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Explaining the TRUST Act: Just the FAQs

Jul 28, 2020 | Budget Process

Updated on 4/15/2021 to reflect reintroduction of the TRUST Act in the House and Senate. 

Today Senators Romney (R-UT), Manchin (D-WV), Young (R-IN), Sinema (D-AZ), Capito (R-WV), King (I-ME), Portman (R-OH), Warner (D-VA), Cornyn (R-TX), Rounds (R-SD), Cramer (R-ND), and Lummis (R-WY) as well as Representatives Gallagher (R-WI), Case (D-HI), Peters (D-CA), Arrington (R-TX, and Bourdeaux (D-GA) reintroduced the Time to Rescue United States Trusts (TRUST) Act.  

This bill reflects a bipartisan Senate Budget Resolution amendment, which received 71 votes in February. It also closely matches the version of the TRUST Act introduced last Congress in the House and Senate. The bill has been endorsed by the Blue Dog Coalition, called for in a bipartisan letter from 60 House Members (30 from each party), and mentioned in the Problem Solvers Caucus budget principles

Unfortunately, there are some misunderstandings about the TRUST Act. This FAQ aims to set the record straight. 

1. What would the TRUST Act do?

The TRUST Act would establish bipartisan and bicameral “rescue committees” for major federal trust funds that are projected to deplete their reserves within the next 14 years. Based on projections from the Congressional Budget Office (CBO), this includes the Highway Trust Fund (HTF) (fiscal year 2022), the Medicare Hospital Insurance (HI) Trust Fund (fiscal year 2026), the Social Security Old-Age and Survivors Insurance (OASI) Trust Fund (calendar year 2032), and the Social Security Disability Insurance (SSDI) Trust Fund (calendar year 2035). The Social Security and Medicare Trustees and Chief Actuaries have similar projections: they estimate the HI trust fund will be insolvent in calendar year 2026 and Social Security’s theoretically combined trust funds in calendar year 2034.

The TRUST Act would not make any changes to these or other federal programs. Rather, 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 Speaker of the House, and the House minority leader. Each commission would be divided evenly between political parties and chambers of Congress. The bill indicates that lawmakers on the committees and subcommittees of jurisdiction should be given “due consideration” for appointment to the rescue committees.

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. The rescue committee would be instructed to consult with the committees of jurisdiction in the Senate and House.

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 updated bill would give the rescue committees a 180-day 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 instead 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 created for highway programs, Medicare Part A (Hospital Insurance), Social Security Old-Age and Survivors Insurance, and possibility Social Security Disability Insurance. 

3. When would the TRUST Act take effect?

Under the updated legislation, the TRUST Act rescue committees would be set up within 28 days of enactment, and their reports would be due within 180 days. 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 2036. The Trustees for these programs have not yet put out official projections that take into account the effects of COVID-19.

CBO’s latest estimates indicate that the Highway Trust Fund will go insolvent in Fiscal Year (FY) 2022, the Medicare Hospital Insurance trust fund in FY 2026, the Social Security Old-Age and Survivors Insurance trust fund in calendar year 2032, and the Social Security Disability insurance trust fund in calendar year 2035. 

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

Under the law, trust fund programs cannot spend in excess of their dedicated funding sources. Once the trust funds are depleted, the programs may only spend incoming revenue. For the Highway Trust Fund, this means new projects will be immediately halted and spending ultimately reduced by a quarter. For Medicare, all payments will be cut by 13 percent or delayed by an equivalent amount upon insolvency.

In the case of Social Security, benefits will be cut immediately and across-the-board upon insolvency. SSDI benefits will be cut by 7 percent when its trust fund runs out, while Social Security retirement benefits will be slashed by 27 percent. For a typical new retiree, that would mean an immediate $7,000 cut in annual benefits, from roughly $26,500 to $19,500 in today’s dollars. For a couple, the cut could be as much as twice as large. These deadlines are no longer far away. Today’s youngest retirees will be 67 when the Medicare trust fund runs out and 73 when Social Security’s retirement program is insolvent based on CBO’s projections. All four trust funds will be insolvent by the time today’s 53-year-olds reach the normal retirement age.

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, 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 Security and Medicare in the middle of a pandemic?

The TRUST Act focuses on securing endangered trust fund programs over the long term. 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 fully regains strength. Given the long-term focus and absence of a near-term fiscal goal, policymakers have little reason to enact 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. All major trust funds are within 14 years of insolvency — with the highway and Medicare trust funds within one and five years of depletion according to CBO. 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.

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 the trust funds is unknown, there is little uncertainty that all will soon be exhausted. Prior to the COVID-19 public health and economic crisis, 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. 

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 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?

The below resources include more information on the TRUST Act and trust fund solutions more generally: