Two laws deserving mention in Actuarial Note 142 were inadvertantly omitted.
Public Law 103-296, titled "Social Security Independence and Program Improvements Act of 1994," requires each obligation issued by the Department of the Treasury for purchase by the Social Security Trust Funds (including those already issued) to be evidenced by a physical document in the form of a bond, note, or certificate of indebtedness, rather than simply by an accounting entry. The law also requires interest payments and proceeds from the sale or redemption of trust fund holdings to be paid by checks drawn on the general fund of the Treasury. The law was enacted on August 15, 1994.
Public Law 104-121, titled "Contract with America Advancement Act of 1996," provides a section that limits the Secretary of the Treasury's discretionary powers with respect to trust fund investments. Specifically, section 107(a) of this law states
"No officer or employee of the United States shall--The law defines the term "Federal fund" as any of the Social Security or Medicare Trust Funds.
- delay the deposit of any amount into (or delay the credit of any amount to) any Federal fund or otherwise vary from the normal terms, procedures, or timing for making such deposits or credits,
- refrain from the investment in public debt obligations of amounts in any Federal fund, or
- redeem prior to maturity amounts in any Federal fund which are invested in public debt obligations for any purpose other than the payment of benefits or administrative expenses from such Federal fund."
On rare occasions, the Managing Trustee had taken steps, now prohibited by Public Law 104-121, to avoid increasing the public debt beyond then current statutory limits. The second item, above, strengthens previous law requiring the Managing Trustee to invest such portion of the funds that is not, in his judgment, required to meet current withdrawals. The third item simply changes what had been an administrative investment policy into a statutory requirement. The law was enacted March 29, 1996.
Return to Actuarial Note 142
Notes published in the 1990s