A rise of 0.6 per cent in the March consumer price index, announced yesterday, will trigger a 5.9 per cent increase beginning July 1 for 35.5 million American receiving Social Security and Supplemental Security Income benefits.
The increase, reflecting the higher cost of living over the past 15 months, means that the average Social Security benefit for a married couple will rise from $377 to $400 a month.
All told, the increased benefits will add $5.3 billion in purchasing power to the economy above the level of payments that otherwise would have been made. The Department of Health, Education, and Welfare now estimates that the Social Security trust funds will pay out a total of $92 billion in the next fiscal year.
At the same time, there was economic news that went in another direction. Bert Lance, director of the Office of Management and Budget, announced a new estimate of the budget deficit for the current fiscal year that is $12 billion less than one projected by President Ford.
That leaves the Carter budget in a much less stimulative posture than Ford's would have been.
Lance said that the budget deficit orginally set by Carter at $68 billion for fiscal 1977, has now been reduced to a range of $45 billion-$46 billion for two reasons. First, federal spending has fallen short of projections. This shortfall, Lance said, is continuing and now amounts to about $10 billion.
Second, President Carter cut the projected deficit by another $11.2 billion last week by withdrawing his proposal for a $50-per-person tax rebate.
Lance said the figures were preliminary, but would be refined in a day or two. The maximum difference of $23 billion between the original Carter budget deficit estimate and the new one appears to include, as well, some increase in Treasury revenues.
In response to questions, Lance said that the economy "is getting better," even with the reduced budget outlays, citing Wednesday's report of a 5.2 per cent gain in the first quarter real gross national product. Administration officials say privately they expect a second quarter gain of 7 to 8 per cent.
At the same time, Lance gave the first approximation of the budgetary impact of Carter's energy program. For fiscal 1978 - the year starting Oct. 1, 1977 - he estimated that the net cost would be between $1.2 billion and $2.6 billion.
From now through 1985, his estimate was that the cost would add up to $7 billion to $15 billion, representating in large part the cost of a strategic reserve of oil, as well as revenues losses because of energy program tax rebates.
Lance conceded that the Carter energy program, if enacted, would have "some temporary adverse impact on the economy." But he said that "as we move toward a period of certainty (on energy legislation)" the economy will gain strength. Over the next four years, if the (impact) is not favorable, at least it won't be unfavorable," Lance said.
He added that the latest information compiled by the office of chief economic adviser Charles L. Schultze predicted an annual inflation increase of 0.25 per cent a year if the proposed standby gasoline tax is not triggered, and 0.5 per cent a year if it is.
The March consumer price index increase was less than the 1.0 per cent increase in February and 0.8 per cent in January, somewhat easing worries about accelerating inflation. But Commerce Department economist Courtenay Slater said that "the underlying rate of inflation is still in the 6 per cent range," (Details on D-12).
Higher inflation rates give Social Security recipients an increased payment under a requirement of the law that automatically boosts retirement and disability benefits in any year that the index rises 3 per cent or more.
Last year, the automatic cost-of-living adjustment for Social Security recipients was 6.4 per cent. In 1975, it was 8 per cent.
The 5.9 per cent boost for this year will boost the maximum monthly benefit for a man retiring this year at age 65 from $412.70 to $437.10. For a woman retiring at the same age this year, the maximum benefit would increase from $422.40 to $447.40.
Because of a quirk in the law, now being corrected, the top benefit available to women is marginally higher than the benefit for men. According to HEW sources, this is the last year that the disparity will prevail.