[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 5 Introduced in Senate (IS)]

  2d Session
                                  S. 5

  To strengthen and permanently preserve social security through the 
power of investment and compound interest without benefit reductions or 
                 tax increases, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 19, 2002

 Mr. Gramm (for himself and Mr. Hagel) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To strengthen and permanently preserve social security through the 
power of investment and compound interest without benefit reductions or 
                 tax increases, 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 ``Social Security 
Preservation Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
             TITLE I--AMENDMENTS TO THE SOCIAL SECURITY ACT

Sec. 101. Establishment of an investment-based option for social 
                            security benefits.
               ``Part B--Investment-Based Social Security

        ``Sec. 250. Guarantee of promised benefits.
        ``Sec. 251. Definitions.
        ``Sec. 252. Social security savings accounts for employees 
                            (SAFE Accounts).
        ``Sec. 253. SAFE Investment Funds.
        ``Sec. 254. Social Security Investment Board.
        ``Sec. 255. SAFE Account contributions.
        ``Sec. 256. Social security savings annuity for eligible 
                            retirees (SAFER Annuities) and other 
                            distributions.
        ``Sec. 257. Money-back guarantee.
        ``Sec. 258. Guarantee of promised benefits.
        ``Sec. 259. Increased SAFE Account investment rate.
        ``Sec. 260. Tax treatment of accounts.
       TITLE II--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

Sec. 201. Reduction of FICA rates resulting from investment-based 
                            social security system.
            TITLE III--AMENDMENTS TO GRAMM-LEACH-BLILEY ACT

Sec. 301. Social Security Investment Board.
        TITLE IV--FINANCING OF INVESTMENT-BASED SOCIAL SECURITY

                   Subtitle A--Dedication of Savings

Sec. 401. Dedication of part B savings to social security trust funds.
  Subtitle B--Exemption of Worker Investments From Federal Corporate 
                              Income Taxes

Sec. 411. SAFE Account and SAFER Annuity investments exempt from 
                            Federal corporate income taxes.
Subtitle C--Amendments to Balanced Budget and Emergency Deficit Control 
                              Act of 1985

Sec. 421. Dedication of budget surpluses to saving social security.
                  Subtitle D--Allocation of Transfers

Sec. 431. Allocation of transfers.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) The exploding cost of social security threatens to 
        become the greatest financial crisis in American history.
            (2) The unfunded liability of the social security system is 
        twice as large as the national debt of the Federal Government 
        and exceeds the combined cost of all the wars fought in our 
        Nation's history.
            (3) More than a financial crisis, the current social 
        security system is fast becoming a human tragedy that will 
        force Americans to choose between economic opportunity for 
        their children and retirement security for their parents.
            (4) The cause of the crisis is a debt-based system of 
        finance. Taxes taken from today's workers are not invested in 
        real assets to fund the retirement of those workers. Instead, 
        that money is used to pay for the social security benefits of 
        current retirees.
            (5) Under current law the retirement benefits for the 
        77,000,000 members of the ``baby boom'' generation born between 
        1946 and 1964 and beginning to retire in 10 years will have to 
        be financed with the payroll taxes paid by a dwindling number 
        of workers.
            (6) By the year 2042, Congress will have to choose between 
        increasing the payroll tax by 38 percent or reducing each 
        social security check by 28 percent.
            (7) Such an unacceptable choice can be avoided if immediate 
        action is taken to transition to an investment-based social 
        security system in which workers will be allowed to place a 
        portion of their payroll tax dollars in private investment 
        accounts owned by such workers.
            (8) By making such real investments and creating real 
        wealth, the system will benefit from what Albert Einstein 
        called the most powerful force in the universe--the power of 
        compound interest.
            (9) Investment-based social security would be voluntary, 
        guaranteed by the Federal Government, owned by the individual, 
        and protected against both inflation and cuts imposed by 
        Congress.
            (10) Investing today means investing in the retirement 
        security of parents and grandparents; saving today means saving 
        tomorrow's economic opportunity for America's children.

             TITLE I--AMENDMENTS TO THE SOCIAL SECURITY ACT

SEC. 101. ESTABLISHMENT OF AN INVESTMENT-BASED OPTION FOR SOCIAL 
              SECURITY BENEFITS.

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

                ``Part A--Debt-Based Social Security'';

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

               ``Part B--Investment-Based Social Security

                    ``guarantee of promised benefits

    ``Sec. 250. Any individual electing to receive benefits of 
investment-based social security under this part shall be guaranteed a 
total monthly benefit not less than the monthly benefit promised under 
debt-based social security under part A, as provided in sections 257 
and 258.

                             ``definitions

    ``Sec. 251. For purposes of this part--
            ``(1) Investing worker.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `investing worker' means any 
                individual--
                            ``(i) who, before, on, or after the date of 
                        enactment of this part--
                                    ``(I) is employed by a covered 
                                employer, or
                                    ``(II) is self-employed, and
                            ``(ii) who elects the option of investment-
                        based social security under this part at the 
                        time of the designation described in section 
                        252(a)(1).
                    ``(B) Eligibility waiver required for certain 
                individuals.--Such term does not include any individual 
                born before January 1, 1953, unless such individual 
                requests in writing and is granted an eligibility 
                waiver from the Social Security Investment Board.
            ``(2) Covered employer.--The term `covered employer' means, 
        for any calendar year, any person on whom an excise tax is 
        imposed under section 3111 of the Internal Revenue Code of 1986 
        with respect to having an individual in the person's employ to 
        whom wages are paid by such person during such calendar year.
            ``(3) Social security savings accounts for employees (safe 
        account).--The term `social security savings accounts for 
        employees' or `SAFE Account' means any individual retirement 
        plan (as defined in section 7701(a)(37) of the Internal Revenue 
        Code of 1986), other than a Roth IRA (as defined in section 
        408A(b) of such Code), which is designated by an investing 
        worker as a SAFE Account (in such manner as the Social Security 
        Investment Board may prescribe) and which is administered by a 
        SAFE Investment Fund.
            ``(4) Social security savings annuity for eligible retirees 
        (safer annuity).--The term `social security savings annuity for 
        eligible retirees' or `SAFER Annuity' has the meaning given 
        such term by section 256(b)(1)(C).
            ``(5) SAFE investment fund.--The term `SAFE Investment 
        Fund' means a fund certified by the Social Security Investment 
        Board under section 801(f)(1) of the Gramm-Leach-Bliley Act.
            ``(6) Social security investment board.--The term `Social 
        Security Investment Board' or `Board' means the board 
        established under section 801 of the Gramm-Leach-Bliley Act.
            ``(7) SAFER annuity investment fund.--The term `SAFER 
        Annuity Investment Fund' means a fund certified by the Social 
        Security Investment Board under section 801(f)(2) of the Gramm-
        Leach-Bliley Act.
            ``(8) Commissioner.--The term `Commissioner' means the 
        Commissioner of Social Security.

    ``social security savings accounts for employees (safe accounts)

    ``Sec. 252. (a) Initial Designation of SAFE Accounts by Investing 
Workers.--An individual who is an investing worker shall receive or be 
provided with the most recent listing of SAFE Investment Funds 
certified for safety and soundness by the Social Security Investment 
Board as compiled under section 801(f)(3) of the Gramm-Leach-Bliley 
Act, and shall designate a SAFE Account not later than 10 business days 
after the individual becomes an investing worker.
    ``(b) Time Designation Takes Effect.--A designation under 
subsection (a) shall take effect with respect to the first pay period 
beginning more than 14 days after the date of the designation.
    ``(c) Investing Worker's Control of and Property Right in 
Designated SAFE Account.--
            ``(1) In general.--An investing worker shall, at the time a 
        designation is made under subsection (a), designate the SAFE 
        Account to which SAFE Account contributions on behalf of the 
        investing worker are to be deposited.
            ``(2) Changes.--The Social Security Investment Board shall 
        by regulation provide the time and manner by which an investing 
        worker may--
                    ``(A) not more than once every 12 months, designate 
                a different SAFE Account to which contributions are to 
                be deposited, and
                    ``(B) transfer the entire balance from one such 
                Account to another.
            ``(3) Account is property of worker.--Each SAFE Account 
        designated by an investing worker is the sole property of the 
        worker.
    ``(d) Form of Designations.--Designations under this section shall 
be made--
            ``(1) on W-4 forms (or any successor forms), or
            ``(2) in such other manner as the Social Security 
        Investment Board may prescribe in order to ensure ease of 
        administration and reductions in burdens on covered employers.

                        ``safe investment funds

    ``Sec. 253. (a) In General.--Each SAFE Account shall be 
administered by a SAFE Investment Fund, which shall be certified and 
regulated by the Social Security Investment Board established under 
section 801 of the Gramm-Leach-Bliley Act, and shall invest the assets 
of each SAFE Account according to the rules established by the Board.
    ``(b) Investment Earnings Report.--
            ``(1) In general.--At least annually, each SAFE Investment 
        Fund shall provide to each investing worker with a SAFE Account 
        managed by the Fund a SAFE Investment Status Report. Such 
        report may be transmitted electronically upon the agreement of 
        the investing worker under the terms and conditions established 
        by the Social Security Investment Board.
            ``(2) Contents of report.--The SAFE Investment Status 
        Report, with respect to a SAFE Account, shall provide the 
        following information:
                    ``(A) The total SAFE Account contributions made in 
                the last quarter, the last year, and since the Account 
                was established.
                    ``(B) The amount and rate of return earned for each 
                period described in subparagraph (A).
                    ``(C) A projection of how much the investing worker 
                will have available on the date the worker attains 
                normal retirement age if such contributions and 
                earnings continue at the same rate during the remaining 
                period ending with such date.
    ``(c) Guaranteed Acceptance Policy.--Each SAFE Investment Fund 
shall accept all investing workers requesting to open SAFE Accounts in 
the Fund.
    ``(d) Maximum Administrative Fee.--Each SAFE Investment Fund shall 
charge each investing worker in the Fund a single, uniform annual 
administrative fee not to exceed 0.3 percent of the value of the assets 
invested in the worker's SAFE Account.

                   ``social security investment board

    ``Sec. 254. For the establishment of the Social Security Investment 
Board, see section 801 of the Gramm-Leach-Bliley Act.

                      ``safe account contributions

    ``Sec. 255. (a) In General.--The Secretary of the Treasury shall 
transfer at least quarterly for payment by the Commissioner to a SAFE 
Investment Fund for deposit in a SAFE Account of an investing worker, 
an amount equal to the base SAFE Account investment rate, plus, if 
applicable, the supplemental SAFE Account investment rate of the 
taxable wages and self-employment income of the investing worker for 
the taxable year as determined under chapters 2 and 21 of the Internal 
Revenue Code of 1986. Transfers referred to under the preceding 
sentence shall be made from that portion of the annual unified Federal 
budget surplus derived from the annual surplus income of the Federal 
Old-Age and Survivors Insurance Trust Fund. The Social Security 
Investment Board may require that such transfers be made on a more 
frequent basis, if the Board determines such frequency is feasible. No 
transfer may be made to a SAFE Account unless provided for under this 
part.
    ``(b) Base SAFE Account Investment Rate.--For purposes of this 
part, with respect to any taxable year, the base SAFE Account 
investment rate is equal to the greater of--
            ``(1) 3.1 percent, or
            ``(2) the investment rate established under section 
        259(a)(2).
All assets and earnings resulting from the base SAFE Account investment 
rate shall be identified as base SAFE Account assets.
    ``(c) Supplemental SAFE Account Investment Rate.--For purposes of 
this part, with respect to any taxable year, in the case of any 
investing worker who has attained the age of 37 but not the age of 58 
on January 1, 2003, the supplemental SAFE Account investment rate is 
equal to 2 percent. All assets and earnings resulting from the 
supplemental SAFE Account investment rate shall be identified as 
supplemental SAFE Account assets.
    ``(d) Notice of Contributions.--The full amount of an investing 
worker's SAFE Account contributions shall be shown on such worker's W-2 
tax statement, as provided in section 6051(a)(12) of the Internal 
Revenue Code of 1986.

    ``social security savings annuity for eligible retirees (safer 
                   annuities) and other distributions

    ``Sec. 256. (a) Date of Initial Distribution.--Except as provided 
in subsection (b)(4), distributions may only be made from a SAFE 
Account of an investing worker on and after the earliest of--
            ``(1) the date the worker attains normal retirement age, as 
        determined under section 216 (or early retirement age (as so 
        determined) if elected by such worker), or
            ``(2) the date on which the worker's base SAFE Account 
        assets are sufficient--
                    ``(A) to purchase a SAFER Annuity (as defined in 
                subsection (b)(1)(B)) with a monthly benefit calculated 
                as if the worker had reached early retirement age on 
                such date, and
                    ``(B) to fund family or survivor benefits for 
                related individuals as calculated under subsection 
                (b)(2).
    ``(b) Forms of Distribution.--
            ``(1) SAFER annuity.--
                    ``(A) In general.--Except as provided in paragraph 
                (4) and section 257, on the date determined under 
                subsection (a), the investing worker shall, in a manner 
                to be determined by the Social Security Investment 
                Board, directly transfer sufficient assets in an amount 
                equal to--
                            ``(i) the aggregate supplemental SAFE 
                        Account assets in the worker's SAFE Account (if 
                        any), plus
                            ``(ii) sufficient base SAFE Account assets 
                        in the worker's SAFE Account,
                to purchase a SAFER Annuity from a SAFER Annuity 
                Investment Fund.
                    ``(B) SAFER annuity investment funds.--
                            ``(i) Notice of funds.--An investing worker 
                        shall receive or be provided with before the 
                        date of initial distribution the most recent 
                        listing of SAFER Annuity Investment Funds 
                        certified for safety and soundness by the 
                        Social Security Investment Board as compiled 
                        under section 801(f)(3) of the Gramm-Leach-
                        Bliley Act.
                            ``(ii) Guaranteed acceptance policy.--Each 
                        SAFER Annuity Investment Fund shall accept all 
                        investing workers requesting to purchase SAFER 
                        Annuities from the Fund.
                            ``(iii) Maximum administrative fee.--Each 
                        SAFER Annuity Investment Fund shall charge each 
                        investing worker in the Fund a single, uniform 
                        annual administrative fee not to exceed 0.3 
                        percent of the total value of the assets in the 
                        worker's SAFER Annuity.
                            ``(iv) Uniform treatment.--Each SAFER 
                        Annuity Investment Fund shall provide each 
                        investing worker of the same age the same 
                        monthly benefit relative to the amount of SAFE 
                        Account assets transferred, regardless of sex, 
                        race, health status, or other characteristics.
                    ``(C) Social security savings annuity for eligible 
                retirees (safer annuity).--For purposes of this part, 
                the term `social security savings annuity for eligible 
                retirees' or `SAFER Annuity' means an annuity--
                            ``(i) the annuity starting date (as defined 
                        in section 72(c)(4) of the Internal Revenue 
                        Code of 1986) of which commences on the first 
                        day of the month beginning after the date of 
                        the purchase of the annuity,
                            ``(ii) that, except as provided in 
                        subparagraph (E), provides for a monthly 
                        payment to the worker during the life of the 
                        worker equal to the SAFER Annuity payment 
                        determined under subparagraph (D), and
                            ``(iii) that includes such terms and 
                        conditions as the Social Security Investment 
                        Board requires for the protection of the 
                        annuitant.
                    ``(D) SAFER annuity payment.--For purposes of this 
                part, the SAFER Annuity payment is equal to a monthly 
                payment equal to the sum of--
                            ``(i) 100 percent of the investing worker's 
                        initial primary insurance amount (determined 
                        under section 215 as if the worker applied for 
                        old-age insurance benefits on the date 
                        determined under subsection (a)), adjusted 
                        annually for benefit changes reflecting the 
                        rate of return on the annuities investment by 
                        the SAFER Annuity Investment Fund, plus
                            ``(ii) a bonus amount equal to 20 percent 
                        of that portion of the benefits described in 
                        clause (i) which are funded by that portion of 
                        the SAFER Annuity derived from the Base SAFE 
                        Account assets in the worker's SAFE Account.
                    ``(E) Guaranty payment to ensure full promised 
                benefits.--If an investing worker purchasing a SAFER 
                Annuity under subparagraph (A) on the date determined 
                under subsection (a)(1) has insufficient assets in the 
                worker's SAFE Account for such an annuity to provide a 
                SAFER Annuity payment, the worker shall purchase the 
                largest SAFER Annuity the worker's SAFE Account can 
                fund, and the worker shall be eligible for a guaranty 
                payment pursuant to section 258.
            ``(2) Family or survivor benefits for related 
        individuals.--
                    ``(A) In general.--In the case of an investing 
                worker whose SAFE Account has more than sufficient base 
                SAFE account assets to purchase a SAFER Annuity 
                providing a SAFER Annuity payment on the date 
                determined under subsection (a), the worker shall set 
                aside excess base SAFE Account assets in an amount 
                determined by the Social Security Investment Board 
                under subparagraph (B) to fund family or survivor 
                benefits for related individuals entitled to such 
                benefits under section 202 based on the wages or self-
                employment income of the worker.
                    ``(B) Determination of set aside amount.--The 
                Social Security Investment Board shall determine and 
                the Commissioner shall implement rules to determine the 
                amount of excess assets to be set aside under 
                subparagraph (A) taking into account--
                            ``(i) the base SAFE Account assets, if any, 
                        of each related individual described in 
                        subparagraph (A),
                            ``(ii) the projected buildup in the base 
                        SAFE Account assets of such individual, if any, 
                        assuming distribution at normal retirement age,
                            ``(iii) the SAFER Annuity, if any, such 
                        related individual is or is projected to 
                        receive, compared to the maximum benefit such 
                        related individual receives or is projected to 
                        receive under part A, and
                            ``(iv) the projected interest rate for the 
                        applicable period as the Board determines on 
                        the set aside date.
                    ``(C) Use of set aside amount.--The assets set 
                aside under subparagraph (A) shall be deposited in a 
                related individual's SAFE Account, if applicable, or 
                shall be used to fund or supplement a SAFER Annuity the 
                starting date of which is the date the related 
                individual is eligible to receive the benefits 
                described in subparagraph (A).
                    ``(D) Protection against additional assessments.--
                Once a determination and set aside is made under this 
                paragraph with respect to any related individual, the 
                investing worker shall be held harmless for any 
                additional amounts necessary to fund any additional 
                benefits such related individual may become entitled to 
                under section 202.
            ``(3) Right to use excess safe account assets.--To the 
        extent assets remain in an investing worker's SAFE Account 
        after the purchase of an annuity under paragraph (1) and a set 
        aside of assets under paragraph (2), such excess assets shall 
        be payable to the worker in such manner and in such amounts as 
        determined by the worker.
            ``(4) Distribution in the event of death before the 
        purchase of an annuity.--If the investing worker dies before 
        the date determined under subsection (a), the balance in the 
        worker's SAFE Account shall be distributed in the following 
        manner:
                    ``(A) An amount equal to the present discount value 
                of the family or survivor benefits related individuals 
                are entitled to under section 202 based on the wages or 
                self-employment income of the worker, for deposit or 
                use as described in paragraph (2)(C).
                    ``(B) The remainder in a lump sum, under rules 
                established by the Social Security Investment Board, to 
                the worker's estate, subject to applicable State laws.

                         ``money-back guarantee

    ``Sec. 257. On the date determined under section 256(a), an 
investing worker may irrevocably elect to reject investment-based 
social security under this part for the full benefits such worker is 
eligible for under part A. Upon such election, an investing worker's 
eligibility under this part shall terminate and the balance in the 
worker's SAFE Account shall be distributed to the Federal Old-Age and 
Survivors Insurance Trust Fund and the Federal Disability Insurance 
Trust Fund in a manner to be determined by the Social Security 
Investment Board.

                    ``guarantee of promised benefits

    ``Sec. 258. (a) Guarantee of Promised Benefits.--
            ``(1) In general.--If an investing worker receives a 
        monthly payment from the worker's SAFER Annuity that is less 
        than the SAFER Annuity payment determined under section 
        256(b)(1)(D), the Commissioner shall use such sums as are 
        necessary from the Federal Old-Age and Survivor's Insurance 
        Trust Fund to provide a guaranty payment to supplement the 
        SAFER Annuity and to guarantee full payment of such worker's 
        monthly promised benefits.
            ``(2) Guaranty payment.--For purposes of paragraph (1), an 
        investing worker's guaranty payment is equal to the excess of--
                    ``(A) the amount which would have been the 
                investing worker's monthly benefit under section 202, 
                as of the date determined under section 256(a)(1) and 
                adjusted for benefit increases reflecting the actual 
                cost-of-living increases provided under section 215, 
                over
                    ``(B) the sum of--
                            ``(i) the annuity payment funded by that 
                        portion of the base SAFE Account assets in the 
                        investing worker's SAFE Account, divided by 120 
                        percent, plus
                            ``(ii) the annuity payment, if any, funded 
                        by the supplemental SAFE Account assets in the 
                        investing worker's SAFE Account.
    ``(b) Protection Against Inflation.--If the assets in an investing 
worker's SAFE Account are sufficient to provide a monthly payment equal 
to the SAFER Annuity payment determined under section 256(b)(1)(D), but 
in any particular year, the SAFER Annuity payment does not equal or 
exceed 120 percent of the cost-of-living adjusted primary insurance 
amount such worker would have received under part A for months in such 
year, the Commissioner shall use such sums as are necessary from the 
Federal Old-Age and Survivor's Insurance Trust Fund to supplement the 
SAFER Annuity, as provided in subsection (a).

                ``increased safe account investment rate

    ``Sec. 259. (a) Determination of Rate.--
            ``(1) Notification of surplus receipts to social security 
        trust funds.--For years beginning after 2005, upon the 
        determination by the Commissioner that the annual projected 
        non-interest receipts of the Federal Old-Age and Survivors 
        Insurance Trust Fund and the Federal Disability Insurance Trust 
        Fund exceed the annual projected costs of providing benefits 
        under part A, the Commissioner shall notify the Social Security 
        Investment Board, the President, and the Congress of such 
        surplus receipts.
            ``(2) Recalculation of safe account investment rate.--
        Beginning after 2005, upon receiving notification under 
        paragraph (1), the Social Security Investment Board shall 
        direct the Secretary of the Treasury to increase the transfers 
        from the Federal Old-Age and Survivors Insurance Trust Fund and 
        the Federal Disability Insurance Trust Fund under section 255 
        by increasing, in increments of tenths of a percentage point, 
        the maximum investment rate supported by such surplus receipts. 
        Such increase shall be determined to ensure that--
                    ``(A) a base SAFE Account investment rate shall 
                never be less than 3.1 percent nor more than 8 percent, 
                and
                    ``(B) a suitable reserve shall be maintained in 
                such Trust Funds so that benefits payable under part A 
                and this part can be fully funded.
            ``(3) Continuing recalculations.--Additional 
        determinations, notifications, and recalculations under this 
        subsection shall be made to ensure that the SAFE Account 
        investment rate remains at its maximum level.
            ``(4) Use of trust funds assets.--In any year with respect 
        to which the annual projected surplus as determined under 
        paragraph (1) is insufficient to maintain a base SAFE Account 
        investment rate of 3.1 percent, the Secretary of the Treasury 
        shall redeem sufficient assets of the Trust Funds to ensure 
        that benefits under part A are fully paid and such rate is so 
        maintained.

                      ``tax treatment of accounts

    ``Sec. 260. (a) In General.--Except as provided in subsection (b), 
any SAFE Account shall be treated in the same manner as an individual 
retirement plan (as defined in section 7701(a)(37) of the Internal 
Revenue Code of 1986), other than a Roth IRA (as defined in section 
408A(b) of such Code).
    ``(b) Exceptions.--
            ``(1) Contribution limit.--The aggregate amount of 
        contributions for any taxable year to the SAFE Account of an 
        investing worker shall not exceed the aggregate amount of 
        contributions transferred pursuant to section 255 on behalf of 
        such worker.
            ``(2) No deduction allowed.--No deduction shall be allowed 
        under section 219 of the Internal Revenue Code of 1986 for a 
        contribution to a SAFE Account.
            ``(3) Rollover contributions.--No rollover contribution may 
        be made to a SAFE Account unless it is from another SAFE 
        Account. A rollover described in the preceding sentence shall 
        not be taken into account for purposes of paragraph (1).
            ``(4) Taxation of distributions.--
                    ``(A) Safer annuity payment.--Any payment from a 
                SAFER Annuity purchased under section 256(b)(1) shall 
                be treated as a social security benefit for purposes of 
                section 86 of the Internal Revenue Code of 1986.
                    ``(B) Distribution of excess assets.--Any 
                distribution from a SAFE Account under section 
                256(b)(3) shall be includible in gross income under 
                rules under section 72 of such Code.
                    ``(C) Other distributions.--Any amount paid to 
                purchase a SAFER Annuity and any other distribution 
                under section 256 shall be exempt from any taxation 
                under such Code.
    ``(c) Nonapplication of State Tax.--
            ``(1) In general.--No tax, fee, or other monetary payment 
        may be imposed or collected by any State, the District of 
        Columbia, or the Commonwealth of Puerto Rico, or by any 
        political subdivision or other governmental authority thereof, 
        on, or with respect to--
                    ``(A) any amount paid to purchase a SAFER Annuity 
                under section 256, or
                    ``(B) any distribution under section 256 (other 
                than a distribution under subsection (b)(3) thereof).
            ``(2) Rule of construction.--Paragraph (1)(A) shall not be 
        construed to exempt any company or other entity issuing an 
        annuity contract under this section from the imposition, 
        payment, or collection of a tax, fee, or other monetary payment 
        on the net income or profit accruing to or realized by that 
        entity from the sale of a SAFER Annuity under this part if that 
        tax, fee, or payment is applicable to a broad range of business 
        activity.''.
    (b) SAFE Account Contributions Shown on
W-2's.--
            (1) In general.--Section 6051(a) of the Internal Revenue 
        Code of 1986 (relating to receipts for employees) is amended by 
        striking ``and'' at the end of paragraph (10), by striking the 
        period at the end of paragraph (11) and inserting ``, and'', 
        and inserting after paragraph (11) the following:
            ``(12) in the case of an investing worker (as defined in 
        section 251(1) of the Social Security Act), of the amount shown 
        pursuant to paragraph (6), the total amount transferred to such 
        worker's SAFE Account under section 255 of such Act.''.
            (2) Conforming amendments.--
                    (A) Section 6051(a)(6) of such Code is amended by 
                inserting ``and paid as tax under section 3111'' after 
                ``section 3101''.
                    (B) Section 6051(c) of such Code is amended by 
                inserting ``and paid as tax under section 3111'' after 
                ``section 3101''.
    (c) Effective Date and Notice Requirements.--
            (1) Effective date.--The amendments made by this section 
        shall apply to designations of accounts made with respect to 
        payroll periods beginning on or after January 1, 2003.
            (2) Notice requirements.--
                    (A) In general.--Not later than January 1, 2003, 
                the Commissioner of Social Security shall--
                            (i) send to the last known address of each 
                        eligible individual a description of the 
                        program established by the amendments made by 
                        this section, that shall be written in the form 
                        of a pamphlet in language that may be readily 
                        understood by the average worker,
                            (ii) provide for toll-free access by 
                        telephone from all localities in the United 
                        States and access by the Internet to the Social 
                        Security Administration through which 
                        individuals may obtain information and answers 
                        to questions regarding such program, and
                            (iii) provide information to the media in 
                        all localities of the United States about such 
                        program and such toll-free access by telephone 
                        and access by Internet.
                    (B) Eligible individual.--For purposes of this 
                paragraph, the term ``eligible individual'' means an 
                individual who, as of the date of the pamphlet sent 
                pursuant to subparagraph (A), is indicated within the 
                records of the Social Security Administration as being 
                credited with 1 or more quarters of coverage under 
                section 213 of the Social Security Act (42 U.S.C. 413).
                    (C) Matters to be included.--The Commissioner of 
                Social Security shall include with the pamphlet sent to 
                each eligible individual pursuant to subparagraph (A)--
                            (i) a statement of the number of quarters 
                        of coverage indicated in the records of the 
                        Social Security Administration as of the date 
                        of the description as credited to such 
                        individual under section 213 of such Act and 
                        the date as of which such records may be 
                        considered accurate, and
                            (ii) the number for toll-free access by 
                        telephone established by the Commissioner 
                        pursuant to subparagraph (A)(ii).

       TITLE II--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

SEC. 201. REDUCTION OF FICA RATES RESULTING FROM INVESTMENT-BASED 
              SOCIAL SECURITY SYSTEM.

    (a) Employee Contribution.--Section 3101 of the Internal Revenue 
Code of 1986 (relating to tax on employees) is amended--
            (1) in the table in subsection (a)--
                    (A) by striking ``1990 or thereafter'' and 
                inserting ``1990 and until the reduction year'',
                    (B) by striking the period at the end, and
                    (C) by adding at the end the following:

    ``The reduction year or 
        thereafter.
                                            The reduction year 
                                                percentage.'',
        and
            (2) by adding at the end the following:
    ``(c) Reduction Year.--For purposes of this section, the term 
`reduction year' means the year beginning after the date on which the 
SAFE Account investment rate established under section 259(a)(2) of the 
Social Security Act is 8 percent of wages (as so defined).
    ``(d) Reduction Year Percentage.--For purposes of this section, the 
term `reduction year percentage' is equal to the sum of--
            ``(1) 4 percent, plus
            ``(2) the Federal Disability Insurance Trust Fund rate of 
        0.9 percent under section 201(b) of the Social Security Act.''.
    (b) Employer Contribution.--Section 3111 of the Internal Revenue 
Code of 1986 (relating to tax on employees) is amended--
            (1) in the table in subsection (a)--
                    (A) by striking ``1990 or thereafter'' and 
                inserting ``1990 and until the reduction year'',
                    (B) by striking the period at the end, and
                    (C) by adding at the end the following:

    ``The reduction year or 
        thereafter.
                                            The reduction year 
                                                percentage.'',
        and
            (2) by adding at the end the following:
    ``(c) Reduction Year.--For purposes of this section, the term 
`reduction year' means the year beginning after the date on which the 
SAFE Account investment rate established under section 259(a)(2) of the 
Social Security Act is 8 percent of wages (as so defined).
    ``(d) Reduction Year Percentage.--For purposes of this section, the 
term `reduction year percentage' is equal to the sum of--
            ``(1) 4 percent, plus
            ``(2) the Federal Disability Insurance Trust Fund rate of 
        0.9 percent under section 201(b) of the Social Security Act.''.
    (c) Self-Employed Contribution.--Section 1401 of the Internal 
Revenue Code of 1986 (relating to tax on self-employment income) is 
amended--
            (1) by striking the table in subsection (a) and inserting 
        the following:

      

 
                     ``In the case of a taxable year
 
                                                         The applicable
                      Beginning:            And:         percentage is:
 
                  After December     Before the         12.4
                   31, 1989.          reduction year..
                  In the reduction   .................  The reduction
                   year or                               year
                   thereafter.                           percentage'',
 

        and
            (2) by adding at the end the following:
    ``(c) Reduction Year.--For purposes of this section, the term 
`reduction year' means the taxable year beginning after the date on 
which the SAFE Account investment rate established under section 
259(a)(2) of the Social Security Act is 8 percent of self-employment 
income (as so defined).
    ``(d) Reduction Year Percentage.--For purposes of this section, the 
term `reduction year percentage' is equal to the sum of--
            ``(1) 8 percent, plus
            ``(2) the Federal Disability Insurance Trust Fund rate of 
        1.8 percent under section 201(b) of the Social Security Act.''.

          TITLE III--AMENDMENTS TO THE GRAMM-LEACH-BLILEY ACT

SEC. 301. SOCIAL SECURITY INVESTMENT BOARD

    (a) In General.--The Gramm-Leach-Bliley Act is amended by adding at 
the end the following new title:

             ``TITLE VIII--SOCIAL SECURITY INVESTMENT BOARD

``SEC. 801. SOCIAL SECURITY INVESTMENT BOARD.

    ``(a) Establishment.--There is established in the Executive Branch 
of the Government a Social Security Investment Board (in this section, 
referred to as the `Board').
    ``(b) Composition.--The Board shall be composed of--
            ``(1) 2 members from the private sector appointed by the 
        President, of whom 1 shall be designated by the President as 
        Chairman and of whom--
                    ``(A) 1 shall be appointed by the President after 
                taking into consideration the recommendation made by 
                the Speaker of the House of Representatives in 
                consultation with the Minority Leader of the House of 
                Representatives, and
                    ``(B) 1 shall be appointed by the President after 
                taking into consideration the recommendation made by 
                the Majority Leader of the Senate in consultation with 
                the Minority Leader of the Senate,
            ``(2) the Secretary of the Treasury,
            ``(3) the Chairman of the Federal Reserve Board, and
            ``(4) the Chairman of the Securities and Exchange 
        Commission.
    ``(c) Advice and Consent.--Appointments under subsection (b)(1) 
shall be made by and with the advice and consent of the Senate.
    ``(d) Membership Requirements.--Members of the Board appointed 
under subsection (b)(1) shall have substantial experience, training, 
and expertise in finance, investments, or insurance.
    ``(e) Length of Appointments.--
            ``(1) Terms.--A member of the Board appointed under 
        subsection (b)(1) shall be appointed for a term of 6 years, 
except that of the members first appointed under subsection (b)(1)--
                    ``(A) the Chairman shall be appointed for a term of 
                6 years, and
                    ``(B) the remaining member shall be appointed for a 
                term of 3 years.
            ``(2) Vacancies.--
                    ``(A) In general.--A vacancy on the Board shall be 
                filled in the manner in which the original appointment 
                was made and shall be subject to any conditions that 
                applied with respect to the original appointment.
                    ``(B) Completion of term.--An individual chosen to 
                fill a vacancy shall be appointed for the unexpired 
                term of the member replaced.
            ``(3) Expiration.--The term of any member shall not expire 
        before the earlier of--
                    ``(A) the date on which the member's successor 
                takes office, or
                    ``(B) 1 year after the member's term is scheduled 
                to expire.
    ``(f) Duties.--The Board shall--
            ``(1) certify as a SAFE Investment Fund any fund that 
        demonstrates to the satisfaction of the Board that the manner 
        in which such Fund will administer SAFE Accounts will be 
        consistent with the requirements of part B of title II of the 
        Social Security Act and any other applicable Federal law,
            ``(2) certify as a SAFER Annuity Investment Fund any fund 
        that demonstrates to the satisfaction of the Board that the 
        manner in which such Fund will administer SAFER Annuities will 
        be consistent with the requirements of such part and any other 
        applicable Federal law,
            ``(3) provide, under a staggered schedule, an annual 
        listing to all workers of the SAFE Investment Funds and the 
        SAFER Annuity Investment Funds certified under paragraphs (1) 
        and (2), the performance of such Funds, and any other 
        information concerning such Funds as the Board determines is 
        necessary for workers to make an informed choice,
            ``(4) establish the safety and soundness standards under 
        which all SAFE Investment Funds and SAFER Annuity Investment 
        Funds are regulated by the Federal and State agencies 
        authorized to oversee such Funds,
            ``(5) establish policies for the investment and management 
        of SAFE Accounts and SAFER Annuities, including policies 
        applicable to each SAFE Investment Fund with responsibility for 
        managing the investment options designated by investing 
        workers, that shall provide for--
                    ``(A) prudent investment instruments suitable for 
                accumulating funds for payment of retirement income,
                    ``(B) sound diversification of investments by each 
                SAFE Investment Fund and SAFER Annuity Investment Fund, 
                including--
                            ``(i) for the first 2 years beginning after 
                        the date of enactment of part B of title II of 
                        the Social Security Act, an overall portfolio 
                        for all SAFE Accounts or SAFER Annuities of a 
                        Fund of 60 percent stocks and 40 percent bonds, 
                        and
                            ``(ii) beginning on the date which is 2 
                        years after such date of enactment, a permitted 
                        range of allocating SAFE Account or SAFER 
                        Annuity investments in stocks, bonds, and other 
                        instruments, taking into account an appropriate 
                        balance of risk and return for the age of the 
                        investing worker, and
                    ``(C) administrative, management, and brokerage 
                fees at a rate--
                            ``(i) uniform among all SAFE Accounts 
                        managed by a SAFE Investment Fund or all SAFER 
                        Annuities managed by a SAFER Annuity Investment 
                        Fund, and
                            ``(ii) not to exceed a total of 30 basis 
                        points,
            ``(6) assess penalties, including decertification, against 
        any SAFE Investment Fund or SAFER Annuity Investment Fund 
        determined by the applicable Federal or State agency to be in 
        violation of the requirements of part B of title II of the 
        Social Security Act and the standards described in paragraph 
        (4),
            ``(7) review and approve the budget of the Board,
            ``(8) apply such statutory requirements of the applicable 
        laws regulating SAFE Investment Funds and SAFER Annuity Funds 
        as the Board deems necessary to ensure the safety and soundness 
        of the funds and the protection of and full disclosure to 
        participants,
            ``(9) exempt from such statutory requirements of the 
        applicable laws regulating SAFE Investment Funds and SAFER 
        Annuity Funds as the Board deems necessary to limit the 
        regulatory, administrative, legal and litigation-related costs 
        imposed on such funds, consistent with the limit on 
        administrative expenses in section 253(d) of the Social 
        Security Act,
            ``(10) make recommendations to Congress for legislation 
        necessary--
                    ``(A) to ensure the safety and soundness of the 
                funds,
                    ``(B) to protect and ensure full disclosure to 
                participants, and
                    ``(C) to limit the regulatory, administrative, 
                legal and litigation-related costs imposed on such 
                funds, and
            ``(11) carry out any other duties specified under part B of 
        title II of the Social Security Act.
In carrying out its duties under paragraph (5), the Board shall require 
that each SAFE Investment Fund and SAFER Annuity Investment Fund have 
not more than 3 percent of its overall portfolio in any 1 stock. 
However, the Board is specifically prohibited from requiring or denying 
the purchase of a specific stock or bond.
    ``(g) Administrative Provisions.--
            ``(1) In general.--The Board may--
                    ``(A) adopt, alter, and use a seal,
                    ``(B) direct the Executive Director to take such 
                action as the Board considers appropriate to carry out 
                the provisions of part B of title II of the Social 
                Security Act and the policies of the Board,
                    ``(C) upon the concurring votes of 4 members, 
                remove the Executive Director from office for good 
                cause shown, and
                    ``(D) take such other actions as may be necessary 
                to carry out the functions of the Board.
            ``(2) Meetings.--The Board shall meet--
                    ``(A) not less than once during each 2-month 
                period, and
                    ``(B) at additional times at the call of the 
                Chairman.
            ``(3) Exercise of powers.--
                    ``(A) In general.--Except as provided in paragraph 
                (1)(C), the Board shall perform the functions and 
                exercise the powers of the Board on a majority vote of 
                a quorum of the Board. Three members of the Board shall 
                constitute a quorum for the transaction of business.
                    ``(B) Vacancies.--A vacancy on the Board shall not 
                impair the authority of a quorum of the Board to 
                perform the functions and exercise the powers of the 
                Board.
    ``(h) Compensation.--
            ``(1) In general.--Each member of the Board who is not an 
        officer or employee of the Federal Government shall be 
        compensated at the daily rate of basic pay for level IV of the 
        Executive Schedule for each day during which such member is 
        engaged in performing a function of the Board.
            ``(2) Expenses.--A member of the Board shall be paid 
        travel, per diem, and other necessary expenses under subchapter 
        I of chapter 57 of title 5, United States Code, while traveling 
        away from such member's home or regular place of business in 
        the performance of the duties of the Board.
    ``(i) Appointment of Executive Director.--
            ``(1) In general.--The Board shall appoint, without regard 
        to the provisions of law governing appointments in the 
        competitive service, an Executive Director by action agreed to 
        by a majority of the members of the Board.
            ``(2) Requirements.--The Executive Director shall have 
        substantial experience, training, and expertise in finance, 
        investments, and insurance.
            ``(3) Duties.--The Executive Director shall--
                    ``(A) carry out the policies established by the 
                Board,
                    ``(B) administer the provisions of part B of title 
                II of the Social Security Act, and
                    ``(C) prescribe such regulations (other than 
                regulations relating to fiduciary responsibilities) as 
                may be necessary for the administration of such part.
            ``(4) Administrative authority.--The Executive Director 
        may--
                    ``(A) appoint such personnel as may be necessary to 
                carry out the provisions of part B of title II of the 
                Social Security Act,
                    ``(B) subject to approval by the Board, procure the 
                services of experts and consultants under section 3109 
                of title 5, United States Code,
                    ``(C) secure directly from an Executive agency, the 
                United States Postal Service, or the Postal Rate 
                Commission any information necessary to carry out the 
                provisions of such part and the policies of the Board,
                    ``(D) make such payments out of sums described in 
                subsection (l) as the Executive Director determines are 
                necessary to carry out the provisions of such part and 
                the policies of the Board,
                    ``(E) accept and use the services of individuals 
                employed intermittently in the Government service and 
                reimburse such individuals for travel expenses, as 
                authorized by section 5703 of title 5, United States 
                Code, including per diem as authorized by section 5702 
                of such title,
                    ``(F) except as otherwise expressly prohibited by 
                law or the policies of the Board, delegate any of the 
                Executive Director's functions to such employees under 
                the Board as the Executive Director may designate and 
                authorize such successive redelegations of such 
                functions to such employees under the Board as the 
                Executive Director may consider to be necessary or 
                appropriate, and
            ``(G) take such other actions as are appropriate to carry 
        out the functions of the Executive Director.
    ``(j) Discharge of Responsibilities.--The members of the Board 
shall discharge their responsibilities solely in the interest of SAFE 
Account holders and beneficiaries under part B of title II of the 
Social Security Act.
    ``(k) Annual Independent Audit.--The Board shall annually engage an 
independent qualified public accountant to audit the activities of the 
Board.
    ``(l) Source of Funds.--Payments authorized under this section 
shall be paid from the Federal Old-Age and Survivors Insurance Trust 
Fund.
    ``(m) Submission of Budget to Congress.--The Board shall prepare 
and submit to the President, and, at the same time, to the appropriate 
committees of Congress, an annual budget of the expenses and other 
items relating to the Board which shall be included as a separate item 
in the budget required to be transmitted to Congress under section 1105 
of title 31, United States Code.
    ``(n) Submission of Legislative Recommendations.--The Board may 
submit to the President, and, at the same time, shall submit to each 
House of Congress, any legislative recommendations of the Board 
relating to any of its functions under part B of title II of the Social 
Security Act or any other provision of law.
    ``(o) Definitions.--For purposes of this section--
            ``(1) Investing worker.--The term `investing worker' has 
        the meaning given such term by section 251(1) of the Social 
        Security Act.
            ``(2) SAFE account.--The term `SAFE Account' means any 
        individual retirement plan (as defined in section 7701(a)(37) 
        of the Internal Revenue Code of 1986), other than a Roth IRA 
        (as defined in section 408A(b) of such Code), which is 
        designated by an investing worker as a SAFE Account (in such 
        manner as the Secretary of the Treasury may prescribe) and 
        which is administered by a SAFE Investment Fund.
            ``(3) SAFER annuity.--The term `SAFER Annuity' has the 
        meaning given such term by section 256(b)(1)(C) of the Social 
        Security Act.
            ``(4) SAFE investment fund.--The term `SAFE Investment 
        Fund' means a fund certified by the Board under subsection 
        (f)(1).
            ``(5) SAFER annuity investment fund.--The term `SAFER 
        Annuity Investment Fund' means a fund certified by the Board 
        under subsection (f)(2).''.
    (b) Conforming Amendment.--The table of contents in section 1(b) of 
the Gramm-Leach-Bliley Act is amended by adding at the end the 
following:

             ``TITLE VIII--SOCIAL SECURITY INVESTMENT BOARD

``Sec. 801. Social Security Investment Board.''.

        TITLE IV--FINANCING OF INVESTMENT-BASED SOCIAL SECURITY

                   Subtitle A--Dedication of Savings

SEC. 401. DEDICATION OF PART B SAVINGS TO SOCIAL SECURITY TRUST FUNDS.

    In the case of fiscal years beginning after September 30, 2002, the 
Secretary of the Treasury, in consultation with the Social Security 
Investment Board, shall estimate and transfer to the Federal Old-Age 
and Survivors Insurance Trust Fund and the Federal Disability Insurance 
Trust Fund established under section 201 of the Social Security Act (42 
U.S.C. 401) within 3 months after the end of each fiscal year an amount 
equal to the annual savings of the Federal Government resulting from 
investment-based social security under part B of such Act, including 
any additional Federal income tax receipts resulting from SAFER Annuity 
bonuses and excess SAFE Account distributions under such part B.

  Subtitle B--Exemption of Worker Investments From Federal Corporate 
                              Income Taxes

SEC. 411. SAFE ACCOUNT AND SAFER ANNUITY INVESTMENTS EXEMPT FROM 
              FEDERAL CORPORATE INCOME TAXES.

    (a) In General.--In the case of fiscal years beginning after 
September 30, 2002, the Secretary of the Treasury, in consultation with 
the Social Security Investment Board, shall estimate and transfer to 
the Federal Old-Age and Survivors Insurance Trust Fund and the Federal 
Disability Insurance Trust Fund established under section 201 of the 
Social Security Act (42 U.S.C. 401) within 3 months after the end of 
each fiscal year an amount equal to the recapture percentage for such 
fiscal year. For purposes of the preceding sentence, the recapture 
percentage for any fiscal year shall be equal to the percentage of 
corporate income tax receipts under the Internal Revenue Code of 1986 
deposited in the Treasury for that fiscal year which are attributable 
to SAFE Account and SAFER Annuity investments under part B of the 
Social Security Act.
    (b) Determination of Recapture Percentage.--In determining the 
recapture percentage under subsection (a) for fiscal years 2001 and 
2002, the Secretary of the Treasury shall make the following 
assumptions concerning the total amount of taxable capital in the 
United States represented by the total assets held by SAFE Accounts and 
SAFER Annuities established under part B of the Social Security Act:
            (1) 80 percent of such total assets are a net addition to 
        national investments.
            (2) Of the amount described in paragraph (1), 90 percent 
        will be invested domestically and subject to Federal taxation.
            (3) Of the amount described in paragraph (2), 95 percent 
        will be subject to Federal corporate income tax.
            (4) The amount described in paragraph (3) is subject to the 
        statutory tax rate of 35 percent, creating an effective 
        corporate income tax rate of 23.9 percent on the earnings of 
        such assets.

Subtitle C--Amendments to Balanced Budget and Emergency Deficit Control 
                              Act of 1985

SEC. 421. DEDICATION OF BUDGET SURPLUSES TO SAVING SOCIAL SECURITY.

    (a) In General.--In the case of fiscal years beginning after 
September 30, 2002, from the surplus in the total budget of the United 
States Government or from that portion of Federal revenues directly 
attributable to the surplus income of the Federal Old-Age and Survivors 
Insurance Trust Fund and the Federal Disability Insurance Trust Fund 
established under section 201 of the Social Security Act (42 U.S.C. 
401), the Secretary of the Treasury shall reimburse each quarter the 
Federal Old-Age and Survivors Insurance Trust Fund in an amount equal 
to the amounts transferred to SAFE Accounts under part B of such Act 
for that quarter.
    (b) Additional Fiscal Restraint To Save Social Security.--
            (1) Amendment to discretionary spending limits to provide 
        an overall cap for fiscal years 2003 through 2009.--Section 
        251(c) of the Balanced Budget and Emergency Deficit Control Act 
        of 1985 is amended (2 U.S.C. 901(c))--
                    (A) in paragraph (6), by striking ``and'' after the 
                semicolon;
                    (B) in paragraph (7)--
                            (i) by redesignating subparagraphs (A) and 
                        (B) as subparagraphs (B) and (C), respectively,
                            (ii) by striking the period at the end of 
                        subparagraph (C) (as so redesignated) and 
                        inserting ``; and'', and
                            (iii) by inserting before subparagraph (B) 
                        (as so redesignated) the following:
                    ``(A) for the discretionary category: 
                $____________________ in new budget authority and 
                $____________________ in outlays, reduced by the total 
                amount of the outlays in the categories described in 
                subparagraphs (B) and (C); ''; and
                    (C) by adding at the end the following:
            ``(8) with respect to each fiscal year beginning with 
        fiscal year 2004 and ending with fiscal year 2009, for the 
        discretionary category: $____________________ in new budget 
        authority and $____________________ in outlays;''.
            (2) Extension of budget enforcement act of 1997 enforcement 
        provisions through fiscal year 2009.--
                    (A) Amendments to the balanced budget and emergency 
                deficit control act of 1985.--The Balanced Budget and 
                Emergency Deficit Control Act of 1985 is amended--
                            (i) in section 250(c) (2 U.S.C. 900(c)), 
                        add at the end the following:
            ``(20) The term `maximum deficit amount' means zero for 
        fiscal year 2003 and thereafter.'';
                            (ii) in section 251(b)(2) (2 U.S.C. 
                        901(b)(2)), in the matter before subparagraph 
                        (A), by striking ``2002'' and inserting 
                        ``2009'';
                            (iii) in section 254(c)(2) (2 U.S.C. 
                        904(c)(2)), by striking ``2002'' and inserting 
                        ``2009'';
                            (iv) in section 254(f)(2)(A) (2 U.S.C. 
                        904(f)(2)(A)), by striking ``2002'' and 
                        inserting ``2009''; and
                            (v) in section 275(b), by striking ``2002'' 
                        and inserting ``2009''.
                    (B) Congressional budget act of 1974.--Section 
                904(e) of the Congressional Budget Act of 1974 (2 
                U.S.C. 621 note) is amended by striking ``2002'' and 
                inserting ``2009''.

                  Subtitle D--Allocation of Transfers

SEC. 431. ALLOCATION OF TRANSFERS.

    The Secretary of the Treasury, in his or her capacity as the 
Managing Trustee of the Federal Old-Age and Survivors Insurance Trust 
Fund and the Federal Disability Insurance Trust Fund established under 
section 201 of the Social Security Act (42 U.S.C. 401), shall determine 
the allocation of the transfers described in sections 401, 411(a), and 
421(a) between such Trust Funds.
                                 <all>