By Alan K. Ota

Law360 (July 27, 2020, 7:03 PM EDT) -- A proposal to establish so-called congressional rescue panels that would force votes on new financing plans, including tax increases and benefit curbs, has surfaced as a sticking point in talks toward finalizing legislation to address fallout from the COVID-19 pandemic.

Senate Majority Leader Mitch McConnell, R-Ky., has said a pillar of an emerging Senate GOP pandemic response package will be a bipartisan proposal by Sen. Mitt Romney, R-Utah, to empower bicameral rescue panels starting in 2021 to propose tweaks to taxes and spending to both chambers. The panels would be empowered to force floor votes on tweaks to Social Security, Medicare and the Highway Trust Fund. 

But the proposal faces opposition from key Democrats, including House Ways and Means Chair Richard Neal, D-Mass., who contend the drafting of tax proposals and other financing measures should be left in the hands of the two congressional tax-writing committees.

While both parties try to cut a deal on a package to replace soon-to-expire expanded jobless aid enacted in the Coronavirus Aid, Relief and Economic Security Act , there has been little consensus on how to deal with the pandemic's damage to collections of levies for big programs with trust funds, including payroll taxes for Social Security and Medicare, as well as gasoline taxes for the Highway Trust Fund. Lawmakers on both sides agree that the novel coronavirus, which causes COVID-19, a respiratory disease, has eroded revenue sources for federal programs, but the sides remain at odds over how to address reduced tax collections.

McConnell pushed for the rescue panels on the Senate floor last week by noting the COVID-19 crisis "has weakened the critical federal trust funds that Americans rely on." In lieu of plans to deal with such issues now, he said, the panels "would help a future Congress evaluate bipartisan proposals for protecting and strengthening the programs that Americans count on."

Romney has argued lawmakers in both parties should back the new version of his proposal in S. 2733, the Time to Rescue United States Trusts Act, as a way to "put in place a responsible process now to prevent dramatic cuts to programs like Social Security and Medicare or be forced to enact massive tax hikes down the road, both of which would be devastating to middle class Americans."

A Romney aide said in an email that the new bill would be "a slightly updated version with technical changes" so that the rescue-panel process would start in the next Congress, not in 2020, and each rescue panel would have a co-chair from each chamber.

The proposal has sparked one of several disputes in talks on a virus response package. Lawmakers also are trying to resolve differences between GOP proposals for business tax incentives and Democratic relief measures including a bigger child and dependent care credit and other incentives for families with children in the House-passed $3 trillion Health and Economic Recovery Omnibus Emergency Solutions Act.

Several Democratic senators have voiced support for the Romney plan. For example, Sen. Joe Manchin, D-W.Va., said the plan would set up a process to "proactively help to secure sustainable funding for programs like these before it's too late."

But key Democrats have fired back by arguing that the new rescue panels are unnecessary. They contend that plans to deal with revenue shortfalls for Social Security, Medicare and the Highway Trust Fund with measures such as tax hikes and cost-saving initiatives should remain under the purview of the tax-writing committees, the House Ways and Means Committee and Senate Finance Committee.

Neal charged the proposed new panels would "result in far-reaching cuts" to Social Security and Medicare and would "fast-track the destruction of these programs."

"The last thing struggling Americans need right now is a secret panel designed to slash their earned benefits and further undermine their economic security," Neal said.

Despite such objections, Romney's TRUST Act has attracted support from a number of co-sponsors, including four Democratic Caucus members, and could be a magnet for deficit hawks in both parties, who have voiced concerns about the longer-range fiscal woes of Social Security, Medicare and the Highway Trust Fund.

The proposed rescue panels also have been backed by several budget watchdog groups. For example, Maya MacGuineas, president of the Committee for a Responsible Federal Deficit, said the new panels would "bring policymakers together to identify bipartisan solutions" with the goal of potentially averting "an abrupt 23% cut" in Social Security benefits linked to the depletion of the program's trust fund in about a dozen years.

A recent study by the Penn Wharton Budget Model concluded the pandemic's harm to jobs, wages and payroll taxes could move the projected depletion of the Social Security trust fund forward by about four years to 2032.

Proponents of the rescue panels have said they would play a role similar to the 18-member National Commission on Fiscal Responsibility and Reform, which put together a fiscal reform proposal in 2010 but fell three votes short of the required 14-vote majority of its members to send it to Congress for mandatory votes. The plan would have set the top individual and corporate tax rates at 28%, raised the gasoline tax by 15 cents per gallon, lifted the Social Security full retirement age to 69 and curbed health care spending.

Former Sen. Alan Simpson, R-Wyo., and Erskine Bowles, former chief of staff to President Bill Clinton, who served as co-chairs of the fiscal commission, have praised Romney's proposal for rescue panels as a way to "create a truly bipartisan process to save these important programs."

But the plan has been opposed by advocates for retiree benefits, who warn that the new rescue panels could try to shrink benefits and torpedo Democrats' efforts to expand them. Nancy Altman, president of Social Security Works, a nonprofit advocacy group backing broader benefits, charged Republicans were "plotting to use the cover of the pandemic to slash Social Security" and urged Democrats to "unequivocally reject any package that includes the TRUST Act."

While senators from both parties begin to debate Romney's proposal as a part of a Senate GOP plan, supporters are trying to rally support for a similar bipartisan TRUST Act bill in the House, H.R. 4907, with 16 co-sponsors.

Led by Reps. Scott Peters, D-Calif., and Jodey Arrington, R-Texas, about 60 lawmakers from both parties signed a June letter that called for budget reforms as a part of pandemic response legislation. The letter also expressed general support for developing bicameral fiscal panels like the proposed rescue committees, which it said would "give these programs the priority and urgency they deserve."

But some lawmakers say they are undecided about Romney's plan to create 12-member rescue panels, with seats evenly divided between the parties. Under Romney's proposal, the panels would be created for any big trust fund with at least $20 billion in outlays last year that is deemed in a mandatory report by Treasury Secretary Steven Mnuchin as having an inadequate balance of liabilities and assets between the date of enactment and 2035. A majority vote of each panel's members — including at least two members of each party — would be required to send a bill to the House and Senate for mandatory floor votes.

Rep. Kevin Brady, R-Texas, ranking member on Ways and Means, said he was still studying details of the plan and pushing for new House GOP business incentives and domestic manufacturing incentives, and had not made a decision on whether to back the rescue panels. Brady and other lawmakers have yet to get traction for a proposal for permanent extension of full expensing of business equipment and other proposals to expand parts of the Tax Cuts and Jobs Act.

Regardless of whether the plan for rescue panels survives in the final package, Brady said he believed there would be supporters in both parties for requiring deliberations on the fiscal problems of Social Security, Medicare and other federal programs.

"What I do support is some provision in this bill that forces Congress to work together on getting our fiscal house in order," Brady told Law360.

--Editing by John Oudens and Robert Rudinger.

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