Short title

This Act may be cited as the

Social Security Surplus Protection Act of 2005

Investment of the Annual Surplus of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund

(a)

In general

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 Such investments may be made only and inserting the following: Except as provided in paragraph (2), such investments may be made only; (3)by striking the last sentence; and (4)by adding at the end the following new paragraph:

(2) (A)The Managing Trustee shall, in accordance with policies prescribed in regulations of the Social Security Surplus Investment Board prescribed under subsection (o), ensure that amounts in each of the Trust Funds equivalent to the annual surplus for such Trust Fund for any calendar year are made available to the Board on a timely basis for purposes of investment in accordance with subsection (o). Such amounts shall be made available in at least monthly installments and shall be determined on the basis of estimates, by the Commissioner and certified to the Secretary of the Treasury, and proper adjustments shall be made in amounts subsequently made available to the extent prior estimates were in excess of or were less than actual amounts. (B)For purposes of this paragraph, the annual surplus for either of the Trust Funds for a calendar year is the excess (if any) of— (i)the sum of— (I)in the case of the Federal Old-Age and Survivors Insurance Trust Fund, the amounts appropriated to such Trust Fund under paragraphs (3) and (4) of subsection (a) and attributable to such calendar year, (II)in the case of the Federal Disability Insurance Trust Fund, the amounts appropriated to such Trust Fund under paragraphs (1) and (2) of subsection (b) and attributable to such calendar year, and (III)in either case, the amount appropriated to such Trust Fund under section 121(e) of the Social Security Amendments of 1983 and attributable to such calendar year, and any amounts otherwise credited to or deposited in such Trust Fund under this title attributable to such calendar year, over (ii)the amount estimated by the Commissioner to be the total amount to be paid from such Trust Fund during such calendar year for all purposes authorized by section 201 (other than payments of interest on, and repayments of, loans from the Federal Hospital Insurance Trust Fund under section 201(l)(1), and excluding any transfer payments between the Trust Funds and reducing the amount of any transfer from either of the Trust Funds to the Railroad Retirement Account by the amount of any transfer into such Trust Fund from such Account). (C)Amounts of either Trust Fund made available to the Social Security Surplus Investment Board under subparagraph (A)(ii) for purposes of investment under subsection (o), and any proceeds from such investment, shall continue to be treated as assets of such Trust Fund.

(b)

Effective date

The amendments made by this section shall apply with respect to annual surpluses for calendar years beginning on or after January 1, 2006.

Social Security Surplus Investment Board

Section 201 of the Social Security Act (42 U.S.C. 401) is amended by adding at the end the following new subsection:

(o)

Social Security Surplus Investment Board

(1)

Establishment of the Board

(A)

Establishment

There is established in the Executive branch of the Government a Social Security Surplus Investment Board. (B)

Number and appointment

The Board shall be composed of 7 members as follows: (i)3 members appointed by the President, of whom 1 shall be designated by the President as Chairman; and (ii)4 members appointed by the President, of whom— (I)2 shall be appointed by the President after taking into consideration the recommendations made by the Speaker of the House of Representatives in consultation with the minority leader of the House of Representatives; and (II)2 shall be appointed by the President after taking into consideration the recommendations made by the majority leader of the Senate in consultation with the minority leader of the Senate. (C)

Membership requirements

Members of the Board shall have substantial experience, training, and expertise in the management of financial investments and pension benefit plans. No more than 4 of the members of the Board may be of the same political party. (D)

Terms

Each member of the Board shall be appointed for a term of 4 years, except that of the members first appointed— (i)the Chairman shall be appointed for a term of 4 years; (ii)the remaining members appointed under subsection (B)(i) shall be appointed for terms of 3 years; (iii)one of the members appointed under subsection (B)(ii)(I) shall be appointed for a term of 4 years and the other for a term of two years; and (iv)one of the members appointed under subsection (B)(ii)(II) shall be appointed for a term of 4 years and the other for a term of 2 years. (E)

Vacancies

A vacancy on the Board shall be filled in the manner in which the original appointment was made and shall be subject to any conditions which applied with respect to the original appointment. An individual chosen to fill a vacancy shall be appointed for the unexpired term of the member replaced. The term of any member shall not expire before the date on which the member's successor takes office. (2)

Powers and duties of the Board

(A)

In general

The Board shall have powers and duties solely as provided in this subsection. The Board shall by regulation provide for investment of amounts in the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund made available to the Board under subsection (d)(2)(A)(ii) for purposes of investment, including policies to be followed in allocating investments among different forms of investment and meeting the requirements of subparagraph (F) of this paragraph and of paragraph (4). (B)

Budgetary requirements

The Board shall prepare and submit to the President and to the appropriate committees of Congress an annual budget of the expenses and other items relating to the Board which shall be included as a separate item in the budget required to be transmitted to the Congress under section 1105 of title 31, United States Code. The Board shall provide for low administrative costs such that, to the extent practicable, overall administrative costs of the Board in connection with investments made pursuant to subparagraph (A) do not exceed 30 basis points per year in relation to assets under management by the Board. (C)

Additional authorities of the Board

The Board may— (i)adopt, alter, and use a seal; (ii)establish policies under this subsection with which the Commissioner shall comply; and (iii)appoint and remove the Executive Director, as provided in paragraph (2). (D)

Meetings of the Board

The Board shall meet at the call of the Chairman or upon the request of a quorum of the Board. The Board shall perform the functions and exercise the powers of the Board on a majority vote of a quorum of the Board. Four members of the Board shall constitute a quorum for the transaction of business. (E)

Compensation of Board members

(i)

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. Any member who is such an officer or employee shall not suffer any loss of pay or deduction from annual leave on the basis of any time used by such member in performing such a function. (ii)

Travel, per diem, and 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. (F)

Standard for Board’s discharge of responsibilities

The members of the Board shall discharge their responsibilities solely in the interest of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund. (G)

Annual report

The Board shall submit an annual report to the President, to each House of the Congress, and to the Board of Trustees of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund regarding the exercise of its duties under this subsection. (H)

Public accountant

(i)

Definition

For purposes of this subparagraph, the term qualified public accountant shall have the same meaning as provided in section 103(a)(3)(D) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1023(a)(3)(D)). (ii)

Engagement

The Executive Director, in consultation with the Board, shall annually engage an independent qualified public accountant, who shall conduct an examination of all records maintained in the administration of the requirements of this subsection that the public accountant considers necessary. (iii)

Duties

The public accountant conducting an examination under clause (ii) shall determine whether the records referred to in such clause have been maintained in conformity with generally accepted accounting principles. The public accountant shall transmit to the Board a report on his examination. (iv)

Reliance on certified actuarial matters

In making a determination under clause (iii), a public accountant may rely on the correctness of any actuarial matter certified by an enrolled actuary if the public accountant states his reliance in the report transmitted to the Board under such clause. (3)

Executive Director

(A)

Appointment and removal

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. The Executive Director shall have substantial experience, training, and expertise in the management of financial investments and pension benefit plans. The Board may, with the concurrence of 4 members of the Board, remove the Executive Director from office for good cause shown. (B)

Powers and duties of Executive Director

The Executive Director shall— (i)carry out the policies established by the Board, (ii)administer the provisions of this subsection in accordance with the policies of the Board, and (iii)meet from time to time with the Board upon request of the Board. (C)

Administrative authorities of Executive Director

The Executive Director may— (i)appoint such personnel as may be necessary to carry out the provisions of this subsection, (ii)subject to approval by the Board, procure the services of experts and consultants under section 3109 of title 5, United States Code, (iii)secure directly from any agency or instrumentality of the Federal Government on a reimbursable basis any information which, in the judgment of the Executive Director, is necessary to carry out the provisions of this subsection and the policies of the Board, and which shall be provided by such agency or instrumentality upon the request of the Executive Director, (iv)pay the compensation, per diem, and travel expenses of individuals appointed under clauses (i), (ii), and (v) of this subparagraph, subject to such limits as may be established by the Board, (v)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, and (vi)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. (4)

Fiduciary responsibilities

(A)

In general

Rules similar to the provisions of section 8477 of title 5, United States Code (relating to fiduciary responsibilities; liability and penalties) shall apply in connection assets placed under the control of the Board for purposes of investment, in accordance with regulations which shall be issued by the Board. The Board shall issue regulations with respect to the investigative authority of appropriate Federal agencies in cases involving such assets. (B)

Exculpatory provisions voided

Any provision in an agreement or instrument which purports to relieve a fiduciary from responsibility or liability for any responsibility, obligation, or duty under this subsection shall be void. (5)

Civil actions by Board

If any person fails to meet any requirement of this subsection or regulations prescribed thereunder or of any contract entered into under this subsection, the Board 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, without regard to the amount in controversy, for appropriate relief to redress the violation or enforce the requirement, and process in such an action may be served in any district. (6)

Authorization of appropriations

There are authorized to be appropriated to the Board, for fiscal years beginning on or after October 1, 2005, such sums as are necessary to carry out the Board’s duties under this subsection.

Protection of social security surpluses

(a)

Protection of social security surpluses

Title III of the Congressional Budget Act of 1974 is amended by adding at the end the following new section:

316.

Safeguarding social security surpluses

(a)

In general

(1)

Concurrent resolutions on the budget

It shall not be in order in the House of Representatives or the Senate to consider any concurrent resolution on the budget, or an amendment thereto or conference report thereon, that would set forth a deficit for any fiscal year for which there is a projected net surplus in the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund. (2)

Spending and tax legislation

It shall not be in order in the House of Representatives or the Senate to consider any bill, joint resolution, amendment, motion, or conference report if— (A)the enactment of that bill or resolution, as reported; (B)the adoption and enactment of that amendment; or (C)the enactment of that bill or resolution in the form recommended in that conference report,

would cause a deficit for any fiscal year for which there is a projected net surplus in the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund.

(b)

Enforcement

(1)

Budgetary levels with respect to concurrent resolutions on the budget

For purposes of enforcing any point of order under subsection (a)(1), the extent to which there is a deficit for any fiscal year shall be determined on the basis of budgetary aggregates set forth in the later of the concurrent resolution on the budget, as reported, or in the conference report on the concurrent resolution on the budget, adjusted to the maximum extent allowable under all procedures that allow budgetary aggregates to be adjusted for legislation that would cause a decrease in any surplus or an increase in any deficit for any fiscal year covered by the concurrent resolution on the budget (other than procedures described in paragraph (2)(A)(ii)). (2)

Current levels with respect to spending and tax legislation

(A)

In general

For purposes of enforcing subsection (a)(2), the extent to which there is a deficit for any fiscal year shall be— (i)calculated using the following assumptions— (I)direct spending and revenue levels at the baseline levels underlying the most recently agreed to concurrent resolution on the budget; and (II)for the budget year, discretionary spending levels at current law levels and, for outyears, discretionary spending levels at the baseline levels underlying the most recently agreed to concurrent resolution on the budget; and (ii)adjusted for changes in the surplus or deficit levels set forth in the most recently agreed to concurrent resolution on the budget pursuant to procedures in such resolution that authorize adjustments in budgetary aggregates for updated economic and technical assumptions in the mid-session report of the Director of the Congressional Budget Office.

Such revisions shall be included in the first current level report on the congressional budget submitted for publication in the Congressional Record after the release of such mid-session report.

(c)

Waiver and appeal

Subsection (a) may be waived or suspended in the Senate only by an affirmative vote of three-fifths of the Members, duly chosen and sworn. An affirmative vote of three-fifths of the Members of the Senate, duly chosen and sworn, shall be required in the Senate to sustain an appeal of the ruling of the Chair on a point of order raised under this section.

(b)

Conforming amendment

The item relating to section 316 in the table of contents set forth in section 1(b) of the Congressional Budget and Impoundment Control Act of 1974 is amended to read as follows:

Sec. 316. Safeguarding social security surpluses