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close video US facing ‘financial armageddon’ if it doesn’t solve debt limit crisis: Sheila Bair

Former U.S. Federal Deposit Insurance Corporation chairperson Sheila Bair assesses the current debt situation, telling ‘The Claman Countdown’ government is on an ‘unsustainable’ spending path.

A bipartisan proposal to shore up the financial future of key federal trust funds that help fund Social Security, Medicare, and highway programs may play a prominent role in the debate over raising America's debt limit in the months ahead.

Congress has until at least early June to raise the debt ceiling and avoid a potential default on the national debt, which has sparked a showdown between Republicans and Democrats over spending levels. Efforts to secure the finances of several trust funds may factor in, as the Congressional Budget Office (CBO) projected last year that three major trust funds will be exhausted in the next decade barring reforms — the Highway Trust Fund in 2027, Medicare's Hospital Insurance Trust Fund in 2030, and Social Security's Old-Age and Survivors Insurance Trust Fund in 2033.

If those trust funds are tapped out, they would no longer be able to pay out benefits or finance projects at their current levels, resulting in a cut to beneficiaries' payments and reduced funding for highway projects as those programs are forced to rely solely on incoming tax revenue due to the insolvent trust funds. To keep those trust funds from meeting that fate, a group of lawmakers has proposed a bill that would create "rescue committees" in Congress to find financial fixes for those programs.

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The Capitol is seen at sunrise in Washington on Tuesday, Sept. 5, 2017. (AP Photo/J. Scott Applewhite) (Associated Press / AccuWeather)

Known as the Time to Rescue United States' Trusts (TRUST) Act, the bill would establish congressional rescue committees focused on each of the federal government's major endangered trust funds — including the Highway Trust Fund, the Medicare Hospital Insurance Trust Fund, and Social Security's trust funds. 

Each rescue committee would have a dozen lawmakers tasked with drafting legislation to extend the long-term solvency of their respective trust fund and otherwise improve it. Two lawmakers from each party would have to support advancing a bill out of the rescue committee, and they would have 180 days to make recommendations, although they could do so anytime prior to that deadline.

Bipartisan bills approved by the rescue committees would receive expedited consideration in both chambers of Congress, although 60 votes would still be required to overcome the Senate's legislative filibuster.

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Blank Social Security checks are run through a printer at the U.S. Treasury printing facility February 11, 2005 in Philadelphia, Pennsylvania. (William Thomas Cain/Getty Images / Getty Images)

The TRUST Act was introduced by a bipartisan group of lawmakers led by Sens. Mitt Romney (R-Utah) and Joe Manchin (D-W.Va.) in the Senate and Reps. Mike Gallagher (R-Wis.) and Ed Case (D-Hawaii) in the House during the last Congress, and will likely be officially reintroduced in the near future now that the fiscal debate is heating up.

"It’s critical that both parties come to an agreement on both reining in our debt and avoiding a catastrophic default," Romney spokesperson Arielle Mueller told FOX Business. "Senator Romney has been encouraged that the TRUST Act has been discussed as part of a potential solution."

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Night falls at the Capitol in Washington, Thursday, Dec. 2, 2021. (AP Photo/J. Scott Applewhite / AP Newsroom)

In an interview on "Mornings with Maria" on the sidelines of the World Economic Forum last week, Manchin mentioned the TRUST Act as a way to prevent the trust funds for Medicare, Social Security, and highways from going defunct.

"We're not getting rid of anything, and you can't scare the bejesus out of people saying we're going to get rid of Social Security, we're going to privatize, that's not going to happen," Manchin said. "But we should be able to solidify it so the people that have worked in earn it, and now they're going to get it and that's what we're talking about."

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The Senate voted on the TRUST Act nearly two years ago when it was considered during a "vote-a-rama" as a non-binding amendment to the resolution that enabled Democrats to pass the $1.9 trillion American Rescue Plan through the budget reconciliation process. Senators approved the non-binding TRUST Act amendment on a 71-29 vote with all 50 Republicans and 21 Democrats in favor, although it was ultimately left out of the American Rescue Plan Act.

So far, the Biden administration has called for a "clean" increase to the debt limit that isn't conditioned on reforms to major federal spending programs. White House press secretary Karine Jean-Pierre said Monday that the debt limit should be raised "without conditions, and it should be done in a bipartisan way, as it's been done many times before." 

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