TRUST Act Could Lead to Wide Social Security Benefit Cuts

Sen. Mitt Romney’s TRUST Act, which was just reintroduced after going nowhere in the previous Congress, is setting off alarm bells for seniors’ advocates. And rightly so.

The Time to Rescue United States Trusts Act would create “rescue committees” in Congress to propose legislation to “shore up” various trust funds, including the reserves for Social Security and Medicare. The committees’ proposals would then be fast-tracked through the House and Senate, with no amendments and limited debate.

While enactment of Romney’s bill would not directly slash Social Security and Medicare benefits, it sets up a process that would likely result in across-the-board benefit cuts. By leaving only the skeleton of Congress’ normal deliberative process in place, it would limit opportunities for seniors to let their lawmakers know whether they support or oppose specific proposals to fix the trust funds.

The Act’s aura of fiscal sobriety has attracted considerable Republican support and some Democratic co-sponsors.

No doubt, the appearance of taking the trust funds’ future solvency seriously may be politically advantageous. And the trust funds do need help. If Congress takes no action, the Social Security trust fund will become depleted in 2035 (though the program still would be able to pay about 80% of promised benefits); Medicare’s will run dry in 2026 (it covers the Part A hospital fund; the other parts of Medicare are funded by premiums), but the program still would be able to pay 90% of benefits.

The challenge is real; the TRUST Act is simply the wrong answer. But there are solutions that do not threaten seniors’ financial and health security. In the 116th Congress, Rep. John Larson (D-Conn.) introduced the Social Security 2100 Act, which would actually extend the life of the program’s trust fund for most of the rest of this century.

However, rather than cutting benefits, Larson wants to expand them, partly by asking the wealthy to begin contributing their fair share of Social Security payroll taxes. (Millionaires stopped paying into Social Security for the year in February when they hit the $142,800 payroll tax wage cap, while the rest of us contribute all year long.)  Rep. Larson is currently working with the Biden administration on a path forward to strengthen the program.

Larson’s efforts stand in stark contrast to the kind of solutions that so-called fiscal hawks will push. One need only look back to the 115th Congress, when then-chairman of the House Social Security subcommittee, Rep. Sam Johnson, R-Texas, introduced a bill that would have cut benefits by 33%. That is more severe than the 21% automatic cut that beneficiaries would endure if the trust fund were allowed to run dry.

Seniors’ advocates understandably mistrust fiscal hawks on this issue, since they have already called for “entitlement reform” (code word for “cuts”) to pay for the Trump/GOP tax cuts benefiting the wealthy and big corporations.

What’s most alarming about the TRUST Act is that it does not instruct the “rescue committees” to take into account the adequacy of seniors’ earned benefits, as if they are simply figures on a ledger.

The average Social Security benefit today is $1,543 per month or about $18,500 a year, just a few thousand dollars above the federal poverty line. Nearly half of seniors rely on their Social Security benefits for all or most of their income. Research indicates that tomorrow’s seniors will rely on their earned benefits for financial survival even more than today’s retirees do.

On the Medicare side, the TRUST Act’s boosters say that cost reductions would be on the table, especially reforms to address the overall cost of health care. We support cost containment measures on the condition that they do not affect the quality of care, provider choice, or increase beneficiaries’ out-of-pocket spending.

Current and future seniors cannot afford to bear those costs. The average Medicare beneficiary already pays more than $5,000 per year in out-of-pocket expenses, which is roughly one quarter of the average annual Social Security benefit.

Simply put, the TRUST Act is a way to cut benefits while leaving few fingerprints from individual members of Congress. It is miserliness masquerading as fiscal responsibility — and must be rejected. Any changes to seniors’ crucial earned benefits must be thoroughly considered through the normal legislative process, with beneficiaries’ best interests at the forefront.  Seniors simply cannot trust the TRUST Act with the all-important financial and health security that Social Security and Medicare provide.

Max Richtman is president and CEO of the National Committee to Preserve Social Security and Medicare.