Bipartisan Group Introduces TRUST Act
Earlier this week, Senators Mitt Romney (R-UT), Joe Manchin (D-WV), Todd Young (R-IN), Doug Jones (D-AL), and Kyrsten Sinema (D-AZ), alongside Representatives Mike Gallagher (R-WI), Ed Case (D-HI), William Timmons (R-SC), Scott Peters (D-CA), and Ben McAdams (D-UT), introduced the TRUST Act, an innovative approach to addressing federal trust funds facing insolvency. The bill establishes bipartisan commissions to make recommendations on each trust fund, and those recommendations would receive a fast-tracked vote in Congress.
The Time to Rescue United States Trusts Act, or the TRUST Act (S. 2733/H.R. 4907) would establish a separate commission to prevent insolvency and improve each major, endangered federal trust fund program. It would apply to trust funds that spend more than $20 billion per year and are projected to be exhausted by 2035, resulting in deep and sudden cuts to beneficiaries and other activities.
The programs expected to be covered are Social Security, Medicare Part A (Hospital Insurance), and highway programs. According to the Congressional Budget Office (CBO), the Highway Trust Fund will be depleted by 2022, Medicare Part A by 2026, Social Security Disability Insurance (SSDI) by 2028, and Social Security Old-Age and Survivors Insurance (OASI) by 2032. The Social Security Trustees separately estimate the Social Security funds will be insolvent in 2052 and 2034, respectively.
Addressing the looming insolvency of these programs will prevent large scheduled benefit cuts for future and current beneficiaries. Under current law, a 62-year-old retiring today will face a 20 to 25 percent benefit cut before they turn 78 (see how old you’ll be when Social Security's funds run out).
Restoring trust fund solvency will also improve projected debt levels, which assume spending will continue beyond trust fund depletion. Earlier this year, we estimated that restoring solvency to each of these major trust funds would reduce projected debt by about 60 percent of GDP in 2050.
|Annual Deficit in Exhaustion Year||Percent Cut at Insolvency|
|Highway Trust Fund (combined)||2022||$15 billion
(0.1% of GDP)
|Medicare Hospital Insurance (HI) (Part A)||2026||$68 billion
(0.2% of GDP)
|Social Security Disability Insurance (SSDI)1||2028||$17 billion
(<0.1% of GDP)
|Social Security Old-Age and Survivors Insurance (OASI)||2032||$525 billion
(1.5% of GDP)
Source: Congressional Budget Office.
Each commission – or “rescue committee” – would have 12 members, three of whom would be selected at the discretion of the “four corners” of Congressional leadership: Senate majority and minority leaders, the House Speaker, and the House minority leader.
Each commission would be charged with producing legislation that:
- Prevents the trust fund’s depletion
- Ensures long-term solvency
- Simplifies the underlying programs
- Makes other general improvements
Rescue committees would have broad mandates and flexibility, which are appropriate considering that each program’s trust fund could be made solvent through numerous combinations of spending and revenue options. Rescue committee members could take this opportunity to implement a wide range of program improvements.
For example, several proposals have been put forward that would restore solvency to Social Security from different angles. The Social Security 2100 Act, offered by Representative John Larson (D-CT), would enact a set of benefit expansions funded by revenue increases. On the other hand, the Social Security Reform Act of 2016, from former Representative Sam Johnson (R-TX), would take the opposite approach by cutting taxes and slowing the growth of benefits. Then there are approaches like the plan offered by the Bipartisan Policy Center’s Commission on Retirement and Personal Savings – the Conrad-Lockhart plan – which seeks a middle ground by raising revenue and slowing the growth of benefits.
In reviewing programs and evaluating options, rescue committees would work closely with relevant federal agencies, CBO, the Government Accountability Office, Congressional leadership, committees of jurisdiction, other members, and each other.
Commissions could put forward a proposal with a simple majority of total members, including at least two members from each party to ensure bipartisan support. Though due the week after the 2020 election, recommendations could be put forward at any point if consensus is reached. Legislation reflecting these proposals would receive fast-track consideration in both chambers of Congress.
While the TRUST Act does not force policymakers to save the major trust funds, it does force them to work together on a bipartisan basis toward that goal. Since introduced, it has received the support of groups and individuals from across the political spectrum interested in securing these programs for current and future generations.
The looming insolvency of major trust funds creates an urgent need for lawmakers to take action soon – and the cost of waiting to close these trust fund imbalances is high. As Committee for a Responsible Federal Budget president Maya MacGuineas has said, “the TRUST Act offers renewed hope that we can address these imbalances before it is too late.”
1 CBO estimates that the SSDI trust fund will become insolvent in 2028, which would qualify the program for reform under the TRUST Act. The Social Security Trustees estimate is farther away, 2052, due to different estimating methodologies and assumptions. The Secretary of the Treasury is one of Social Security's trustees, and under the legislation, would determine whether or not SSDI is projected to be insolvent before 2035 to qualify it for inclusion.