[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 750 Introduced in House (IH)]






109th CONGRESS
  1st Session
                                H. R. 750

To amend the Social Security Act and the Internal Revenue Code of 1986 
  to preserve and strengthen the Social Security program through the 
 creation of personal Social Security guarantee accounts ensuring full 
benefits for all workers and their families, restoring long-term Social 
Security solvency, to make certain benefit improvements, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 10, 2005

    Mr. Shaw (for himself, Mr. Lewis of Kentucky, and Mr. Norwood) 
 introduced the following bill; which was referred to the Committee on 
Ways and Means, and in addition to the Committees on Rules and Budget, 
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 the Social Security Act and the Internal Revenue Code of 1986 
  to preserve and strengthen the Social Security program through the 
 creation of personal Social Security guarantee accounts ensuring full 
benefits for all workers and their families, restoring long-term Social 
Security solvency, to make certain benefit improvements, 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 
Guarantee Plus Act of 2005''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings and statement of purpose.
               TITLE I--SOCIAL SECURITY GUARANTEE PROGRAM

Sec. 101. Social Security guarantee refundable credit.
Sec. 102. Establishment of the Social Security Guarantee Program.
              ``Part B--Social Security Guarantee Program

        ``Sec. 251. Definitions.
        ``Sec. 252. Establishment of Program.
        ``Sec. 253. Social Security guarantee accounts.
        ``Sec. 254. Investment of accounts.
        ``Sec. 255. Determination of monthly annuity amounts and use in 
                            determining account distribution 
                            supplements.
        ``Sec. 256. Disposition of account assets.
        ``Sec. 257. Administration of the Program.
Sec. 103. Benefit increases.
Sec. 104. Tax treatment.
Sec. 105. Annual account Statements.
Sec. 106. Protection of social security surpluses.
                       TITLE II--BENEFIT UPDATES

Sec. 201. Elimination of the Social Security earnings test for 
                            individuals who have attained age 62.
Sec. 202. Increase in widow's and widower's insurance benefits.
Sec. 203. Benefits for disabled widows and widowers without regard to 
                            age.
Sec. 204. Repeal of 7-YEAR restriction on eligibility for widow's and 
                            widower's insurance benefits based on 
                            disability.
Sec. 205. Exemption from two-year waiting period for divorced spouse's 
                            benefits upon other spouse's remarriage.
Sec. 206. Increase in amount of wages and self-employment income 
                            credited to years taken into account in 
                            determining average indexed monthly 
                            earnings for beneficiaries precluded from 
                            remunerative work by need to provide child 
                            care.
Sec. 207. Government pension offset reduced from two-thirds to one-
                            third of the Government pension.

SEC. 2. FINDINGS AND STATEMENT OF PURPOSE.

    (a) Findings.--The Congress finds as follows:
            (1) The Social Security program provides essential income 
        security for about 48 million Americans of all ages through its 
        retirement, disability, and survivor benefits.
            (2) Social Security's benefit structure is designed to help 
        lower-wage workers, and its family benefits are of particular 
        importance to women.
            (3) The Board of Trustees of the Social Security trust 
        funds project that, because people are living longer, families 
        are having fewer children, and the baby boom generation is 
        approaching retirement, the Social Security program's benefit 
        costs will exceed its tax revenues beginning in 2018. By 2042, 
        the Social Security trust funds will be depleted and the 
        program will be able to honor only 73 percent of benefit 
        commitments, and even less thereafter.
            (4) Each payday, American workers send their hard-earned 
        payroll taxes to Social Security and in return are promised 
        protection for themselves and their families upon retirement, 
        disability, or death. That commitment must be kept.
            (5) Reducing benefits will result in more seniors and 
        individuals with disabilities living in poverty.
            (6) Workers who are more in need of early retirement, such 
        as police officers, firefighters, and manual laborers, would be 
        especially harmed by increases in the age of eligibility for 
        Social Security benefits.
            (7) Inasmuch as payroll taxes already constitute the single 
        largest tax burden for most American families, further tax 
        increases would contribute to erosion in public support for 
        Social Security and would not result in sustainable financing 
        for the long term.
            (8) Allowing the Federal Government to invest workers' 
        payroll taxes in private financial assets risks political 
        interference in investment decisions and may reduce economic 
        efficiency.
            (9) Workers' ability to save and invest for their own 
        economic security in retirement will continue to be 
        particularly important, especially for younger workers.
            (10) The creation of Social Security guarantee accounts as 
        provided for in this Act is a critical goal in light of Social 
        Security's financial challenges, the options available to 
        address these challenges, and the Nation's interest in 
        preserving and strengthening Social Security for the next 75 
        years and beyond.
    (b) Statement of Purpose.--The purpose of this Act is to preserve 
and strengthen the Social Security program through the creation of 
Social Security guarantee accounts that will--
            (1) ensure the payment of Social Security benefits promised 
        under current law, or greater benefits, to all eligible workers 
        and their families;
            (2) provide for the long-run sustainability of the Social 
        Security program; and
            (3) provide personal account assets to be used exclusively 
        for the financial security of the account holder and his or her 
        family that this and future Congresses cannot redirect for any 
        other purpose.

               TITLE I--SOCIAL SECURITY GUARANTEE PROGRAM

SEC. 101. SOCIAL SECURITY GUARANTEE REFUNDABLE CREDIT.

    (a) In General.--Chapter 25 of the Internal Revenue Code of 1986 
(relating to general provisions relating to employment taxes) is 
amended by adding at the end the following new section:

``SEC. 3511. SOCIAL SECURITY GUARANTEE REFUNDABLE CREDIT.

    ``(a) In General.--The Social Security guarantee account 
established under section 253 of the Social Security Act for each 
individual who has filed an election under section 253(b) of such Act 
shall receive for each calendar year following such election, during 
which such individual has earned wages or to which self-employment 
income of such individual is credited, a payment equal to the credit 
amount determined under subsection (b) for the individual for such 
calendar year.
    ``(b) Credit Amount.--
            ``(1) In general.--For purposes of subsection (a), the 
        credit amount determined under this subsection for an 
        individual for a calendar year is an amount equal to the lesser 
        of--
                    ``(A) 4 percent of the sum of--
                            ``(i) wages (as defined in section 3121(a)) 
                        received by such individual during such year on 
                        which tax is imposed by section 3101, and
                            ``(ii) self-employment income (as defined 
                        in 1402(b)) of such individual for the taxable 
                        year of such individual ending in such calendar 
                        year on which tax is imposed by section 1401, 
                        or
                    ``(B) $1,000 (in the case of the calendar year 
                ending after the date of the enactment of the Social 
                Security Guarantee Plus Act of 2005) and the amount 
                determined under paragraph (2) for the calendar year 
                (in the case of subsequent calendar years).
            ``(2) Wage-based adjustments.--The Secretary shall, on or 
        before November 1 of the first calendar year ending after the 
        date of the enactment of the Social Security Guarantee Plus Act 
        of 2005 and of every calendar year thereafter, determine and 
        publish in the Federal Register the dollar amount under 
        paragraph (1)(B) for the succeeding calendar year. Such amount 
        shall be the larger of--
                    ``(A) the amount in effect in the calendar year in 
                which the determination under this paragraph is made, 
                or
                    ``(B) the product of $1,000 and the ratio of the 
                national average wage index (as defined in section 
                209(k)(1) of the Social Security Act) for the calendar 
                year before the year in which the determination under 
                this paragraph is made to the national average wage 
                index (as so defined) for the first of the 2 calendar 
                years preceding the calendar year ending after the date 
                of the enactment of the Social Security Guarantee Plus 
                Act of 2005,
        with such product, if not a multiple of $10, being rounded to 
        the next higher multiple of $10 where such amount is a multiple 
        of $5 but not of $10 and to the nearest multiple of $10 in any 
        other case.
    ``(c) Special Rules.--
            ``(1) Agreements by american employers of foreign 
        affiliates.--Any amounts paid pursuant to an agreement under 
        section 3121(l) (relating to agreements entered into by 
        American employers with respect to foreign affiliates) which 
        are equivalent to the taxes referred to in subsection (b)(1)(A) 
        shall be treated as taxes referred to in such subsection.
            ``(2) Coordination with special refund of social security 
        taxes.--For purposes of subsection (b)(1)(A), tax imposed by 
        section 3101 shall not include any taxes to the extent the 
        individual is entitled to a special refund of such taxes under 
        section 6413(c).
    ``(d) Payment.--Notwithstanding any other provision of this title, 
the payment under subsection (a) shall be paid only as provided in 
section 253 of the Social Security Act.''.
    (b) Conforming Amendment.--The table of sections for chapter 25 of 
such Code is amended by adding at the end the following new item:

``Sec. 3511. Social Security guarantee refundable credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to remuneration received, and net earnings for self-employment 
for services performed, in calendar years ending after the date of the 
enactment of this Act.

SEC. 102. ESTABLISHMENT OF THE SOCIAL SECURITY GUARANTEE PROGRAM.

    (a) In General.--Title II of the Social Security Act is amended--
            (1) by inserting before section 201 the following:

                    ``Part A--Insurance Benefits'';

            (2) by adding at the end of such title the following new 
        part:

              ``Part B--Social Security Guarantee Program

                             ``definitions

    ``Sec. 251. For purposes of this part--
            ``(1) Covered individual.--The term `covered individual' 
        means an individual who has filed an election under section 
        253(b).
            ``(2) Account assets.--The term `account assets' means, 
        with respect to a Social Security guarantee account, the total 
        amount transferred to such account, increased by earnings 
        credited under this part and reduced by losses and 
        administrative expenses under this part.
            ``(3) Certified account manager.--The term `certified 
        account manager' means a person who is certified under section 
        257(b).
            ``(4) Board.--The term `Board' means the Social Security 
        Guarantee Board established under section 257(a).
            ``(5) Commissioner.--The term `Commissioner' means the 
        Commissioner of Social Security.
            ``(6) Program.--The term `Program' means the Social 
        Security Guarantee Program established under this part.
            ``(7) Covered monthly insurance benefit.--The term `covered 
        monthly insurance benefit' means a monthly insurance benefit 
        under section 202 or 223, other than a child's insurance 
        benefit under section 202(d) of a child who has not attained 
        age 18 (or who is a full-time elementary or secondary school 
        student (as defined in section 202(d)(7)(A)) and has not 
        attained age 19).

                       ``establishment of program

    ``Sec. 252. There is hereby established a Social Security Guarantee 
Program. The Program shall be governed by regulations which shall be 
prescribed by the Social Security Guarantee Board. The Board, the 
Executive Director appointed by the Board, the Commissioner, and the 
Secretary of the Treasury shall consult with each other in issuing 
regulations relating to their respective duties under this part. Such 
regulations shall provide for appropriate exchange of information to 
assist them in performing their duties under this part.

                  ``social security guarantee accounts

    ``Sec. 253. (a) Establishment of Accounts.--Under regulations which 
shall be prescribed by the Board in consultation with the Secretary of 
the Treasury--
            ``(1) the Board shall establish a Social Security guarantee 
        account for each covered individual (for whom a Social Security 
        guarantee account has not otherwise been established under this 
        part) upon initial receipt of a transfer under subsection (c) 
        with respect to such covered individual, and
            ``(2) in any case described in paragraph (2) of section 
        256(d), the Board shall establish a Social Security guarantee 
        account for the divorced spouse referred to in such paragraph 
        (2).
    ``(b) Election of Status as Covered Individual.--
            ``(1) In general.--Any individual who has attained age 18 
        and has been assigned a social security account number under 
        section 205(c) may elect to be a covered individual under this 
        part upon filing an election under this subsection in a form 
        and manner which shall be prescribed in regulations of the 
        Commissioner of Social Security, in consultation with the 
        Board. Such regulations shall provide for the filing of such 
        elections during regularly scheduled intervals. Such an 
        election shall be irrevocable and shall be effective with 
        respect to wages earned, and self-employment income derived, on 
        or after January 1 following the date of such filing.
            ``(2) Requirements.--An election by an individual under 
        this subsection is an election, filed with the Commissioner, in 
        such form and manner as shall be prescribed in regulations of 
        the Commissioner, consisting of a written and signed 
        declaration of such individual's intention to become a covered 
        individual under this part. The Commissioner shall provide for 
        immediate notification to the Board and the Executive Director 
        of such election.
    ``(c) Transfers of Social Security Guarantee Refundable Credits.--
            ``(1) In general.--Under regulations which shall be 
        prescribed by the Secretary of the Treasury in consultation 
        with the Board, as soon as practicable during the 1-year period 
        after each calendar year, while minimizing capital market 
        distortions, the Secretary of the Treasury shall transfer to 
        each covered individual's Social Security guarantee account, 
        from amounts otherwise available in the general fund of the 
        Treasury, an amount equal to the sum of--
                    ``(A) the amount payable to the covered 
                individual's Social Security guarantee account under 
                section 3511 of the Internal Revenue Code of 1986 
                (relating to the Social Security guarantee refundable 
                credit) with respect to wages received during such 
                calendar year by the covered individual and self-
                employment income derived by the covered individual 
                during the such individual's taxable year ending in 
                such calendar year, and
                    ``(B) deemed interest on the amount determined 
                under subparagraph (A) for the period commencing with 
                July 1 of such calendar year and ending with the date 
                of the transfer, computed at a rate equal to the 
                average market yield (computed by the Managing Trustee 
                on the basis of market quotations as of the end of the 
                calendar month next preceding the date of the transfer) 
                on all marketable interest-bearing obligations of the 
                United States then forming a part of the public debt 
                which are not due or callable earlier than 4 years 
                after the end of such calendar month (rounding any 
                average market yield computed under this paragraph 
                which is not a multiple of \1/8\ of 1 percent to the 
                nearest multiple of \1/8\ of 1 percent).
            ``(2) Transition rule.--Notwithstanding paragraph (1), 
        amounts payable to Social Security guarantee accounts under 
        paragraph (1) with respect to the first calendar year described 
        in paragraph (1)(A) ending after the date of the enactment of 
        the Social Security Guarantee Plus Act of 2005 shall be paid by 
        the Secretary of the Treasury as soon as practicable after such 
        Secretary determines that the administrative mechanisms 
        necessary to provide for accurate and efficient payment of such 
        amounts have been established.
            ``(3) Availability of trust funds for transfers.--
                    ``(A) Recommendations by managing trustee.--As 
                determined appropriate from time to time by the 
                Managing Trustee of the Federal Old-Age and Survivors 
                Insurance Trust Fund and the Federal Disability 
                Insurance Trust Fund, the Managing Trustee shall 
                transmit to each House of the Congress the Managing 
                Trustee's recommendation that amounts to be transferred 
                to Social Security guarantee accounts under paragraph 
                (1) be transferred from such Trust Funds in lieu of the 
                general fund. Any such recommendation shall take effect 
                only upon ratification thereof by an Act of Congress.
                    ``(B) Determinations of availability.--The Managing 
                Trustee may not determine that any such transfer from 
                the Trust Funds is appropriate at any time unless the 
                Managing Trustee has determined that amounts in such 
                Trust Fund are available at such time for such 
                transfers. For purposes of this subparagraph, amounts 
                in either of the Trust Funds shall be considered to be 
                available for such transfers at any time only to the 
                extent that the balance in such Trust Fund at such time 
                exceeds the best estimate of the Managing Trustee of 
                the projected withdrawals otherwise required from such 
                Trust Fund during the next following 1-year period.
                    ``(C) Assumptions.--In making recommendations under 
                this paragraph, the Managing Trustee shall utilize the 
                intermediate actuarial assumptions utilized by the 
                Board of Trustees of the Trust Funds for its most 
                recent annual report issued under section 201(c).
                    ``(D) Report on use of social security surpluses.--
                The Managing Trustee shall annually prepare a report 
                consisting of--
                            ``(i) the Managing Trustee's determination 
                        of the extent to which amounts have been 
                        appropriated from the Trust Funds under this 
                        paragraph in connection with Social Security 
                        guarantee refundable credits under section 3511 
                        of such Code, and
                            ``(ii) the Managing Trustee's 
                        recommendations, based on the Managing 
                        Trustee's review of the financial status of 
                        such Trust Funds, with respect to whether or to 
                        what extent that portion of the taxes under 
                        chapters 2 and 21 of the Internal Revenue Code 
                        of 1986 to which surpluses in the Trust Funds 
                        may be attributed should be reduced or should 
                        be maintained so as to allow for continued 
                        appropriations from the Trust Funds under this 
                        paragraph in connection with such credits.
                The Board of Trustees of the Trust Funds shall include 
                such report in the Board's annual report to the 
                President and the Congress under section 201(c)(2).
    ``(d) Requirements for Accounts.--The following requirements shall 
be met with respect to each Social Security guarantee account:
            ``(1) Amounts transferred to the account consist solely of 
        amounts transferred pursuant to this part.
            ``(2) In accordance with section 254, the account assets 
        are held for purposes of investment under the Program by a 
        certified account manager designated by (or on behalf of) the 
        covered individual for whom such account is established under 
        the Program.
            ``(3) Disposition of the account assets is made solely in 
        accordance with section 256.
    ``(e) Accounting of Receipts and Disbursements Under the Program.--
The Board shall provide by regulation for an accounting system for 
purposes of this part--
            ``(1) which shall be maintained by or under the Executive 
        Director,
            ``(2) which shall provide for crediting of earnings from, 
        and debiting of losses and administrative expenses from, 
        amounts held in Social Security guarantee accounts, and
            ``(3) under which receipts and disbursements under the 
        Program which are attributable to each account are separately 
        accounted for with respect to such account.
    ``(f) Correction of Erroneous Transfers.--The Board, in 
consultation with the Commissioner, shall provide by regulation rules 
similar to paragraphs (4) through (7) and (9) of section 205(c) and 
section 205(g) with respect to the correction of erroneous or omitted 
transfers of amounts to Social Security guarantee accounts.

                        ``investment of accounts

    ``Sec. 254. (a) Designation of Certified Account Managers.--Under 
the Program, a certified account manager shall be designated by or on 
behalf of each covered individual to hold for investment under this 
section such individual's Social Security guarantee account assets.
    ``(b) Procedure for Designation.--Any designation made under 
subsection (a) shall be made in such form and manner as shall be 
prescribed in regulations prescribed by the Board, following the 
initiation of an educational campaign as provided in section 
257(a)(3)(C). Such regulations shall provide for annual selection 
periods during which covered individuals may make designations pursuant 
to subsection (a). Designations made pursuant to subsection (a) during 
any such period shall be irrevocable for the one-year period following 
such period, except that such regulations shall provide for such 
interim designations as may be necessitated by the decertification of a 
certified account manager. Such regulations shall provide for such 
designations made by the Board on behalf of a covered individual in any 
case in which a timely designation is not made by the covered 
individual.
    ``(c) Investment Guidelines.--
            ``(1) In general.--For purposes of investment of amounts 
        held in each Social Security guarantee account, the Board shall 
        provide by regulation for 3 investment options. Such options 
        shall consist of the 60/40 investment option, the 65/35 
        investment option, and the 70/30 investment option.
            ``(2) Alternative investment options.--
                    ``(A) The 60/40 investment option.--Under the 60/40 
                investment option, amounts are held in the Social 
                Security guarantee account so as to ensure, to the 
                maximum extent practicable, that, of the total balance 
                credited to the account and available for investment 
                (after allowing for administrative expenses)--
                            ``(i) 60 percent is invested in common 
                        stock as provided in paragraph (4), and
                            ``(ii) 40 percent is invested in fixed 
                        income securities as provided in paragraph (5).
                For such purpose, certified account managers shall 
                offer each account holder a choice of one or more 
                portfolios of each such type of investment. Except as 
                provided in an election under paragraph (3), amounts 
                held in a Social Security guarantee account shall be 
                invested under the 60/40 investment option.
                    ``(B) The 65/35 investment option.--Under the 65/35 
                investment option, amounts are held in the Social 
                Security guarantee account so as to ensure, to the 
                maximum extent practicable, that, of the total balance 
                credited to the account and available for investment 
                (after allowing for administrative expenses)--
                            ``(i) 65 percent is invested in common 
                        stock as provided in paragraph (4), and
                            ``(ii) 35 percent is invested in fixed 
                        income securities as provided in paragraph (5).
                For such purpose, certified account managers shall 
                offer each account holder a choice of one or more 
                portfolios of each such type of investment.
                    ``(C) The 70/30 investment option.--Under the 70/30 
                investment option, amounts are held in the Social 
                Security guarantee account so as to ensure, to the 
                maximum extent practicable, that, of the total balance 
                credited to the account and available for investment 
                (after allowing for administrative expenses)--
                            ``(i) 70 percent is invested in common 
                        stock as provided in paragraph (4), and
                            ``(ii) 30 percent is invested in fixed 
                        income securities as provided in paragraph (5).
                For such purpose, certified account managers shall 
                offer each account holder a choice of one or more 
                portfolios of each such type of investment.
            ``(3) Elections among investment options.--Pursuant to any 
        individual's written election filed in accordance with 
        regulations of the Board during annual open seasons specified 
        in such regulations, the certified account manager of the 
        individual's Social Security guarantee account shall, in 
        accordance with such regulations, provide for disinvestment and 
        reinvestment of amounts held in the account under any of the 
        investment options described in paragraph (2) so as to provide 
        for investment of amounts held in the account in any of the 
        other such investment options specified in such election.
            ``(4) Common stock index requirements.--The Board shall 
        establish by regulation standards which must be met by any 
        portfolio of common stock selected for investment of account 
        assets as provided in subparagraph (A)(i), (B)(i), or (C)(i) of 
        paragraph (2), consistent with the requirement that such 
        portfolio replicate the performance of one or more common stock 
        indices comprised of common stock the aggregate market value of 
        which is, in each case, a reasonably broad representation of 
        publicly held companies whose shares are traded on the equity 
        markets.
            ``(5) Fixed income securities requirements.--The Board 
        shall establish by regulation standards which must be met by 
        fixed income securities selected for investment of account 
        assets as provided in subparagraph (A)(ii), (B)(ii), or (C)(ii) 
        of paragraph (2). Amounts invested in fixed income securities 
        by a certified account manager under the Program shall be held 
        in a portfolio which shall consist of a diverse range of high-
        grade corporate bonds.
    ``(d) Diversification Standards.--The Board shall specify by 
regulation standards governing investments under this section to ensure 
prudent diversification among the investments under the Program.

   ``determination of monthly annuity amounts and use in determining 
                    account distribution supplements

    ``Sec. 255. (a) Monthly Annuity Amounts.--
            ``(1) In general.--In accordance with regulations of the 
        Board meeting the requirements of this section, the 
        Commissioner shall determine a monthly annuity amount in 
        connection with such covered individual's Social Security 
        guarantee account, for each month--
                    ``(A) which commences after such individual becomes 
                a covered individual,
                    ``(B) for which such individual is entitled to a 
                covered monthly insurance benefit under part A, and
                    ``(C) which ends prior to or with--
                            ``(i) the date of the covered individual's 
                        death, or
                            ``(ii) if later, the date of the death of 
                        the covered individual's spouse (if any), 
                        except as provided in regulations prescribed by 
                        the Board pursuant to paragraph (5).
            ``(2) Amount.--The monthly annuity amount shall be equal to 
        the amount which would be the initial monthly payment under--
                    ``(A) if the covered individual is not married on 
                such date, an immediate single life annuity for the 
                covered individual, or
                    ``(B) if the covered individual is married on such 
                date, an immediate annuity for the joint lives of the 
                covered individual and the covered individual's spouse, 
                together with a survivor annuity to the one of them who 
                survives the other of them for the life of the survivor 
                payable in monthly installments equal to 66\2/3\ 
                percent of the monthly payment of the annuity that 
                would be payable if both spouses remained alive,
        purchased with the balance of the account (determined after 
        payment of the initial lump sum payment under section 256(c)).
            ``(3) Assumptions.--The assumptions under this subsection 
        include the probability of survival for persons born in the 
        same year as the covered individual (and the spouse, in the 
        case of a joint annuity), future projection of investment 
        earnings based on investment of the account assets in the 65/35 
        investment option under section 254(c)(2)(B), and expected 
        price inflation. Determinations under this subsection shall be 
        made in accordance with regulations which shall be prescribed 
        by the Board, otherwise using generally accepted actuarial 
        assumptions, except that no differentiation shall be made in 
        such assumptions on the basis of sex, race, health status, or 
        other characteristics other than age.
            ``(4) Adjustments based on additional social security 
        guarantee refundable credits.--The Board shall annually augment 
        the monthly annuity amount in connection with each Social 
        Security guarantee account by an additional monthly annuity 
        amount, determined under this subsection on the basis of any 
        additional transfer to the account of a Social Security 
        guarantee refundable credit for the year (plus deemed interest) 
        under section 253(c), after subtracting the amount of the 
        annual lump sum payment made from such account under section 
        256(c)(2).
            ``(5) Treatment of changes in marital status and benefit 
        eligibility after commencement of entitlement to benefits.--The 
        Board shall provide by regulation for recalculation or 
        adjustment of the monthly annuity amount determined under this 
        subsection in connection with any covered individual's Social 
        Security guarantee account so as to appropriately take into 
        account any entry into marriage or divorce or changes in 
        eligibility for benefits.
    ``(b) Amount of Account Distribution Supplement.--The Board shall 
determine for each month the amount of the monthly account distribution 
supplement (if any) in connection with a covered individual's Social 
Security guarantee account and shall certify such amount to the 
Commissioner so as to allow inclusion of such supplement in each 
covered monthly insurance benefit payment pursuant to section 202(z) or 
223(j). The amount of the supplement for each benefit shall be the 
excess (if any) of--
            ``(1) the sum of--
                    ``(A) the monthly annuity amount in connection with 
                such account, plus
                    ``(B) in the case of a covered individual surviving 
                a deceased spouse, a monthly amount which would be the 
                monthly equivalent of the survivor annuity described in 
                subsection (a)(2)(B) in connection with the Social 
                Security guarantee account of the deceased spouse, over
            ``(2) the amount of the benefit (as determined before 
        applying sections 202(z) and 223(j) and before applying any 
        reduction or deduction applicable under part A).

                    ``disposition of account assets

    ``Sec. 256. (a) In General.--Account assets with respect to covered 
individuals shall be distributed solely as provided in this section.
    ``(b) Account Manager Transfers to the Trust Funds.--
            ``(1) In general.--In accordance with a schedule which 
        shall be prescribed in regulations of the Board, each certified 
        account manager holding account assets shall make account 
        manager transfers to the Secretary of the Treasury. Such 
        Secretary shall immediately credit each such transfer to the 
        Federal Old-Age and Survivors Insurance Trust Fund or the 
        Federal Disability Insurance Trust Fund, according to an 
        appropriate distribution formula which shall be prescribed in 
        regulations of the Executive Director. The Executive Director 
        shall provide to the certified account manager timely 
        information necessary to carry out such account manager's 
        duties under this section.
            ``(2) Determination of amount of account manager 
        transfer.--The amount of each account manager transfer due from 
        a certified account manager for any period shall be an amount 
        equal to the sum of--
                    ``(A) the aggregate monthly annuity amount or 
                amounts determined under paragraph (3) for the month or 
                months ending during such period in connection with the 
                Social Security guarantee accounts under the management 
                of the certified account manager under the Program, and
                    ``(B) the aggregate monthly account remittance for 
                such period described in paragraph (4) in connection 
                with such accounts.
            ``(3) Aggregate monthly annuity amount.--The aggregate 
        monthly annuity amount for any month in connection with the 
        Social Security guarantee accounts under the management of any 
        certified account manager under the Program is equal to the sum 
        of all monthly annuity amounts in connection with such 
        accounts, determined under section 255.
            ``(4) Aggregate monthly account remittance.--The aggregate 
        monthly account remittance for any month in connection with the 
        Social Security guarantee accounts under the management of any 
        certified account manager under the Program is equal to the sum 
        of all the amounts required to be transferred during such month 
        from the certified account manager to the Secretary of the 
        Treasury for crediting to the Federal Old-Age and Survivors 
        Insurance Trust Fund or the Federal Disability Insurance Trust 
        Fund under subsection (e)(2) in connection with the deaths of 
        covered individuals for whom such accounts were established 
        under this part.
            ``(5) Withdrawals from account balances for purposes of 
        account manager transfers.--In advance of each account manager 
        transfer required under this subsection to be made by a 
        certified account manager managing one or more Social Security 
        guarantee accounts under the Program, the Commissioner shall 
        certify to the Executive Director and to such certified account 
        manager the monthly annuity amount in connection with each such 
        account for each month during the period for which such 
        transfer is to be made. At the time of such transfer, the 
        certified account manager may withdraw from the assets of each 
        such account the monthly annuity amount in connection with such 
        account taken into account in determining each of the aggregate 
        monthly annuity amounts included in the amount of the account 
        manager transfer. Such withdrawn assets shall be available to 
        the certified account manager solely for purposes of making 
        such account manager transfer.
    ``(c) Lump Sum Payments.--Upon initial entitlement of a covered 
individual to covered monthly insurance benefits under part A, such 
individual shall be entitled to--
            ``(1) an initial lump sum payment, from such individual's 
        Social Security guarantee account, equal to 5 percent of the 
        balance in such account, and
            ``(2) a lump sum payment in connection with each subsequent 
        transfer to such account (pursuant to section 253(c)) of such 
        individual's social security guarantee refundable credits for 
        years beginning after commencement of such initial entitlement, 
        payable as soon as practicable after the transfer, equal to 5 
        percent of the transferred amount (including deemed interest).
The Executive Director shall certify to the certified account manager 
managing such account the amount of each lump sum payment, and upon 
receipt of such certification, the certified account manager shall 
transfer such certified amount to the Secretary of the Treasury for 
subsequent transfer to the covered individual. Such certification shall 
also include such information as may be necessary to make each lump sum 
payment in a timely manner.
    ``(d) Splitting of Account Assets Upon Divorce After 1 Year of 
Marriage.--Upon the divorce of a covered individual for whom a Social 
Security guarantee account has been established under this part, from a 
spouse to whom the covered individual had been married for at least 1 
year--
            ``(1) if a Social Security guarantee account has been 
        established under this part for the divorced spouse of the 
        covered individual, the Board shall direct the appropriate 
        certified account manager to transfer--
                    ``(A) from the Social Security guarantee account 
                with the greater amount of accruals (including 
                earnings) during the time of the marriage,
                    ``(B) to the other such account,
        an amount equal to one-half of the difference between the 
        amounts of such accruals in such accounts, or
            ``(2) if a Social Security guarantee account has not been 
        established for the divorced spouse, the Board shall establish 
        a Social Security guarantee account for the divorced spouse, 
        and shall direct the appropriate certified account manager to 
        transfer--
                    ``(A) from the Social Security guarantee account of 
                the covered individual,
                    ``(B) to the Social Security guarantee account of 
                the divorced spouse,
        an amount equal to one-half of the amount of accruals 
        (including earnings) during the time of the marriage in the 
        Social Security guarantee account of the covered individual.
In the case of any transfer directed under this subsection, the 
Executive Director shall certify to the appropriate certified account 
manager the information necessary to make such transfer.
    ``(e) Closing of Account Upon the Death of the Covered 
Individual.--
            ``(1) Transfers upon death before entitlement.--Upon the 
        death of a covered individual before the individual has become 
        entitled to covered monthly insurance benefits, the Executive 
        Director shall close out the covered individual's Social 
        Security guarantee account. In closing out the account, the 
        Executive Director shall certify to the certified account 
        manager the amount of the account assets, and, upon receipt of 
        such certification, such certified account manager shall 
        transfer from such account an amount equal to such certified 
        amount to the Secretary of the Treasury for subsequent transfer 
        to the estate of such covered individual.
            ``(2) Transfers upon death after entitlement.--
                    ``(A) In general.--In any case in which the covered 
                individual dies after the individual has become 
                entitled to covered monthly insurance benefits, the 
                Executive Director shall, except as provided in 
                subparagraph (B), close out the covered individual's 
                Social Security guarantee account upon such covered 
                individual's death.
                    ``(B) Delayed closing in the case of surviving 
                spouse.--If the covered individual was married at the 
                time of the covered individual's death, the Executive 
                Director shall close out the covered individual's 
                Social Security guarantee account with the close, upon 
                the surviving spouse's death, of the period to which 
                the survivor annuity portion of the monthly annuity 
                amount in connection with such account is applicable 
                under section 255(a). The Board shall from time to time 
                propose to the Congress recommendations for legislative 
                changes necessary to provide for closing of the account 
                in a manner and time consistent with regulations 
                prescribed pursuant to section 255(a)(5).
                    ``(C) Certification and transfer to trust funds.--
                In closing out the account, the Executive Director 
                shall certify to the certified account manager holding 
                the covered individual's account assets the amount of 
                the account assets, and such certified account manager 
                shall transfer an amount equal to such certified amount 
                to the Secretary of the Treasury for crediting to the 
                Federal Old-Age and Survivors Insurance Trust Fund or 
                the Federal Disability Insurance Trust Fund, as 
                determined appropriate under regulations of the Board.
    ``(f) Closing of Account of Covered Individuals Who Are Ineligible 
for Benefits Upon Attaining Retirement Age.--In any case in which, as 
of the date on which a covered individual attains retirement age (as 
defined in section 216(l)), such individual is not eligible for a 
covered monthly insurance benefit, the Commissioner shall so certify to 
the Executive Director and, upon receipt of such certification, the 
Executive Director shall close out the covered individual's Social 
Security guarantee account. In closing out the account, the Executive 
Director shall certify to the certified account manager the amount of 
the account assets, and upon receipt of such certification from the 
Executive Director, the account manager shall transfer from such 
account an amount equal to such certified amount to the Secretary of 
the Treasury for subsequent transfer to the covered individual.
    ``(g) Administrative Expenses.--
            ``(1) In general.--Under regulations which shall be 
        prescribed by the Board, account assets are available for 
        payment of the reasonable administrative costs of the Program 
        (including reasonable administration fees charged by certified 
        account managers under the Program), but in no event to exceed 
        25 basis points per year of the assets under management.
            ``(2) Temporary authorization of appropriations for startup 
        administrative costs.--For any such administrative costs that 
        remain after applying paragraph (1) for each of the first five 
        fiscal years that end after the date of the enactment of this 
        part, there are authorized to be appropriated such sums as may 
        be necessary for each of such fiscal years.

                    ``administration of the program

    ``Sec. 257. (a) General Provisions.--
            ``(1) Establishment and duties of the social security 
        guarantee board.--
                    ``(A) Establishment.--There is established in the 
                Social Security Administration a Social Security 
                Guarantee Board.
                    ``(B) Membership.--The Board shall be composed of 6 
                members appointed by the Board of Trustees of the 
                Federal Old-Age and Survivors Insurance Trust Fund and 
                the Federal Disability Insurance Trust Fund. One member 
                shall serve as Chairman, as designated by the Board of 
                Trustees. Members of the Board shall have substantial 
                experience, training, and expertise in the area of 
                pension benefits, finance, investment, or insurance.
                    ``(C) Terms.--
                            ``(i) In general.--A member of the Board 
                        shall be appointed for a term of 9 years, 
                        subject only to removal by the Board of 
                        Trustees for cause, except that of the members 
                        first appointed--
                                    ``(I) two shall be appointed for a 
                                term of 3 years;
                                    ``(II) two shall be appointed for a 
                                term of 6 years; and
                                    ``(III) two shall be appointed for 
                                a term of 9 years.
                            ``(ii) 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.
                    ``(D) Powers and duties of the board.--
                            ``(i) In general.--The Board shall have 
                        powers and duties solely as provided in this 
                        part. The Board shall prescribe by regulation 
                        the terms of the Social Security Guarantee 
                        Program established under this part, including 
                        policies for investment under the Program of 
                        account assets, and policies for the 
                        certification and decertification of account 
                        managers under the Program, which shall include 
                        consideration of the appropriateness of the 
                        marketing materials and plans of such person.
                            ``(ii) 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 Program do not 
                        exceed 25 basis points in relation to assets 
                        under management under the Program.
                    ``(E) Additional authorities of the board.--The 
                Board may--
                            ``(i) adopt, alter, and use a seal;
                            ``(ii) establish policies with which the 
                        Commissioner shall comply under this part; and
                            ``(iii) appoint and remove the Executive 
                        Director, as provided in paragraph (2).
                    ``(F) Independence of certified account managers.--
                The policies of the Board may not require a certified 
                account manager to invest or to cause to be invested 
                any account assets in a specific asset or to dispose of 
                or cause to be disposed of any specific asset so held.
                    ``(G) 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.
                    ``(H) 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 I 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.
                    ``(I) Standard for board's discharge of 
                responsibilities.--The members of the Board shall 
                discharge their responsibilities solely in the interest 
                of covered individuals and the Program.
                    ``(J) 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 
                financial and operating condition of the Program.
                    ``(K) 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, on behalf of all individuals for whom a 
                        Social Security guarantee account is 
                        established under this part, an independent 
                        qualified public accountant, who shall conduct 
                        an examination of all records maintained in the 
                        administration of this part 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.
            ``(2) 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 
                        part in accordance with the policies of the 
                        Board,
                            ``(iii) in consultation with the Board, 
                        prescribe such regulations (other than 
                        regulations relating to fiduciary 
                        responsibilities) as may be necessary for the 
                        administration of this part, and
                            ``(iv) 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 
                        part,
                            ``(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 any 
                        information which, in the judgment of the 
                        Executive Director, is necessary to carry out 
                        the provisions of this part 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.
            ``(3) Role of the commissioner of social security.--The 
        Commissioner shall--
                    ``(A) prescribe such regulations (supplementary to 
                and consistent with the regulations prescribed by the 
                Board and the Executive Director) as may be necessary 
                for carrying out the duties of the Commissioner under 
                this part,
                    ``(B) meet from time to time with, and provide 
                information to, the Board upon request of the Board 
                regarding matters relating to the Social Security 
                Guarantee Program, and
                    ``(C) in consultation with the Board and utilizing 
                available Federal agencies and resources, develop a 
                campaign to educate workers about the Program.
    ``(b) Certification and Oversight of Account Managers.--
            ``(1) Certification by the board.--
                    ``(A) In general.--Any person that is a qualified 
                professional asset manager (as defined in section 
                8438(a)(8) of title 5, United States Code) may apply to 
                the Board (in such form and manner as shall be provided 
                by the Board by regulation) for certification under 
                this subsection as a certified account manager. In 
                making certification decisions, the Board shall 
                consider the applicant's general character and fitness, 
                financial history and future earnings prospects, and 
                ability to serve covered individuals under the Program, 
                and such other criteria as the Board deems necessary to 
                carry out this part. Certification of any person under 
                this subsection shall be contingent upon entry into a 
                contractual arrangement between the Board and such 
                person.
                    ``(B) Nondelegation requirement.--The authority of 
                the Board to make any determination to deny any 
                application under this subsection may not be delegated 
                by the Board.
            ``(2) Oversight of certified account managers.--
                    ``(A) Role of regulatory agencies.--The Board may 
                enter into cooperative arrangements with Federal and 
                State regulatory agencies identified by the Board as 
                having jurisdiction over persons eligible for 
                certification under this subsection so as to ensure 
                that the provisions of this part are enforced with 
                respect to certified account managers in a manner 
                consistent with and supportive of the requirements of 
                other provisions of Federal law applicable to them. 
                Such Federal regulatory agencies shall cooperate with 
                the Board to the extent that the Board determines that 
                such cooperation is necessary and appropriate to ensure 
                that the provisions of this part are effectively 
                implemented.
                    ``(B) Access to records.--The Board may from time 
                to time require any certified account manager to file 
                such reports as the Board may specify by regulation as 
                necessary for the administration of this part. In 
                prescribing such regulations, the Board shall minimize 
                the regulatory burden imposed upon certified account 
                managers while taking into account the benefit of the 
                information to the Board in carrying out its functions 
                under this part.
            ``(3) Revocation of certification.--The Board shall 
        provide, in the contractual arrangements entered into under 
        this subsection with each certified account manager, for 
        revocation of such person's status as a certified account 
        manager upon determination by the Board of such person's 
        failure to comply with the requirements of such contractual 
        arrangements. Such arrangements shall include provision for 
        notice and opportunity for review of any such revocation.
    ``(c) Fiduciary Responsibilities.--
            ``(1) 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 with account assets, 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 account 
        assets.
            ``(2) 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 part shall be void.
    ``(d) Civil Actions by Board.--If any person fails to meet any 
requirement of this part or of any contract entered into under this 
part, 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 provisions of this part, and process in such 
an action may be served in any district.
    ``(e) Preemption of Inconsistent State Law.--A provision of this 
part shall not be construed to preempt any provision of the law of any 
State or political subdivision thereof, or prevent a State or political 
subdivision thereof from enacting any provision of law with respect to 
the subject matter of this part, except to the extent that such 
provision of State law is inconsistent with this part, and then only to 
the extent of the inconsistency.''.
    (b) Conforming Amendments.--(1) Section 701(b) of the Social 
Security Act (42 U.S.C. 901(b)) is amended by striking ``title II'' and 
inserting ``part A of title II, the Social Security Guarantee Program 
under part B of title II,''.
    (2) Section 702(a)(4) of the Social Security Act (42 U.S.C. 
902(a)(4)) is amended by inserting ``other than those of the Social 
Security Guarantee Board'' after ``Administration'', and by striking 
``thereof'' and inserting ``of the Administration in connection with 
the exercise of such powers and the discharge of such duties''.

SEC. 103. BENEFIT INCREASES.

    (a) Old-Age Insurance Benefits and Other Benefits Under Section 
202.--Section 202 of the Social Security Act (42 U.S.C. 402) is amended 
by adding at the end the following new subsection:

                   ``Account Distribution Supplements

    ``(z) Each monthly insurance benefit under this section (after 
application of any reduction or deduction applicable under this section 
or under any other provision of this part) shall be increased by the 
amount of the account distribution supplement determined for such 
benefit under section 255.''.
    (b) Disability Insurance Benefits.--Section 223 of such Act (42 
U.S.C. 423) is amended by adding at the end the following new 
subsection:

                   ``Account Distribution Supplements

    ``(j) Each monthly insurance benefit under this section (after 
application of any reduction or deduction applicable under this part) 
shall be increased by the amount of the account distribution supplement 
determined for such benefit under section 255.''.

SEC. 104. TAX TREATMENT.

    (a) Tax Treatment of Social Security Guarantee Accounts.--Section 
7701 of the Internal Revenue Code of 1986 (relating to definitions) is 
amended by redesignating subsection (o) as subsection (p) and by 
inserting after subsection (n) the following new subsection:
    ``(o) Tax Treatment of Social Security Guarantee Accounts.--All 
Social Security guarantee accounts established under part B of title II 
of the Social Security Act shall be exempt from taxation under this 
title.''.
    (b) Benefits Taxable as Social Security Benefits.--
            (1) Monthly benefits.--Section 86(d)(1)(A) of such Code 
        (relating to definition of Social Security benefit) is amended 
        to read as follows:
                    ``(A) a monthly benefit under part A of title II of 
                the Social Security Act (including an account 
                distribution supplement referred to in section 202(z) 
                and 223(j) of such Act), or''.
            (2) Special rules relating to lump sum payment under 
        section 256(c) of social security act.--
                    (A) Section 86(a) of such Code is amended by adding 
                at the end the following new paragraph:
            ``(3) Inclusion in gross income of lump sum payment under 
        section 256(c) of social security act.--
                    ``(A) In general.--A lump sum payment received 
                under section 256(c) of the Social Security Act shall 
                be includible in gross income in the amount provided by 
                subparagraph (B). Such payment shall not be treated as 
                a social security benefit for purposes of this section.
                    ``(B) Amount included in income.--The portion of 
                such lump sum payment that is includible in gross 
                income shall be equal to an amount which bears the same 
                ratio to the total amount of such payment as the 
                portion of social security benefits included in gross 
                income under paragraphs (1) and (2) bears to the total 
                amount of such benefits.''.
                    (B) Special rule relating to nonresident alien 
                individuals.--Section 871(a)(3)(A) of such Code is 
                amended by inserting ``and of any lump sum payment 
                received under section 256(c) of the Social Security 
                Act'' after ``section 86(d))''.
                    (C) Transfers to trust funds.--
                            (i) In general.--Paragraph (1) of section 
                        121(e) of the Social Security Amendments of 
                        1983 (Public Law 98-21; 42 U.S.C. 401 note) is 
                        amended by adding at the end the following new 
                        subparagraph:
            ``(C) There are hereby appropriated to each payor fund 
        amounts equivalent to the aggregate increase in tax liabilities 
        under chapter 1 of the Internal Revenue Code of 1986 which is 
        attributable to the application of section 86 and section 
        871(a)(3) of such Code to lump sum payments received under 
        section 256(c) of the Social Security Act by individuals 
        entitled to benefits payable from such payor fund.''.
                            (ii) Conforming amendment.--Section 
                        121(e)(2) of such Act is amended by striking 
                        ``paragraph (1)(A)'' and inserting ``paragraphs 
                        (1)(A) and (C)''.
            (3) Special rules relating to distribution of closed 
        account under section 256(f) of social security act.--Section 
        86(a) of such Code (as amended by paragraph (2)) is amended by 
        adding at the end the following new paragraph:
            ``(4) Extension of paragraph (2)(b) to distributions of 
        closed account under section 256(f) of social security act.--
        Notwithstanding any other provision of this subsection, in the 
        case of any amount received pursuant to the closing of an 
        account under section 256(f) of the Social Security Act, 
        paragraph (2)(B) shall apply to such amounts, and for such 
        purposes the amount allocated to the investment in the contract 
        shall be zero.''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after the end of the 
        calendar year in which this Act is enacted.
    (c) Estate Tax not to Apply to Assets of Social Security Guarantee 
Accounts.--
            (1) In general.--Part IV of subchapter A of chapter 11 of 
        the Internal Revenue Code of 1986 (relating to taxable estate) 
        is amended by adding at the end the following new section:

``SEC. 2059. SOCIAL SECURITY GUARANTEE ACCOUNTS.

    ``For purposes of the tax imposed by section 2001, the value of the 
taxable estate shall be determined by deducting from the value of the 
gross estate an amount equal to the value of the assets of a Social 
Security guarantee account transferred by the Secretary to the estate 
of the decedent under section 256 of the Social Security Act.''.
            (2) Clerical amendment.--The table of sections for part IV 
        of subchapter A of chapter 11 of such Code is amended by adding 
        at the end the following new item:

``Sec. 2059. Social Security guarantee accounts.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to decedents dying in or after the calendar year in 
        which this Act is enacted.

SEC. 105. ANNUAL ACCOUNT STATEMENTS.

    Section 1143 of the Social Security Act (42 U.S.C. 1320b-13) is 
amended by adding at the end the following new subsection:

          ``Performance of Social Security Guarantee Accounts

    ``(d) Beginning not later than 1 year after the date of the first 
deposit is made to an eligible individual's Social Security guaranty 
account, each statement provided to such eligible individual under this 
section shall include information determined by the Social Security 
Guarantee Board as sufficient to fully inform such eligible individual 
annually of the balance, investment performance, and administrative 
expenses of such account.''.

SEC. 106. 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:

                ``lock-box for social security surpluses

    ``Sec. 316. (a) Lock-Box for Social Security Surpluses.--
            ``(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 which is attributable to the Social Security Guarantee 
        Program under part B of title II of the Social Security Act.
            ``(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 attributable to the Social Security Guarantee Program 
        under part B of title II of the Social Security Act.
    ``(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. Lock-box for social security surpluses.''.

                       TITLE II--BENEFIT UPDATES

SEC. 201. ELIMINATION OF THE SOCIAL SECURITY EARNINGS TEST FOR 
              INDIVIDUALS WHO HAVE ATTAINED AGE 62.

    (a) In General.--Section 203 of the Social Security Act (42 U.S.C. 
403) is amended--
            (1) in subsection (c)(1), by striking ``retirement age (as 
        defined in section 216(l))'' and inserting ``the age of 62'';
            (2) in clause (B) of the last sentence of subsection 
        (f)(1), by striking ``retirement age (as defined in section 
        216(l))'' and inserting ``the age of 62'';
            (3) in subsection (f)(3), by striking ``retirement age (as 
        defined in section 216(l))'' and inserting ``the age of 62'';
            (4) in subsection (h)(1)(A), by striking ``retirement age 
        (as defined in section 216(l))'' each place it appears and 
        inserting ``the age of 62''; and
            (5) in subsection (j)--
                    (A) in the heading, by striking ``retirement age'' 
                and inserting ``Age 62''; and
                    (B) by striking ``retirement age (as defined in 
                section 216(l))'' and inserting ``the age of 62''.
    (b) Conforming Amendments Eliminating the Special Exempt Amount for 
Year of Attaining Retirement Age.--
            (1) Uniform exempt amount.--Section 203(f)(8)(A) of such 
        Act (42 U.S.C. 403(f)(8)(A)) is amended by striking ``the new 
        exempt amounts (separately stated for individuals described in 
        subparagraph (D) and for other individuals) which are to be 
        applicable'' and inserting ``a new exempt amount which shall be 
        applicable''.
            (2) Conforming amendments.--Section 203(f)(8)(B) of such 
        Act (42 U.S.C. 403(f)(8)(B)) is amended--
                    (A) in the matter preceding clause (i), by striking 
                ``Except'' and all that follows through ``whichever'' 
                and inserting ``The exempt amount which is applicable 
                for each month of a particular taxable year shall be 
                whichever'';
                    (B) in clause (i), by striking ``corresponding'';
                    (C) in clause (ii)--
                            (i) by striking ``the product'' and all 
                        that follows through ``other individuals), 
                        and'' and inserting ``the product derived by 
                        multiplying the exempt amount which is in 
                        effect with respect to months in the taxable 
                        year ending after 1993 and before 1995, by''; 
                        and
                            (ii) by striking subclause (II) and 
                        inserting the following:
                            ``(II) the national average wage index (as 
                        so defined) for 1992,''; and
                    (D) in the last sentence, by striking ``an exempt 
                amount'' and inserting ``the exempt amount''.
            (3) Repeal of basis for computation of special exempt 
        amount.--Subparagraphs (D) and (E) of section 203(f)(8) of such 
        Act (42 U.S.C. (f)(8)(D), (E)) are repealed.
    (c) Additional Conforming Amendments.--
            (1) Section 203 of such Act (42 U.S.C. 403) is amended--
                    (A) in subsection (b)(1)--
                            (i) by striking ``(b)(1) Deductions'' and 
                        inserting ``(b) Deductions'';
                            (ii) by striking ``and from any payment or 
                        payments to which any other persons are 
                        entitled on the basis of such individual's 
                        wages and self-employment income,'';
                            (iii) by striking ``until the total'' and 
                        all that follows through ``if for such month'' 
                        and inserting the following: ``until the total 
                        of such deductions equals such individual's 
                        benefit or benefits under section 202 for any 
                        month, if for such month'';
                            (iv) by striking ``total of benefits 
                        referred to in clauses (A) and (B)'' and 
                        inserting ``the total of such benefits''; and
                            (v) by striking ``If a child'' and all that 
                        follows through ``have been made.'';
                    (B) by striking subsection (b)(2);
                    (C) by striking subsection (d);
                    (D) in subsection (f)(1), by striking ``The amount 
                of'' and all that follows through ``Notwithstanding'' 
                and inserting the following: ``The amount of an 
                individual's excess earnings (as defined in paragraph 
                (3)) shall be charged to months as follows: There shall 
                be charged to the first month of such taxable year an 
                amount of his excess earnings equal to the payment to 
                which he is entitled for such month under section 202 
                (or the total of his excess earnings if such excess 
                earnings are less than such payment), and the balance, 
                if any, of such excess earnings shall be charged to 
                each succeeding month in such year to the extent, in 
                the case of each such month, of the payment to which 
                such individual is entitled for such month under 
                section 202, until the total of such excess has been so 
                charged. Notwithstanding'';
                    (E) in subsection (f)(3), by striking ``33\1/3\ 
                percent'' and all that follows through ``other 
                individual,'' and inserting ``50 percent of such 
                individual's earnings for such year in excess of the 
                product of the exempt amount as determined under 
                paragraph (8),'';
                    (F) by striking subsection (f)(7);
                    (G) by striking subsection (f)(9); and
                    (H) in subsection (h)(1)(A)(ii), by striking 
                subclauses (I), (II), and (III) and inserting the 
                following:
                    ``(I) such individual's benefits under section 202 
                are reduced under subsection (a) of this section for 
                any month in such taxable year, and
                    ``(II) in any such month there is another person 
                who also is entitled to benefits under subsection (b), 
                (c), (d), (e), (f), (g), or (h) of section 202 on the 
                basis of the same wages and self-employment income and 
                who does not live in the same household as such 
                individual.''.
            (2) The second sentence of section 223(d)(4) of such Act 
        (42 U.S.C. 423(d)(4)) is amended by striking ``if section 102 
        of the Senior Citizens' Right to Work Act of 1996 had not been 
        enacted'' and inserting the following: if the amendments to 
        section 203 made by section 102 of the Senior Citizens' Right 
        to Work Act of 1996 and by section 201 of the Social Security 
        Guarantee Plus Act of 2005 had not been enacted.
    (d) Effective Date and Transitional Rule.--
            (1) Effective date.--The amendments and repeals made by 
        this section shall apply with respect to taxable years ending 
        after December 31, 2010.
            (2) Transitional rule.--Notwithstanding paragraph (8) of 
        section 203(f) of the Social Security Act (42 U.S.C. 
        403(f)(8)), the exempt amount which is applicable, for purposes 
        of such section 203(f), to an individual who is entitled to 
        monthly insurance benefits under section 202 of such Act but 
        who has not attained retirement age (as defined in section 
        216(l) of such Act) before the close of the taxable year 
        involved shall be--
                    (A) for each month of any taxable year ending after 
                2005 and before 2007, $1,250.00,
                    (B) for each month of any taxable year ending after 
                2006 and before 2008, $1,666.66\2/3\,
                    (C) for each month of any taxable year ending after 
                2007 and before 2009, $2,083.33\1/3\,
                    (D) for each month of any taxable year ending after 
                2008 and before 2010, $2,500.00, and
                    (E) for each month of any taxable year ending after 
                2009 and before 2011, $2,916.66\2/3\.

SEC. 202. INCREASE IN WIDOW'S AND WIDOWER'S INSURANCE BENEFITS.

    (a) Widow's Insurance Benefits.--Section 202(e) of the Social 
Security Act (42 U.S.C. 402(e)) is amended by adding at the end the 
following new paragraph:
    ``(9)(A) In any case in which the amount of a widow's insurance 
benefit (as determined under the preceding paragraphs of this 
subsection) for the entitlement month of the widow (or surviving 
divorced wife) is less than the minimum benefit amount for such month 
determined under subparagraph (C), the amount of such benefit for such 
month and each succeeding month shall be increased to such minimum 
benefit amount (or the amount most recently established in lieu thereof 
under section 215(i)).
    ``(B) For purposes of this paragraph, the term `entitlement month' 
of a widow (or surviving divorced wife) means, in connection with her 
benefit under this subsection, the first month of her entitlement to 
such benefit.
    ``(C) For purposes of subparagraph (A), the minimum benefit amount 
determined under this subparagraph for the entitlement month of the 
widow (or surviving divorced wife) is an amount equal to the lesser 
of--
            ``(i) 75 percent of the sum of--
                    ``(I) the imputed deceased individual's benefit for 
                such month, as determined under subparagraph (D) or (E) 
                (as applicable), and
                    ``(II) the imputed survivor benefit for such month, 
                as determined under subparagraph (F), or
            ``(ii) the increased benefit cap determined under 
        subparagraph (G) for such month.
    ``(D)(i) For purposes of subparagraph (C)(i)(I), if the deceased 
individual died in a month for which he was not entitled to any benefit 
under this title based on his wages or self-employment income or the 
wages and self-employment income of the widow (or surviving divorced 
wife), the imputed deceased individual's benefit for the entitlement 
month of the widow (or surviving divorced wife) is the sum of--
            ``(I) the imputed old-age insurance benefit (determined 
        under clause (ii)) of the deceased individual for her 
        entitlement month (if any), and
            ``(II) the imputed husband's insurance benefit (determined 
        under clause (iii)) of the deceased individual for her 
        entitlement month (if any).
    ``(ii) The amount of the imputed old-age insurance benefit of the 
deceased individual for the entitlement month of the widow (or 
surviving divorced wife) is the amount of the old-age insurance benefit 
to which he would have been entitled for such month--
            ``(I) determined, in the case of such a deceased individual 
        who had attained age 62 as of the date of his death, as if he 
        had applied for such benefit in the month of his death and had 
        survived throughout the subsequent period ending with her 
        entitlement month, or
            ``(II) determined, in the case of such a deceased 
        individual who died before attaining age 62 but would have 
        attained age 62 before the end of her entitlement month, as if 
        he had survived throughout the subsequent period ending with 
        her entitlement month, and had applied for such benefit during 
        the first month for which he would have been eligible for such 
        benefit (assuming a primary insurance amount for the deceased 
        individual determined under paragraph (2)(B) of this 
        subsection).
For purposes of determining the deceased individual's imputed old-age 
insurance benefit under this clause, the determination of whether the 
deceased individual was a fully-insured individual (as defined in 
section 214(a)) shall be made as of the date of his death. In any case 
in which the deceased individual died before attaining age 62 and would 
not have attained age 62 before the end of the entitlement month of the 
widow (or surviving divorced wife), the deceased individual's imputed 
old-age insurance benefit shall be deemed to be zero.
    ``(iii) The amount of the imputed husband's insurance benefit of 
the deceased individual for the entitlement month of the widow (or 
surviving divorced wife) is the amount of the husband's insurance 
benefit under subsection (c) to which he would have been entitled for 
such month (assuming, for purposes of reduction under subsection 
(k)(3)(A), the entitlement to an old-age insurance benefit for such 
month, if any, as described in clause (ii))--
            ``(I) determined, in the case of such a deceased individual 
        who had attained age 62 as of the date of his death, as if he 
        had applied for such benefit in the month of his death and had 
        survived throughout the subsequent period ending with her 
        entitlement month, or
            ``(II) determined, in the case of such a deceased 
        individual who died before attaining age 62 but would have 
        attained age 62 before the end of her entitlement month, as if 
        he had survived throughout the subsequent period ending with 
        her entitlement month and had applied for such benefit during 
        the first month for which he would have been eligible for such 
        benefit.
In any case in which the deceased individual died before he attained 
age 62 and would not have attained age 62 before the end of the 
entitlement month of the widow (or surviving divorced spouse), the 
deceased individual's imputed husband's insurance benefit shall be 
deemed to be zero.
    ``(E)(i) For purposes of subparagraph (C), if the deceased 
individual died during a month for which he otherwise would have been 
entitled (but for his death) to an old-age insurance benefit under 
subsection (a) or a disability insurance benefit under section 223, or 
to a husband's insurance benefit under subsection (c) based on the 
wages and self-employment income of the widow (or surviving divorced 
wife), the imputed deceased individual's benefit for the entitlement 
month of the widow (or surviving divorced wife) is the sum of--
            ``(I) the amount of the old-age or disability insurance 
        benefit (if any) to which he would have been entitled for her 
        entitlement month if he had survived throughout the period 
        subsequent to his death and ending with such month, and
            ``(II) the amount of the husband's insurance benefit (if 
        any) to which he would have been entitled for her entitlement 
        month based on her wages and self-employment income if he had 
        survived throughout the period subsequent to his death and 
        ending with such month (assuming, for purposes of reduction 
        under subsection (k)(3)(A), the entitlement to an old-age or 
        disability insurance benefit for such month, if any, as 
        described in subclause (I)).
    ``(ii) If the deceased individual otherwise would have been 
entitled (but for his death) to a disability insurance benefit under 
section 223 for the month in which he died, the amount determined under 
clause (i) shall be determined as if he had survived throughout the 
period commencing with the month of his death and ending with the 
entitlement month of the widow (or surviving divorced wife) and he had 
remained entitled to disability insurance benefits throughout such 
period (or until becoming entitled to old-age insurance benefits under 
subsection (a) during such period).
    ``(F) For purposes of subparagraph (C)(i)(II)--
            ``(i) In the case of a widow (or surviving divorced wife) 
        who is entitled for her entitlement month to an old-age 
        insurance benefit under subsection (a) or a disability 
        insurance benefit under section 223, or otherwise would have 
        been entitled (but for the deceased individual's death) to a 
        wife's insurance benefit under subsection (b) for such month, 
        the amount of her imputed survivor benefit for such month is 
        the sum of--
                    ``(I) the amount of such old-age or disability 
                insurance benefit (if any), and
                    ``(II) the amount of such wife's insurance benefit 
                (if any), assuming, for purposes of reduction under 
                subsection (k)(3)(A), the entitlement to an old-age 
                insurance or disability insurance benefit for such 
                month (if any), as described in subclause (I).
            ``(ii) In the case of a widow (or surviving divorced wife) 
        who is not described in clause (i) but has attained (or would 
        attain) age 62 as of the end of her entitlement month, the 
        amount of her imputed survivor benefit is the sum of--
                    ``(I) the amount of the old-age insurance benefit 
                under subsection (a) to which she would be entitled for 
                such month if she filed application for such benefit 
                during such month, and
                    ``(II) the amount to which she otherwise would have 
                been entitled (but for the deceased individual's death) 
                as a wife's insurance benefit under subsection (b) for 
                such month, based on the deceased individual's wages 
                and self-employment income, if she had filed 
                application for such benefit during such month 
                (assuming a primary insurance amount for the deceased 
                individual determined under paragraph (2)(B) of this 
                subsection and assuming, for purposes of reduction 
                under subsection (k)(3)(A), the entitlement to an old-
                age insurance benefit for such month, if any, as 
                described in subclause (I)).
In any case in which the widow (or surviving divorced wife) would not 
attain age 62 before the end of the her entitlement month, her imputed 
survivor benefit shall be deemed to be zero.
    ``(G) The increased benefit cap determined under this subparagraph 
for the entitlement month of the widow (or surviving divorced wife) is 
the amount which would be the amount of a theoretical individual's old-
age insurance benefit under subsection (a) (reduced as provided in 
subsection (q)) if--
            ``(i) such theoretical individual's primary insurance 
        amount for the first month of entitlement were equal to the 
        average of the primary insurance amounts upon which old-age 
        insurance benefits under subsection (a) are payable for--
                    ``(I) in any case in which the entitlement month of 
                the widow (or surviving divorced wife) is the month of 
                December, such month, or
                    ``(II) in any other case, the latest month of 
                December preceding such entitlement month,
            ``(ii) such first month of such theoretical individual's 
        entitlement to such old-age insurance benefit were the 
        entitlement month of the widow (or surviving divorced spouse), 
        and
            ``(iii) the month in which the theoretical individual 
        attained or would attain retirement age (as defined in section 
        216(l)) were the month in which the widow (or surviving 
        divorced wife) attained or would attain retirement age (as so 
        defined).
    ``(H) If, in determining the amount of the benefit under this 
section pursuant to this paragraph, the imputed old-age insurance 
benefit or imputed husband's insurance benefit of the deceased 
individual was deemed to be zero pursuant to the last sentence of 
clause (ii) or (iii) of subparagraph (D), or the imputed survivor 
benefit of the widow (or surviving divorced wife) was deemed to be zero 
pursuant to the last sentence of subparagraph (F), effective for any 
month after the entitlement month of the widow (or surviving divorced 
wife) in which the deceased individual would have attained age 62 or 
she attains age 62, the Commissioner shall recompute the amount of the 
benefit under this paragraph by substituting a reference to such later 
month for each reference in the preceding provisions of this paragraph 
to her entitlement month.
    ``(I)(i) Any reference in this paragraph to the widow's insurance 
benefit (as determined under the preceding paragraphs of this 
subsection) shall be deemed a reference to such benefit, taking into 
account all applicable reductions and deductions under this title.
    ``(ii) Any reference in this paragraph to the imputed old-age 
insurance benefit or imputed husband's insurance benefit described in 
subparagraph (D), the old-age insurance benefit, disability insurance 
benefit, or husband's insurance benefit described in subparagraph (E), 
or the old-age insurance benefit, disability insurance benefit, or 
wife's insurance benefit described in subparagraph (F) shall be deemed 
a reference to such benefit, taking into account applicable reductions 
under this section but disregarding reductions or deductions otherwise 
applicable under this title.
    ``(iii) A widow's insurance benefit which has been increased under 
this paragraph shall be subject to all reductions and deductions 
otherwise applicable to widow's insurance benefits under this title, 
except that such benefit shall not be subject to any reduction 
otherwise applicable under subsection (q)(1).''.
    (b) Widower's Insurance Benefits.--Section 202(f) of such Act (42 
U.S.C. 402(f)) is amended by adding at the end the following new 
paragraph:
    ``(9)(A) In any case in which the amount of a widower's insurance 
benefit (as determined under the preceding paragraphs of this 
subsection) for the entitlement month of the widower (or surviving 
divorced husband) is less than the minimum benefit amount for such 
month determined under subparagraph (C), the amount of such benefit for 
such month and each succeeding month shall be increased to such minimum 
benefit amount (or the amount most recently established in lieu thereof 
under section 215(i)).
    ``(B) For purposes of this paragraph, the term `entitlement month' 
of a widower (or surviving divorced husband) means, in connection with 
his benefit under this subsection, the first month of his entitlement 
to such benefit.
    ``(C) For purposes of subparagraph (A), the minimum benefit amount 
determined under this subparagraph for the entitlement month of the 
widower (or surviving divorced husband) is an amount equal to the 
lesser of--
            ``(i) 75 percent of the sum of--
                    ``(I) the imputed deceased individual's benefit for 
                such month, as determined under subparagraph (D) or (E) 
                (as applicable), and
                    ``(II) the imputed survivor benefit for such month, 
                as determined under subparagraph (F), or
            ``(ii) the increased benefit cap determined under 
        subparagraph (G) for such month.
    ``(D)(i) For purposes of subparagraph (C)(i)(I), if the deceased 
individual died in a month for which she was not entitled to any 
benefit under this title based on her wages or self-employment income 
or the wages and self-employment income of the widower (or surviving 
divorced husband), the imputed deceased individual's benefit for the 
entitlement month of the widower (or surviving divorced husband) is the 
sum of--
            ``(I) the imputed old-age insurance benefit (determined 
        under clause (ii)) of the deceased individual for his 
        entitlement month (if any), and
            ``(II) the imputed wife's insurance benefit (determined 
        under clause (iii)) of the deceased individual for his 
        entitlement month (if any).
    ``(ii) The amount of the imputed old-age insurance benefit of the 
deceased individual for the entitlement month of the widower (or 
surviving divorced husband) is the amount of the old-age insurance 
benefit to which she would have been entitled for such month--
            ``(I) determined, in the case of such a deceased individual 
        who had attained age 62 as of the date of her death, as if she 
        had applied for such benefit in the month of her death and had 
        survived throughout the subsequent period ending with his 
        entitlement month, or
            ``(II) determined, in the case of such a deceased 
        individual who died before attaining age 62 but would have 
        attained age 62 before the end of his entitlement month, as if 
        she had survived throughout the subsequent period ending with 
        his entitlement month, and had applied for such benefit during 
        the first month for which she would have been eligible for such 
        benefit (assuming a primary insurance amount for the deceased 
        individual determined under paragraph (2)(B) of this 
        subsection).
For purposes of determining the deceased individual's imputed old-age 
insurance benefit under this clause, the determination of whether the 
deceased individual was a fully-insured individual (as defined in 
section 214(a)) shall be made as of the date of her death. In any case 
in which the deceased individual died before attaining age 62 and would 
not have attained age 62 before the end of the entitlement month of the 
widower (or surviving divorced husband), the deceased individual's 
imputed old-age insurance benefit shall be deemed to be zero.
    ``(iii) The amount of the imputed wife's insurance benefit of the 
deceased individual for the entitlement month of the widower (or 
surviving divorced husband) is the amount of the wife's insurance 
benefit under subsection (c) to which she would have been entitled for 
such month (assuming, for purposes of reduction under subsection 
(k)(3)(A), the entitlement to an old-age insurance benefit for such 
month, if any, as described in clause (ii))--
            ``(I) determined, in the case of such a deceased individual 
        who had attained age 62 as of the date of her death, as if she 
        had applied for such benefit in the month of her death and had 
        survived throughout the subsequent period ending with his 
        entitlement month, or
            ``(II) determined, in the case of such a deceased 
        individual who died before attaining age 62 but would have 
        attained age 62 before the end of his entitlement month, as if 
        she had survived throughout the subsequent period ending with 
        his entitlement month and had applied for such benefit during 
        the first month for which she would have been eligible for such 
        benefit.
In any case in which the deceased individual died before she attained 
age 62 and would not have attained age 62 before the end of the 
entitlement month of the widower (or surviving divorced husband), the 
deceased individual's imputed wife's insurance benefit shall be deemed 
to be zero.
    ``(E)(i) For purposes of subparagraph (C), if the deceased 
individual died during a month for which she otherwise would have been 
entitled (but for his death) to an old-age insurance benefit under 
subsection (a) or a disability insurance benefit under section 223, or 
to a wife's insurance benefit under subsection (c) based on the wages 
and self-employment income of the widower (or surviving divorced 
husband), the imputed deceased individual's benefit for the entitlement 
month of the widower (or surviving divorced husband) is the sum of--
            ``(I) the amount of the old-age or disability insurance 
        benefit (if any) to which she would have been entitled for his 
        entitlement month if she had survived throughout the period 
        subsequent to her death and ending with such month, and
            ``(II) the amount of the wife's insurance benefit (if any) 
        to which she would have been entitled for his entitlement month 
        based on his wages and self-employment income if she had 
        survived throughout the period subsequent to her death and 
        ending with such month (assuming, for purposes of reduction 
        under subsection (k)(3)(A), the entitlement to an old-age or 
        disability insurance benefit for such month, if any, as 
        described in subclause (I)).
    ``(ii) If the deceased individual otherwise would have been 
entitled (but for her death) to a disability insurance benefit under 
section 223 for the month in which she died, the amount determined 
under clause (i) shall be determined as if she had survived throughout 
the period commencing with the month of her death and ending with the 
entitlement month of the widower (or surviving divorced husband) and 
she had remained entitled to disability insurance benefits throughout 
such period (or until becoming entitled to old-age insurance benefits 
under subsection (a) during such period).
    ``(F) For purposes of subparagraph (C)(i)(II)--
            ``(i) In the case of a widower (or surviving divorced 
        husband) who is entitled for his entitlement month to an old-
        age insurance benefit under subsection (a) or a disability 
        insurance benefit under section 223, or otherwise would have 
        been entitled (but for the deceased individual's death) to a 
        husband's insurance benefit under subsection (b) for such 
        month, the amount of his imputed survivor benefit for such 
        month is the sum of--
                    ``(I) the amount of such old-age or disability 
                insurance benefit (if any), and
                    ``(II) the amount of such husband's insurance 
                benefit (if any), assuming, for purposes of reduction 
                under subsection (k)(3)(A), the entitlement to an old-
                age insurance or disability insurance benefit for such 
                month (if any), as described in subclause (I).
            ``(ii) In the case of a widower (or surviving divorced 
        husband) who is not described in clause (i) but has attained 
        (or would attain) age 62 as of the end of his entitlement 
        month, the amount of his imputed survivor benefit is the sum 
        of--
                    ``(I) the amount of the old-age insurance benefit 
                under subsection (a) to which he would be entitled for 
                such month if he filed application for such benefit 
                during such month, and
                    ``(II) the amount to which he otherwise would have 
                been entitled (but for the deceased individual's death) 
                as a husband's insurance benefit under subsection (c) 
                for such month, based on the deceased individual's 
                wages and self-employment income, if he had filed 
                application for such benefit during such month 
                (assuming a primary insurance amount for the deceased 
                individual determined under paragraph (2)(B) of this 
                subsection and assuming, for purposes of reduction 
                under subsection (k)(3)(A), the entitlement to an old-
                age insurance benefit for such month, if any, as 
                described in subclause (I)).
In any case in which the widower (or surviving divorced husband) would 
not attain age 62 before the end of his entitlement month, his imputed 
survivor benefit shall be deemed to be zero.
    ``(G) The increased benefit cap determined under this subparagraph 
for the entitlement month of the widower (or surviving divorced 
husband) is the amount which would be the amount of a theoretical 
individual's old-age insurance benefit under subsection (a) (reduced as 
provided in subsection (q)) if--
            ``(i) such theoretical individual's primary insurance 
        amount for the first month of entitlement were equal to the 
        average of the primary insurance amounts upon which old-age 
        insurance benefits under subsection (a) are payable for--
                    ``(I) in any case in which the entitlement month of 
                the widower (or surviving divorced husband) is the 
                month of December, such month, or
                    ``(II) in any other case, the latest month of 
                December preceding such entitlement month,
            ``(ii) such first month of such theoretical individual's 
        entitlement to such old-age insurance benefit were the 
        entitlement month of the widower (or surviving divorced 
        husband), and
            ``(iii) the month in which the theoretical individual 
        attained or would attain retirement age (as defined in section 
        216(l)) were the month in which the widower (or surviving 
        divorced husband) attained or would attain retirement age (as 
        so defined).
    ``(H) If, in determining the amount of the benefit under this 
section pursuant to this paragraph, the imputed old-age insurance 
benefit or imputed wife's insurance benefit of the deceased individual 
was deemed to be zero pursuant to the last sentence of clause (ii) or 
(iii) of subparagraph (D), or the imputed survivor benefit of the 
widower (or surviving divorced husband) was deemed to be zero pursuant 
to the last sentence of subparagraph (F), effective for any month after 
the entitlement month of the widower (or surviving divorced husband) in 
which the deceased individual would have attained age 62 or he attains 
age 62, the Commissioner shall recompute the amount of the benefit 
under this paragraph by substituting a reference to such later month 
for each reference in the preceding provisions of this paragraph to his 
entitlement month.
    ``(I)(i) Any reference in this paragraph to the widower's insurance 
benefit (as determined under the preceding paragraphs of this 
subsection) shall be deemed a reference to such benefit, taking into 
account all applicable reductions and deductions under this title.
    ``(ii) Any reference in this paragraph to the imputed old-age 
insurance benefit or imputed wife's insurance benefit described in 
subparagraph (D), the old-age insurance benefit, disability insurance 
benefit, or wife's insurance benefit described in subparagraph (E), or 
the old-age insurance benefit, disability insurance benefit, or 
husband's insurance benefit described in subparagraph (F) shall be 
deemed a reference to such benefit, taking into account applicable 
reductions under this section but disregarding reductions or deductions 
otherwise applicable under this title.
    ``(iii) A widower's insurance benefit which has been increased 
under this paragraph shall be subject to all reductions and deductions 
otherwise applicable to widower's insurance benefits under this title, 
except that such benefit shall not be subject to any reduction 
otherwise applicable under subsection (q)(1).''.
    (c) Cost-Of-Living Adjustments to Guaranteed Widow's and Widower's 
Insurance Benefits.--Section 215(i)(2)(A)(ii) of such Act (42 U.S.C. 
415(i)(2)(A)(ii)) is amended--
            (1) in subclause (II), by striking ``and'' at the end;
            (2) in subclause (III), by striking ``1978.'' and inserting 
        ``1979, and'';
            (3) by adding at the end the following new subclause:
            ``(IV) the benefit amount to which an individual is 
        entitled for that month under subsection (e) or (f) of section 
        202 if such benefit amount has been increased under paragraph 
        (9) of such subsection.''; and
            (4) in the matter following subclause (IV) (added by 
        paragraph (3)), by striking ``(I), (II), and (III)'' and 
        inserting ``(I), (II), (III), and (IV)''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to widow's and widower's insurance benefits for 
months after November of the calendar year in which this Act is 
enacted.

SEC. 203. BENEFITS FOR DISABLED WIDOWS AND WIDOWERS WITHOUT REGARD TO 
              AGE.

    (a) Eligibility for Widow's Insurance Benefits.--Section 
202(e)(1)(B)(ii) of the Social Security Act (42 U.S.C. 
402(e)(1)(B)(ii)) is amended by striking ``has attained age 50 but has 
not attained age 60 and''.
    (b) Eligibility for Widower's Insurance Benefits.--Section 
202(f)(1)(B)(ii) of such Act (42 U.S.C. 402(f)(1)(B)(ii)) is amended by 
striking ``has attained age 50 but has not attained age 60 and''.
    (c) Conforming Amendment.--Section 202(q)(3)(A) of such Act (42 
U.S.C. 402(q)(3)(A)) is amended by striking ``If the first month'' and 
all that follows through ``widow's or widower's insurance benefit)'' 
and inserting ``If the first month for which an individual both is 
entitled to a wife's or husband's insurance benefit and has attained 
age 62 or for which an individual is entitled to a widow's or widower's 
insurance benefit''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to monthly insurance benefits payable under title II 
of the Social Security Act for months after November of the calendar 
year in which this Act is enacted and for which applications are filed 
or pending after November of such year.

SEC. 204. REPEAL OF 7-YEAR RESTRICTION ON ELIGIBILITY FOR WIDOW'S AND 
              WIDOWER'S INSURANCE BENEFITS BASED ON DISABILITY.

    (a) Widow's Insurance Benefits.--
            (1) In general.--Section 202(e) of the Social Security Act 
        (as amended by section 202(a) of this Act) is further amended--
                    (A) in paragraph (1)(B)(ii), by striking ``which 
                began before the end of the period specified in 
                paragraph (4)'';
                    (B) in paragraph (1)(F)(ii), by striking ``(I) in 
                the period specified in paragraph (4) and (II)'';
                    (C) by striking paragraph (4) and by redesignating 
                paragraphs (5) through (9) as paragraphs (4) through 
                (8), respectively; and
                    (D) in paragraph (4)(A)(ii) (as redesignated), by 
                striking ``whichever'' and all that follows through 
                ``begins'' and inserting ``the first day of the 
                seventeenth month before the month in which her 
                application is filed''.
            (2) Conforming amendments.--
                    (A) Section 202(e)(1)(F)(i) of such Act (42 U.S.C. 
                402(e)(1)(F)(i)) is amended by striking ``paragraph 
                (5)'' and inserting ``paragraph (4)''.
                    (B) Section 202(e)(1)(C)(ii)(III) of such Act (42 
                U.S.C. 402(e)(2)(C)(ii)(III)) is amended by striking 
                ``paragraph (8)'' and inserting ``paragraph (6)''.
                    (C) Section 226(e)(1)(A)(i) of such Act (42 U.S.C. 
                426(e)(1)(A)(i)) is amended by striking ``202(e)(4),''.
    (b) Widower's Insurance Benefits.--
            (1) In general.--Section 202(f) of such Act (as amended by 
        section 202(b) of this Act) is further amended--
                    (A) in paragraph (1)(B)(ii), by striking ``which 
                began before the end of the period specified in 
                paragraph (4)'';
                    (B) in paragraph (1)(F)(ii), by striking ``(I) in 
                the period specified in paragraph (4) and (II)'';
                    (C) by striking paragraph (4) and by redesignating 
                paragraphs (5) through (9) as paragraphs (4) through 
                (8), respectively; and
                    (D) in paragraph (4)(A)(ii) (as redesignated), by 
                striking ``whichever'' and all that follows through 
                ``begins'' and inserting ``the first day of the 
                seventeenth month before the month in which his 
                application is filed''.
            (2) Conforming amendments.--
                    (A) Section 202(f)(1)(F)(i) of such Act (42 U.S.C. 
                402(f)(1)(F)(i)) is amended by striking ``paragraph 
                (5)'' and inserting ``paragraph (4)''.
                    (B) Section 202(f)(1)(C)(ii)(III) of such Act (42 
                U.S.C. 402(f)(2)(C)(ii)(III)) is amended by striking 
                ``paragraph (8)'' and inserting ``paragraph (6)''.
                    (C) Section 226(e)(1)(A)(i) of such Act (as amended 
                by subsection (a)(2)) is further amended by striking 
                ``202(f)(1)(B)(ii), and 202(f)(5)'' and inserting ``and 
                202(f)(1)(B)(ii)''.
    (c) Conforming Amendment.--Section 215(i)(2)(A)(ii)(IV) of such Act 
(as added by section 202(c)(3) of this Act) is amended by striking 
``paragraph (9)'' and inserting ``paragraph (8)''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to benefits for months after November of the 
calendar year in which this Act is enacted and for which applications 
are filed or pending after November of such year.

SEC. 205. EXEMPTION FROM TWO-YEAR WAITING PERIOD FOR DIVORCED SPOUSE'S 
              BENEFITS UPON OTHER SPOUSE'S REMARRIAGE.

    (a) Wife's Insurance Benefits.--Section 202(b)(4)(A) of the Social 
Security Act (42 U.S.C. 402(b)(4)(A)) is amended by adding at the end 
the following new sentence: ``The criterion for entitlement under 
clause (ii) shall be deemed met upon the remarriage of the insured 
individual to someone other than the applicant during the 2-year period 
referred to in such clause.''.
    (b) Husband's Insurance Benefits.--Section 202(c)(4)(A) of such Act 
(42 U.S.C. 402(c)(4)(A)) is amended by adding at the end the following 
new sentence: ``The criterion for entitlement under clause (ii) shall 
be deemed met upon the remarriage of the insured individual to someone 
other than the applicant during the 2-year period referred to in such 
clause.''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to benefits for months after November of the 
calendar year in which this Act is enacted and for which applications 
are filed or pending after November of such year.

SEC. 206. INCREASE IN AMOUNT OF WAGES AND SELF-EMPLOYMENT INCOME 
              CREDITED TO YEARS TAKEN INTO ACCOUNT IN DETERMINING 
              AVERAGE INDEXED MONTHLY EARNINGS FOR BENEFICIARIES 
              PRECLUDED FROM REMUNERATIVE WORK BY NEED TO PROVIDE CHILD 
              CARE.

    (a) In General.--Section 215(b)(3) of the Social Security Act (42 
U.S.C. 415(b)(3)) is amended--
            (1) in subparagraph (A), by striking ``subparagraph (B)'' 
        and inserting ``subparagraphs (B) and (C)'', and
            (2) by adding at the end the following new subparagraph:
    ``(C)(i) Subject to clause (iii), in any case in which--
            ``(I) in any calendar year which is included in an 
        individual's elapsed years, such individual was living with a 
        child (of such individual or his or her spouse) under the age 
        of 7, and
            ``(II) at any time during or after such calendar year and 
        on or before the date of the application by such individual for 
        benefits based on such individual's wages and self-employment 
        income, such individual submits to the Commissioner, in such 
        form as the Commissioner shall prescribe by regulation, a 
        written statement that the requirements of subclause (I) are 
        met with respect to such calendar year,
the amount of the wages and self-employment income paid in or credited 
to such year under subparagraph (A), if less than the minimum credit 
amount for such individual for such year, shall be deemed equal to such 
minimum credit amount.
    ``(ii) For purposes of clause (i), the minimum credit amount for an 
individual described in clause (i) for any calendar year shall be an 
amount equal to the product derived by multiplying--
            ``(I) subject to clause (iii), \1/4\ of the average indexed 
        monthly earnings of such individual, determined as if such 
        individual became entitled to disability insurance benefits on 
        January 1 of such year (disregarding any elapsed year with 
        respect to which wages and self-employment income of such 
        individual are deemed to be increased under this subparagraph), 
        by
            ``(II) the number of months in such year during which such 
        individual meets the requirements of clause (i)(I).
    ``(iii) In any case in which a minimum credit amount for an 
individual is determined under clause (ii) for 2 or more elapsed years, 
the amount determined in the case of such individual under clause 
(ii)(I) in connection with each such elapsed year shall not be less 
than the amount determined under clause (ii)(I) for such individual 
under clause (ii)(I) in connection with the latest of such 2 or more 
elapsed years.
    ``(iv) Clause (i) shall apply only with respect to not more than 5 
elapsed years designated by the individual described in clause (i) with 
respect to which such individual submits a statement under clause 
(i)(II).
    ``(v) Clause (i) shall not apply in the case of an individual with 
respect to any calendar year referred to in clause (i)(I), if such 
individual's spouse referred to in such clause was also living with the 
child referred to in such clause in such year, and--
            ``(I) the amount of such individual's wages and self-
        employment income paid in or credited to such year (as 
        determined before the application of this subparagraph) is 
        greater than the amount of the wages and self-employment income 
        paid in or credited to such year (as so determined) of such 
        spouse, or
            ``(II) in any case in which the amount of the wages and 
        self-employment income of such individual paid in or credited 
        to such year is equal to the wages and self-employment income 
        of such individual's spouse paid in or credited to such year, 
        the amount determined under clause (ii)(I) in connection with 
        such calendar year in the case of such individual is greater 
        than the amount so determined in the case of such individual's 
        spouse.
In any case in which the requirements of neither subclause (I) nor 
subclause (II) are met in the case of such individual with respect to 
any calendar year, the Commissioner of Social Security shall provide by 
regulation for the application of clause (i) only with respect to one 
of the two spouses in accordance with the equities of the case.''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to benefits for months after November of the 
calendar year in which this Act is enacted.

SEC. 207. GOVERNMENT PENSION OFFSET REDUCED FROM TWO-THIRDS TO ONE-
              THIRD OF THE GOVERNMENT PENSION.

    (a) In General.--Section 202(k)(5)(A) of the Social Security Act 
(42 U.S.C. 402(k)(5)(A)) is amended by striking ``two-thirds'' and 
inserting ``one-third''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to benefits for months after November of the calendar year 
in which this Act is enacted.
                                 <all>