IN PERSUADING Senate and House budget conferees this week to stick by their earlier decision to terminate the Social Security minimum benefit, the Office of Management and Budget issued a fact sheet assuring Congress that there is no cause for concern because elderly couples have a "federal safety net" valued at $10,600 a year.
That fact sheet, as well as the conferees' decision, deserves some reconsideration.The $10,600 figure is made up of three items -- Supplemental Security Income payments (welfare for the aged and disabled), food stamps and Medicaid. As of this month, SSI payments have been raised to $265 a month for a single person and $397 for a couple to which food stamps would add about $35 and $48, respectively. Most minimum beneficiaries are single, not couples as OMB implies, so the federal safety net would provide them with total spendable income of about $300 a month, or $3,600 a year. This is an income about 20 percent below the official poverty line for 1981 -- in other words, strictly a hand-to-mouth standard of living.
Where's the rest of OMB's total? Some comes from assuming that states supplement the federal welfare benefit with money of their own. Thirty states do this, but some pay as little as $10 a month. Most of the remainder, however, represents average Medicaid benefits for older people. Medicaid, of course, is not paid to pppor people but to doctors, hospitals and nursing homes. It can't be used to pay rent, buy food or cover electric bills. In about 15 states, Medicaid is not automatically available to elderly welfare recipients (one state has no program at all). OMB values Medicaid at $3,660, again for a couple rather than the more typical individual. But few people get the "average" benefit since that average is heavily weighted by large expenditures made on behalf of those relatively few recipients who are institutionalized or terminally ill. Almost half of Medicaid's payments, moreover, are for people who are not chronically poor but who have exhausted their normally higher incomes paying for medical care. Medicaid is an important last-ditch protection, but it's not like money in the bank.
OMB also cites data showing that many recipients have income from other government pensions or from working spouses. These data, however, come from a GAO survey of people coming onto the Social Security rolls in 1977 in Los Angeles. Most minimum beneficiaries have been receiving benefits much longer, and most don't live in Los Angeles -- two factors that, as the study notes, may greatly overstate the resources of a typical recipient.
There are, no doubt, some non-needy recipients of the minimum benefit. Perhaps there are many. But remember there are many other people getting Social Security benefits far in excess of their contributions -- including many federal "double-dippers" -- who wouldn't be affected by dropping the minimum because they get payments higher than that. If federal pensioners are the main target of the reform, the change should be tailored to reach all of them, not just those at the minimum benefit level.
For those among the 3 million beneficiaries who are, in fact, in need, a real "safety net" -- an exemption -- is in order. This can't cost much since, without this protection, welfare would have ahd to absorb much of the loss. Needs-tests may be inconsistent with the earned entitlement concept upon which Social Security is based, but in this case the equally time-honored principle of holding harmless the society's most vulnerable citizens should govern.