To strengthen and protect Social Security.

January 7, 2003

Mr. ROYCE introduced the following bill; which was referred to the Committee on Ways and Means

To strengthen and protect Social Security.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Social Security Strengthening and Protection Act of 2003'.

SEC. 2. INVESTMENT OF THE FEDERAL OLD-AGE AND SURVIVORS INSURANCE TRUST FUND AND THE FEDERAL DISABILITY INSURANCE TRUST FUND.

(a) IN GENERAL- Section 201(d) of the Social Security Act (42 U.S.C. 401(d)) is amended--

(1) by inserting `(1)' after `(d)';

(2) by striking `Such investments may be made only' and inserting the following: `Except as provided in paragraphs (2) and (3), such investments may be made only';

(3) by striking the last sentence; and

(4) by adding at the end the following new paragraphs:

`(2)(A) As of the end of each fiscal year, the Managing Trustee shall determine--

`(i) the surplus (if any) in the total budget of the Government of the United States, and

`(ii) the total amount of the Trust Funds then invested in obligations issued pursuant to paragraph (1).

`(B) During the following fiscal year, the Managing Trustee shall purchase qualified investments, with amounts otherwise available in the general fund of the Treasury, at original issue or on the market, at a total cost equal to at least 90 percent of the surplus referred to in subparagraph (A)(i), except that such total cost may not exceed the total amount referred to in subparagraph (A)(ii).

`(C) Upon the purchase of qualified investments pursuant to subparagraph (B), the Managing Trustee shall redeem, with such qualified investments, obligations which have been issued pursuant to paragraph (1) and are held by either of the Trust Funds. Such qualified investments shall be held by the Trust Fund until liquidation of such qualified investments is necessary to meet current withdrawals or is otherwise determined by the Managing Trustee to be in the public interest.

`(D) Effective for fiscal years beginning after such time as all obligations issued pursuant to paragraph (1) and held by the Trust Funds have been redeemed with qualified investments pursuant to subparagraph (C), the Managing Trustee shall invest only in qualified investments such portion of each Trust Fund as is not, in his judgment, required to meet current withdrawals.

`(E) The Managing Trustee shall exercise his authority under this paragraph solely for the benefit of the beneficiaries under the old-age, survivors, and disability insurance program under this title.

`(3) For purposes of paragraph (2)--

`(A)(i) The term `qualified investment' means a marketable interest-bearing obligation of the United States, purchased on original issue or at the market price, which meets the requirements of clause (ii).

`(ii) An obligation referred to in clause (i) meets the requirements of this section if such obligation--

`(I) has a maturity fixed with due regard for the needs of the Trust Funds,

`(II) bears interest at a rate at least 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 purchase) on all marketable interest-bearing obligations of the United States then forming a part of the public debt which are not due or callable until after the expiration of four years from the end of such calendar month, and

`(III) is subject to an option to redeem such obligations at any time at the purchase price.

`(B) The term `total budget of the United States Government' means all spending and receipt

accounts of the United States Government that are designated as on-budget or off-budget accounts.

`(4) The preceding provisions of this subsection shall be subject to such reforms of the old-age, survivors, and disability insurance program under this title as may be provided in legislation enacted after the date of the enactment of the Social Security Strengthening and Protection Act of 2003.'.

(b) EFFECTIVE DATE- The amendments made by this section shall apply with respect to fiscal years beginning on or after October 1, 2004.

SEC. 3. PROTECTION OF THE SOCIAL SECURITY TRUST FUNDS FROM THE PUBLIC DEBT LIMIT.

(a) PROTECTION OF TRUST FUNDS- Notwithstanding any other provision of law--

(1) no officer or employee of the United States may--

(A) delay the deposit of any amount into (or delay the credit of any amount to) the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund or otherwise vary from the normal terms, procedures, or timing for making such deposits or credits, or

(B) refrain from the investment in public debt obligations of amounts in either of such Trust Funds,

if a purpose of such action or inaction is to not increase the amount of outstanding public debt obligations, and

(2) no officer or employee of the United States may disinvest amounts in either of such Trust Funds which are invested in public debt obligations if a purpose of the disinvestment is to reduce the amount of outstanding public debt obligations.

(b) PROTECTION OF BENEFITS AND EXPENDITURES FOR ADMINISTRATIVE EXPENSES-

(1) IN GENERAL- Notwithstanding subsection (a), during any period for which cash benefits or administrative expenses would not otherwise be payable from the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund by reason of an inability to issue further public debt obligations because of the applicable public debt limit, public debt obligations held by such Trust Fund shall be sold or redeemed only for the purpose of making payment of such benefits or administrative expenses and only to the extent cash assets of such Trust Fund are not available from month to month for making payment of such benefits or administrative expenses.

(2) ISSUANCE OF CORRESPONDING DEBT- For purposes of undertaking the sale or redemption of public debt obligations held by the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund pursuant to paragraph (1), the Secretary of the Treasury may issue corresponding public debt obligations to the public, in order to obtain the cash necessary for payment of benefits or administrative expenses from such Trust Fund, notwithstanding the public debt limit.

(3) ADVANCE NOTICE OF SALE OR REDEMPTION- Not less than 3 days prior to the date on which, by reason of the public debt limit, the Secretary of the Treasury expects to undertake a sale or redemption authorized under paragraph (1), the Secretary of the Treasury shall report to each House of the Congress and to the Comptroller General of the United States regarding the expected sale or redemption. Upon receipt of such report, the Comptroller General shall review the extent of compliance with subsection (a) and paragraphs (1) and (2) of this subsection and shall issue such findings and recommendations to each House of the Congress as the Comptroller General considers necessary and appropriate.

(c) PUBLIC DEBT OBLIGATION- For purposes of this section, the term `public debt obligation' means any obligation subject to the public debt limit established under section 3101 of title 31, United States Code.

END