Committee for a Responsible Federal Budget
Concept_DC_Capitol Building

Explaining the TRUST Act: Just the FAQs

Jul 28, 2020 | Budget Process

As the COVID-19 recession continues, Congress is debating additional fiscal support, economic relief, and public health spending.

The Senate majority package will include the TRUST Act, bipartisan legislation re-introduced today by Senator Mitt Romney (R-UT), co-sponsored by a number of Senate Democrats and Republicans, and called for in a bipartisan letter from 60 House Members last month.

Unfortunately, there are many myths and falsehoods about the TRUST Act. The below FAQ aims to set the record straight.

1. What does the TRUST Act do?

The TRUST Act would establish bipartisan bicameral “rescue committees” for major federal trust funds projected to deplete their reserves by 2035. This would include Social Security, Highways, and Medicare Part A.

The TRUST Act would not make any changes to federal programs. It would set up a process to encourage bipartisan agreement to avoid automatic cuts that will happen if lawmakers do not act.

Each rescue committee would consist of 12 members of Congress appointed by the “four corners” of Congressional leadership: Senate majority and minority leaders, the House Speaker, and the House minority leader. Each commission would be divided evenly between political parties and chambers of Congress.

Each rescue committee would be tasked with writing legislation to prevent trust fund depletion, improve long-term solvency, and simplify and improve the underlying programs.

In order to report recommendations, a rescue committee would need to achieve majority support including two lawmakers from each party (one-third of that party's membership on the commission).

The revised bill would set a June 1, 2021, deadline for recommendations. In addition, lawmakers could advance recommendations any time they are able to strike an agreement. Legislation reflecting these proposals would receive fast-track consideration in both chambers of Congress while preserving the 60-vote threshold in the Senate.

2. Which programs would be affected?

The TRUST Act would not make any direct changes to programs. It would set up rescue committees for lawmakers to seek bipartisan agreement on changes to extend the solvency of and to otherwise improve trust fund programs. These dedicated commissions would be set up for highway programs, Social Security Old-Age and Survivors Insurance, Social Security Disability Insurance, and Medicare Part A (Hospital Insurance).

3. When would the TRUST Act take effect?

Under the revised legislation, the TRUST Act rescue committees would be set up in January 2021, and their reports would be due by June 1, 2021. Enacted reforms could and almost certainly would start at some point in the future and be phased in over time.

4. Who determines which programs would get rescue committees?

The TRUST Act instructs the Secretary of the Treasury to report to Congress on those trust funds that spend at least $20 billion per year and are on track to run out of reserves by 2035. The Trustees for these programs have not yet put out official projections that take into account the effects of COVID-19.

Our latest estimates, however, indicate that the Highway Trust Fund (HTF) will be depleted by 2021, the Medicare Hospital Insurance (HI) trust fund by the beginning of 2024, the Social Security Disability Insurance (SSDI) trust fund in the 2020s, and the Social Security Old-Age and Survivors Insurance (OASI) trust fund by 2031.

5. What happens if lawmakers do nothing and major trust funds run out of money?

Absent new legislation, highway spending will be cut by 30 percent, Medicare Part A spending by 11 percent, and Social Security spending by 23 percent immediately upon the exhaustion of their respective trust funds. The cuts would be immediate and permanent. They would apply to all existing beneficiaries and other program activities as well as those becoming newly eligible.

For example, today's youngest retirees would experience a 23 percent immediate cut in their Social Security benefits at age 73 or so.

6. Why the rescue committee approach?

Congress has a history of waiting until the last minute to address major, long-anticipated policy deadlines. Doing so with these trust fund programs would reduce Congress’ options and increase uncertainty for beneficiaries and users of the programs as the depletion dates approach. The rescue committees are designed to facilitate bipartisan agreement well before the automatic cuts that will occur unless new legislation is enacted. To go into effect, any recommendations would still need to be passed by the House and the Senate before going to the President for a signature.

7. Are commissions a realistic way to improve these programs?

The regular legislative process has certainly not performed well at ensuring the long-term solvency of these programs. When the process has extended solvency, it has usually only done so for a short time and without addressing the structural shortfall in each trust fund. Commissions have a better chance of working because they focus the discussion on program solvency, they provide concrete goals for commission members to achieve, and their design requires bipartisanship for anything to get done.

The TRUST Act’s rescue committee approach also learns from previous commissions. The 1983 Social Security Commission led to bipartisan negotiations between President Reagan and House Speaker Tip O’Neill and ultimately to legislation improving Social Security solvency. This paper provides a history of commissions and design considerations.

8. Does the TRUST Act cut Social Security and Medicare?

The TRUST Act would not make any direct changes to Social Security or Medicare. It would set up bipartisan commissions made up of members of Congress that would be charged with restoring the solvency of these important programs. Cost reductions would be on the table, especially reforms to address the overall cost of health care, as would benefit expansions and new revenue.

A commission could recommend a revenue-only approach, such as Chairman John Larson's (D-CT) Social Security 2100 Act or Rep. Earl Blumenauer's (D-OR) Rebuild America Act for transportation. It could also recommend a spending-focused approach or a more balanced approach. Ultimately, recommendations would need to have bipartisan support to succeed.

9. Does the TRUST Act cut Social and Medicare in the middle of a pandemic?

The TRUST Act focuses on securing endangered trust fund programs over the long term. In fact, it is currently being discussed as part of a package that would dramatically increase near-term deficits to support the economy and otherwise address the pandemic.

Because the commissions' main goal would be long-term solvency, policymakers would likely phase in policies or delay them for several years until the economy regains strength. Given the long-term focus and absence of a near-term fiscal goal, policymakers have little reason to enact benefit changes immediately.

10. Does the TRUST Act go around the Senate filibuster?

No. The TRUST Act would preserve the current 60-vote threshold for legislation in the Senate and well as the simple majority rule in the House. Assuming rescue committees agreed to recommendations with a bipartisan majority, consideration would be expedited in other ways - but voting thresholds would remain unchanged.

11. Is it too soon to talk about fixing trust funds?

No, and members of Congress have made proposals for years. The TRUST Act rescue committees would start in January 2021 and attempt to make recommendations by the middle of the year. Waiting until the last minute imposes uncertainty, makes reforms harder, and would lead to sudden, severe cuts under current law, all of which the TRUST Act could help avoid.

Based on our latest estimates, that would be only months before the Highway Trust Fund runs out of reserves, two and a half years before the Medicare Hospital Insurance fund does, and a decade before Social Security's Old-Age and Survivors Insurance trust fund runs out.

There is widespread agreement among experts across the ideological spectrum that the right time to address the finances of these trust funds was in the 1990s or early 2000s. Addressing them in 2021 is not too early, and addressing them much later could be too late.

12. Is there too much uncertainty about the future to include the TRUST Act in current pandemic response legislation?

While the exact insolvency year for various trust funds is unknown, there is little uncertainty that all will soon be exhausted. Prior to the COVID recession, the Social Security Trustees estimated a 98.5 percent chance that Social Security would run out reserves by 2044 and a 90 percent chance it would run out in the 2030s. To the extent the pandemic has added uncertainty, it is to advance the insolvency date of all major trust funds. This uncertainty makes action more urgent, not less.

13. Does the TRUST Act create a closed-door process?

No. The TRUST Act would establish an inclusive process. Leaders would choose the members, who would undoubtedly share information with their respective caucuses. The rescue committees would solicit information, options, and views of standing committees, administration officials, independent watchdogs like the Congressional Budget Office (CBO) and the Government Accountability Office (GAO), and others who could provide useful input. TRUST Act commissions would also provide transparency, such as announcing public hearings seven days in advance and publishing recommendations. Commission members would continue to consult with members of other rescue committees, other legislators, advocates, and constituents throughout the process.

14. Where can I learn more?