[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2771 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 2771

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

                             August 2, 2001

Mr. Kolbe (for himself, Mr. Stenholm, Mr. Smith of Michigan, Mr. Dooley 
of California, and Mr. Toomey) 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 Security 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. Reduction in the amount of certain transfers to Medicare Trust 
                            Fund.
Sec. 5. Increase in number of years taken into account in determining 
                            average indexed monthly earnings.
Sec. 6. Actuarial adjustment for retirement.
Sec. 7. Improvements in process for cost-of-living adjustments.
Sec. 8. Adjustment to benefit formula factors.
Sec. 9. Adjustments to bend points in determining primary insurance 
                            amounts.
Sec. 10. Modification to PIA formula to reflect changes in life 
                            expectancy.
Sec. 11. Treatment of disabled beneficiaries.
Sec. 12. Maintenance of benefit and contribution base.
Sec. 13. Phased-in increase in Social Security retirement ages.
Sec. 14. Mechanism for remedying unforeseen deterioration in Social 
                            Security solvency.

SEC. 2. INDIVIDUAL SECURITY ACCOUNTS.

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

                    ``Part A--Insurance Benefits'';

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

                  ``Part B--Individual Security System

               ``Subpart 1--Individual Security Accounts

          ``federally-administered individual security account

    ``Sec. 251. (a) Establishment.--
            ``(1) In general.--Within 30 days after receiving the first 
        contribution under subsection (b) with respect to an eligible 
        individual, the Commissioner of Social Security shall establish 
        an individual security account for such individual in the 
        Individual Security Fund. Each account shall be identified to 
        its account holder by means of the account holder's Social 
        Security account number.
            ``(2) Eligible individual.--For purposes of this part, the 
        term `eligible individual' means any individual born after 
        December 31, 1946.
    ``(b) Contributions.--
            ``(1) In general.--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 
        the 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 532(c)(2) and 6402(l) of the Internal 
        Revenue Code of 1986.
    ``(c) Crediting Requirements.--Except as otherwise provided in 
section 252, contributions under subsection (b) on behalf of an 
eligible individual shall be credited--
            ``(1) to the individual security account established for 
        such individual under subsection (a); and
            ``(2) in accordance with the allocation in effect with 
        respect to such individual under subsection (d).
    ``(d) Allocation and Other Designations.--
            ``(1) In general.--The Commissioner of Social Security 
        shall prescribe regulations in accordance with which any 
        eligible individual who is employed or self-employed may 
        designate--
                    ``(A) in the event that 2 or more investment 
                options are available in the Individual Security Fund--
                            ``(i) the option or options to which such 
                        individual wishes to have such individual's 
                        contributions under subsection (b) credited; 
                        and
                            ``(ii) if such individual designates more 
                        than 1 option under clause (i), how such 
                        individual wishes for those contributions to be 
                        allocated; and
                    ``(B) the amount of wages or self-employment income 
                such individual wishes to designate for purposes of 
                section 3101(a)(2)(C) or 1401(a)(2)(C) of the Internal 
                Revenue Code of 1986 (as applicable), if any.
            ``(2) Default allocation.--In the absence of a required 
        designation under paragraph (1)(A), contributions on behalf of 
        the individual involved shall be allocated in such manner as 
        the Commissioner of Social Security shall prescribe, taking 
        into account the competing objectives of maximizing returns on 
        investments and minimizing the risk involved with such 
        investments.
            ``(3) Form of designation.--Any designation under 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 to avoid creating an undue 
        burden on employers.
            ``(4) Special rule for 2003.--Not later than January 1, 
        2003, any eligible individual who is employed or self-employed 
        as of such date shall execute all designations required under 
        paragraph (1).
    ``(e) Periodic Statements to Account Holder.--
            ``(1) In general.--The Individual Security Fund Board shall 
        prescribe regulations under which each individual for whom an 
        individual security account is maintained under this section 
        shall be furnished with--
                    ``(A) a periodic statement relating to the 
                individual's account, including, for any reporting 
                period as of the end of which the individual's account 
                balance is at least equal to the minimum balance amount 
                (within the meaning of section 252), clear and 
                conspicuous notice to that effect;
                    ``(B) a summary description of any investment 
                options or other choices which may be available to such 
                individual under this section or under section 252 (as 
                applicable); and
                    ``(C) any forms and information necessary to make a 
                designation under subsection (d) or section 252 (as 
                applicable).
            ``(2) Informed decisionmaking.--All information, materials, 
        and other matter furnished under this subsection shall be 
        furnished to the account holder at such times and in such 
        manner as the Board considers appropriate in order to permit 
        informed decisionmaking.

          ``privately-administered individual security account

    ``Sec. 252. (a) Definitions.--For purposes of this part--
            ``(1) Minimum deposit amount.--
                    ``(A) In general.--The term `minimum deposit 
                amount' means an amount equal to $7,500, as adjusted 
                under subparagraph (B).
                    ``(B) Adjustment.--The Secretary of the Treasury 
                shall adjust annually (effective for periods beginning 
                after December 2003) the dollar amount set forth in 
                subparagraph (A) under procedures providing for 
                adjustments in the same manner and to the same extent 
                as adjustments are provided for under the procedures 
                used to adjust benefit amounts under section 
                215(i)(2)(A), except that any amount so adjusted that 
                is not a multiple of $10 shall be rounded to the 
                nearest multiple of $10.
            ``(2) Federally-administered individual security account.--
        The term `Federally-administered individual security account' 
        means an individual security account maintained, in accordance 
        with applicable provisions of this part, in the Individual 
        Security Fund.
            ``(3) Privately-administered individual security account.--
        The term `privately-administered individual security account' 
        means an individual security account maintained, in accordance 
        with applicable provisions of this part, by a certified 
        institution.
            ``(4) Certified institution.--The term `certified 
        institution' refers to an investment firm, credit union, 
        insurance company, or other certified institution under subpart 
        3.
    ``(b) Option To Designate a Privately-Administered Individual 
Security Account.--
            ``(1) In general.--Under regulations prescribed by the 
        Individual Security Fund Board, whenever the balance in an 
        individual's Federally-administered individual security account 
        is at least equal to the minimum deposit amount, such 
        individual shall be eligible to designate a privately-
        administered individual security account (established and 
        maintained on such individual's behalf) to serve as such 
        individual's individual security account under this part, in 
        lieu of such individual's Federally-administered individual 
        security account.
            ``(2) Effect of designation.--If an individual makes a 
        designation under paragraph (1)--
                    ``(A) the entire balance in the individual's 
                Federally-administered individual security account 
                shall be promptly transferred to the privately-
                administered individual security account specified by 
                such individual in such designation; and
                    ``(B) that privately-administered individual 
                security account shall, for all purposes, be treated as 
                the electing individual's individual security account, 
                subject to paragraph (4).
            ``(3) Information required to be included.--A designation 
        under this subsection shall not be effective unless it is made 
        in such time, form, and manner as the Individual Security Fund 
        Board prescribes.
            ``(4) Subsequent designations.--The Securities and Exchange 
        Commission shall provide by regulation opportunity for 
        subsequent designation, from time to time, of another 
        individual security account in lieu of the account previously 
        designated under this section, subject to the following:
                    ``(A) Options available.--The account designated 
                under this paragraph may be either within--
                            ``(i) another certified institution, 
                        subject to subparagraph (B); or
                            ``(ii) the Individual Security Fund.
                    ``(B) Minimum balance.--In order to make a 
                designation referred to in subparagraph (A)(i), the 
                balance in the individual's individual security account 
                must be at least equal to the minimum deposit amount. 
                No minimum balance requirement under this subparagraph 
                shall apply in the case of a designation referred to in 
                subparagraph (A)(ii).
                    ``(C) Only 1 account permitted at any time.--An 
                individual may not, at any time, concurrently 
                maintain--
                            ``(i) a privately-administered individual 
                        security account with each of 2 or more 
                        certified institutions; or
                            ``(ii) a privately-administered and a 
                        Federally-administered individual security 
                        account.
                    ``(D) Effect.--A designation under this paragraph 
                has (with respect to the individual's respective 
                accounts, before and after such designation) the same 
                effect as results following a designation under 
                paragraph (2) (with respect to the Federally-
administered and privately-administered accounts involved).

           ``distributions from individual security accounts

    ``Sec. 253. (a) Date of Earliest Distribution.--Except as provided 
in subsection (c), distributions may not be made from the Federally-
administered or privately-administered individual security account of 
an eligible individual (as the case may be) before the earlier 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 
        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 185 percent 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 as of the date distributions begin to 
        be made in accordance with subsection (a), the balance in the 
        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 or the Securities and Exchange 
        Commission, as applicable), 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 or Commission, as 
        applicable) similar to the requirements applicable to payments 
        of benefits under subchapter III of chapter 84 of title 5, 
        United States Code.
            ``(2) Payment of excess funds.--To the extent funds remain 
        in an eligible individual's Federally-administered or 
        privately-administered individual security account (as the case 
        may be) 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 to the individual's 
heirs under rules established by the Individual Security Fund Board or 
the Securities and Exchange Commission, as applicable.

 ``Subpart 2--Individual Security Fund; Individual Security Fund Board

                       ``individual security fund

    ``Sec. 261. There shall be 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 (excluding 
paragraphs (4) and (5) of subsection (c) thereof), 8438, and 8439 of 
title 5, United States Code.

                    ``individual security fund board

    ``Sec. 262. (a) Establishment.--There shall be established and 
maintained 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.
    ``(b) Specific Investment and Reporting Duties.--The Individual 
Security Fund Board shall manage and report on the activities of the 
Individual Security Fund and on Federally-administered individual 
security accounts 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.
    ``(c) Budgetary Treatment of Individual Security Fund and Accounts
    ``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.
    ``(d) Commissioner of Social Security as Executive Director.--The 
Commissioner of Social Security shall have, with respect to the 
Individual Security Fund and accounts within such Fund, the same duties 
and responsibilities as does the Executive Director (appointed under 
section 8474(a) of title 5, United States Code) with respect to the 
Thrift Savings Fund and accounts within such Fund.

                  ``Subpart 3--Certified Institutions

 ``certification of institutions by securities and exchange commission

    ``Sec 271. (a) In General.--For purposes of meeting the 
requirements of section 532 of the Internal Revenue Code of 1986 
(relating to trusteeship of individual security accounts), any 
institution that is engaged, in a fiduciary capacity, in the business 
of maintaining accounts for individuals for purposes of investment may 
apply to the Securities and Exchange Commission (in such form and 
manner as the Commission shall by regulation require) for certification 
under this subpart.
    ``(b) Review Requirements.--In reviewing any application for 
certification under this subpart and determining whether to approve the 
application for certification, the Commission shall consider the 
following factors:
            ``(1) The financial history and condition of the 
        institution.
            ``(2) The adequacy of the institution's capital structure.
            ``(3) The future earnings prospects of the institution.
            ``(4) The general character and fitness of the management 
        of the institution.
            ``(5) The convenience and needs of individuals who are 
        account holders with respect to personal retirement accounts 
        for which the institution is to serve as trustee.
            ``(6) Whether the institution's corporate powers are 
        consistent with the purposes of this part.
            ``(7) The institution's disclosure policies, including with 
        respect to its administrative fees, investment policies, and 
        investment activities.
            ``(8) The appropriateness of--
                    ``(A) the fund or funds that such institution 
                proposes to offer for purposes of this part, and
                    ``(B) the criteria by which such institution will 
                make future decisions regarding the selection of new 
                funds or the making of any other modifications in the 
                investment options offered by such institution for 
                purposes of this part,
        as determined based on guidelines established by the Commission 
        for purposes of this paragraph.
    ``(c) Notice of Denial of Application for Certification.--If the 
Commission votes to deny any application for certification by any 
institution, the Commission shall promptly notify the institution of 
the denial of such application, giving specific reasons in writing for 
the Commission's determination with reference to the factors described 
in subsection (b).
    ``(d) Nondelegation Requirement.--The authority of the Commission 
to make any determination to deny any application under this section 
may not be delegated by the Commission.

                     ``revocation of certification

    ``Sec. 272. (a) In General.--The Securities and Exchange Commission 
shall prescribe regulations in accordance with which the certified 
status of an institution may be voluntarily or involuntarily revoked.
    ``(b) Judicial Review.--Any party to any involuntary revocation 
proceeding under this section to which an institution is a party may 
obtain a review of any order served pursuant to this section by the 
filing in the court of appeals of the United States for the circuit in 
which the home office of the institution is located, or in the United 
States Court of Appeals for the District of Columbia Circuit, within 30 
days after the date of service of such order, a written petition 
praying that the order of the Commission be modified, terminated, or 
set aside. A copy of such petition shall be forthwith transmitted by 
the clerk of the court to the Commission, and thereupon the Commission 
shall file in the court the record in the proceeding, as provided in 
section 2112 of title 28, United States Code. Upon the filing of such 
petition, such court shall have jurisdiction, which upon the filing of 
the record shall be exclusive, to affirm, modify, terminate, or set 
aside, in whole or in part, the order of the Commission. Review of such 
proceedings shall be had as provided in chapter 7 of title 5, United 
States Code. The judgment and decree of the court shall be final, 
except that the judgment and decree shall be subject to review by the 
Supreme Court upon certiorari, as provided in section 1254 of title 28, 
United States Code. The commencement of proceedings for judicial review 
under this subsection shall not, unless specifically ordered by the 
court, operate as a stay of any order issued by the Commission.

                           ``fiduciary duties

    ``Sec. 273. (a) In General.--In the case of a privately-
administered individual security account which does not form part of an 
individual account plan covered under part 4 of subtitle B of title I 
of the Employee Retirement Income Security Act of 1974, rules similar 
to the rules of such part 4 applicable to individual account plans 
covered under such part 4 shall apply with respect to a privately-
administered individual security account and the terms of any 
arrangement under which such account is maintained.
    ``(b) General Requirements.--In applying under subsection (a) the 
rules of part 4 of subtitle B of title I of the Employee Retirement 
Income Security Act of 1974 in the case of a privately-administered 
individual security account, references in such part to the Secretary 
of Labor shall be deemed to be references to the Securities and 
Exchange Commission, references in such part to a participants or 
beneficiary in connection with an individual account plan covered under 
such part shall be deemed to be references to the account holder with 
respect to the privately-administered individual security account, and 
references in such part to the plan administrator or plan sponsor in 
connection with an individual account plan covered under such part 
shall be deemed to be references to the trustee of the privately-
administered individual security account.
    ``(c) Limitation on Liability.--Any account holder who issues an 
instruction to the trustee of the account directing an investment of 
funds held in the account shall sign an acknowledgement prescribed by 
the Securities and Exchange Commission which states that the account 
holder understands that an investment of any amount in the account is 
made at the account holder's risk, that the account holder is not 
protected by the Government or by the trustee against any loss on such 
investment, and that a return on such investment is not guaranteed by 
the Government or by the trustee. Notwithstanding the preceding 
provisions of this section and any other provision of Federal or State 
law, the trustee of a privately-administered individual security 
account shall not be liable for losses suffered in connection with any 
investment of assets held in the account unless it is shown by clear 
and convincing evidence that the trustee did not act in the manner in 
which a reasonable trustee would act under the circumstances then 
prevailing in evaluating the risk and reward properties of the 
investment option involved.

                        ``Subpart 4--Enforcement

                           ``cause of action

    ``Sec. 281. The account holder with respect to a privately-
administered individual security account who is adversely affected by 
an act or practice of any party (other than the Securities and Exchange 
Commission, the Social Security Administration, the Department of the 
Treasury, or any officer or employee of any of the foregoing) in 
violation of any provision of this part, may bring an action--
            ``(1) to enjoin such act or practice, or
            ``(2) to obtain other appropriate equitable relief (A) to 
        redress such violation or (B) to enforce such provision.

                        ``jurisdiction and venue

    ``Sec. 282. Civil actions under this subpart may be brought in the 
district courts of the United States in the district where the 
privately-administered individual security account is administered, 
where the violation took place, or where a defendant resides or may be 
found, and process may be served in any district where a defendant 
resides or may be found. The district courts of the United State shall 
have jurisdiction, without regard to the amount in controversy or the 
citizenship of the parties, to grant the relief provided for in section 
281 in any action.

       ``right of securities and exchange commission to intervene

    ``Sec. 283. A copy of the complaint or notice of appeal in any 
action under this subpart shall be served upon the Securities and 
Exchange Commission by certified mail. The Commission shall each have 
the right to intervene in any action.

                     ``awards of costs and expenses

    ``Sec. 284. In any action brought under this subpart, the court in 
its discretion may award all or a portion of the costs and expenses 
incurred in connection with such action, including reasonable 
attorney's fees, to any party who prevails or substantially prevails in 
such action.

                        ``limitation on actions

    ``Sec. 285. (a) In General.--Except as provided in subsection (c), 
an action under this subpart may not be brought after the later of--
            ``(1) 6 years after the date on which the cause of action 
        arose, or
            ``(2) 3 years after the applicable date specified in 
        subsection (b).
    ``(b) Applicable Date.--The applicable date specified in this 
subsection is the earliest date on which the plaintiff acquired or 
should have acquired actual knowledge of the existence of such cause of 
action.
    ``(c) Cases of Fraud or Concealment.--In the case of fraud or 
concealment, the period described in subsection (a)(2) shall be 
extended to 6 years after the applicable date specified in subsection 
(b).

      ``penalty for failure to timely provide required information

    ``Sec. 286. The Securities and Exchange Commission may assess a 
penalty, payable to it, against any person who fails to provide any 
notice or other material information required under this part or any 
regulations prescribed under this part within the applicable time limit 
specified therein. Such penalty shall not exceed $1,000 for each day 
for which such failure continues.

            ``actions by securities and exchange commission

    ``Sec. 287. If any person is assessed under this subpart and fails 
to pay the assessment when due, or any person otherwise fails to meet 
any requirement of this part, the Securities and Exchange Commission 
may bring a civil action in any district court of the United States 
within the jurisdiction of which such person's assets are located or in 
which such person resides or is found for the recovery of the amount of 
the assessment or for appropriate equitable relief to redress the 
violation or enforce the provisions of this part, and process may be 
served in any other district. The district courts of the United States 
shall have jurisdiction over actions brought under this section by the 
Commission without regard to the amount in controversy.

   ``criminal penalty for fraud or intentional misrepresentation in 
                   connection with investment options

    ``Sec. 288. Any person who makes, or causes to be made, a statement 
or representation of a material fact for use in selecting an investment 
option that the person knows or should know is false or misleading or 
knows or should know omits a material fact or makes such a statement 
with knowing disregard for the truth shall upon conviction be fined not 
more than $500,000 or imprisoned for not more than 5 years, or both.''.
            (2) Implementation.--
                    (A) Provisions relating to federally-administered 
                individual security accounts.--The Individual Security 
                Fund Board, in consultation with the Commissioner of 
                Social Security and the Secretary of the Treasury, 
                shall establish an expedited procedure to ensure timely 
                implementation of the amendments made by this 
                subsection, to the extent that they relate to 
                Federally-administered individual security accounts. 
                The Board shall submit to each House of the Congress a 
                report on the status of such implementation not later 
                than March 1, 2003. All measures necessary to prepare 
                for--
                            (i) the implementation of such amendments, 
                        to the extent necessary to provide for at least 
                        the option described in section 251(d)(2) of 
                        the Social Security Act (as amended by this 
                        section), shall be completed by the Board, the 
                        Commissioner, and the Secretary not later than 
                        January 1, 2003; and
                            (ii) full implementation of such amendments 
                        (as they relate to Federally-administered 
                        individual security accounts) shall be 
                        completed by the Commission, the Commissioner, 
                        and the Secretary not later than January 1, 
                        2005.
                    (B) Provisions relating to privately-administered 
                individual security accounts.--The Securities and 
                Exchange Commission, in consultation with the 
                Commissioner of Social Security and the Secretary of 
                the Treasury, shall establish an expedited procedure to 
                ensure timely implementation of the amendments made by 
                this section, to the extent that they relate to 
                privately-administered individual security accounts. 
                The Commission shall submit to each House of the 
                Congress a report on the status of such implementation 
                not later than March 1, 2003. All measures necessary to 
                prepare for full implementation of such amendments (as 
                they relate to privately-administered individual 
                security accounts) shall be completed by the 
                Commission, the Commissioner, and the Secretary not 
                later than January 1, 2005.
                    (C) Definitions.--For purposes of this paragraph, 
                the terms ``Individual Security Fund Board'', 
                ``Federally-administered individual security account'', 
                and ``privately-administered individual security 
                account'' have the meanings given them under part B of 
                title II of the Social Security Act (as amended by this 
                subsection).
    (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 received by him 
                with respect to employment.
                    ``(B) Individuals covered under part b of title ii 
                of the social security act.--
                            ``(i) In general.--In addition to other 
                        taxes, there is hereby imposed on the income of 
                        every part B eligible individual a tax equal to 
                        the applicable percentage of the wages received 
                        by such individual with respect to employment.
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the term `applicable percentage' 
                        means the excess of 6.2 percent, over
                                    ``(I) 3 percent, in the case of the 
                                first $10,000 of such wages received in 
                                the calendar year, and
                                    ``(II) 2 percent, in the case of 
                                any additional such wages received in 
                                the calendar year.
            ``(2) Contribution of oasdi tax reduction to individual 
        security accounts.--In addition to other taxes, there is hereby 
        imposed on the income of every part B eligible individual for 
        the calendar year an individual security account contribution 
        equal to the sum of--
                    ``(A) 3 percent of so much of the wages as does not 
                exceed the first $10,000 received in such calendar year 
                by such individual with respect to employment,
                    ``(B) 2 percent of the excess of--
                            ``(i) such wages, over
                            ``(ii) the wages taken into account under 
                        subparagraph (A), plus
                    ``(C) so much of such wages (not to exceed $5,000) 
                as designated by the individual in the same manner as 
                described in section 251(c) of the Social Security Act.
            ``(3) Inflation adjustment based on wage index.--
                    ``(A) In general.--In the case of any calendar year 
                beginning after 2003, the $10,000 amount in paragraphs 
                (1) and (2) shall be increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the percentage increase (if any) for 
                        such year determined under section 215(i) of 
                        the Social Security Act.
                    ``(B) Designated contributions.--In the case of any 
                calendar year beginning after 2008, the $5,000 amount 
                in paragraph (2)(C) shall be increased by an amount 
                equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the percentage increase (if any) for 
                        such year determined under section 215(i) of 
                        the Social Security Act.
                    ``(C) Rounding.--If any dollar amount after being 
                increased under subparagraph (A) or (B) is not a 
                multiple of $10, such dollar amount shall be rounded to 
                the nearest multiple of $10.
            ``(4) Definitions.--For purposes of this subsection--
                    ``(A) Wages.--The term `wages' shall have the 
                meaning given to such term by section 3121(a).
                    ``(B) Employment.--The term `employment' shall have 
                the meaning given to such term by section 3121(b).''.
            (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.--
                            ``(i) In general.--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 the 
                        applicable percentage of the amount of the 
                        self-employment income for such taxable year.
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the term `applicable percentage' 
                        means the excess of 12.4 percent, over
                                    ``(I) 3 percent, in the case of the 
                                first $10,000 of self-employment income 
                                received in the calendar year, and
                                    ``(II) 2 percent, in the case of 
                                any additional self-employment income 
                                received in the calendar year.
            ``(2) Contribution of oasdi tax reduction to individual 
        security accounts.--In addition to other taxes, there is hereby 
        imposed for each taxable year, on the self-employment income of 
        every part B eligible individual for the calendar year, an 
        individual security account contribution equal to the sum of--
                    ``(A) 3 percent of self-employment income as does 
                not exceed the first $10,000 of such income derived 
                during the taxable year by such individual,
                    ``(B) 2 percent of self-employment income in the 
                case of any additional self-employment income derived 
                by such individual during the taxable year, and
                    ``(C) so much of such self-employment income (not 
                to exceed $5,000) as designated by the individual in 
                the same manner as described in section 251(c) of the 
                Social Security Act.
            ``(3) Inflation adjustment based on wage index.--
                    ``(A) In general.--In the case of any calendar year 
                beginning after 2003, the $10,000 amount in paragraphs 
                (1) and (2) shall be increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the percentage increase (if any) for 
                        such year determined under section 215(i) of 
                        the Social Security Act.
                    ``(B) Designated contributions.--In the case of any 
                calendar year beginning after 2008, the $5,000 amount 
                in paragraph (2)(C) shall be increased by an amount 
                equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the percentage increase (if any) for 
                        such year determined under section 215(i) of 
                        the Social Security Act.
                    ``(C) Rounding.--If any dollar amount after being 
                increased under subparagraph (A) or (B) 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, 2002.
                    (B) Self-employed individuals.--The amendments made 
                by paragraphs (2) and (3)(B) apply to taxable years 
                beginning after December 31, 2002.
    (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 paragraphs (2) 
        and (3) of subsection (a) 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 
                subparagraphs (A) and (B) of section 3101(a)(2) and 
                subparagraphs (A) and (B) of 1401(a)(2) 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)(C) plus the amount 
        self-employment income designated under section 1401(a)(2)(C) 
        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)(C).
            ``(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)(C) 
        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:
    ``(n) 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(n) 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, 2002.
    (d) Tax Treatment of Individual Security System.--
            (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 SYSTEM

                              ``Sec. 531. Individual security fund.
                              ``Sec. 532. Individual security accounts.

``SEC. 531. INDIVIDUAL SECURITY FUND AND FEDERALLY-ADMINISTERED 
              INDIVIDUAL SECURITY ACCOUNTS.

    ``The Individual Security Fund established under section 261 of the 
Social Security Act shall be exempt from taxation under this subtitle.

``SEC. 532. INDIVIDUAL SECURITY ACCOUNTS.

    ``(a) In General.--For purposes of this section, the term 
`individual security account' means a Federally-administered individual 
security account and a privately-administered security account.
    ``(b) Individual Security Accounts Defined.--For purposes of 
subsection (a)--
            ``(1) Federally-administered security account.--The term 
        `Federally-administered individual security account' means the 
        account established under section 251 of the Social Security 
        Act.
            ``(2) Privately-administered security account.--The term 
        `privately-administered individual security account' means a 
        trust created or organized in the United States exclusively for 
        the benefit of an individual or his beneficiaries, but only if 
        the written governing instrument creating the trust meets the 
        following requirements:
                    ``(A) Except in the case of rollover contributions 
                from another individual security account of such 
                individual--
                            ``(i) no contribution will be accepted 
                        unless it is in cash,
                            ``(ii) contributions will not be accepted 
                        for the taxable year in excess of the sum of--
                                    ``(I) the amounts collected with 
                                respect to such beneficiary under 
                                sections 3101(a)(2) and 1401(a)(2), and
                                    ``(II) the amounts transferred to 
                                such account under section 6402(l), and
                            ``(iii) any contributions with respect to 
                        an account holder which are not accepted 
                        pursuant to this paragraph are promptly 
                        refunded directly to the account holder.
                    ``(B) The trustee is a institution which is 
                certified under subpart 3 of subtitle B of title II of 
                the Social Security Act.
                    ``(C) No part of the trust funds will be invested 
                in life insurance contracts.
                    ``(D) The interest of an individual in the balance 
                in his account is nonforfeitable.
                    ``(E) The assets of the trust will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
    ``(c) Contributions.--
            ``(1) In general.--No deduction shall be allowed for 
        contributions credited to an individual security account under 
        part B of title II of the Social Security Act or amounts 
        transferred to such account under section 6402(l).
            ``(2) Rollovers.--
                    ``(A) Rollover from privately-administered 
                individual security account.--The entire balance of an 
                individual security account of the account holder may 
                be rolled over to another individual security account 
                of the account holder.
                    ``(B) Rollover of inheritance.--Any portion of a 
                distribution to an heir from a Federally-administered 
                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) Tax Treatment of Accounts.--
            ``(1) Exemption from tax.--An individual security account 
        is exempt from taxation under this subtitle unless such account 
        has ceased to be an individual security account by reason of 
        paragraph (2). Notwithstanding the preceding sentence, any such 
        account is subject to the taxes imposed by section 511 
        (relating to imposition of tax on unrelated business income of 
        charitable, etc. organizations).
            ``(2) Account terminations.--Rules similar to the rules of 
        paragraphs (2) and (4) of section 408(e) shall apply to 
        privately-administered individual security accounts, and any 
        amount treated as distributed under such rules shall be 
        includible in gross income and shall not be treated as a social 
        security benefit for purposes of section 86.
            ``(3) Rollover contribution.--An amount is described in 
        this paragraph as a rollover contribution if it meets the 
        requirements of subparagraphs (A) and (B).
                    ``(A) In general.--The requirements of this 
                subparagraph are met with respect to an amount paid or 
                distributed from an individual security account to the 
                account holder only if the entire amount in such 
                account is received by the account holder and is paid 
                into another individual security account for the 
                benefit of such holder not later than the 60th day 
                after the day on which the holder receives the payment 
                or distribution.
                    ``(B) Limitation.--This paragraph shall not apply 
                to any amount described in subparagraph (A) received by 
                an individual from a privately-administered individual 
                security account if, at any time during the 1-year 
                period ending on the day of such receipt, such 
                individual received on 3 other occasions any other 
                amount described in subparagraph (A) from an individual 
                security account which was not includible in the 
                individual's gross income because of the application of 
                this paragraph.
    ``(e) Distributions.--
            ``(1) In general.--The portion of any distribution from an 
        individual security account under section 253 of the Social 
        Security Act which is attributable to amounts contributed to 
        such account under section 3101(a)(2) (other than subparagraph 
        (C) thereof) and section 1401(a)(2) (other than subparagraph 
        (C) thereof), together with earnings thereon, shall be 
        includible in gross income as a social security benefit for 
        purposes of section 86.
            ``(2) Voluntary contributions.--The portion of any 
        distribution from an individual security account under section 
        253 of the Social Security Act which is attributable to amounts 
        contributed to such account under section 3101(a)(2)(C), 
        section 1401(a)(2)(C), and section 6402(l), together with 
        earnings thereon, shall not be includible in gross income.
            ``(3) 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.
            ``(4) 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.
    ``(f) Account Beneficiary.--For purposes of this section, the 
account beneficiary is the individual for whose benefit the individual 
security account is established.''.
            (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 system.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 2002.

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, 2009, and
                    ``(ii) who has at least 80 quarters of coverage.
            ``(B) The term `applicable amount' means, in connection 
        with an individual, $8,259 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. 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. 5. 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, 2001.

SEC. 6. 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 2002, is \5/9\;
            ``(B) 2002, is \7/12\;
            ``(C) 2003, is \11/18\;
            ``(D) 2004, is \23/36\;
            ``(E) 2005, is \2/3\; and
            ``(F) 2006 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 2002, is \5/12\;
            ``(B) 2002, is \16/36\;
            ``(C) 2003, is \16/36\;
            ``(D) 2004, is \17/36\;
            ``(E) 2005, is \17/36\; and
            ``(F) 2006 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 2001.
    (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. 7. 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, 2002, 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 January 31, 2001.
            (2) Upper level substitution bias.--Not later than August 
        1, 2002, 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 2002, 2003, and 2004, $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 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 Security Act 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 Security 
                        Act), 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 2001.
    (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 (9) 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:
            ``(9) 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 Security Act 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, 2002, 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 Security Act.
            (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 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. 8. ADJUSTMENT TO 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 2008, each of 
the amounts otherwise established for purposes of clauses (i), (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--
            ``(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 2012 and ending 
with the earlier of--
            ``(I) the year of the individual's initial eligibility or 
        death, or
            ``(II) 2060.
    ``(v) For purposes of clause (iii), the term `designated factor' 
means--
            ``(I) for a year prior to 2031, 0.975, except that, for any 
        such year, such factor shall be 1.000 with respect to amounts 
        otherwise established for purposes of clause (i) of 
        subparagraph (A) under this subparagraph, and
            ``(II) for a year after 2030, 0.985.''.

SEC. 9. ADJUSTMENTS TO BEND POINTS IN DETERMINING PRIMARY INSURANCE 
              AMOUNTS.

    (a) Additional Bend Point.--Section 215(a)(1)(A) of the Social 
Security Act (42 U.S.C. 415(a)(1)(A)) is amended--
            (1) in clause (ii)--
                    (A) by striking ``32 percent'' and inserting ``70 
                percent''; and
                    (B) by striking ``and'' at the end;
            (2) in clause (iii)--
                    (A) by striking ``15 percent'' and inserting ``20 
                percent''; and
                    (B) by striking ``clause (ii),'' and inserting the 
                following: ``clause (ii) but do not exceed the amount 
                established for purposes of this clause by subparagraph 
                (B), and''; and
            (3) by inserting after clause (iii) the following:
            ``(iv) 15 percent of the individual's average indexed 
        monthly earnings to the extent that such earnings exceed the 
        amount established for purposes of clause (iii),''.
    (b) Initial Level of Additional Bend Point.--Section 215(a)(1)(B) 
of such Act (42 U.S.C. 415(a)(1)(B)) is amended--
            (1) by redesignating clause (iii) as clause (iv);
            (2) by inserting after clause (ii) the following new 
        clause:
    ``(iii) For individuals who initially become eligible for old-age 
or disability insurance benefits, or who die (before becoming eligible 
for such benefits), in any calendar year after 2008, the amount 
established for purposes of clause (ii) of subparagraph (A) for such 
calendar year after 2008 shall be 196 percent of the amount established 
for purposes of clause (i) for such calendar year.''; and
            (3) in clause (iv) (as redesignated by paragraph (1)), by 
        striking ``clause (ii)'' and inserting ``clauses (ii) and 
        (iii)''.

SEC. 10. MODIFICATION TO PIA FORMULA TO REFLECT CHANGES TO LIFE 
              EXPECTANCY.

    (a) In General.--Section 215(a)(1) of the Social Security Act (42 
U.S.C. 415(a)(1)(B)) is amended by redesignating subparagraph (C) and 
(D) as subparagraphs (D) and (E), respectively, and by inserting after 
subparagraph (B) the following new subparagraph:
    ``(C)(i) For individuals who initially become eligible for old-age 
or disability 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 by the life expectancy ratio for such 
calendar year.
    ``(ii) The Commissioner of Social Security, using generally 
accepted actuarial principles, shall determine and publish in the 
Federal Register on or before November 1 of each calendar year the life 
expectancy ratio for the following calendar year.
    ``(iii) For purposes of clause (ii), the life expectancy ratio for 
any calendar year is the ratio of--
            ``(I) the period life expectancy of an individual attaining 
        age 62 on January 1, 2010, to
            ``(II) the period life expectancy of an individual 
        attaining age 62 on January 1 of the third calendar year 
        preceding the calendar year in which the determination under 
        clause (ii) is made.''.
    (b) Study of the Effect of Increases in Life Expectancy.--
            (1) Study plan.--Not later than February 15, 2003, 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, 2008--
                    (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, 2008, 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. 11. TREATMENT OF DISABLED BENEFICIARIES.

    Section 215(a) of the Social Security Act (42 U.S.C. 415(a)) is 
amended by adding at the end the following new paragraph:
    ``(8)(A) Notwithstanding the preceding provisions of this 
subsection, in the case of an individual who has or has had a period of 
disability and becomes entitled to old-age insurance benefits under 
section 202(a) (or dies) in or after 2006, the primary insurance amount 
of such individual shall be the sum of--
            ``(i) the amount determined under subparagraph (B), and
            ``(ii) the product derived by multiplying--
                    ``(I) the excess of the amount determined under 
                subparagraph (C) over the amount determined under 
                subparagraph (B), by
                    ``(II) the adjustment factor for such individual 
                determined under subparagraph (D).
    ``(B) The amount determined under this subparagraph is the amount 
of such individual's primary insurance amount as determined under this 
section without regard to this paragraph.
    ``(C) The amount determined under this subparagraph is the amount 
of such individual's primary insurance amount as determined under this 
section as in effect with respect to individuals becoming eligible for 
old-age or disability insurance benefits under section 202(a) in 2001.
    ``(D) The adjustment factor determined under this subparagraph for 
any individual is the ratio (not greater than 1) of--
            ``(i) the number of months, preceding the earlier of such 
        individual's first month of entitlement to old-age insurance 
        benefits under section 202(a) or the month of such individual's 
        death, which occurred during a period of disability of such 
        individual, to
            ``(ii) 480.''.

SEC. 12. MAINTENANCE OF BENEFIT AND CONTRIBUTION BASE.

    (a) In General.--Section 230 of the Social Security Act (42 U.S.C. 
430) is amended to read as follows:

            maintenance of the contribution and benefit base

    ``Sec. 230. (a) The Commissioner of Social Security shall determine 
and publish in the Federal Register on or before November 1 of each 
calendar year the contribution and benefit base determined under 
subsection (b) which shall be effective with respect to remuneration 
paid after such calendar year and taxable years beginning after such 
year.
    ``(b) For purposes of this section, for purposes of determining 
wages and self-employment income under sections 209, 211, 213, and 215 
of this Act and sections 54, 1402, 3121, 3122, 3125, 6413, and 6654 of 
the Internal Revenue Code of 1986, and for purposes of section 
4022(b)(3)(B) of Public Law 93-406, the contribution and benefit base 
is--
            ``(1) with respect to remuneration paid in (and taxable 
        years beginning in) 2002, $90,800,
            ``(2) with respect to remuneration paid in (and taxable 
        years beginning in) 2003, $101,200,
            ``(3) with respect to remuneration paid in (and taxable 
        years beginning in) 2004, $111,600, and
            ``(4) with respect to remuneration paid in (and taxable 
        years beginning in) any calendar year after 2004, an amount 
        equal to 86 percent of the quotient derived by dividing--
                    ``(A) the total wages paid in the calendar year 
                preceding the calendar year in which the determination 
                is made under subsection (a), by
                    ``(B) the number of individuals credited with wages 
                paid during the calendar year preceding the calendar 
                year in which the determination is made under 
                subsection (a),
        rounded (if not a multiple of $100) to the nearest multiple of 
        $100.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to remuneration paid in (and taxable years beginning in) any calendar 
year after 2001.

SEC. 13. PHASED-IN INCREASE IN SOCIAL SECURITY RETIREMENT AGES.

    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 early 
        retirement age (as defined in paragraph (2)) before January 1, 
        2000, 65 years of age; and
            ``(B) with respect to an individual who attains early 
        retirement age after December 31, 1999, and before January 1, 
        2012, 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 early retirement 
        age; and
            ``(C) with respect to an individual who attains early 
        retirement age after December 31, 2011, 67 years of age.''; and
            (2) by striking paragraph (3).

SEC. 14. 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 21st Century Retirement 
Security Act 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>