[Congressional Record Volume 146, Number 80 (Thursday, June 22, 2000)]
[Senate]
[Pages S5666-S5676]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GREGG (for himself, Mr. Kerrey, Mr. Breaux, Mr. Grassley, 
        Mr. Thompson, Mr. Robb, and Mr. Thomas):
  S. 2774. A bill to amend title II of the Social Security Act to 
provide for individual savings accounts funded by employee and employer 
Social Security payroll deductions, to extend the solvency of the old-
age, survivors, and disability insurance program, and for other 
purposes; to the Committee on Finance.


           the bipartisan social security reform act of 2000

  Mr. GRASSLEY. Mr. President, I rise today in support of legislation 
to make

[[Page S5669]]

technical corrections to the Bipartisan Social Security Reform bill my 
colleagues and I introduced last summer. The purpose of this 
legislation is simple: to conform our previous legislative language to 
changes that have been made in the Social Security program--such as 
eliminating the earnings limit--since last July; to correct some 
inadvertent errors we discovered; and to update our assumptions to 
reflect the new reality of the Trust Funds as reported in the 2000 
Social Security and Medicare Trustees Report which came out earlier 
this year.
  Since July 16, 1999 when Senators Gregg, Kerrey, Breaux, Thompson, 
Thomas, and Robb and I introduced our legislation to save Social 
Security, the issue has taken on new life, due to Governor Bush's 
willingness to make Social Security reform a primary issue in his 
presidential campaign. He should be commended for his leadership and 
for grabbing the third rail of American politics fearlessly in order to 
create a truly secure Social Security system so that future generations 
will be able to rely on Social Security like their parents and 
grandparents.
  I want to urge my colleagues to take a serious look at our proposal 
to save Social Security. It was designed in a bipartisan, bicameral 
manner: four Republicans and three Democrats cosponsored the Bipartisan 
Social Security Reform Bill, and Congressmen Kolbe and Stenholm 
sponsored similar legislation in the House of Representatives.
  The bipartisan plan would maintain a basic floor of protection 
through a traditional Social Security benefit, but two percentage 
points of the 12.4 percent payroll tax would be redirected to 
individual accounts. Individuals could invest their personal accounts 
in any combination of the funds offered through the Social Security 
system. An individual who invested his or her personal account in a 
bond fund would receive a guaranteed interest rate. However, 
individuals who wish to pursue a higher rate of return through 
investment in a fund including equities could do so.
  Our proposal would eliminate the need for future payroll tax 
increases by advance funding a portion of future benefits through 
personal accounts. With individual accounts, we provide Americans with 
the tools necessary to build financial independence in retirement--
especially to those who previously had limited opportunities to create 
wealth. The legislation provides incentives for low and middle income 
working Americans to save additional funds for retirement by matching 
their voluntary contributions to their individual accounts. Under our 
plan, they will be able to save for retirement and benefit from 
economic growth.
  As all the cosponsors have said a hundred times, our proposal offers 
no ``free lunch''. In order to save Social Security for future 
generations it must be modernized. We have crafted a responsible plan 
to save Social Security for generations to come. By making incremental, 
steady changes to the Social Security system, we will be able to ensure 
the long-term solvency of the program.
  With this technical corrections bill we have improved upon our 
original legislation and I urge my colleagues to support the bipartisan 
proposal to save Social Security.
  Mr. President, I ask that the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2774

       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 ``Bipartisan 
     Social Security Reform Act of 2000.''
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                  TITLE I--INDIVIDUAL SAVINGS ACCOUNTS

Sec. 101. Individual savings accounts.
Sec. 102. Social security KidSave Accounts.
Sec. 103. Adjustments to primary insurance amounts under part A of 
              title II of the Social Security Act.

              TITLE II--SOCIAL SECURITY SYSTEM ADJUSTMENTS

Sec. 201. Adjustments to bend points in determining primary insurance 
              amounts.
Sec. 202. Adjustment of widows' and widowers' insurance benefits.
Sec. 203. Elimination of earnings test for individuals who have 
              attained early retirement age.
Sec. 204. Gradual increase in number of benefit computation years; use 
              of all years in computation.
Sec. 205. Maintenance of benefit and contribution base.
Sec. 206. Reduction in the amount of certain transfers to Medicare 
              Trust Fund.
Sec. 207. Actuarial adjustment for retirement.
Sec. 208. Improvements in process for cost-of-living adjustments.
Sec. 209. Modification of PIA factors to reflect changes in life 
              expectancy.
Sec. 210. Mechanism for remedying unforeseen deterioration in social 
              security solvency.

                  TITLE I--INDIVIDUAL SAVINGS ACCOUNTS

     SEC. 101. INDIVIDUAL SAVINGS ACCOUNTS.

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

                    ``Part A--Insurance Benefits'';

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

                 ``Part B--Individual Savings Accounts


                     ``individual savings accounts

       ``Sec. 251. (a) Establishment.--
       ``(1) In general.--
       ``(A) Establishment in absence of kidsave account.--Except 
     as provided in subparagraph (B), the Commissioner of Social 
     Security, within 30 days of the receipt of the first 
     contribution received pursuant to subsection (b) with respect 
     to an eligible individual, shall establish in the name of 
     such individual an individual savings account. The individual 
     savings account shall be identified to the account holder by 
     means of the account holder's Social Security account number.
       ``(B) Use of kidsave account.--If a KidSave Account has 
     been established in the name of an eligible individual under 
     section 262(a) before the date of the first contribution 
     received by the Commissioner pursuant to subsection (b) with 
     respect to such individual, the Commissioner shall 
     redesignate the KidSave Account as an individual savings 
     account for such individual.
       ``(2) Definition of eligible individual.--In this part, the 
     term `eligible individual' means any individual born after 
     December 31, 1937.
       ``(b) Contributions.--
       ``(1) Amounts transferred from the trust fund.--The 
     Secretary of the Treasury shall transfer from the Federal 
     Old-Age and Survivors Insurance Trust Fund, for crediting by 
     the Commissioner of Social Security to an individual savings 
     account of an eligible individual, an amount equal to the sum 
     of any amount received by such Secretary on behalf of such 
     individual under section 3101(a)(2) or 1401(a)(2) of the 
     Internal Revenue Code of 1986.
       ``(2) Other contributions.--For provisions relating to 
     additional contributions credited to individual savings 
     accounts, see sections 531(c)(2) and 6402(l) of the Internal 
     Revenue Code of 1986.
       ``(c) Designation of Investment Type of Individual Savings 
     Account.--
       ``(1) Designation.--Each eligible individual who is 
     employed or self-employed shall designate the investment type 
     of individual savings account to which the contributions 
     described in subsection (b) on behalf of such individual are 
     to be credited.
       ``(2) Form of designation.--The designation described in 
     paragraph (1) shall be made in such manner and at such 
     intervals as the Commissioner of Social Security may 
     prescribe in order to ensure ease of administration and 
     reductions in burdens on employers.
       ``(3) Special rule for 2001.--Not later than January 1, 
     2001, any eligible individual that is employed or self-
     employed as of such date shall execute the designation 
     required under paragraph (1).
       ``(4) Designation in absence of designation by eligible 
     individual.--In any case in which no designation of the 
     individual savings account is made, the Commissioner of 
     Social Security shall make the designation of the individual 
     savings account in accordance with regulations that take into 
     account the competing objectives of maximizing returns on 
     investments and minimizing the risk involved with such 
     investments.
       ``(d) Treatment of Incompetent Individuals.--Any 
     designation under subsection (c)(1) to be made by an 
     individual mentally incompetent or under other legal 
     disability may be made by the person who is constituted 
     guardian or other fiduciary by the law of the State of 
     residence of the individual or is otherwise legally vested 
     with the care of the individual or his estate. Payment under 
     this part due an individual mentally incompetent or under 
     other legal disability may be made to the person who is 
     constituted guardian or other fiduciary by the law of the 
     State of residence of the claimant or is otherwise legally 
     vested with the care of the claimant or his estate. In any 
     case in which a guardian or other fiduciary of the individual 
     under legal disability has not been appointed under the law 
     of the State of residence of the individual, if any other 
     person, in the judgment of the Commissioner, is responsible 
     for the care of such individual, any designation under 
     subsection (c)(1)

[[Page S5670]]

     which may otherwise be made by such individual may be made by 
     such person, any payment under this part which is otherwise 
     payable to such individual may be made to such person, and 
     the payment of an annuity payment under this part to such 
     person bars recovery by any other person.


   ``definition of individual savings account; treatment of accounts

       ``Sec. 252. (a) Individual Savings Account.--In this part, 
     the term `individual savings account' means any individual 
     savings account in the Individual Savings Fund (established 
     under section 254) which is administered by the Individual 
     Savings Fund Board.
       ``(b) Treatment of Account.--Except as otherwise provided 
     in this part and in section 531 of the Internal Revenue Code 
     of 1986, any individual savings account described in 
     subsection (a) shall be treated in the same manner as an 
     individual account in the Thrift Savings Fund under 
     subchapter III of chapter 84 of title 5, United States Code.


               ``individual savings account distributions

       ``Sec. 253. (a) Date of Initial Distribution.--Except as 
     provided in subsection (c), distributions may only be made 
     from an individual savings account of an eligible individual 
     on and after the earliest of--
       ``(1) the date the eligible individual attains normal 
     retirement age, as determined under section 216 (or early 
     retirement age (as so determined) if elected by such 
     individual), or
       ``(2) the date on which funds in the eligible individual's 
     individual savings account are sufficient to provide a 
     monthly payment over the life expectancy of the eligible 
     individual (determined under reasonable actuarial 
     assumptions) which, when added to the eligible individual's 
     monthly benefit under part A (if any), is at least equal to 
     an amount equal to \1/12\ of the poverty line (as defined in 
     section 673(2) of the Community Services Block Grant Act (42 
     U.S.C. 9902(2) and determined on such date for an individual) 
     and adjusted annually thereafter by the adjustment determined 
     under section 215(i).
       ``(b) Forms of Distribution.--
       ``(1) Required monthly payments.--Except as provided in 
     paragraph (2), beginning with the date determined under 
     subsection (a), the balance in an individual savings account 
     available to provide monthly payments not in excess of the 
     amount described in subsection (a)(2) shall be paid, as 
     elected by the account holder (in such form and manner as 
     shall be prescribed in regulations of the Individual Savings 
     Fund Board), by means of the purchase of annuities or equal 
     monthly payments over the life expectancy of the eligible 
     individual (determined under reasonable actuarial 
     assumptions) in accordance with requirements (which shall be 
     provided in regulations of the Board) similar to the 
     requirements applicable to payments of benefits under 
     subchapter III of chapter 84 of title 5, United States Code, 
     and providing for indexing for inflation.
       ``(2) Payment of excess funds.--To the extent funds remain 
     in an eligible individual's individual savings account after 
     the application of paragraph (1), such funds shall be payable 
     to the eligible individual in such manner and in such amounts 
     as determined by the eligible individual, subject to the 
     provisions of subchapter III of chapter 84 of title 5, United 
     States Code.
       ``(c) Distribution in the Event of Death Before the Date of 
     Initial Distribution.--If the eligible individual dies before 
     the date determined under subsection (a), the balance in such 
     individual's individual savings account shall be distributed 
     in a lump sum, under rules established by the Individual 
     Savings Fund Board, to the individual's heirs.


                       ``individual savings fund

       ``Sec. 254. (a) Establishment.--There is established and 
     maintained in the Treasury of the United States an Individual 
     Savings Fund in the same manner as the Thrift Savings Fund 
     under sections 8437, 8438, and 8439 (but not section 8440) of 
     title 5, United States Code.
       ``(b) Individual Savings Fund Board.--
       ``(1) In general.--There is established and operated in the 
     Social Security Administration an Individual Savings Fund 
     Board in the same manner as the Federal Retirement Thrift 
     Investment Board under subchapter VII of chapter 84 of title 
     5, United States Code.
       ``(2) Specific investment and reporting duties.--
       ``(A) In general.--The Individual Savings Fund Board shall 
     manage and report on the activities of the Individual Savings 
     Fund and the individual savings accounts of such Fund in the 
     same manner as the Federal Retirement Thrift Investment Board 
     manages and reports on the Thrift Savings Fund and the 
     individual accounts of such Fund under subchapter VII of 
     chapter 84 of title 5, United States Code.
       ``(B) Study and report on increased investment options.--
       ``(i) Study.--The Individual Savings Fund Board shall 
     conduct a study regarding ways to increase an eligible 
     individual's investment options with respect to such 
     individual's individual savings account and with respect to 
     rollovers or distributions from such account.
       ``(ii) Report.--Not later than 2 years after the date of 
     enactment of the Bipartisan Social Security Reform Act of 
     2000, the Individual Savings Fund Board shall submit a report 
     to the President and Congress that contains a detailed 
     statement of the results of the study conducted pursuant to 
     clause (i), together with the Board's recommendations for 
     such legislative actions as the Board considers appropriate.


     ``budgetary treatment of individual savings fund and accounts

       ``Sec. 255. The receipts and disbursements of the 
     Individual Savings Fund and any accounts within such fund 
     shall not be included in the totals of the budget of the 
     United States Government as submitted by the President or of 
     the congressional budget and shall be exempt from any general 
     budget limitation imposed by statute on expenditures and net 
     lending (budget outlays) of the United States Government.''.
       (b) Modification of FICA Rates.--
       (1) Employees.--Section 3101(a) of the Internal Revenue 
     Code of 1986 (relating to tax on employees) is amended to 
     read as follows:
       ``(a) Old-Age, Survivors, and Disability Insurance.--
       ``(1) In general.--
       ``(A) Individuals covered under part a of title ii of the 
     social security act.--In addition to other taxes, there is 
     hereby imposed on the income of every individual who is not a 
     part B eligible individual a tax equal to 6.2 percent of the 
     wages (as defined in section 3121(a)) received by him with 
     respect to employment (as defined in section 3121(b)).
       ``(B) Individuals covered under part b of title ii of the 
     social security act.--In addition to other taxes, there is 
     hereby imposed on the income of every part B eligible 
     individual a tax equal to 4.2 percent of the wages (as 
     defined in section 3121(a)) received by such individual with 
     respect to employment (as defined in section 3121(b)).
       ``(2) Contribution of oasdi tax reduction to individual 
     savings accounts.--
       ``(A) In general.--In addition to other taxes, there is 
     hereby imposed on the income of every part B eligible 
     individual an individual savings account contribution equal 
     to the sum of--
       ``(i) 2 percent of the wages (as so defined) received by 
     such individual with respect to employment (as so defined), 
     plus
       ``(ii) so much of such wages (not to exceed $2,000) as 
     designated by the individual in the same manner as described 
     in section 251(c) of the Social Security Act.
       ``(B) Inflation adjustment.--
       ``(i) In general.--In the case of any calendar year 
     beginning after 2001, the dollar amount in subparagraph 
     (A)(ii) shall be increased by an amount equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year, determined by 
     substituting `calendar year 2000' for `calendar year 1992' in 
     subparagraph (B) thereof.

       ``(ii) Rounding.--If any dollar amount after being 
     increased under clause (i) is not a multiple of $10, such 
     dollar amount shall be rounded to the nearest multiple of 
     $10.''.
       (2) Self-employed.--Section 1401(a) of the Internal Revenue 
     Code of 1986 (relating to tax on self-employment income) is 
     amended to read as follows:
       ``(a) Old-Age, Survivors, and Disability Insurance.--
       ``(1) In general.--
       ``(A) Individuals covered under part a of the social 
     security act.--In addition to other taxes, there shall be 
     imposed for each taxable year, on the self-employment income 
     of every individual who is not a part B eligible individual 
     for the calendar year ending with or during such taxable 
     year, a tax equal to 12.40 percent of the amount of the self-
     employment income for such taxable year.
       ``(B) Individuals covered under part b of title ii of the 
     social security act.--In addition to other taxes, there is 
     hereby imposed for each taxable year, on the self-employment 
     income of every part B eligible individual, a tax equal to 
     10.4 percent of the amount of the self-employment income for 
     such taxable year.
       ``(2) Contribution of oasdi tax reduction to individual 
     savings accounts.--
       ``(A) In general.--In addition to other taxes, there is 
     hereby imposed for each taxable year, on the self-employment 
     income of every individual, an individual savings account 
     contribution equal to the sum of--
       ``(i) 2 percent of the amount of the self-employment income 
     for each individual for such taxable year, and
       ``(ii) so much of such self-employment income (not to 
     exceed $2,000) as designated by the individual in the same 
     manner as described in section 251(c) of the Social Security 
     Act.
       ``(B) Inflation adjustment.--
       ``(i) In general.--In the case of any taxable year 
     beginning after 2001, the dollar amount in subparagraph 
     (A)(ii) shall be increased by an amount equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2000' 
     for `calendar year 1992' in subparagraph (B) thereof.

       ``(ii) Rounding.--If any dollar amount after being 
     increased under clause (i) is not a multiple of $10, such 
     dollar amount shall be rounded to the nearest multiple of 
     $10.''.
       (3) Part b eligible individual.--
       (A) Taxes on employees.--Section 3121 of such Code 
     (relating to definitions) is amended by inserting after 
     subsection (s) the following:
       ``(t) Part B Eligible Individual.--For purposes of this 
     chapter, the term `part B eligible individual' means, for any 
     calendar year, an individual who is an eligible individual

[[Page S5671]]

     (as defined in section 251(a)(2) of the Social Security Act) 
     for such calendar year.''.
       (B) Self-employment tax.--Section 1402 of such Code 
     (relating to definitions) is amended by adding at the end the 
     following:
       ``(k) Part B Eligible Individual.--The term `part B 
     eligible individual' means, for any calendar year, an 
     individual who is an eligible individual (as defined in 
     section 251(a)(2) of the Social Security Act) for such 
     calendar year.''.
       (4) Effective dates.--
       (A) Employees.--The amendments made by paragraphs (1) and 
     (3)(A) apply to remuneration paid after December 31, 2000.
       (B) Self-employed individuals.--The amendments made by 
     paragraphs (2) and (3)(B) apply to taxable years beginning 
     after December 31, 2000.
       (c) Matching Contributions.--
       (1) In general.--Part IV of subchapter A of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to credits 
     against tax) is amended by adding at the end the following:

            ``Subpart H--Individual Savings Account Credits

``Sec. 54. Individual savings account credit.''.

     ``SEC. 54. INDIVIDUAL SAVINGS ACCOUNT CREDIT.

       ``(a) Allowance of Credit.--Each part B eligible individual 
     is entitled to a credit for the taxable year in an amount 
     equal to the sum of--
       ``(1) $100, plus
       ``(2) 100 percent of the designated wages of such 
     individual for the taxable year, plus
       ``(3) 100 percent of the designated self-employment income 
     of such individual for the taxable year.
       ``(b) Limitations.--
       ``(1) Amount.--The amount determined under subsection (a) 
     with respect to such individual for any taxable year may not 
     exceed the excess (if any) of--
       ``(A) an amount equal to 1 percent of the contribution and 
     benefit base for such taxable year (as determined under 
     section 230 of the Social Security Act), over
       ``(B) the sum of the amounts received by the Secretary on 
     behalf of such individual under sections 3101(a)(2)(A)(i) and 
     1401(a)(2)(A)(i) for such taxable year.
       ``(2) Failure to make voluntary contributions.--In the case 
     of a part B eligible individual with respect to whom the 
     amount of wages designated under section 3101(a)(2)(A)(ii) 
     plus the amount self-employment income designated under 
     section 1401(a)(2)(A)(ii) for the taxable year is less that 
     $1, the credit to which such individual is entitled under 
     this section shall be equal to zero.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Part b eligible individual.--The term `part B 
     eligible individual' means, for any calendar year, an 
     individual who--
       ``(A) is an eligible individual (as defined in section 
     251(a)(2) of the Social Security Act) for such calendar year, 
     and
       ``(B) is not an individual with respect to whom another 
     taxpayer is entitled to a deduction under section 151(c).
       ``(2) Designated wages.--The term `designated wages' means 
     with respect to any taxable year the amount designated under 
     section 3101(a)(2)(A)(ii).
       ``(3) Designated self-employment income.--The term 
     `designated self-employment income' means with respect to any 
     taxable year the amount designated under section 
     1401(a)(2)(A)(ii) for such taxable year.
       ``(d) Credit Used Only for Individual Savings Account.--For 
     purposes of this title, the credit allowed under this section 
     with respect to any part B eligible individual--
       ``(1) shall not be treated as a credit allowed under this 
     part, but
       ``(2) shall be treated as an overpayment of tax under 
     section 6401(b)(3) which may, in accordance with section 
     6402(l), only be transferred to an individual savings account 
     established under part B of title II of the Social Security 
     Act with respect to such individual.''.
       (2) Contribution of credited amounts to individual savings 
     account.--
       (A) Credited amounts treated as overpayment of tax.--
     Subsection (b) of section 6401 of such Code (relating to 
     excessive credits) is amended by adding at the end the 
     following:
       ``(3) Special rule for credit under section 54.--Subject to 
     the provisions of section 6402(l), the amount of any credit 
     allowed under section 54 for any taxable year shall be 
     considered an overpayment.''.
       (B) Transfer of credit amount to individual savings 
     account.--Section 6402 of such Code (relating to authority to 
     make credits or refunds) is amended by adding at the end the 
     following:
       ``(l) Overpayments Attributable to Individual Savings 
     Account Credit.--In the case of any overpayment described in 
     section 6401(b)(3) with respect to any individual, the 
     Secretary shall transfer for crediting by the Commissioner of 
     Social Security to the individual savings account of such 
     individual, an amount equal to the amount of such 
     overpayment.''.
       (3) Conforming amendments.--
       (A) Section 1324(b)(2) of title 31, United States Code, is 
     amended by inserting before the period at the end ``, or 
     enacted by the Bipartisan Social Security Reform Act of 
     2000''.
       (B) The table of subparts for part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following:

``Subpart H. Individual Savings Account Credits.''.
       (4) Effective date.--The amendments made by this subsection 
     shall apply to refunds payable after December 31, 2000.
       (d) Tax Treatment of Individual Savings Accounts.--
       (1) In general.--Subchapter F of chapter 1 of the Internal 
     Revenue Code of 1986 (relating to exempt organizations) is 
     amended by adding at the end the following:

            ``PART IX--INDIVIDUAL SAVINGS FUND AND ACCOUNTS

``Sec. 531. Individual Savings Fund and Accounts.

     ``SEC. 531. INDIVIDUAL SAVINGS FUND AND ACCOUNTS.

       ``(a) General Rule.--The Individual Savings Fund and 
     individual savings accounts shall be exempt from taxation 
     under this subtitle.
       ``(b) Individual Savings Fund and Accounts Defined.--For 
     purposes of this section, the terms `Individual Savings Fund' 
     and `individual savings account' means the fund and account 
     established under sections 254 and 251, respectively, of part 
     B of title II of the Social Security Act.
       ``(c) Contributions.--
       ``(1) In general.--No deduction shall be allowed for 
     contributions credited to an individual savings account under 
     section 251 of the Social Security Act or section 6402(l).
       ``(2) Rollover of inheritance.--Any portion of a 
     distribution to an heir from an individual savings account 
     made by reason of the death of the beneficiary of such 
     account may be rolled over to the individual savings account 
     of the heir after such death.
       ``(d) Distributions.--
       ``(1) In general.--Any distribution from an individual 
     savings account under section 253 of the Social Security Act 
     shall be included in gross income under section 72.
       ``(2) Period in which distributions must be made from 
     account of decedent.--In the case of amounts remaining in an 
     individual savings account from which distributions began 
     before the death of the beneficiary, rules similar to the 
     rules of section 401(a)(9)(B) shall apply to distributions of 
     such remaining amounts.
       ``(3) Rollovers.--Paragraph (1) shall not apply to amounts 
     rolled over under subsection (c)(2) in a direct transfer by 
     the Commissioner of Social Security, under regulations which 
     the Commissioner shall prescribe.''.
       (2) Clerical amendment.--The table of parts for subchapter 
     F of chapter 1 of such Code is amended by adding after the 
     item relating to part VIII the following:

``Part IX. Individual savings fund and accounts.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 102. SOCIAL SECURITY KIDSAVE ACCOUNTS.

       Title II of the Social Security Act (42 U.S.C. 401 et 
     seq.), as amended by section 101(a), is amended by adding at 
     the end the following:

                       ``Part C--KidSave Accounts


                           ``kidsave accounts

       ``Sec. 261. (a) Establishment.--The Commissioner of Social 
     Security shall establish in the name of each individual born 
     on or after January 1, 1995, a KidSave Account upon the later 
     of--
       ``(1) the date of enactment of this part, or
       ``(2) the date of the issuance of a Social Security account 
     number under section 205(c)(2) to such individual.
     The KidSave Account shall be identified to the account holder 
     by means of the account holder's Social Security account 
     number.
       ``(b) Contributions.--
       ``(1) In general.--There are authorized to be appropriated 
     and are appropriated such sums as are necessary in order for 
     the Secretary of the Treasury to transfer from the general 
     fund of the Treasury for crediting by the Commissioner to 
     each account holder's KidSave Account under subsection (a), 
     an amount equal to the sum of--
       ``(A) in the case of any individual born on or after 
     January 1, 2001, $1,000, on the date of the establishment of 
     such individual's KidSave Account, and
       ``(B) in the case of any individual born on or after 
     January 1, 1995, $500, on the 1st, 2nd, 3rd, 4th, and 5th 
     birthdays of such individual occurring on or after January 1, 
     2001.
       ``(2) Adjustment for inflation.--For any calendar year 
     after 2001, each of the dollar amounts under paragraph (1) 
     shall be increased by the cost-of-living adjustment using the 
     wage increase percentage determined under section 215(i) for 
     the calendar year.
       ``(c) Designations Regarding KidSave Accounts.--
       ``(1) Initial designations of investment vehicle.--A person 
     described in subsection (d) shall, on behalf of the 
     individual described in subsection (a), designate the 
     investment vehicle for the KidSave Account to which 
     contributions on behalf of such individual are to be 
     deposited. Such designation shall be made on the application 
     for such individual's Social Security account number.
       ``(2) Changes in investment vehicles.--The Commissioner 
     shall by regulation provide the time and manner by which an 
     individual or a person described in subsection (d) on behalf 
     of such individual may change 1 or more investment vehicles 
     for a KidSave Account.

[[Page S5672]]

       ``(d) Treatment of Minors and Incompetent Individuals.--Any 
     designation under subsection (c) to be made by a minor, or an 
     individual mentally incompetent or under other legal 
     disability, may be made by the person who is constituted 
     guardian or other fiduciary by the law of the State of 
     residence of the individual or is otherwise legally vested 
     with the care of the individual or his estate. Payment under 
     this part due a minor, or an individual mentally incompetent 
     or under other legal disability, may be made to the person 
     who is constituted guardian or other fiduciary by the law of 
     the State of residence of the claimant or is otherwise 
     legally vested with the care of the claimant or his estate. 
     In any case in which a guardian or other fiduciary of the 
     individual under legal disability has not been appointed 
     under the law of the State of residence of the individual, if 
     any other person, in the judgment of the Commissioner, is 
     responsible for the care of such individual, any designation 
     under subsection (c) which may otherwise be made by such 
     individual may be made by such person, any payment under this 
     part which is otherwise payable to such individual may be 
     made to such person, and the payment of an annuity payment 
     under this part to such person bars recovery by any other 
     person.


                    ``definitions and special rules

       ``Sec. 262. (a) Kidsave Accounts.--In this part, the term 
     `KidSave Account' means any KidSave Account in the Individual 
     Savings Fund (established under section 254) which is 
     administered by the Individual Savings Fund Board.
       ``(b) Treatment of Accounts.--
       ``(1) In general.--Except as provided in paragraph (2), any 
     KidSave Account described in subsection (a) shall be treated 
     in the same manner as an individual savings account under 
     part B.
       ``(2) Distributions.--Notwithstanding any other provision 
     of law, distributions may only be made from a KidSave Account 
     of an individual on or after the earlier of--
       ``(A) the date on which the individual begins receiving 
     benefits under this title, or
       ``(B) the date of the individual's death.''.

     SEC. 103. ADJUSTMENTS TO PRIMARY INSURANCE AMOUNTS UNDER PART 
                   A OF TITLE II OF THE SOCIAL SECURITY ACT.

       (a) In General.--Section 215 of the Social Security Act (42 
     U.S.C. 415) is amended by adding at the end the following:

 ``Adjustment of Primary Insurance Amount in Relation to Deposits Made 
          to Individual Savings Accounts and KidSave Accounts

       ``(j)(1) Except as provided in paragraph (2), an 
     individual's primary insurance amount as determined in 
     accordance with this section (before adjustments made under 
     subsection (i)) shall be equal to--
       ``(A) the amount which would be so determined without the 
     application of this subsection, multiplied by
       ``(B) 1 minus the ratio of--
       ``(i) the sum of--
       ``(I) the total of all amounts which have been credited 
     pursuant to sections 3101(a)(2)(A)(i) and 1401(a)(2)(A)(i) of 
     the Internal Revenue Code of 1986 to the individual savings 
     account held by such individual, plus
       ``(II) 50 percent of the accumulated value of the KidSave 
     Account (established on behalf of such individual under 
     section 261(a)) determined on the date such KidSave Account 
     is redesignated as an individual savings account held by such 
     individual under section 251(a)(1)(B), plus
       ``(III) accrued interest on such amounts compounded 
     annually up to the date of initial benefit entitlement based 
     on the individual's earnings, assuming an interest rate equal 
     to the projected interest rate of the Federal Old-Age and 
     Survivors Trust Fund, to
       ``(ii) the expected present value of all future benefits 
     paid based on the individual's earnings, as of the date of 
     initial benefit entitlement based on such earnings, assuming 
     future mortality and interest rates for the Federal Old-Age 
     and Survivors Trust Fund used in the intermediate projections 
     of the most recent Board of Trustees report under section 
     201.
       ``(2) In the case of an individual who becomes entitled to 
     disability insurance benefits under section 223, such 
     individual's primary insurance amount shall be determined 
     without regard to paragraph (1).''.
       (b) Conforming Amendment to Railroad Retirement Act of 
     1974.--Section 1 of the Railroad Retirement Act of 1974 (45 
     U.S.C. 231) is amended by adding at the end the following:
       ``(s) In applying applicable provisions of the Social 
     Security Act for purposes of determining the amount of the 
     annuity to which an individual is entitled under this Act, 
     section 215(j) of the Social Security Act and part B of title 
     II of such Act shall be disregarded.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to computations and recomputations 
     of primary insurance amounts occurring after December 31, 
     2000.

              TITLE II--SOCIAL SECURITY SYSTEM ADJUSTMENTS

     SEC. 201. ADJUSTMENTS TO BEND POINTS IN DETERMINING PRIMARY 
                   INSURANCE AMOUNTS.

       (a) Additional Bend Point.--Section 215(a)(1)(A) of the 
     Social Security Act (42 U.S.C. 415(a)(1)(A)) is amended--
       (1) in clause (ii), by striking ``and'' at the end;
       (2) in clause (iii)--
       (A) by striking ``15 percent'' and inserting ``32 
     percent'';
       (B) by striking ``clause (ii),'' and inserting the 
     following: ``clause (ii) but do not exceed the amount 
     established for purposes of this clause by subparagraph (B), 
     and''; and
       (3) by inserting after clause (iii) the following:
       ``(iv) 15 percent of the individual's average indexed 
     monthly earnings to the extent that such earnings exceed the 
     amount established for purposes of clause (iii),''.
       (b) Initial Level of Additional Bend Point.--Section 
     215(a)(1)(B)(i) of such Act (42 U.S.C. 415(a)(1)(B)(i)) is 
     amended--
       (1) by striking ``clause (i) and (ii)'' and inserting 
     ``clauses (i) and (iii)''; and
       (2) by adding at the end the following: ``For individuals 
     who initially become eligible for old-age or disability 
     insurance benefits, or who die (before becoming eligible for 
     such benefit), in the calendar year 2001, the amount 
     established for purposes of clause (ii) of subparagraph (A) 
     shall be equal to 197.5 percent of the amount established for 
     purposes of clause (i).''.
       (c) Adjustments to PIA Formula Factors.--Section 
     215(a)(1)(B) of such Act (42 U.S.C. 415(a)(1)(B)) is amended 
     further--
       (1) by redesignating clause (iii) as clause (iv);
       (2) by inserting after clause (ii) the following:
       ``(iii) For individuals who initially become eligible for 
     old-age or disability insurance benefits, or who die (before 
     becoming eligible for such benefits), in any calendar year 
     after 2005, effective for such calendar year--
       ``(I) the percentage in effect under clause (ii) of 
     subparagraph (A) shall be equal to the percentage in effect 
     under such clause for calendar year 2005 increased the 
     applicable number of times by 3.8 percentage points,
       ``(II) the percentage in effect under clause (iii) of 
     subparagraph (A) shall be equal to the percentage in effect 
     under such clause for calendar year 2005 decreased the 
     applicable number of times by 1.2 percentage points, and
       ``(III) the percentage in effect under clause (iv) of 
     subparagraph (A) shall be equal to the percentage in effect 
     under such clause for calendar year 2005 decreased the 
     applicable number of times by 0.5 percentage points.
     For purposes of the preceding sentence, the term `applicable 
     number of times' means a number equal to the lesser of 10 or 
     the number of years beginning with 2006 and ending with the 
     year of initial eligibility or death.''; and
       (3) in clause (iv) (as redesignated), by striking 
     ``amount'' and inserting ``dollar amount''.
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to primary insurance amounts of 
     individuals attaining early retirement age (as defined in 
     section 216(l) of the Social Security Act), or dying, after 
     December 31, 2000.

     SEC. 202. ADJUSTMENT OF WIDOWS' AND WIDOWERS' INSURANCE 
                   BENEFITS.

       (a) Widow's Benefit.--Section 202(e)(2)(A) of the Social 
     Security Act (42 U.S.C. 402(e)(2)(A)) is amended by striking 
     ``equal to'' and all that follows and inserting ``equal to 
     the greater of--
       ``(i) the primary insurance amount (as determined for 
     purposes of this subsection after application of 
     subparagraphs (B) and (C)) of such deceased individual, or
       ``(ii) the lesser of--
       ``(I) the applicable percentage of the joint benefit which 
     would have been received by the widow or surviving divorced 
     wife and the deceased individual for such month if such 
     individual had not died, or
       ``(II) the benefit which would have been received by the 
     widow or surviving divorced wife if such individual's 
     contributions were based on the maximum contribution and 
     benefit base amount (determined under section 230) for each 
     contribution base year (as determined under section 
     215(b)(2)(B)(ii)) of such individual.
     For purposes of clause (ii)(I), the applicable percentage is 
     equal to 50 percent in 2001, increased (but not above 75 
     percent) by 1 percentage point in every second year 
     thereafter.''.
       (b) Widower's Benefit.--Section 202(f)(3)(A) of the Social 
     Security Act (42 U.S.C. 402(b)(3)(A)) is amended by striking 
     ``equal to'' and all that follows and inserting ``equal to 
     the greater of--
       ``(i) the primary insurance amount (as determined for 
     purposes of this subsection after application of 
     subparagraphs (B) and (C)) of such deceased individual, or
       ``(ii) the lesser of--
       ``(I) the applicable percentage of the joint benefit which 
     would have been received by the widow or surviving divorced 
     wife and the deceased individual for such month if such 
     individual had not died, or
       ``(II) the benefit which would have been received by the 
     widower or surviving divorced husband if such individual's 
     contributions were based on the maximum contribution and 
     benefit base amount (determined under section 230) for each 
     contribution base year (as determined under section 
     215(b)(2)(B)(ii)) of such individual.
     For purposes of clause (ii)(II), the applicable percentage is 
     equal to 50 percent in 2001, increased (but not above 75 
     percent) by 1 percentage point in every second year 
     thereafter.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply individuals entitled to benefits after the date 
     of enactment of this Act.

[[Page S5673]]

     SEC. 203. ELIMINATION OF EARNINGS TEST FOR INDIVIDUALS WHO 
                   HAVE ATTAINED EARLY RETIREMENT AGE.

       (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'' 
     and inserting ``early retirement age'';
       (2) in paragraphs (1)(A) and (2) of subsection (d), by 
     striking ``retirement age'' each place it appears and 
     inserting ``early retirement age'';
       (3) in subsection (f)(1)(B), by striking ``retirement age'' 
     and inserting ``early retirement age'';
       (4) in subsection (f)(3)--
       (A) by striking ``33\1/3\ percent'' and all that follows 
     through ``any 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),''; and
       (B) by striking ``retirement age'' and inserting ``early 
     retirement age'';
       (5) in subsection (f)(5)(D)(i), by striking ``retirement 
     age'' and inserting ``early retirement age'';
       (6) in subsection (f)(9)--
       (A) by striking ``, (5)(D)(i), and (8)(D)'' and inserting 
     ``and (5)(D)(i)''; and
       (B) by striking ``retirement age'' both places it appears 
     and inserting ``early retirement age'';
       (7) in subsection (h)(1)(A), by striking ``retirement age 
     (as defined in section 216(l))'' each place it appears and 
     inserting ``early retirement age (as defined in section 
     216(l))''; and
       (8) in subsection (j)--
       (A) in the heading, by striking ``Retirement Age'' and 
     inserting ``Early Retirement Age''; and
       (B) by striking ``having attained retirement age (as 
     defined in section 216(l))'' and inserting ``having attained 
     early retirement age (as defined in section 216(l))''.
       (b) Conforming Amendments Eliminating the Special Exempt 
     Amount for Individuals Who Have Attained Age 62.--
       (1) Uniform exempt amount.--Section 203(f)(8)(A) of the 
     Social Security 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 the 
     Social Security 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 clauses (i) and (ii), by striking ``corresponding'' 
     each place it appears; and
       (C) 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 
     the Social Security Act (42 U.S.C. 403(f)(8)) are repealed.
       (c) Additional Conforming Amendments.--
       (1) Elimination of redundant references to retirement 
     age.--Section 203 of the Social Security Act (42 U.S.C. 403) 
     is amended--
       (A) in subsection (c), in the last sentence, by striking 
     ``nor shall any deduction'' and all that follows and 
     inserting ``nor shall any deduction be made under this 
     subsection from any widow's or widower's insurance benefit if 
     the widow, surviving divorced wife, widower, or surviving 
     divorced husband involved became entitled to such benefit 
     prior to attaining age 60.''; and
       (B) in subsection (f)(1), by striking clause (D) and 
     inserting the following: ``(D) for which such individual is 
     entitled to widow's or widower's insurance benefits if such 
     individual became so entitled prior to attaining age 60,''.
       (2) Provisions relating to earnings taken into account in 
     determining substantial gainful activity of blind 
     individuals.--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 the Bipartisan 
     Social Security Reform Act of 2000 had not been enacted''.
       (d) Study of the Effect of Taking Earnings Into Account in 
     Determining Substantial Gainful Activity of Disabled 
     Individuals.--
       (1) In general.--Not later than February 15, 2001, the 
     Commissioner of Social Security shall conduct a study on the 
     effect that taking earnings into account in determining 
     substantial gainful activity of individuals receiving 
     disability insurance benefits has on the incentive for such 
     individuals to work and submit to Congress a report on the 
     study.
       (2) Contents of study.--The study conducted under paragraph 
     (1) shall include the evaluation of--
       (A) the effect of the current limit on earnings on the 
     incentive for individuals receiving disability insurance 
     benefits to work;
       (B) the effect of increasing the earnings limit or changing 
     the manner in which disability insurance benefits are reduced 
     or terminated as a result of substantial gainful activity 
     (including reducing the benefits gradually when the earnings 
     limit is exceeded) on--
       (i) the incentive to work; and
       (ii) the financial status of the Federal Disability 
     Insurance Trust Fund;
       (C) the effect of extending eligibility for the Medicare 
     program to individuals during the period in which disability 
     insurance benefits of the individual are gradually reduced as 
     a result of substantial gainful activity and extending such 
     eligibility for a fixed period of time after the benefits are 
     terminated on--
       (i) the incentive to work; and
       (ii) the financial status of the Federal Hospital Insurance 
     Trust Fund and the Federal Supplementary Medical Insurance 
     Trust Fund; and
       (D) the relationship between the effect of substantial 
     gainful activity limits on blind individuals receiving 
     disability insurance benefits and other individuals receiving 
     disability insurance benefits.
       (3) Consultation.--The analysis under paragraph (2)(C) 
     shall be done in consultation with the Administrator of the 
     Health Care Financing Administration.
       (e) Effective Date.--The amendments and repeals made by 
     subsections (a), (b), and (c) shall apply with respect to 
     taxable years ending after December 31, 2002.

     SEC. 204. GRADUAL INCREASE IN NUMBER OF BENEFIT COMPUTATION 
                   YEARS; USE OF ALL YEARS IN COMPUTATION.

       (a) In General.--Section 215(b)(2)(A) of the Social 
     Security Act (42 U.S.C. 415(b)(2)(A)) is amended--
       (1) in clause (i), by striking ``5 years'' and inserting 
     ``the applicable number of years for purposes of this 
     clause''; and
       (2) by striking ``Clause (ii),'' in the matter following 
     clause (ii) and inserting the following:
     ``For purposes of clause (i), the applicable number of years 
     is the number of years specified in connection with the year 
     in which such individual reaches early retirement age (as 
     defined in section 216(l)(2)), or, if earlier, the calendar 
     year in which such individual dies, as set forth in the 
     following table:

The applicable number of years is:
  2002...............................................................4.
  2003...............................................................4.
  2004...............................................................3.
  2005...............................................................3.
  2006...............................................................2.
  2007...............................................................2.
  2008...............................................................1.
  2009...............................................................1.
  After 2009.........................................................0.
     Notwithstanding the preceding sentence, the applicable number 
     of years is 5, in the case of any individual who is entitled 
     to old-age insurance benefits, and has a spouse who is also 
     so entitled (or who died without having become so entitled) 
     who has greater total wages and self-employment income 
     credited to benefit computation years than the individual. 
     Clause (ii),''.
       (b) Use of All Years in Computation.--
       (1) In general.--Section 215(b)(2)(B) of the Social 
     Security Act (42 U.S.C. 415(b)(2)(B)) is amended by striking 
     clauses (i) and (ii) and inserting the following:
       ``(i)(I) for calendar years after 2001 and before 2010, the 
     term `benefit computation years' means those computation base 
     years equal in number to the number determined under 
     subparagraph (A) plus the applicable number of years 
     determined under subclause (III), for which the total of such 
     individual's wages and self-employment income, after 
     adjustment under paragraph (3), is the largest;
       ``(II) for calendar years after 2009, the term `benefit 
     computation years' means all of the computation base years; 
     and
       ``(III) for purposes of subclause (I), the applicable 
     number of years is the number of years specified in 
     connection with the year in which such individual reaches 
     early retirement age (as defined in section 216(l)(2)), or, 
     if earlier, the calendar year in which such individual dies, 
     as set forth in the following table:

The applicable number of years is:
  Before 2002........................................................0.
  2002...............................................................1.
  2003...............................................................1.
  2004...............................................................2.
  2005...............................................................2.
  2006...............................................................3.
  2007...............................................................3.
  2008...............................................................4.
  2009...............................................................4;
       ``(ii) the term `computation base years' means the calendar 
     years after 1950, except that such term excludes any calendar 
     year entirely included in a period of disability; and''.
       (2) Conforming amendment.--Section 215(b)(1)(B) of the 
     Social Security Act (42 U.S.C. 415(b)(1)(B)) is amended by 
     striking ``in those years'' and inserting ``in an 
     individual's computation base years determined under 
     paragraph (2)(A)''.
       (c) Effective Date.--
       (1) Subsection (a).--The amendments made by subsection (a) 
     shall apply with respect to individuals attaining early 
     retirement age (as defined in section 216(l)(2) of the Social 
     Security Act) after December 31, 2001.
       (2) Subsection (b).--The amendment made by subsection (b) 
     shall apply to benefit computation years beginning after 
     December 31, 2000.

     SEC. 205. MAINTENANCE OF BENEFIT AND CONTRIBUTION BASE.

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

[[Page S5674]]

            maintenance of the contribution and benefit base

       ``Sec. 230. (a) The Commissioner of Social Security shall 
     determine and publish in the Federal Register on or before 
     November 1 of each calendar year the contribution and benefit 
     base determined under subsection (b) which shall be effective 
     with respect to remuneration paid after such calendar year 
     and taxable years beginning after such year.
       ``(b) For purposes of this section, for purposes of 
     determining wages and self-employment income under sections 
     209, 211, 213, and 215 of this Act and sections 54, 1402, 
     3121, 3122, 3125, 6413, and 6654 of the Internal Revenue Code 
     of 1986, and for purposes of section 4022(b)(3)(B) of Public 
     Law 93-406, the contribution and benefit base with respect to 
     remuneration paid in (and taxable years beginning in) any 
     calendar year is an amount equal to 84.5 percent of the total 
     wages and self-employment income for the preceding calendar 
     year (within the meaning of section 209).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to remuneration paid in (and taxable years 
     beginning in) any calendar year after 2000.

     SEC. 206. REDUCTION IN THE AMOUNT OF CERTAIN TRANSFERS TO 
                   MEDICARE TRUST FUND.

       Subparagraph (A) of section 121(e)(1) of the Social 
     Security Amendments of 1983 (42 U.S.C. 401 note), as amended 
     by section 13215(c)(1) of the Omnibus Budget Reconciliation 
     Act of 1993, is amended--
       (1) in clause (ii), by striking ``the amounts'' and 
     inserting ``the applicable percentage of the amounts''; and
       (2) by adding at the end the following: ``For purposes of 
     clause (ii), the applicable percentage for a year is equal to 
     100 percent, reduced (but not below zero) by 10 percentage 
     points for each year after 2004.''.

     SEC. 207. ACTUARIAL ADJUSTMENT FOR RETIREMENT.

       (a) Early Retirement.--
       (1) In general.--Section 202(q) of the Social Security Act 
     (42 U.S.C. 402(q)) is amended--
       (A) in paragraph (1)(A), by striking ``\5/9\'' and 
     inserting ``the applicable fraction (determined under 
     paragraph (12))''; and
       (B) by adding at the end the following:
       ``(12) For purposes of paragraph (1)(A), the `applicable 
     fraction' for an individual who attains the age of 62 in--
       ``(A) any year before 2001, is \5/9\;
       ``(B) 2001, is \7/12\;
       ``(C) 2002, is \11/18\;
       ``(D) 2003, is \23/36\;
       ``(E) 2004, is \2/3\; and
       ``(F) 2005 or any succeeding year, is \25/36\.''.
       (2) Months beyond first 36 months.--Section 202(q) of such 
     Act (42 U.S.C. 402(q)(9)) (as amended by paragraph (1)) is 
     amended--
       (A) in paragraph (9)(A), by striking ``five-twelfths'' and 
     inserting ``the applicable fraction (determined under 
     paragraph (13))''; and
       (B) by adding at the end the following:
       ``(13) For purposes of paragraph (9)(A), the `applicable 
     fraction' for an individual who attains the age of 62 in--
       ``(A) any year before 2001, is \5/12\;
       ``(B) 2001, is \16/36\;
       ``(C) 2002, is \16/36\;
       ``(D) 2003, is \17/36\;
       ``(E) 2004, is \17/36\; and
       ``(F) 2005 or any succeeding year, is \1/2\.''.
       (3) Effective date.--The amendments made by paragraphs (1) 
     and (2) shall apply to individuals who attain the age of 62 
     in years after 2000.
       (b) Delayed Retirement.--Section 202(w)(6) of the Social 
     Security Act (42 U.S.C. 402(w)(6)) is amended--
       (1) in subparagraph (C), by striking ``and'' at the end;
       (2) in subparagraph (D), by striking ``2004.'' and 
     inserting ``2004 and before 2007;''; and
       (3) by adding at the end the following:
       ``(E) \17/24\ of 1 percent in the case of an individual who 
     attains the age of 62 in a calendar year after 2006 and 
     before 2009;
       ``(F) \3/4\ of 1 percent in the case of an individual who 
     attains the age of 62 in a calendar year after 2008 and 
     before 2011;
       ``(G) \19/24\ of 1 percent in the case of an individual who 
     attains the age of 62 in a calendar year after 2010 and 
     before 2013; and
       ``(H) \5/6\ of 1 percent in the case of an individual who 
     attains the age of 62 in a calendar year after 2012.''.

     SEC. 208. IMPROVEMENTS IN PROCESS FOR COST-OF-LIVING 
                   ADJUSTMENTS.

       (a) Annual Declarations of Persisting Upper Level 
     Substitution Bias, Quality-Change Bias, and New-Product 
     Bias.--Not later than December 1, 2000, and annually 
     thereafter, the Commissioner of the Bureau of Labor 
     Statistics shall publish in the Federal Register an estimate 
     of the upper level substitution bias, quality-change bias, 
     and new-product bias retained in the Consumer Price Index, 
     expressed in terms of a percentage point effect on the annual 
     rate of change in the Consumer Price Index determined through 
     the use of a superlative index that accounts for changes that 
     consumers make in the quantities of goods and services 
     consumed.
       (b) Modification of Cost-of-Living Adjustment.--
       (1) In general.--Notwithstanding any other provision of 
     law, for each calendar year after 2000 any cost-of-living 
     adjustment described in subsection (f) shall be further 
     adjusted by the greater of--
       (A) the applicable percentage point, or
       (B) the correction for the upper level substitution bias, 
     quality-change bias, and new-product bias (as last published 
     by the Commissioner of the Bureau of Labor Statistics 
     pursuant to subsection (a)).
       (2) Applicable percentage point.--For purposes of paragraph 
     (1)(A), the applicable percentage point shall be determined 
     in accordance with the following table:

                                                             Applicable
Calendar year:                                        Percentage Point:
  2001.........................................................0.1 ....

  2002.........................................................0.2 ....

  2003.........................................................0.3 ....

  2004 and thereafter.........................................0.33.....

       (c) Funding for CPI Improvements.--
       (1) In general.--There is hereby appropriated to the Bureau 
     of Labor Statistics in the Department of Labor, for each of 
     fiscal years 2001, 2002, and 2003, $60,000,000 for use by the 
     Bureau for the following purposes:
       (A) Research, evaluation, and implementation of a 
     superlative index to estimate upper level substitution bias, 
     quality-change bias, and new-product bias in the Consumer 
     Price Index.
       (B) Expansion of the Consumer Expenditure Survey and the 
     Point of Purchase Survey.
       (2) Reports.--The Commissioner of the Bureau of Labor 
     Statistics shall submit reports regarding the use of 
     appropriations made under paragraph (1) to the Committee on 
     Appropriations of the House of Representative and the 
     Committee on Appropriations of the Senate upon the request of 
     each Committee.
       (d) Information Sharing.--The Commissioner of the Bureau of 
     Labor Statistics may secure directly from the Secretary of 
     Commerce information necessary for purposes of calculating 
     the Consumer Price Index. Upon request of the Commissioner of 
     the Bureau of Labor Statistics, the Secretary of Commerce 
     shall furnish that information to the Commissioner.
       (e) Administrative Advisory Committee.--The Bureau of Labor 
     Statistics shall, in consultation with the National Bureau of 
     Economic Research, the American Economic Association, and the 
     National Academy of Statisticians, establish an 
     administrative advisory committee. The advisory committee 
     shall periodically advise the Bureau of Labor Statistics 
     regarding revisions of the Consumer Price Index and conduct 
     research and experimentation with alternative data collection 
     and estimating approaches.
       (f) Cost-of-Living Adjustment Described.--A cost-of-living 
     adjustment described in this subsection is any cost-of-living 
     adjustment for a calendar year after 2000 determined by 
     reference to a percentage change in a consumer price index or 
     any component thereof (as published by the Bureau of Labor 
     Statistics of the Department of Labor and determined without 
     regard to this section) and used in any of the following:
       (1) The Internal Revenue Code of 1986.
       (2) The provisions of this Act (other than programs under 
     title XVI and any adjustment in the case of an individual who 
     attains early retirement age before January 1, 2001).
       (3) Any other Federal program.
       (g) Recapture of CPI Reform Revenues Deposited Into the 
     Federal Old-Age and Survivors Insurance Trust Fund.--Section 
     201 of the Social Security Act (42 U.S.C. 401) is amended by 
     adding at the end the following:
       ``(n) On July 1 of each calendar year specified in the 
     following table, the Secretary of the Treasury shall 
     transfer, from the general fund of the Treasury to the 
     Federal Old-Age and Survivors Insurance Trust Fund, an amount 
     equal to the applicable percentage for such year, specified 
     in such table, of the total wages paid in and self-employment 
     income credited to such year.

The applicable percentage for the year is--
    0.4 percent.efore 2020.............................................
    0.53 percent.fore 2040.............................................
    0.67 percent.fore 2060.............................................
    0.8 percent.''.....................................................

     SEC. 209. MODIFICATION OF PIA FACTORS TO REFLECT CHANGES IN 
                   LIFE EXPECTANCY.

       (a) Modification of PIA Factors.--Section 215(a)(1) of the 
     Social Security Act (42 U.S.C. 415(a)(1)(B)) is amended by 
     redesignating subparagraph (D) as subparagraph (F) and by 
     inserting after subparagraph (C) the following:
       ``(D)(i) For individuals who initially become eligible for 
     old-age insurance benefits in any calendar year after 2005, 
     each of the percentages under clauses (i), (ii), (iii), and 
     (iv) of subparagraph (A) shall be multiplied the applicable 
     number of times by the applicable factor.
       ``(ii) For purposes of clause (i)--
       ``(I) the term `applicable number of times' means a number 
     equal to the sum of--
       ``(aa) the number of years beginning with 2006 and ending 
     with the earlier of 2016 or the year of initial eligibility; 
     plus
       ``(bb) if the year of initial eligibility has not occurred, 
     the number of years beginning with 2023 and ending with the 
     earlier of 2053 or the year of initial eligibility; and
       ``(II) the term `applicable factor' means .988 with respect 
     to the first 6 applicable number of times and .997 with 
     respect to the applicable number of times in excess of 6.
       ``(E) For any individual who initially becomes eligible for 
     disability insurance benefits in any calendar year after 
     2005, the primary insurance amount for such individual shall 
     be equal to the greater of--
       ``(i) such amount as determined under this paragraph, or
       ``(ii) such amount as determined under this paragraph 
     without regard to subparagraph (D) thereof.''.

[[Page S5675]]

       (b) Study of the Effect of Increases in Life Expectancy.--
       (1) Study plan.--Not later than February 15, 2001, the 
     Commissioner of Social Security shall submit to Congress a 
     detailed study plan for evaluating the effects of increases 
     in life expectancy on the expected level of retirement income 
     from social security, pensions, and other sources. The study 
     plan shall include a description of the methodology, data, 
     and funding that will be required in order to provide to 
     Congress not later than February 15, 2006--
       (A) an evaluation of trends in mortality and their 
     relationship to trends in health status, among individuals 
     approaching eligibility for social security retirement 
     benefits;
       (B) an evaluation of trends in labor force participation 
     among individuals approaching eligibility for social security 
     retirement benefits and among individuals receiving 
     retirement benefits, and of the factors that influence the 
     choice between retirement and participation in the labor 
     force;
       (C) an evaluation of changes, if any, in the social 
     security disability program that would reduce the impact of 
     changes in the retirement income of workers in poor health or 
     physically demanding occupations;
       (D) an evaluation of the methodology used to develop 
     projections for trends in mortality, health status, and labor 
     force participation among individuals approaching eligibility 
     for social security retirement benefits and among individuals 
     receiving retirement benefits; and
       (E) an evaluation of such other matters as the Commissioner 
     deems appropriate for evaluating the effects of increases in 
     life expectancy.
       (2) Report on results of study.--Not later than February 
     15, 2006, the Commissioner of Social Security shall provide 
     to Congress an evaluation of the implications of the trends 
     studied under paragraph (1), along with recommendations, if 
     any, of the extent to which the conclusions of such 
     evaluations indicate that projected increases in life 
     expectancy require modification in the social security 
     disability program and other income support programs.

     SEC. 210. MECHANISM FOR REMEDYING UNFORESEEN DETERIORATION IN 
                   SOCIAL SECURITY SOLVENCY.

       (a) In General.--Section 709 of the Social Security Act (42 
     U.S.C. 910) is amended--
       (1) by redesignating subsection (b) as subsection (c); and
       (2) by striking ``Sec. 709. (a) If the Board of Trustees'' 
     and all that follows through ``any such Trust Fund'' and 
     inserting the following:
       ``Sec. 709. (a)(1)(A) If the Board of Trustees of the 
     Federal Old-Age and Survivors Insurance Trust Fund and the 
     Federal Disability Insurance Trust Fund determines at any 
     time, using intermediate actuarial assumptions, that the 
     balance ratio of either such Trust Fund during any calendar 
     year within the succeeding period of 75 calendar years will 
     attain zero, the Board shall promptly submit to each House of 
     the Congress and to the President a report setting forth its 
     recommendations for statutory adjustments affecting the 
     receipts and disbursements of such Trust Fund necessary to 
     maintain the balance ratio of such Trust Fund at not less 
     than 20 percent, with due regard to the economic conditions 
     which created such inadequacy in the balance ratio and the 
     amount of time necessary to alleviate such inadequacy in a 
     prudent manner. The report shall set forth specifically the 
     extent to which benefits would have to be reduced, taxes 
     under section 1401, 3101, or 3111 of the Internal Revenue 
     Code of 1986 would have to be increased, or a combination 
     thereof, in order to obtain the objectives referred to in the 
     preceding sentence.
       ``(B) In addition to any reports under subparagraph (A), 
     the Board shall, not later than May 30, 2001, prepare and 
     submit to Congress and the President recommendations for 
     statutory adjustments to the disability insurance program 
     under title II of this Act to modify the changes in 
     disability benefits under the Bipartisan Social Security 
     Reform Act of 2000 without reducing the balance ratio of the 
     Federal Disability Insurance Trust Fund. The Board shall 
     develop such recommendations in consultation with the 
     National Council on Disability, taking into consideration the 
     adequacy of benefits under the program, the relationship of 
     such program with old age benefits under such title, and 
     changes in the process for determining initial eligibility 
     and reviewing continued eligibility for benefits under such 
     program.
       ``(2)(A) The President shall, no later than 30 days after 
     the submission of the report to the President, transmit to 
     the Board and to the Congress a report containing the 
     President's approval or disapproval of the Board's 
     recommendations.
       ``(B) If the President approves all the recommendations of 
     the Board, the President shall transmit a copy of such 
     recommendations to the Congress as the President's 
     recommendations, together with a certification of the 
     President's adoption of such recommendations.
       ``(C) If the President disapproves the recommendations of 
     the Board, in whole or in part, the President shall transmit 
     to the Board and the Congress the reasons for that 
     disapproval. The Board shall then transmit to the Congress 
     and the President, no later than 60 days after the date of 
     the submission of the original report to the President, a 
     revised list of recommendations.
       ``(D) If the President approves all of the revised 
     recommendations of the Board transmitted to the President 
     under subparagraph (C), the President shall transmit a copy 
     of such revised recommendations to the Congress as the 
     President's recommendations, together with a certification of 
     the President's adoption of such recommendations.
       ``(E) If the President disapproves the revised 
     recommendations of the Board, in whole or in part, the 
     President shall transmit to the Board and the Congress the 
     reasons for that disapproval, together with such revisions to 
     such recommendations as the President determines are 
     necessary to bring such recommendations within the 
     President's approval. The President shall transmit a copy of 
     such recommendations, as so revised, to the Board and the 
     Congress as the President's recommendations, together with a 
     certification of the President's adoption of such 
     recommendations.
       ``(3)(A) This paragraph is enacted by Congress--
       ``(i) as an exercise of the rulemaking power of the Senate 
     and the House of Representatives, respectively, and as such 
     it is deemed a part of the rules of each House, respectively, 
     but applicable only with respect to the procedure to be 
     followed in that House in the case of a joint resolution 
     described in subparagraph (B), and it supersedes other rules 
     only to the extent that it is inconsistent with such rules; 
     and
       ``(ii) with full recognition of the constitutional right of 
     either House to change the rules (so far as relating to the 
     procedure of that House) at any time, in the same manner, and 
     to the same extent as in the case of any other rule of that 
     House.
       ``(B) For purposes of this paragraph, the term `joint 
     resolution' means only a joint resolution which is introduced 
     within the 10-day period beginning on the date on which the 
     President transmits the President's recommendations, together 
     with the President's certification, to the Congress under 
     subparagraph (B), (D), or (E) of paragraph (2), and--
       ``(i) which does not have a preamble;
       ``(ii) the matter after the resolving clause of which is as 
     follows: `That the Congress approves the recommendations of 
     the President as transmitted on __ pursuant to section 709(a) 
     of the Social Security Act, as follows: ____', the first 
     blank space being filled in with the appropriate date and the 
     second blank space being filled in with the statutory 
     adjustments contained in the recommendations; and
       ``(iii) the title of which is as follows: `Joint resolution 
     approving the recommendations of the President regarding 
     social security.'.
       ``(C) A joint resolution described in subparagraph (B) that 
     is introduced in the House of Representatives shall be 
     referred to the Committee on Ways and Means of the House of 
     Representatives. A joint resolution described in subparagraph 
     (B) introduced in the Senate shall be referred to the 
     Committee on Finance of the Senate.
       ``(D) If the committee to which a joint resolution 
     described in subparagraph (B) is referred has not reported 
     such joint resolution (or an identical joint resolution) by 
     the end of the 20-day period beginning on the date on which 
     the President transmits the recommendation to the Congress 
     under paragraph (2), such committee shall be, at the end of 
     such period, discharged from further consideration of such 
     joint resolution, and such joint resolution shall be placed 
     on the appropriate calendar of the House involved.
       ``(E)(i) On or after the third day after the date on which 
     the committee to which such a joint resolution is referred 
     has reported, or has been discharged (under subparagraph (D)) 
     from further consideration of, such a joint resolution, it is 
     in order (even though a previous motion to the same effect 
     has been disagreed to) for any Member of the respective House 
     to move to proceed to the consideration of the joint 
     resolution. A Member may make the motion only on the day 
     after the calendar day on which the Member announces to the 
     House concerned the Member's intention to make the motion, 
     except that, in the case of the House of Representatives, the 
     motion may be made without such prior announcement if the 
     motion is made by direction of the committee to which the 
     joint resolution was referred. All points of order against 
     the joint resolution (and against consideration of the joint 
     resolution) are waived. The motion is highly privileged in 
     the House of Representatives and is privileged in the Senate 
     and is not debatable. The motion is not subject to amendment, 
     or to a motion to postpone, or to a motion to proceed to the 
     consideration of other business. A motion to reconsider the 
     vote by which the motion is agreed to or disagreed to shall 
     not be in order. If a motion to proceed to the consideration 
     of the joint resolution is agreed to, the respective House 
     shall immediately proceed to consideration of the joint 
     resolution without intervening motion, order, or other 
     business, and the joint resolution shall remain the 
     unfinished business of the respective House until disposed 
     of.
       ``(ii) Debate on the joint resolution, and on all debatable 
     motions and appeals in connection therewith, shall be limited 
     to not more than 2 hours, which shall be divided equally 
     between those favoring and those opposing the joint 
     resolution. An amendment to the joint resolution is not in 
     order. A motion further to limit debate is in order and not 
     debatable. A motion to postpone, or a motion to proceed to 
     the consideration of other business, or a motion to recommit 
     the joint resolution is not in order. A motion to reconsider 
     the vote by which the joint resolution is agreed to or 
     disagreed to is not in order.

[[Page S5676]]

       ``(iii) Immediately following the conclusion of the debate 
     on a joint resolution described in subparagraph (B) and a 
     single quorum call at the conclusion of the debate if 
     requested in accordance with the rules of the appropriate 
     House, the vote on final passage of the joint resolution 
     shall occur.
       ``(iv) Appeals from the decisions of the Chair relating to 
     the application of the rules of the Senate or the House of 
     Representatives, as the case may be, to the procedure 
     relating to a joint resolution described in subparagraph (B) 
     shall be decided without debate.
       ``(F)(i) If, before the passage by one House of a joint 
     resolution of that House described in subparagraph (B), that 
     House receives from the other House a joint resolution 
     described in subparagraph (B), then the following procedures 
     shall apply:
       ``(I) The joint resolution of the other House shall not be 
     referred to a committee and may not be considered in the 
     House receiving it except in the case of final passage as 
     provided in subclause (II).
       ``(II) With respect to a joint resolution described in 
     subparagraph (B) of the House receiving the joint resolution, 
     the procedure in that House shall be the same as if no joint 
     resolution had been received from the other House, but the 
     vote on final passage shall be on the joint resolution of the 
     other House.
       ``(ii) Upon disposition of the joint resolution received 
     from the other House, it shall no longer be in order to 
     consider the joint resolution that originated in the 
     receiving House.
       ``(b) If the Board of Trustees of the Federal Hospital 
     Insurance Trust Fund or the Federal Supplementary Medical 
     Insurance Trust Fund determines as any time that the balance 
     ratio of either such Trust Fund.''.
       (b) Conforming Amendments.--
       (1) Section 709(b) of the Social Security Act (42 U.S.C. 
     910(b)) (as amended by subsection (a) of this section) is 
     amended by striking ``any such'' and inserting ``either 
     such''.
       (2) Section 709(c) of such Act (42 U.S.C. 910(c)) (as 
     redesignated by subsection (a) of this section) is amended by 
     inserting ``or (b)'' after ``subsection (a)''.
                                 ______