph (1) to apply only to computation of benefit 
        amounts.--Paragraph (1) shall apply only for purposes of 
        determining the amount of benefits and not for purposes of 
        determining--
                    (A) whether a threshold increase in the relevant 
                index has been met, or
                    (B) increases in amounts under other provisions of 
                law not described in paragraph (5) which operate by 
                reference to increases in such benefits.
            (4) Definitions.--For purposes of this subsection--
                    (A) Cost-of-living adjustment.--The term ``cost-of-
                living adjustment'' means any adjustment in the amount 
                of benefits described in paragraph (5) which is 
                determined by reference to changes in an index.
                    (B) Index.--
                            (i) Index.--The term ``index'' means the 
                        Consumer Price Index and any other index of 
                        price or wages.
                            (ii) Relevant index.--The term ``relevant 
                        index'' means the index on the basis of which 
                        the amount of the cost-of-living adjustment is 
                        determined.
                    (C) Achieved substitution bias correction; upper 
                level substitution bias.--The terms `achieved 
                substitution bias correction' and `upper level 
                substitution bias' mean, with respect to the applicable 
                12-month period preceding a cost-of-living adjustment, 
                the achieved substitution bias correction and upper 
                level substitution bias most recently published by the 
                Secretary of Labor pursuant to section 8(a) of the 21st 
                Century Retirement Act of 1999.
            (5) Benefits to which subsection applies.--For purposes of 
        this subsection, the benefits described in this paragraph are--
                    (A) retired and retainer pay subject to adjustment 
                under section 1401a of title 10, United States Code;
                    (B) civil service retirement benefits under section 
                8340 of title 5, United States Code, foreign service 
                retirement benefits under section 826 of the Foreign 
                Service Act of 1980, Central Intelligence Agency 
                retirement benefits under part J of the Central 
                Intelligence Agency Retirement Act of 1964 for certain 
                employees, and any other benefits under any similar 
                provision under any retirement system for employees of 
                the government of the United States;
                    (C) Federal workers' compensation under section 
                8146a of title 5, United States Code;
                    (D) benefits under section 3(a), 4(a), or 4(f) of 
                the Railroad Retirement Act of 1974; and
                    (E) benefits and expenditure limits under title 
                XVIII or XIX of the Social Security Act.
            (6) Benefit.--For purposes of this section, the term 
        ``benefit'' includes a payment.
    (h) Recapture 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) On July 1 of each calendar year specified in the following 
table, the Secretary of the Treasury shall transfer, from the general 
fund of the Treasury to the Federal Old-Age and Survivors Insurance 
Trust Fund, an amount equal to the applicable percentage for such year, 
specified in such table, of the total wages paid in and self-employment 
income credited to such year.

``For a calendar year--             The applicable percentage for the 
                                            year is--
    After 1999 and before 2001.....
                                        0.03 percent.
    After 2000 and before 2002.....
                                        0.07 percent.
    After 2001 and before 2003.....
                                        0.13 percent.
    After 2002 and before 2004.....
                                        0.15 percent.
    After 2003 and before 2005.....
                                        0.20 percent.
    After 2004 and before 2006.....
                                        0.24 percent.
    After 2005 and before 2007.....
                                        0.28 percent.
    After 2006 and before 2008.....
                                        0.32 percent.
    After 2007 and before 2009.....
                                        0.35 percent.
    After 2008 and before 2010.....
                                        0.38 percent.
    After 2009 and before 2016.....
                                        0.47 percent.
    After 2015 and before 2040.....
                                        0.55 percent.
    After 2039 and before 2060.....
                                        0.66 percent.
    After 2059.....................
                                        0.80 percent.''.

SEC. 9. ADJUSTMENT TO UPPER 2 BENEFIT FORMULA FACTORS.

    Section 215(a)(1)(B) of the Social Security Act (42 U.S.C. 
415(a)(1)(B)) is amended--
            (1) by redesignating clause (iii) as clause (vi); and
            (2) by inserting after clause (ii) the following:
    ``(iii) For an individual who initially becomes eligible for old-
age or disability insurance benefits, or who dies (before becoming 
eligible for such benefits), in any calendar year after 2005, each of 
the amounts otherwise established for purposes of clauses (ii) and 
(iii) of subparagraph (A) under this subparagraph shall be substituted 
with the product derived by successively multiplying, once for each 
year of the factoring period for such individual commencing with 2006--
            ``(I) such amount (after applying this clause for earlier 
        years of the factoring period), by
            ``(II) the designated factor for such year.
    ``(iv) For purposes of clause (iii), the term `factoring period' 
means, for an individual, the period beginning with 2006 and ending 
with the earlier of--
            ``(I) the year of the individual's initial eligibility or 
        death, or
            ``(II) 2030.
    ``(v) For purposes of clause (iii), the term `designated factor' 
means--
            ``(I) for a year prior to 2011, 0.985, and
            ``(II) for a year after 2010, 0.980.''.

SEC. 10. PHASED-IN INCREASE IN SOCIAL SECURITY RETIREMENT AGES.

    (a) Normal Retirement Age.--Section 216(l) of the Social Security 
Act (42 U.S.C. 416(l) is amended--
            (1) in paragraph (1), by striking subparagraphs (A), (B), 
        (C), (D), and (E) and inserting the following:
                    ``(A) with respect to an individual who attains age 
                62 (or in the case of a widow's or widower's insurance 
                benefit, age 60) before January 1, 2000, 65 years of 
                age;
                    ``(B) with respect to an individual who attains age 
                62 (or in the case of a widow's or widower's insurance 
                benefit, age 60) after December 31, 1999 and before 
                January 1, 2011, 65 years of age plus \2/12\ of the 
                number of months in the period beginning with January 
                2000 and ending with December of the year in which the 
                individual attains age 62 (or in the case of a widow's 
                or widower's insurance benefit, age 60);
                    ``(C) with respect to an individual who attains age 
                62 (or in the case of a widow's or widower's insurance 
                benefit, age 60) after December 31, 2010, and before 
                January 1, 2012, 67 years of age; and
                    ``(D) with respect to an individual who attains age 
                62 (or in the case of a widow's or widower's insurance 
                benefit, age 60) after December 31, 2011, 67 years of 
                age plus \1/24\ of the number of months in the period 
                beginning with January 2012 and ending with December of 
                the year in which the individual attains age 62 
                (rounded down to a full month).''; and
            (2) by striking paragraph (3).
    (b) Early Retirement Age.--Section 216(l)(2) of the Social Security 
Act (42 U.S.C. 416(l)(2)) is amended to read as follows:
    ``(2) The term `early retirement age' means--
                    ``(A)(i) in the case of an old-age, wife's, or 
                husband's insurance benefit, except as provided in 
                subparagraph (B), age 62, and
                    ``(ii) in the case of a widow's or widower's 
                insurance benefit, age 60; and
                    ``(B) in the case of an old-age, wife's, or 
                husband's insurance benefit with respect to an 
                individual who attains age 62 after December 31, 2011, 
                62 years of age plus \1/18\ of the number of whole 
                months elapsing since such date.''.

SEC. 11. MODIFICATION OF PIA FORMULA TO REFLECT CHANGES IN LIFE 
              EXPECTANCY.

    (a) Modification of Formula.--Section 215(a)(1) of the Social 
Security Act (42 U.S.C. 415(a)(1)(B)) is amended by redesignating 
subparagraph (D) as subparagraph (E) and by inserting after 
subparagraph (C) the following new subparagraph:
    ``(D)(i) For individuals who initially become eligible for old-age 
insurance benefits (or who die before becoming eligible for such 
benefits) in any calendar year after 2011, the primary insurance amount 
computed under this paragraph shall be the product derived by 
multiplying such amount as computed under the preceding subparagraphs 
of this paragraph the applicable number of times by 0.995.
    ``(ii) For purposes of the clause (i), the term `applicable number 
of times' means a number equal to the number of years beginning with 
2012 and ending with the earlier of the year of initial eligibility (or 
death) or 2045.''.
    (b) Study of the Effect of Increases in Life Expectancy.--
            (1) Study plan.--Not later than February 15, 2001, the 
        Commissioner of Social Security shall submit to Congress a 
        detailed study plan for evaluating the effects of increases in 
        life expectancy on the expected level of retirement income from 
        social security, pensions, and other sources. The study plan 
        shall include a description of the methodology, data, and 
        funding that will be required in order to provide to the 
        Congress not later than February 15, 2006--
                    (A) an evaluation of trends in mortality and their 
                relationship to trends in health status, among 
                individuals approaching eligibility for old-age 
                insurance benefits under title II of the Social 
                Security Act;
                    (B) an evaluation of trends in labor force 
                participation among individuals approaching eligibility 
                for such benefits and among individuals receiving such 
                benefits, and of the factors that influence the choice 
                between retirement and participation in the labor 
                force;
                    (C) an evaluation of changes, if any, in the 
                disability insurance program under title II of the 
                Social Security Act that would reduce the impact of 
                changes in the retirement income of workers in poor 
                health or physically demanding occupations;
                    (D) an evaluation of the methodology used to 
                develop projections for trends in mortality, health 
                status, and labor force participation among individuals 
                approaching eligibility for old-age insurance benefits 
and among individuals receiving such benefits; and
                    (E) an evaluation of such other matters as the 
                Commissioner deems appropriate for evaluating the 
                effects of increases in life expectancy.
            (2) Report on results of study.--Not later than February 
        15, 2006, the Commissioner of Social Security shall provide to 
        the Congress an evaluation of the implications of the trends 
        studied under paragraph (1), along with recommendations, if 
        any, of the extent to which the conclusions of such evaluations 
        indicate that projected increases in life expectancy require 
        modification in the disability insurance program under title II 
        of the Social Security Act and other income support programs.

SEC. 12. MECHANISM FOR REMEDYING UNFORESEEN DETERIORATION IN SOCIAL 
              SECURITY SOLVENCY.

    (a) In General.--Section 709 of the Social Security Act (42 U.S.C. 
910) is amended--
            (1) by redesignating subsection (b) as subsection (c); and
            (2) by striking ``Sec. 709. (a) If the Board of Trustees'' 
        and all that follows through ``any such Trust Fund'' and 
        inserting the following:
    ``Sec. 709. (a)(1)(A) If the Board of Trustees of the Federal Old-
Age and Survivors Insurance Trust Fund and the Federal Disability 
Insurance Trust Fund determines at any time, using intermediate 
actuarial assumptions, that the balance ratio of either such Trust Fund 
for any calendar year during the succeeding period of 75 calendar years 
will be zero, the Board shall promptly submit to each House of the 
Congress and to the President a report setting forth its 
recommendations for statutory adjustments affecting the receipts and 
disbursements of such Trust Fund necessary to maintain the balance 
ratio of such Trust Fund at not less than 20 percent, with due regard 
to the economic conditions which created such inadequacy in the balance 
ratio and the amount of time necessary to alleviate such inadequacy in 
a prudent manner. The report shall set forth specifically the extent to 
which benefits would have to be reduced, taxes under section 1401, 
3101, or 3111 of the Internal Revenue Code of 1986 would have to be 
increased, or a combination thereof, in order to obtain the objectives 
referred to in the preceding sentence.
    ``(B) In addition to any reports under subparagraph (A), the Board 
shall, not later than May 30, 2001, prepare and submit to Congress and 
the President recommendations for statutory adjustments to the 
disability insurance program under title II of this Act to modify the 
changes in disability benefits under the Strengthening Social Security 
Act of 1998 without reducing the balance ratio of the Federal 
Disability Insurance Trust Fund. The Board shall develop such 
recommendations in consultation with the National Council on 
Disability, taking into consideration the adequacy of benefits under 
the program, the relationship of such program with old age benefits 
under such title, and changes in the process for determining initial 
eligibility and reviewing continued eligibility for benefits under such 
program.
    ``(2)(A) The President shall, no later than 30 days after the 
submission of the report to the President, transmit to the Board and to 
the Congress a report containing the President's approval or 
disapproval of the Board's recommendations.
    ``(B) If the President approves all the recommendations of the 
Board, the President shall transmit a copy of such recommendations to 
the Congress as the President's recommendations, together with a 
certification of the President's adoption of such recommendations.
    ``(C) If the President disapproves the recommendations of the 
Board, in whole or in part, the President shall transmit to the Board 
and the Congress the reasons for that disapproval. The Board shall then 
transmit to the Congress and the President, no later than 60 days after 
the date of the submission of the original report to the President, a 
revised list of recommendations.
    ``(D) If the President approves all of the revised recommendations 
of the Board transmitted to the President under subparagraph (C), the 
President shall transmit a copy of such revised recommendations to the 
Congress as the President's recommendations, together with a 
certification of the President's adoption of such recommendations.
    ``(E) If the President disapproves the revised recommendations of 
the Board, in whole or in part, the President shall transmit to the 
Board and the Congress the reasons for that disapproval, together with 
such revisions to such recommendations as the President determines are 
necessary to bring such recommendations within the President's 
approval. The President shall transmit a copy of such recommendations, 
as so revised, to the Board and the Congress as the President's 
recommendations, together with a certification of the President's 
adoption of such recommendations.
    ``(3)(A) This paragraph is enacted by Congress--
            ``(i) as an exercise of the rulemaking power of the Senate 
        and the House of Representatives, respectively, and as such it 
        is deemed a part of the rules of each House, respectively, but 
        applicable only with respect to the procedure to be followed in 
that House in the case of a joint resolution described in subparagraph 
(B), and it supersedes other rules only to the extent that it is 
inconsistent with such rules; and
            ``(ii) with full recognition of the constitutional right of 
        either House to change the rules (so far as relating to the 
        procedure of that House) at any time, in the same manner, and 
        to the same extent as in the case of any other rule of that 
        House.
    ``(B) For purposes of this paragraph, the term `joint resolution' 
means only a joint resolution which is introduced within the 10-day 
period beginning on the date on which the President transmits the 
President's recommendations, together with the President's 
certification, to the Congress under subparagraph (B), (D), or (E) of 
paragraph (2), and--
            ``(i) which does not have a preamble;
            ``(ii) the matter after the resolving clause of which is as 
        follows: `That the Congress approves the recommendations of the 
        President as transmitted on ____ pursuant to section 709(a) of 
        the Social Security Act, as follows: ________', the first blank 
        space being filled in with the appropriate date and the second 
        blank space being filled in with the statutory adjustments 
        contained in the recommendations; and
            ``(iii) the title of which is as follows: `Joint resolution 
        approving the recommendations of the President regarding social 
        security.'.
    ``(C) A joint resolution described in subparagraph (B) that is 
introduced in the House of Representatives shall be referred to the 
Committee on Ways and Means of the House of Representatives. A joint 
resolution described in subparagraph (B) introduced in the Senate shall 
be referred to the Committee on Finance of the Senate.
    ``(D) If the committee to which a joint resolution described in 
subparagraph (B) is referred has not reported such joint resolution (or 
an identical joint resolution) by the end of the 20-day period 
beginning on the date on which the President transmits the 
recommendation to the Congress under paragraph (2), such committee 
shall be, at the end of such period, discharged from further 
consideration of such joint resolution, and such joint resolution shall 
be placed on the appropriate calendar of the House involved.
    ``(E)(i) On or after the third day after the date on which the 
committee to which such a joint resolution is referred has reported, or 
has been discharged (under subparagraph (D)) from further consideration 
of, such a joint resolution, it is in order (even though a previous 
motion to the same effect has been disagreed to) for any Member of the 
respective House to move to proceed to the consideration of the joint 
resolution. A Member may make the motion only on the day after the 
calendar day on which the Member announces to the House concerned the 
Member's intention to make the motion, except that, in the case of the 
House of Representatives, the motion may be made without such prior 
announcement if the motion is made by direction of the committee to 
which the joint resolution was referred. All points of order against 
the joint resolution (and against consideration of the joint 
resolution) are waived. The motion is highly privileged in the House of 
Representatives and is privileged in the Senate and is not debatable. 
The motion is not subject to amendment, or to a motion to postpone, or 
to a motion to proceed to the consideration of other business. A motion 
to reconsider the vote by which the motion is agreed to or disagreed to 
shall not be in order. If a motion to proceed to the consideration of 
the joint resolution is agreed to, the respective House shall 
immediately proceed to consideration of the joint resolution without 
intervening motion, order, or other business, and the joint resolution 
shall remain the unfinished business of the respective House until 
disposed of.
    ``(ii) Debate on the joint resolution, and on all debatable motions 
and appeals in connection therewith, shall be limited to not more than 
2 hours, which shall be divided equally between those favoring and 
those opposing the joint resolution. An amendment to the joint 
resolution is not in order. A motion further to limit debate is in 
order and not debatable. A motion to postpone, or a motion to proceed 
to the consideration of other business, or a motion to recommit the 
joint resolution is not in order. A motion to reconsider the vote by 
which the joint resolution is agreed to or disagreed to is not in 
order.
    ``(iii) Immediately following the conclusion of the debate on a 
joint resolution described in subparagraph (B) and a single quorum call 
at the conclusion of the debate if requested in accordance with the 
rules of the appropriate House, the vote on final passage of the joint 
resolution shall occur.
    ``(iv) Appeals from the decisions of the Chair relating to the 
application of the rules of the Senate or the House of Representatives, 
as the case may be, to the procedure relating to a joint resolution 
described in subparagraph (B) shall be decided without debate.
    ``(F)(i) If, before the passage by one House of a joint resolution 
of that House described in subparagraph (B), that House receives from 
the other House a joint resolution described in subparagraph (B), then 
the following procedures shall apply:
            ``(I) The joint resolution of the other House shall not be 
        referred to a committee and may not be considered in the House 
        receiving it except in the case of final passage as provided in 
        subclause (II).
            ``(II) With respect to a joint resolution described in 
        subparagraph (B) of the House receiving the joint resolution, 
        the procedure in that House shall be the same as if no joint 
        resolution had been received from the other House, but the vote 
        on final passage shall be on the joint resolution of the other 
        House.
    ``(ii) Upon disposition of the joint resolution received from the 
other House, it shall no longer be in order to consider the joint 
resolution that originated in the receiving House.
    ``(b) If the Board of Trustees of the Federal Hospital Insurance 
Trust Fund or the Federal Supplementary Medical Insurance Trust Fund 
determines at any time that the balance ratio of either such Trust 
Fund''.
    (b) Conforming Amendments.--
            (1) Section 709(b) of such Act (as amended by subsection 
        (a) of this section) is amended by striking ``any such'' and 
        inserting ``either such''.
            (2) Section 709(c) of such Act (as redesignated by 
        subsection (a) of this section) is amended by inserting ``or 
        (b)'' after ``subsection (a)''.
                                 <all>