LAST YEAR, when the administration asked Congress to cut out payment of minimum benefits to Social Security recipients with low earnings records, Congress went along at first but then partially changed its mind. Cutting back on benefits for 3 million aged beneficiaries seemed too harsh even to a Congress bent on reducing the federal budget. But Congress did not reinstate the provision for most people who would have become eligible for minimum benefits in future years. Was that a reasonable choice?
No one really knows much about the 3 million people already receiving minimum benefits except that many are very old and that other government benefits would not have replaced all the lost income for most of them. But people applying for Social Security in recent years are more likely than their predecessors to have other sources of income, so that ending the minimum benefit for future recipients should not cause as much hardship.
To find out how many people were likely to be hurt, the Social Security Administration drew a sample of people who became eligible for the minimum benefit shortly before it was terminated last January. Most of these people turned out to be housewives who hadn't worked recently. Partly that may have been because the sample only included people claiming the benefit at age 62--the lowest age for eligi- bility--and people who aren't working are most likely to apply for benefits as early as possible. 2 Still, it is striking that over half the people in the sample had husbands who were already getting Social Security or who would in a few years. These people would have lost little or nothing from the cutoff of minimum benefits because Social Security's rules allow a wife to claim benefits equal to half her husband's check instead of her own benefit.
Another 5 percent of the group were nuns--who will continue to receive minimum benefits under a special exemption--or people getting disability payments that will make up most of their losses. Only 14 percent of the sample was made up of federal retirees drawing civil service pensions. The move to end minimum benefits was ostensibly aimed at these "double dippers," but since most federal retirees qualify for higher benefits than the minimum, the reform missed most of its target.
That leaves somewhere between 10 and 35 percent of the group as possible losers. Losses could be substantial for someone with little or no other income-- almost 15 percent of the group would lose more than $40 a month--but some losses might be made up partially by welfare. You might conclude from the study that eliminating the minimum benefit for future retirees isn't likely to hurt much because most of the loss will be made up by other government benefits. That also means it isn't going to save much either.