109 HR 1123 IH: Preserving Social Security Act of 2005 U.S. House of Representatives 2005-03-03 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I 109th CONGRESS 1st Session H. R. 1123 IN THE HOUSE OF REPRESENTATIVES March 3, 2005 Mr. Sabo introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend title II of the Social Security Act to establish an effective real annual rate of interest at 4.7 percent for special obligations issued to the Social Security trust funds.

1.

Short title

This Act may be cited as the Preserving Social Security Act of 2005.

2.

Interest borne by, and increases in par value of, special obligations issued to the Social Security Trust Funds

Section 201(d) of the Social Security Act (42 U.S.C. 401(d)) is amended— (1)by inserting (1) after (d); (2)by striking the fifth sentence and inserting the following new sentences: Such obligations issued for purchase by the Trust Funds shall have maturities fixed with due regard for the needs of the Trust Funds and shall bear interest at an effective annual rate equal to 4.7 percent, which shall be paid to the Trust Funds semiannually. On June 30 and December 31 of each calendar year, and (with respect to each obligation) on its date of maturity (or date of redemption, if prior to maturity), the Managing Trustee shall adjust (subject to paragraph (2)) the par value of each obligation then held by either of the Trust Funds and issued for purchase by such Trust Fund so as to equal the product derived by multiplying the current par value as of immediately before the applicable date by the CPI adjustment factor (defined in paragraph (3)(A)) for the obligation in connection with the month in which the applicable date occurs (rounded, if not a multiple of $0.01, to the nearest multiple of $0.01).; and (3)by adding at the end the following new paragraphs: (2) (A)In any case in which the number of days in the actual adjustment period (defined in subparagraph (B)(i)) for an obligation differs from the number of days in the computation period (defined in subparagraph (B)(ii)) for the obligation, the amount by which the par value of an obligation is adjusted pursuant to paragraph (1) shall be an amount which bears the same ratio to the amount that would otherwise apply under paragraph (1) as the number of days in the actual adjustment period bears to the number of days in the computation period. (B)For purposes of subparagraph (A)— (i)The term actual adjustment period for an obligation means the period beginning with— (I)the date following the date of the last previous adjustment in the par value of the obligation under paragraph (1), or (II)if no such adjustment in the par value of the obligation has occurred, the date of the issuance of the obligation,and ending with the date of the increase in par value to be determined under paragraph (1). (ii)The term computation period for an obligation means the period beginning with the date following the adjustment reference month (defined in paragraph (3)(C)) for the obligation and ending with the last date of the adjustment computation month (defined in paragraph (3)(B)) for the obligation. (3)For purposes of this subsection— (A)The term CPI adjustment factor, for an obligation in connection with any calendar month, means the ratio (expressed as a percentage) of— (i)the Consumer Price Index for the adjustment computation month for the obligation in connection with such calendar month to (ii)the Consumer Price Index for the adjustment reference month for the obligation in connection with such calendar month. (B)The term adjustment computation month for an obligation means, in connection with a month in which occurs the date of an adjustment in par value of the obligation to be determined under paragraph (1), the first of the 2 preceding calendar months. (C)The term adjustment reference month for an obligation means, in connection with a month in which occurs the date of an adjustment in par value of the obligation to be determined under paragraph (1)— (i)the last adjustment computation month with respect to which an adjustment in par value of the obligation under paragraph (1) has occurred, or (ii)if no such adjustment in the par value of the obligation has occurred, the first of the 2 months preceding the month in which such obligation was issued. (D)The term Consumer Price Index means the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI–W), issued by the Bureau of Labor Statistics of the Department of Labor..

3.

Effective date and transitional rule

(a)

Effective date

The amendments made by this Act shall apply with respect to special obligations issued on or after January 1, 2006. (b)

Transitional rule

On January 1, 2006, the Secretary of the Treasury shall redeem all obligations which are held on such date by the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund and which were issued for purchase by the Trust Funds pursuant to section 201(d) of the Social Security Act. Upon the redemption of each such obligation, such Secretary shall immediately issue an obligation of the type authorized to be issued for purchase by the Trust Funds under such section 201(d) (as amended by this Act) with an initial par value equal to the par value of the redeemed obligation and with a date of maturity which is the same as the date of maturity of the redeemed obligation.