The idea, as described by Mr. Clinton in his weekly radio address, is to pay down more than $3.1 trillion in public debt over the next 15 years as part of a plan that would make the United States debt-free for the first time since 1835.
The billions saved in interest payments to service the debt would then be diverted to the Social Security Trust Fund to ensure its solvency to 2050.
President Clinton said that Republican pledges to save Social Security surpluses don't go far enough.
"I think the American people deserve more than confusion, double talk and delay on this issue," the president said. "It's time to have a clear, straightforward bill on the table."
It is a proposal he floated earlier this year, but it has failed to find support in the Republican-led Congress.
By sending the legislation to Capitol Hill on Monday, he is apparently hoping that the proposal will be discussed during budget negotiations with Republicans.
Both sides have been accusing the other of making budget proposals that would tap into Social Security surpluses, a practice that has been done for years but which is unpopular now during a time of budget surpluses.
Republicans have proposed Social Security "lockboxes" of their own to protect the entitlement program from being raided to pay for current programs.
But Democrats insist these plans do not extend the solvency of Social Security by a single day. At this point Social Security is projected to go bankrupt in 2034, unless reforms are made, because of the costs of benefits for baby boomers when they retire.
White House economic adviser Gene Sperling said if the Social Security surpluses were entirely spent, interest payments on debt held by the public would be $163 billion in 2011.
But devoting a decade of Social Security surpluses to debt reduction would slash the debt by $2.1 trillion, cutting interest payments to $56 billion.
That would save $107 billion that would be transferred into the Social Security Trust Fund in 2011, and growing amounts through 2016. Transfers would stay at the 2016 level through 2044.
Sperling told reporters Saturday that should the economy take a turn for the worst between now and 2011, Mr. Clinton's plan would stabilize the U.S. market.
"I think that debt reduction and having this type of plan increases the chances that the economy will stay strong and put you in the strongest situation possible to deal with a downturn, and gives both the federal government and the Fed the largest number of tools possible," he said.
Mr. Clinton, with little more than a year left in his presidency, said his plan represents a historic opportunity to protect Social Security for future generations.
"It will take the trust fund out beyond the life span of the bby boom generation -- no gimmicks, no budgetary sleight of hand, just the right choices that really add up to protecting the Social Security surplus," he said.
GOP leaders will take another look at Mr. Clinton's offering, said John Feehrey, a spokesman for House Speaker Dennis Hastert, R-Ill.
However, Republicans had previously rejected the proposal -- first mentioned in Clinton's State of the Union address in January -- and proclaimed any further discussion of it dead for the year.