Australia Markets close in 2 hrs 15 mins

Congress might finally address the 'imminent danger' facing Social Security

Ben Werschkul
DC Producer

Even as Washington focuses on impeachment hearings and a divisive election campaign after that, hope springs eternal that lawmakers can pass new laws in 2020.

One such effort is known as the TRUST (Time to Rescue United States Trusts) Act, which a bipartisan group of lawmakers introduced last year to shore up federal trust funds. The bill would establish commissions tasked with preventing insolvency for each of the major endangered federal trust funds.

Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget and a supporter of the bill, calls the TRUST Act a “first step.”

"What folks don't really understand is we have several trusts funds in really imminent danger," Goldwein says in an interview with Yahoo Finance’s “On the Move.” "We don't need to save Social Security for our grandkids, we actually need to save it for our grandparents.”

The issue may come into greater focus in the coming days after President Trump, in an interview with CNBC this week, reversed his past statements on entitlement programs and implied a willingness to look at reforming Medicare and Social Security. “At the right time, we will take a look at that,” Trump said.

What the bill does

The bill is focused on funds that spend more than $20 billion a year and which are estimated to be exhausted by 2035 or earlier. The programs likely to be covered under the proposed law are Social Security, Medicare Part A, and the Highway Trust Fund. The Highway Fund, with no action, could be depleted as early as 2022.

Sen. Mitt Romney (R-UT) is a lead sponsor of the bill. (Photo by Chip Somodevilla/Getty Images)

A range of high-profile lawmakers are involved: Senators Mitt Romney (R-UT) and Joe Manchin (D-WV) are leading the effort in the Senate. Reps. Mike Gallagher (R-WI) and Ed Case (D-HI) are spearheading the effort in the House. Other lawmakers, like Senators Todd Young (R-IN), Doug Jones (D-AL), and Kyrsten Sinema (D-AZ) are on board.

The bill does not make specific policy proposals; instead it sets up a commission – alternatively known as a “rescue committee” – with members picked by Congressional leadership in the House and Senate.

The senators involved are not likely to be doing much lobbying of their colleagues this week or next. Each day of the impeachment trial, the senators are told they need to stay silent under penalty of “imprisonment.” 

"I don't expect Congress to enact the TRUST Act into law tomorrow,” says Goldwein, “but it's getting more and more co-sponsors every week and it's building momentum and I expect that ultimately that momentum is going to lead to some action."

Goldwein appeared as part of Yahoo Finance’s ongoing partnership with the Funding our Future campaign, a group of organizations advocating for increased retirement security for Americans.

Competing ideas for Social Security

On Social Security, one of the thorniest issues, there are a variety of proposals that would likely be considered. The Social Security 2100 Act is backed by Democrats would include benefit expansions via more taxes on both the wealthiest – by lifting the payroll tax cap on wages above $400,000 – and also by gradually phasing in an increase in the contribution rate paid by all workers.

Another idea, an approach backed by many Republicans, is the Social Security Reform Act of 2016 which would push towards solvency by limiting benefits and raise the full retirement age.

Sen. Bernie Sanders (I-VT) speaks during a news conference to announce legislation to expand Social Security, on Capitol Hill February 13, 2019 in Washington (Photo by Mark Wilson/Getty Images)

Any effort to cut benefits, especially for Social Security recipients, is likely to face significant Democratic opposition, especially in an election year when nearly every candidate is proposing raising benefits.

A New York Times/Siena College poll of Iowa from last fall found that 89% of likely Democratic caucus participants expressed support for increasing Social Security benefits by $200 per month. Among those who identified Bernie Sanders as their top choice, the figure rose to a whopping 98%. Elizabeth Warren has been campaigning on the idea of raising Social Security benefits by $200 per month for all recipients. Sanders has a plan that raises benefits across the board, including by $1,300 a year for seniors with incomes of $16,000 a year or less.

The average Social Security retirement benefit in June 2019 was about $1,470 a month, or about $17,640 a year. The Social Security trust fund will be depleted in about 15 years without action, according to the 2019 Trustees report. Cuts in benefits for current and future retirees would follow.

A recent op-ed by the executive director of Social Security Works, a Democratic-leaning group dedicated to raising benefits, called the bill a “plot to gut Social Security behind closed doors” and argued that the Democrats on board with the bill are “outliers in their party.”

The co-sponsors, at the moment, are Republicans or Democrats predominantly from states that President Trump won in 2016.

Many miles to go

If the bill were to pass, each of the commissions would begin meeting with the goal of producing legislation agreed upon by both parties to ensure the long-term solvency of their fund through some combination of increased revenues or cuts to benefits.

The resulting proposal would still need 60 votes in the Senate and a majority in the House to pass but would be fast tracked to limit amendments. Goldwein says this authority means the bill would "get a fair hearing on the floor without poison pills, without amendments that are designed to ruin them."

"If we can come up with a solution,” he says, the commission’s work will have “earned a fair shake on the House and Senate floor."

Ben Werschkul is a producer for Yahoo Finance in Washington, DC.

Read more:

Pete Buttigieg has a new plan to shake up the retirement system

Retirement expert: The 'easiest' crack to fix in the system is workplace access

A plan that could save Social Security and boost the economy — with one big catch

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on TwitterFacebookInstagramFlipboardLinkedIn, YouTube, and reddit.