H.R. 750House109th Congress (2005-2007)In Committee
Social Security Guarantee Plus Act of 2005

Legislative Activity

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3 earlier actions
HouseCommittee Latest Action
Referred to the Subcommittee on Social Security.
Social Security Subcommittee
March 3, 2005
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HouseIntro Referral
Introduced in House
February 10, 2005
HouseIntro Referral
Sponsor introductory remarks on measure. (CR E220)
February 10, 2005
HouseIntro Referral
Referred to the Committee on Ways and Means, and in addition to the Committees on Rules, and the 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.
February 10, 2005
HouseCommittee
Referred to the Subcommittee on Social Security.
Social Security Subcommittee
March 3, 2005
Floor Debate

1 member
What members said about H.R. 750 on the floor
1 Republican
Rep. E. Clay Shaw Jr.R-FL-22 · Feb 10, 2005
Mr. Speaker, whether we live in prosperous or uncertain times, American families need economic security--the kind of economic security that Social Security provides. For 70 years, Social Security has protected workers and their families from falling into poverty if a breadwinner retires, suffers disability, or dies. Social Security has endured, unlike many other government programs, because its architects designed it to be owned by workers and to treat all workers fairly.
Social Security has evolved over the decades, strengthening its protections and finances along the way. However, our nation's demographics and economics are fundamentally changing, and Social Security's ability to continue meeting its promises is threatened. The Social Security Guarantee Plus Plan I am introducing today will enable Social Security to continue fulfilling its vital role in the lives of all Americans.
First, the Guarantee Plus Plan keeps intact the Social Security safety net. Promised benefits, including cost of living increases, are guaranteed for people receiving benefits today, tomorrow and for all future generations.
Second, the plan treats all workers fairly. Workers have paid into the system, it's their money, and we must protect and enhance their investment. It's not fair to workers to raise their payroll taxes or lower their benefits. Nor is it fair for the government to tell workers to work longer. That's why my plan does not raise taxes, does not lower benefits, and does not change the retirement age.
Third, Social Security payroll taxes belong to the workers who paid them. My plan gives workers a real ownership stake in Social Security by allowing them to choose to receive a tax cut to invest directly in prudent, individually-selected, market investments. For the first time, a nation of savers, not the government, will own and control the assets backing Social Security. Should an individual die before becoming eligible, the balance of their money will be passed along to their heirs.
Fourth, under my plan, Social Security can be counted on for the next 75 years, and beyond. Real assets guarantee current and future benefits, establishing a sound and sustainable financial footing. No longer will there be a need to periodically increase taxes or lower benefits to keep the program working.
Beyond keeping these promises to all Americans, we must also do more to improve Social Security for the women of our nation. Because of their longer life expectancies and lower earnings, women are more likely to suffer poverty in old age. Social Security is a vital safety net for these women. In addition, because benefits are based on earnings, women are disadvantaged when they choose to stay home to raise their children. The Guarantee Plus Plan protects our daughters, our mothers, our aunts and our grandmothers, not only by securing the future of Social Security and guaranteeing full benefits, but also by enhancing benefits for widows, divorced spouses, and working mothers. These benefits become available immediately in my bill.
Here's how the Social Security Guarantee Plus Plan works. The plan guarantees full, promised, current law benefits for all workers, whether you are 6 or 65. Just as companies must back your pension plan with real assets, the Guarantee Plus Plan saves Social Security by setting aside real assets, not IOUs, to pre-fund benefits. These assets are saved in each worker's own account, thereby providing workers the opportunity to create real wealth for themselves and their families.
Workers who choose to participate will receive a refundable credit of up to 4% of their earnings to establish their own Social Security Guarantee Account. Workers, not the government, would select where to invest their Guarantee Account funds. The assets in these accounts would grow tax-free. No withdrawals would be permitted until a worker starts receiving benefits to ensure that the money is preserved for retirement.
At retirement or when the worker becomes disabled, a portion of the Guarantee Account is paid directly to the worker and the rest is used to help pay full, guaranteed Social Security benefits. But that's not all.
In addition to the much needed improvements in benefits for women I mentioned, my plan eliminates the retirement earnings penalty for all workers age 62 and older and reduces the so-called Government Pension Offset affecting spouse and survivor benefits to certain government workers.
Other plans may cost less, because they cut benefits or raise taxes. If our goal is to pay full promised benefits, boost women's benefits, and return Social Security to financial independence, the Guarantee Plus Plan is the lowest-cost proposal to date. The Guarantee Plus Plan does all this and pays for itself over the seventy five-year actuarial period, and that's confirmed by the Social Security Administration's Office of the Actuary in the 108th Congress. Even under the most conservative estimates, the Guarantee Plus Plan allows the new Social Security system to generate surplus cash in the latter part of the century, actually adding black ink to the government's bottom line.
My plan uses general revenues to fund the accounts. Even assuming borrowing for a transitional period, my plan pays back every borrowed dollar plus interest within the seventy five-year evaluation period. My plan also requires that Social Security surpluses created by the plan be dedicated to reducing publicly-held debt. Not only would we pay off the mortgage on Social Security, we would leave workers with substantial account balances and the federal government with excess cash.
The Guarantee Plus Plan also meets or exceeds all of the President's principles for reform--pays promised benefits to retirees, near- retirees, and all workers; no tax increases; no government investing; fully preserves disability and survivor benefits; offers individually controlled, voluntary personal retirement accounts that will augment Social Security. In addition, my plan is consistent with the first option to establish personal accounts recommended by the President's Commission to Strengthen Social Security.
President Bush has made the strengthening of Social Security now and for generations to come a top priority. Americans are showing their willingness to explore new ideas to strengthen this vital program, since the old ways must be improved upon for future generations. Now is the time for a straight-forward, honest and realistic discussion about the future of Social Security. The longer we wait to address the coming crisis, the more difficult and expensive the job will be down the line.
From the time of Social Security's enactment until today, the history of the program's evolution has demonstrated that while everybody has his or her own ideas on how to strengthen the program, progress toward that goal is only achieved through bipartisan cooperation. It's long past time for us to lay all our best thoughts on the table and work together to build on our success to make a stronger Social Security system that is an asset to all and not a liability to our children and grandchildren.
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Introduced in HouseIssued February 10, 2005
        [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.
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