The limits on cost-of-living adjustments (COLAs) proposed by President Reagan and Senate Republican leaders for Social Security and other programs would cause 650,000 people to fall below the poverty level over three years, the Congressional Budget Office said yesterday.
Two-thirds of them would be elderly, according to the CBO study, the first to analyze the impact of proposed cost-of-living adjustment changes for Social Security, railroad retirement, military retirement and civil service retirement benefits. The COLA limits are the cornerstone of a package of budget cuts designed to cut the annual deficit in half over the next three fiscal years.
Under the plan, recipients would receive a cost-of-living increase for the first 2 percent of inflation and for any inflation rate greater than 4 percent, but nothing for the 2 percentage points in between.
The CBO figures indicate that the deficit-reduction package would face a tough fight when it reaches the Senate floor.
The plan is scheduled for debate during the week of April 22.
In an informal count earlier this week, no more than 32 of the Senate's 53 Republicans would commit themselves to support the package, and many Democrats were vowing to oppose it and seek major revisions.
The CBO used administration and its own assumptions of expected inflation rates.
Under the administration assumption of about 4 percent or slightly higher annual inflation for the next three years, the CBO said that 650,000 more people would be below the poverty line by the end of the period if the new COLA proposal were enacted.
The CBO said about two-thirds of them would be elderly. The official poverty line in 1984 was $10,610 a year of income for a family of four and $6,280 for an elderly couple. The CBO said the loss per family would be about $410 a year -- measured in 1983 dollars -- by the end of the three-year per- iod.
While cutting COLAs for Social Security, railroad, civil service and military retirement, the White House-Senate GOP package would allow cost-of-living increases to continue for the Supplemental Security Income (SSI) program for the low-income aged, blind and disabled -- the "poorest of the poor" -- and would carry the exception one step farther with a one-time $10-a-month increase in basic benefits.
As a result, the CBO analysis said, about 80,000 of the SSI recipients would escape the poverty classification over the three years, meaning that the net increase in the poverty classification resulting directly from the COLA and SSI provisions would be 570,000.
Using its own inflation estimates, which differ slightly from the administration's, the CBO said the COLA provisions would drive 600,000 people under the poverty level over three years.
The SSI provisions would allow 70,000 to escape the poverty classification, so the net increase in poverty directly attributable to the provisions of the GOP budget compromise would be 530,000 people, using these assumptions.