In truth, if they cut it by 2.5% per month, that would still mean that in two years 50% of the greater welfare costs would be gone. In four 100% of the greater welfare would be gone.
Even in one year, over 25% would be gone. Not bad at all...
Though your math is slightly off. 2.5% cut the first month would leave only 2.5% of 97.5% to cut the next month, 2.5% of 95.06% to cut the following month, and so forth. But the basic idea is sound.