Social Security and Medicare Lock-Box Act

I 116TH CONGRESS 1ST SESSION H. R. 1215 To amend titles II and XVIII of the Social Security Act to establish a Social Security Surplus Protection Account in the Federal Old-Age and Survivors Insurance Trust Fund to hold the Social Security surplus and a Medicare Surplus Protection Account in the Federal Hospital Insurance Trust Fund to hold the Medicare surplus, to provide for suspension of investment of amounts held in such Accounts until enact- ment of legislation providing for investment of the Trust Funds in investment vehicles other than obligations of the United States, and to establish a Social Security and Medicare Part A Investment Commis- sion to make recommendations for alternative forms of investment of the Social Security and Medicare surpluses. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 13, 2019 Mr. WALBERG introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend titles II and XVIII of the Social Security Act to establish a Social Security Surplus Protection Account in the Federal Old-Age and Survivors Insurance Trust Fund to hold the Social Security surplus and a Medicare Surplus Protection Account in the Federal Hospital In- surance Trust Fund to hold the Medicare surplus, to provide for suspension of investment of amounts held in such Accounts until enactment of legislation providing for investment of the Trust Funds in investment vehicles other than obligations of the United States, and to estab- VerDate Sep 11 2014 21:20 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H1215.IH H1215 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 1215 IH lish a Social Security and Medicare Part A Investment Commission to make recommendations for alternative forms of investment of the Social Security and Medicare surpluses. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE; FINDINGS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Social Security and Medicare Lock-Box Act’’. 5 (b) FINDINGS REGARDING SOCIAL SECURITY AND 6 MEDICARE PART A.—The Congress finds the following: 7 (1)(A) Long-term projections show serious 8 problems facing the fiscal health of the trust funds 9 associated with Social Security and Medicare Hos- 10 pital Insurance. 11 (B) According to the 2018 Annual Report of 12 the Board of Trustees of the Federal Old-Age and 13 Survivors Insurance and Federal Disability Insur- 14 ance Trust Funds, the assets of the combined Fed- 15 eral Old-Age and Survivors Insurance Trust Fund 16 and the Federal Disability Insurance Trust Fund 17 will be exhausted by 2034, and the Disability Insur- 18 ance Trust Fund alone will be depleted by 2032. 19 (C) According to the 2018 Annual Report of 20 the Board of Trustees of the Federal Hospital In- 21 surance and Federal Supplementary Medical Insur- 22 VerDate Sep 11 2014 21:20 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1215.IH H1215 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 1215 IH ance Trust Funds, the assets of the Federal Hos- 1 pital Insurance Trust Fund will be exhausted by 2 2026. 3 (2)(A) The Trustees of these trust funds 4 strongly encourage action to protect the solvency of 5 the trust funds. 6 (B) In their message to the public, included in 7 the 2018 Annual Reports, the Social Security and 8 Medicare Boards of Trustees wrote, ‘‘The Trustees 9 recommend that lawmakers address the projected 10 trust fund shortfalls in a timely way in order to 11 phase in necessary changes gradually and give work- 12 ers and beneficiaries time to adjust to them. Imple- 13 menting changes sooner rather than later would 14 allow more generations to share in the needed rev- 15 enue increases or reductions in scheduled benefits 16 and could preserve more trust fund reserves to help 17 finance future benefits. Social Security will play a 18 critical role in the lives of 63 million beneficiaries 19 and 175 million covered workers and their families 20 during 2018. With informed discussion, creative 21 thinking, and timely legislative action, Social Secu- 22 rity can continue to protect future generations.’’. 23 VerDate Sep 11 2014 21:20 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1215.IH H1215 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 1215 IH (3) Social Security and Medicare are meant to 1 provide a secure and stable base so that older Amer- 2 icans can live in dignity. 3 (4) Protecting the future surpluses of these 4 trust funds can only occur when meaningful reform 5 has been enacted by Congress. Any path to solvency 6 must include the protection of future surpluses. 7 SEC. 2. INTERIM PROTECTIONS FOR SOCIAL SECURITY 8 TRUST FUND SURPLUS. 9 Section 201(d) of the Social Security Act (42 U.S.C. 10 402(d)) is amended— 11 (1) by striking ‘‘It shall be the duty’’ and in- 12 serting ‘‘(1) Except as provided in paragraph (2), it 13 shall be the duty’’; 14 (2) by striking ‘‘(1) on original issue at the 15 issue price, or (2)’’ and inserting ‘‘(A) on original 16 issue at the issue price, or (B)’’; and 17 (3) by adding at the end the following new 18 paragraph: 19 ‘‘(2)(A) There is established in the Federal Old-Age 20 and Survivors Insurance Trust Fund a Social Security 21 Surplus Protection Account. As soon as practicable after 22 the end of each fiscal year after fiscal year 2020, the Man- 23 aging Trustee shall transfer to the Account, from amounts 24 otherwise available in the Trust Fund, amounts equivalent 25 VerDate Sep 11 2014 21:20 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1215.IH H1215 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 1215 IH to the social security surplus for such fiscal year. Such 1 amounts shall be transferred from time to time to the Ac- 2 count, such amounts to be determined on the basis of esti- 3 mates by the Managing Trustee, and proper adjustments 4 shall be made in amounts subsequently transferred to the 5 extent prior estimates were in excess of or were less than 6 the correct amount. 7 ‘‘(B) For purposes of subparagraph (A), the term ‘so- 8 cial security surplus’ means, for any fiscal year, the excess, 9 if any, of— 10 ‘‘(i) the sum of— 11 ‘‘(I) the taxes imposed for such fiscal year 12 by chapter 21 (other than sections 3101(b) and 13 3111(b)) of the Internal Revenue Code of 1986 14 with respect to wages (as defined in section 15 3121 of such Code) reported to the Secretary of 16 the Treasury or his delegates pursuant to sub- 17 title F of such Code, as determined by the Sec- 18 retary of the Treasury by applying the applica- 19 ble rates of tax under such chapter 21 (other 20 than sections 3101(b) and 3111(b)) to such 21 wages, less the amounts specified in clause (1) 22 of subsection (b) of this section for such fiscal 23 year; 24 VerDate Sep 11 2014 21:20 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1215.IH H1215 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 1215 IH ‘‘(II) the taxes imposed by chapter 2 1 (other than section 1401(b)) of the Internal 2 Revenue Code of 1986 with respect to self-em- 3 ployment income (as defined in section 1402 of 4 such Code) reported to the Secretary of the 5 Treasury on tax returns under subtitle F of 6 such Code, as determined by the Secretary of 7 the Treasury by applying the applicable rate of 8 tax under such chapter (other than section 9 1401(b)) to such self-employment income, less 10 the amounts specified in clause (2) of sub- 11 section (b) of this section for such fiscal year; 12 and 13 ‘‘(III) the amount equivalent to the aggre- 14 gate increase in tax liabilities under chapter 1 15 of the Internal Revenue Code of 1986 which is 16 attributable to the application of sections 86 17 and 871(a)(3) of such Code to payments from 18 the Trust Fund; over 19 ‘‘(ii) the sum of— 20 ‘‘(I) benefits paid from the Trust Fund 21 during the fiscal year; and 22 ‘‘(II) amounts authorized to be made avail- 23 able from the Trust Fund under subsection (g) 24 VerDate Sep 11 2014 21:20 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1215.IH H1215 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 1215 IH of this section which are paid from the Trust 1 Fund during such fiscal year. 2 ‘‘(C) Notwithstanding paragraph (1), the balance in 3 the Account shall not be available for investment by the 4 Managing Trustee. 5 ‘‘(D)(i) The preceding provisions of this paragraph 6 shall not apply with respect to fiscal years commencing 7 with or after the first fiscal year, after fiscal year 2020, 8 for which a provision of Federal law takes effect and au- 9 thorizes, for amounts in the Trust Fund, an investment 10 vehicle other than obligations of the United States. 11 ‘‘(ii) A provision of Federal law shall be deemed to 12 meet the requirements of clause (i) if such provision in- 13 cludes the following: ‘This Act shall be considered to be 14 a provision of Federal law meeting the requirements of 15 section 201(d)(2)(D)(i) of the Social Security Act.’.’’. 16 SEC. 3. INTERIM PROTECTIONS FOR MEDICARE PART A 17 TRUST FUND SURPLUS. 18 (a) IN GENERAL.—Section 1817(c) of the Social Se- 19 curity Act (42 U.S.C. 1395i(c)) is amended— 20 (1) by striking ‘‘It shall be the duty’’ and in- 21 serting ‘‘(1) Except as provided in paragraph (2), it 22 shall be the duty’’; 23 VerDate Sep 11 2014 21:20 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1215.IH H1215 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 1215 IH (2) by striking ‘‘(1) on original issue at the 1 issue price, or (2)’’ and inserting ‘‘(A) on original 2 issue at the issue price, or (B)’’; and 3 (3) by adding at the end the following new 4 paragraph: 5 ‘‘(2)(A) There is established in the Federal Hospital 6 Insurance Trust Fund a Medicare Surplus Protection Ac- 7 count (in this paragraph referred to as the ‘Account’). As 8 soon as practicable after the end of each fiscal year after 9 fiscal year 2020, the Managing Trustee shall transfer to 10 the Account, from amounts otherwise available in the 11 Trust Fund, amounts equivalent to the Medicare part A 12 surplus for such fiscal year. Such amounts shall be trans- 13 ferred from time to time to the Account, such amounts 14 to be determined on the basis of estimates by the Man- 15 aging Trustee, and proper adjustments shall be made in 16 amounts subsequently transferred to the extent prior esti- 17 mates were in excess of or were less than the correct 18 amount. 19 ‘‘(B) For purposes of subparagraph (A), the term 20 ‘Medicare part A surplus’ means, for any fiscal year, the 21 excess, if any, of— 22 ‘‘(i) the sum of— 23 ‘‘(I) the taxes imposed for such fiscal year 24 by sections 3101(b) and 3111(b) of the Internal 25 VerDate Sep 11 2014 21:20 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1215.IH H1215 pamtmann on DSKBFK8HB2PROD with BILLS 9 •HR 1215 IH Revenue Code of 1986 with respect to wages 1 (as defined in section 3121 of such Code) re- 2 ported to the Secretary of the Treasury or his 3 delegates pursuant to subtitle F of such Code, 4 as determined by the Secretary of the Treasury 5 by applying the applicable rates of tax under 6 such sections to such wages; and 7 ‘‘(II) the taxes imposed by section 1401(b) 8 of the Internal Revenue Code of 1986 with re- 9 spect to self-employment income (as defined in 10 section 1402 of such Code) reported to the Sec- 11 retary of the Treasury on tax returns under 12 subtitle F of such Code, as determined by the 13 Secretary of the Treasury by applying the ap- 14 plicable rate of tax under such section 1401(b) 15 to such self-employment income; over 16 ‘‘(ii) the sum of— 17 ‘‘(I) benefits paid from the Trust Fund 18 during the fiscal year; and 19 ‘‘(II) amounts authorized to be made avail- 20 able from the Trust Fund under subsection (f) 21 of this section (or section 201(g)) which are 22 paid from the Trust Fund during such fiscal 23 year. 24 VerDate Sep 11 2014 21:20 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1215.IH H1215 pamtmann on DSKBFK8HB2PROD with BILLS 10 •HR 1215 IH ‘‘(C) Notwithstanding paragraph (1), the balance in 1 the Account shall not be available for investment by the 2 Managing Trustee. 3 ‘‘(D)(i) The preceding provisions of this paragraph 4 shall not apply with respect to fiscal years commencing 5 with or after the first fiscal year, after fiscal year 2020, 6 for which a provision of Federal law takes effect and au- 7 thorizes, for amounts in the Trust Fund, an investment 8 vehicle other than obligations of the United States. 9 ‘‘(ii) A provision of Federal law shall be deemed to 10 meet the requirements of clause (i) if such provision in- 11 cludes the following: ‘This Act shall be considered to be 12 a provision of Federal law meeting the requirements of 13 section 1817(c)(2)(D)(i) of the Social Security Act.’.’’. 14 SEC. 4. SOCIAL SECURITY AND MEDICARE PART A INVEST- 15 MENT COMMISSION. 16 (a) ESTABLISHMENT.—There is established in the ex- 17 ecutive branch of the Government a Social Security and 18 Medicare Part A Investment Commission (in this section 19 referred to as the ‘‘Commission’’). 20 (b) STUDY AND REPORT.—As soon as practicable 21 after the date of the enactment of this Act, the Commis- 22 sion shall conduct a study to ascertain the most effective 23 vehicles for investment of the Federal Old-Age and Sur- 24 vivors Insurance Trust Fund and the Federal Hospital In- 25 VerDate Sep 11 2014 21:20 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1215.IH H1215 pamtmann on DSKBFK8HB2PROD with BILLS 11 •HR 1215 IH surance Trust Fund, other than investment in the form 1 of obligations of the United States. Not later than October 2 1, 2020, the Commission shall submit a report to the 3 President and to each House of the Congress setting forth 4 its recommendations for such vehicles for investment, to- 5 gether with proposals for such administrative and legisla- 6 tive changes as the Commission determines necessary to 7 authorize and implement such recommendations. 8 (c) COMPOSITION.—The Commission shall be com- 9 posed of— 10 (1) 3 members appointed by the President, of 11 whom 1 shall be designated by the President as 12 Chairman; 13 (2) 2 members appointed by the Speaker of the 14 House of Representatives; 15 (3) 1 member appointed by the minority leader 16 of the House of Representatives; 17 (4) 2 members appointed by the majority leader 18 of the Senate; and 19 (5) 1 member appointed by the minority leader 20 of the Senate. 21 (d) MEMBERSHIP REQUIREMENTS.—Members of the 22 Commission shall have substantial experience, training, 23 and expertise in the management of financ [Text truncated for display. 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