The Reagan administration is all but certain to propose wiping out Social Security's minimum monthly benefits and student benefits as part of its slashes in spending, congressional sources said yesterday.
The cuts, which must be approved by Congress, may not be the only Social Security trims.Others are also being considered, but without a final decision so far.
The request for cuts in minimum and student benefits, which could affect 2.7 million persons and save as much as $3.8 billion a year if put into effect all at once, is certain to set off a tremendous fight.
A coalition of 115 national organizations of the elderly and disabled, formed two years ago to fight similar Carter administration proposals, is pledged to go all-out against them again.
"If these changes are proposed, we will oppose them," said Robert Ball, a coalition leader and former commissionerof Social Security.
The Social Security minimum benefitis $122 a month, except for persons who retired early and therefore took a reduction in benefits. About 2 millionpersons receive the minimum.
The minimum has long been criticized as providing a loophole for some people who retire under federal, state or civil Service programs with a good pension, then also collect Social Security on the basis of only a short work record in jobs paying into Social Security.
Under the regular benefit formula, such persons might receive only $50, $60 or $70 a month, but they enjoy what amounts to a windfall by being able to collect the $122 minimum. Critics say the minimum, designed to protect low-income workers and reduce paper work, has allowed well-paid civil servants with high Civil Service retirement pensions to "double dip" against Social Security, helping to contribute to its financial deficit problems.
The General Accounting Office, in a Dec. 10, 1979, study said 15 percent of those receiving the Social Securityminimum were also receiving other federal pensions averaging about $900 a month.
According to one estimate, if the minimum benefit were eliminated for everybody and payments were based strictly on the benefit formula, the Social Security system would save about $1.3 billion a year. However, it isn't clear whether the Reagan team wants to eliminate the minimum all at once, or just phase it out by refusing to apply it to those coming on the rolls in the future.
A representative of the American Association of Retired Persons, a member of the SOS coalition, said that while some of the people receiving the minimum may have income from elsewhere, many of the others are quite poor and loss of the minimum guarantee would be a hardship. The Reagan proposal apparently would rely on the welfare program for the aged, blind and disabled, called supplemental security income, to take care of these people.
The so-called student benefit programmakes monthly Social Security support payments to the children of dead, retired or disabled workers. Normally such payments stop when the child reaches 18, but they can continue through the 22nd birthday if the child is still in school or college.
In November 1980, 772,000 persons were receiving the benefit, with an average payment of $229 a month. Estimated cost to Social Security in fiscal 1982 was $2.4 billion.
There is no needs test. According to a GAO study two years ago, about 70 percent of the recipients had under $15,000 family income a year, so loss of the benefit could push many families into a fairly low income range.
However, the GAO and the Carter administration at that time made the argument that a wide variety of federal financial aid to education had become available to students of low and moderate income, substantially reducing the need to handle the matter through Social Security. The GAO also argued that benefits overlapped, that some students drop out but continue to collect. Reagan administration leadersreportedly have adopted the same line of thought.
If the student benefits were wiped out all at once and not phased out over several years, it would create a giant saving of $2.4 billion a year, though some of this might be offset by drains on educational and welfare aid.
However, both the student and minimum benefit proposals face a mighty battle on Capitol Hill from the SOS coalition, which represents millions of persons. Ball said, "It is a violation of the basic compact between the worker and his government to reduce Social Security protection for reasonsof short-term budget strategy."