THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, October 17, 1996 TAG: 9610170367
SECTION: FRONT PAGE: A2 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: 75 lines
Social Security benefits for 44 million Americans will go up 2.9 percent next year, marking the fifth straight year of modest increases in the government's biggest benefit program.
The change will mean an extra $21 for the average Social Security recipient, increasing the monthly check to $745. Social Security cost of living adjustments in the 1990s have been rising at the slowest pace since Congress made the increases automatic 23 years ago.
Advocates for the elderly warned Wednesday that even these moderate annual increases could be threatened if government budget-balancers proceed with proposals to cut them by about one-third on the ground that the Consumer Price Index is overstating inflation.
``A loss of that magnitude would permanently plunge millions of older people - particularly long-surviving women - into poverty as they age,'' said Horace B. Deets, executive director of the American Association of Retired Persons.
Deets said that for one out of four beneficiaries Social Security is their only source of income, and a 1 percentage point cut would mean over 10 years a $5,000 cut in average benefits.
The 1997 raise already is seen by some as too small.
``It should be closer to $100 or $150,'' said Paul O'Brien, 35, a Bostonian temporarily living in Washington, who said both of his parents receive Social Security but ``I'm not banking on it for myself.''
``It's not enough,'' said Barbara Dash, 43, of Washington. ``There's not enough to pay for anything on a fixed income.''
Supporters of a balanced budget say the only way to achieve that goal by 2002 and maintain it in the years beyond is to restrain growth in the government's two biggest benefit programs, Social Security and Medicare, which provides health care for the elderly.
A congressional advisory panel headed by Michael Boskin, former chief economist for George Bush, is scheduled to issue its final report on the CPI issue Dec. 1. It is expected to closely track a preliminary report issued last year that the CPI overstated inflation by around 1 percent.
While President Clinton and GOP challenger Bob Dole have said little about Social Security during the presidential campaign, many believe entitlement reform will have to be faced by the next president.
``The various budget plans won't get to balance in 2002 unless you take on the cost of living issue. That is what makes the numbers work,'' said Stanley Collender, director of Burson-Marsteller's federal budget consulting group.
Social Security accountants have said if the cost of living increases were trimmed by 1 percentage point annually, it would eliminate two-thirds of the deficit Social Security is currently facing. The Social Security trust fund is expected to be broke by 2029, unable to pay full retirement benefits of the baby boomers. ILLUSTRATION: Graphic
THE IMPACT
Examples of the impact that Wednesday's 2.9 percent
cost-of-living increase will have each month on Social Security
beneficiaries and other groups:
Average retired worker, $724 benefit will increase to $745.
Average retired couple, both receiving benefits, $1,220 monthly
check will rise to $1,256.
Widowed mother and two children, up from $1,436 to $1,478.
Elderly widow or widower living alone, up from $687 to $707.
Disabled worker, spouse and children, from $1,136 to $1,169.
All disabled workers, up from $684 to $704.
Maximum payment for Supplemental Security Income benefits for an
individual, up from $470 to $484 and for a couple from $705 to $726.
The earnings base will increase from $62,700 to $65,400 for the
6.2 percent Social Security portion of the tax.
There is no ceiling on earnings subject to the remaining 1.45
percent tax that finances Medicare, the health care program for the
elderly.
KEYWORDS: SOCIAL SECURITY BENEFITS INCREASE by CNB