WASHINGTON — White House Budget Director James C. Miller III indicated Thursday that the Administration will not oppose congressional efforts to give cost-of-living increases to Social Security recipients, even though it appears inflation will not reach the 3% threshold that automatically triggers the hikes under current law.
Miller's comments made it appear virtually certain that the increases would be granted. Denial of next January's inflation-based increases, as the law would allow, would reduce the deficit by roughly $4 billion this year, if inflation runs at the 2% rate that government economists have forecast.
Wary of Recipients
But few lawmakers relish the prospect of angering the nation's 37 million Social Security recipients during an election year. Both houses of Congress have anticipated 2% increases in their budget resolutions.
Miller did not specifically endorse bypassing the law granting the cost-of-living increases but said: "That is the likely outcome."
"We've had a significant savings from the lowering of inflation, and people on Social Security should have some sharing of that," he told reporters after a speech to the U.S. Chamber of Commerce.
Two years ago, when Reagan was running for reelection and it appeared that inflation would be less than 3%, the President himself had proposed and Congress had approved the increases anyway. In the end, however, inflation exceeded that level, and the hike went through automatically.
Prices Still Falling
But this year, "it's essentially a sure thing it will be under 3%," said Edwin L. Dale Jr., spokesman for the Office of Management and Budget, which Miller heads. Figures released Wednesday showed that prices thus far this year have been falling at a 2.3% annual rate.
A decision to grant the increase would also boost veterans' pensions, supplemental security income payments to needy aged, blind and disabled people, and some railroad retirement benefits, all of which are tied to Social Security payments.
A 14-year-old law provides that the cost-of-living increases be delayed for any year in which inflation falls below 3% but that they ultimately be paid when inflation reaches that rate. For instance, if inflation this year were 2% and rose to 3% in 1987, the law would allow no increase next year and a 5% hike to be paid in January, 1988.
Thus, Dale noted, any savings achieved by delaying the increase would be only temporary.
Legislation has been introduced in the House to permanently lower the trigger to 1%.