Becerra Introduces Bill to Combine Social Security Trust Funds
Just hours in advance of the release of Wednesday's 2015 Social Security Trustees' Report, Rep. Xavier Becerra (D-CA), Ranking Member of the Ways & Means Social Security Subcommittee, and 22 Democratic co-sponsors introduced H.R. 3150, the One Social Security Act, a bill that would merge the Social Security Disability Insurance (SSDI) and Old-Age and Survivors' Insurance (OASI) trust funds into one combined Social Security trust fund. Aimed at averting the impending depletion of the SSDI trust fund, combining the trust funds would result in one insolvency date of 2034, according to the 2015 Trustees' Report.
As one of the Fiscal Speed Bumps that Congress will need to address before the end of the session, the SSDI trust fund will be unable to pay the full amount of the program's scheduled benefits by the end of 2016. The One Social Security Act would change the structure of the Social Security trust funds, merging the disability and old-age funds into one that collects the entire 12.4 percent of payroll taxes rather than the current split of 1.8 percent to the disability fund and 10.6 percent to the old-age fund. By combining the funds, insolvency for the combined program would be in 2034, reducing the OASI program's solvency by 1 year and extending SSDI's solvency.
Although H.R. 3150 would protect SSDI beneficiaries from a 19-percent benefit cut next year, eliminating the separate nature could also have negative consequences. Charles Blahous, one of Social Security's public trustees, described five costs of merging the funds in a commentary posted on the e21 blog in April, including the historical rationale for trust fund separation and the self-financing principle of Social Security. Most importantly, Blahous discussed how combining the trust funds could just be an excuse to ignore making necessary reforms to the greater Social Security program.
The One Social Security Act would also violate the spirit and possibly the letter of the new House rule that requires any bills that increase the actuarial deficit of the OASI fund to be accompanied by measures that improve the overall solvency of the combined trust funds. Because this bill would just combine the trust funds, it would effectively shift a portion of the deficit in the DI trust fund to the OASI trust fund and thus would be potentially subject to a point of order.
This legislation would not be scored with a cost under traditional budget scoring rules which assume spending continues at levels scheduled in law even after a trust fund is depleted. But relative to what is allowed under current law, the bill would result in higher spending in the SSDI program, which is currently limited to incoming revenues and the DI trust fund balance.
While at face value combining the trust funds would not substantively harm Social Security's finances, doing so runs the risk of further delaying needed action to shore up the trust funds with a balanced mix of changes to benefits and revenue increases that extend its life for the entire 75-year actuarial period. As we've shown with previous measures that have been used to buy more time to find solvency solutions, they're rarely effective in making real reforms that strengthen the fiscal position of the combined program, and often they are only used to delay real action.
To learn about the 257-page 2015 Social Security Trustee's Report, see our 7-page paper "Analysis of the 2015 Social Security Trustees' Report."