Effects of OASDI benefit increase, December 1983.

Early in January 1984, beneficiaries under the OldAge, Survivors, and Disability Insurance (OASDI) program received a 3.5-percent cost-of-living increase. This increase, effective for December 1983, was originally scheduled to take effect in June but was postponed by the 1983 Amendments to the Social Security Act. . Automatic cost-of-living increases were instituted in 1975 by legislation enacted in 1972 and 1973. The legislation provided that an increase be triggered whenever the Consumer Price Index (CPI) for the first calendar quarter of a year exceeded the CPI for the base quarter by at least 3 percent. The base is defined as either the first calendar quarter of the last year in which there was an automaticBdjustment or any quarter in which a general benefit increase was effective. From 1975 through 1982 the effective date for automatic ‘increases was June. The 1983 amendments changed the effective month to December. In addition, effective with cost-of-living increases after 1983, 1 the computation period for calculating increases will be shifted from the first to the third quarter of the year to correspond with the change in the effective month. The 1983 amendments also introduced, for the first time, a provision relating cost-of-living increases to trust fund assets. Under this provision, whenever the ratio of the combined OASDI Trust Fund assets falls below 15 percent of estimated expenditures for the year (for years 1984-88 and 20 percent thereafter), cost-of-living increases will be based on the lower of the CPI or average wage increases. In the event that the ratio of assets to outlays reaches and is maintained at the 32-percent level, beneficiaries will be compensated for reduced increases in prior years.’ The initial effects of the cost-of-living increase can best be demonstrated by comparing the monthly benefits payable to beneficiaries immediately before and after the increase; Table 1 presents such data for the various types of beneficiaries as well as for the total beneficiary population. The cost-of-living increase resulted in a rise of $477 million in total monthly benefits