H.R. 3178 (ih) To amend the Internal Revenue Code of 1986 to make the dependent care credit refundable and to provide for advance payments of such credit. [Introduced in House] ...

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108th CONGRESS
  1st Session
                                H. R. 3177

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 individual Social Security accounts ensuring full benefits 
for all workers and their families, giving Americans ownership of their 
retirement, restoring long-term Social Security solvency, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 25, 2003

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

_______________________________________________________________________

                                 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 individual Social Security accounts ensuring full benefits 
for all workers and their families, giving Americans ownership of their 
retirement, restoring long-term Social Security solvency, 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 AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Social Security 
Savings Act of 2003''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title and table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Individual social security account program and individual 
                            social security accounts.
          ``Part B--Individual Social Security Account Program

        ``Sec. 251. Definitions.
        ``Sec. 252. Personal Savings Board.
        ``Sec. 253. Executive Director.
        ``Sec. 254. Social Security Personal Savings Fund.
        ``Sec. 255. Eligible individuals.
        ``Sec. 256. Individual social security accounts.
        ``Sec. 257. Prescribed social security deposits.
        ``Sec. 258. Investments in stock and Government obligations.
        ``Sec. 259. Accounting and information.
        ``Sec. 260. Account distributions.
        ``Sec. 261. Payments upon death of account owner.
        ``Sec. 262. Treatment of account balances and annuities.
        ``Sec. 263. Fiduciary responsibilities.
Sec. 4. Conforming adjustments to monthly insurance benefits.
Sec. 5. Maintenance of adequate balances in the Social Security Trust 
                            Funds.
Sec. 6. Taxation of Individual Social Security Account Program.
Sec. 7. Report on private sector investment and management.
Sec. 8. Maintenance of current levels of FICA and SECA taxes.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds the following:
            (1) Social Security is a defining American promise that 
        must be kept. As one of the most successful Government programs 
        of the 20th Century, it must always honor its founding purpose 
        of protecting the elderly from poverty and bringing dignity to 
        retirement.
            (2) Social Security's retirement, survivors, and disability 
        benefits help provide more than 46,000,000 Americans of all 
        ages income security, without which nearly 50 percent of 
        seniors would live in poverty.
            (3) Social Security is of particular importance for low-
        income earners, for whom it may be their sole source of 
        retirement income. In addition, it is especially important for 
        widows and mothers caring for children, without which nearly 53 
        percent of these women would live in poverty.
            (4) Social Security is unsustainable in its present form. 
        The 2003 Report of the Social Security Board of Trustees 
        projects that the system's obligations will exceed its annual 
        tax revenue starting in 2018. From 2018 to 2042, the Government 
        is obligated to pay full benefits using general tax revenues 
        owed to the Social Security trust funds. However, this means 
        that the long-term financing problem will begin in 2018.
            (5) The Social Security trust funds will not solve the 
        problem. These trust fund balances are available to finance 
        future benefit payments only in a bookkeeping sense. They do 
        not consist of real economic assets that can be drawn down in 
        the future to fund benefits. Instead, they are claims on the 
        general budget that, when redeemed, will have to be financed by 
        raising taxes, borrowing from the public, cutting spending, or 
        reducing benefits. The existence of large trust fund balances 
        does not, by itself, have any impact on the Government's 
        ability to pay benefits.
            (6) Faster economic growth will not solve the problem. 
        Under the Board of Trustees' 2003 Report, Social Security's 
        yearly deficits will increase significantly every year. By 
        2038, Social Security will require more than 1 trillion a year 
        in addition to the money raised through payroll taxes. By 2078, 
        the annual Social Security deficit will be as large as the 
        national debt in 2003. Even worse, these deficits will stretch 
        far beyond the 75-year budget window with no sign of returning 
        to balance. No amount of economic growth can overcome these 
        substantial yearly deficits.
            (7) The primary reason for this financial shortfall is 
        demographic. In 1960 there were more than five workers paying 
        into Social Security for every individual collecting benefits. 
        Today, demographic changes have reduced the worker-to-
        beneficiary ratio to 3.4 to 1. By 2050, it will be just 2 to 1.
            (8) If reforms are not made, younger workers will receive 
        lower benefits for every dollar they pay into the current 
        system. The inflation-adjusted rate of return averaged more 
        than 25 percent annually for Social Security's first retirees 
        in the 1940s, but are estimated to average roughly 4 percent 
        for today's retirees, roughly 2 percent for ``baby boomers,'' 
        and 1 percent for those who will be born 40 years from now. 
        Since these figures do not include the extra cost of meeting 
        Social Security's needs from 2018 to 2042, real rates of return 
        for younger workers will likely be even lower.
            (9) If reforms are not made, Social Security payroll taxes 
        will have to be raised to balance the system over the next 75 
        years. When Social Security was first started, its tax was 
        never supposed to go higher than 6 percent. Today, it is over 
        12 percent and if something is not done, it will go over 18 
        percent. Americans pay far too much into Social Security for 
        what they receive to have their payroll taxes raised again.
            (10) Inasmuch as payroll taxes already constitute the 
        single largest tax burden for most American families, payroll 
        tax increases will further harm low and middle income American 
        families and add to the burden on employers. This would 
        especially affect small businesses and harm job creation.
            (11) If reforms are not made and payroll taxes are not 
        raised, Social Security benefits will have to be cut by 35 
        percent to balance the system over the next 75 years. Seniors 
        rely too heavily on Social Security for their retirement 
        security and it would be unfair to reduce their promised 
        benefits.
            (12) Social Security is currently a Government-controlled, 
        Government-owned program that does not save a penny for 
        workers' retirement. Instead, it requires each generation to 
        support the generation that came before it. With demographic 
        changes, this structure passes on higher taxes, fewer benefits, 
        and lower rates of return to younger Americans.
            (13) In its current form, Social Security hinders wealth 
        creation and accumulation. While Social Security does an 
        adequate job of providing some Americans a steady poverty level 
        income, it should also allow workers to build a nest egg that 
        they can use to improve their retirement income, provide 
        freedom and security in retirement, send grandchildren to 
        college, or leave wealth to the next generation. Americans 
        should have more to show for a lifetime of work than a small 
        monthly check.
            (14) Social Security does not currently help the low-income 
        workers enough. The average monthly Social Security benefit 
        check hovers at the poverty level. Despite popular perceptions, 
        this means that in retirement the poor barely have enough money 
        to sustain themselves on a monthly basis, and nothing to leave 
        their children after their death.
            (15) More than 50 percent of American households are 
        invested in the economy. However, low-income and working poor 
        individuals do not have access to the investment tools that 
        help the middle class prosper and succeed. Personal Social 
        Security savings accounts would allow even the poorest workers 
        to participate in a growing economy.
            (16) Social Security is currently unfair to minorities. A 
        survey by the Federal Reserve Board of Governors shows that the 
        wealth gap between whites and African-Americans is growing, 
        despite the fact that the income gap between them is 
        decreasing. As a result, white households have five to ten 
        times as much wealth as black households. If this trend 
        continues, this lack of wealth will prevent African-Americans 
        from having the assets necessary to prosper and succeed, 
        prohibiting full participation in the American dream. Personal 
        savings accounts can provide a minimum level of investment that 
        will help the poor build capital and wealth.
            (17) As a result of mortality differences, African 
        Americans receive nearly $21,000 less on a lifetime basis from 
        Social Security's retirement program than whites with similar 
        income and marital status. Because they are younger than the 
        general population, disproportionate numbers of Hispanic 
        Americans will enter retirement having received below the 
        market rates of return from the Social Security program.
            (18) Social Security is currently unfair to women who do 
        not work for the required amount of time or would receive very 
        low benefits based on their own earnings. Many women who have 
        paid into Social Security over their working lives find that 
        their best option is to claim benefits on their husband's 
        contributions rather than on their own work history. 
        Consequently, they get no return on the money they paid into a 
        system. Personal savings accounts would allow women to build 
        wealth with their own money, which can be combined with their 
        husband's contributions for even larger benefit levels.
            (19) Social Security's rigid benefit structure does not 
        provide hard-working Americans with the flexibility to plan and 
        shape their retirements to best suit their various lifestyles 
        and life expectancies.
            (20) Social Security is creating a culture of dependency. 
        As the population ages, more and more Americans are becoming 
        dependent on the government for their retirement income. This 
        trend robs older Americans of their freedom, independence, and 
        dignity.
            (21) Social Security does not currently offer Americans any 
        guarantee that they will receive their benefits. According to 
        the United States Supreme Court, Americans do not own their 
        Social Security benefits. In fact, the Court has said that 
        Congress has the right ``to alter, amend, or repeal any 
        provision'' of Social Security at any time. Americans have only 
        a tenuous promise that Congress can change at any time, by any 
        amount, and for any reason.
            (22) Personal savings accounts would transform Social 
        Security from an IOU into real assets that individuals could 
        own and pass along to their children. Personal savings accounts 
        would enable Social Security to start saving real economic 
        assets for the first time, locking them away so they cannot be 
        spent on non-Social Security programs.
            (23) Personal savings accounts would generate higher 
        returns on the payroll taxes currently paid into Social 
        Security, drastically reducing the financial shortfall in the 
        system and paving the way for a fully funded system that is 
        permanently self-sustaining.
            (24) Personal savings accounts would correct Social 
        Security's inequities for the poor, minorities, and women by 
        offering everyone ownership, independence, and access to 
        wealth.
    (b) Purposes.--The Congress finds that it must act to reform the 
Social Security system so that--
            (1) Social Security benefits are not changed for current 
        retirees and near-retirees;
            (2) payroll taxes and other Social Security taxes are not 
        increased;
            (3) Social Security surpluses are not used for other 
        programs;
            (4) Social Security taxes are only used to benefit workers;
            (5) the Government will not invest in the stock market;
            (6) Social Security's disability and survivors components 
        are maintained;
            (7) the current Social Security safety net is preserved and 
        strengthened through individually owned, voluntary personal 
        savings accounts;
            (8) the current safety net is strengthened to give all 
        workers with a personal savings account the opportunity to 
        receive more than their currently promised benefits;
            (9) low-income workers will be allowed to save a larger 
        portion of their payroll taxes than higher income workers, 
        helping many low-income Americans accumulate savings sufficient 
        to pay retirement income higher than the current system;
            (10) younger workers are empowered with generous savings 
        that offer them the ability to completely own their retirement 
        benefits;
            (11) the transition to a funded system is financed from the 
        general budget, which has taken money from Social Security for 
        years; and
            (12) the long-term solvency of the system is guaranteed for 
        at least 75 years, and cash-flow deficits are completely 
        eliminated, making Social Security permanently self-sustaining.

SEC. 3. INDIVIDUAL SOCIAL SECURITY ACCOUNT PROGRAM AND INDIVIDUAL 
              SOCIAL SECURITY ACCOUNTS.

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

                    ``Part A--Insurance Benefits'';

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

          ``Part B--Individual Social Security Account Program

                             ``definitions

    ``Sec. 251. For purposes of this part--
            ``(1) Eligible individual.--The term `eligible individual' 
        means an individual described in section 255(a) with respect to 
        whom an election filed under section 255(b) renouncing such 
        status has not been filed or has not taken effect, or with 
        respect to whom an election filed under section 255(c) 
        reinstating such status has taken effect.
            ``(2) Account owner.--The term `account owner' means an 
        eligible individual holding an individual social security 
        account.
            ``(3) Individual social security account.--The term 
        ``individual social security account'' means an account 

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