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Notch Babies - Can Congress Help?

Dateline: 08/21/00

You probably know about the fears of Baby Boomers that Social Security will be flat out of money by the time they retire. A problem so potentially devastating to the economy that President Clinton made ensuring the long-term solvency of Social Security one of the top priorities of his administration.

Far less familiar to most Americans, are a smaller group of people who are now and have been suffering the short comings of changes to the Social Security system for the last 23 years. These are the Notch Babies -- persons drawing Social Security born after 1917 but before 1922. The Notch Babies' problem is that since 1977, they have been drawing significantly less in Social Security benefits than persons born either before or after them.  

The plight of the Notch Babies started to develop in 1972 when Congress changed the Social Security system to adjust annual benefit increases according to the cost of living. Over the next five years, the cost of living, to say the least, skyrocketed. By 1977, Congress could see that, unless some drastic action was taken, the Social Security Program would be a dead duck by 1981, if not sooner.

As part of their 1977 changes to save Social Security, Congress "grandfathered," or retained the old benefit calculation formulas for persons born between 1911 and 1916, while actually reducing them for persons born after 1917 and before 1922. Thus, the Notch Babies were born and, to this day, they continue to receive an average of 20 percent less less in Social Security than persons born in 1917 or 1922.

Will Congress Help?
There are currently two bills in Congress designed to give the Notch Babies some relief.

H.R. 538 - The Social Security Notch Act of 1999, sponsored by Rep. Bob Clement (D-TN) would, according to the Congressional Research Service, "To amend title II of the Social Security Act to provide for an improved benefit computation formula for workers who attain age 65 in or after 1982 and to whom applies the 15-year period of transition to the changes in benefit computation rules enacted in the Social Security Amendments of 1977 (and related beneficiaries) and to provide prospectively for increases in their benefits accordingly." And, "sets forth a schedule of additional benefit increases for such beneficiaries (and related beneficiaries), with percentages declining from 70 percent to 35 percent keyed to the year an individual became eligible for such benefits between 1979 and 1983."

H.R. 120 - The Notch Baby Act of 1999, sponsored by Rep. Jo Ann Emerson (R-MO) would, "amend title II of the Social Security Act to provide for an improved benefit computation formula for workers who attain age 65 in or after 1982 and to whom applies the 5-year period of transition to the changes in benefit computation rules enacted in the Social Security Amendments of 1977 (and related beneficiaries) and to provide prospectively for increases in their benefits accordingly." And, "sets forth a schedule of additional benefit increases for such beneficiaries (and related beneficiaries), with percentages declining from 60 percent to 10 percent keyed to the year an individual became eligible for such benefits between 1979 and 1983."

The basic differences in the two bills are shown bolded above and both bills have been in the House Subcommittee on Social Security since early in 1999. 

As you might expect, opposition to these bills come from persons who argue that they would penalize current workers who are already paying a much greater percentage of their income into Social Security than did any of the Notch Babies, or Baby Boomers, for that matter.

Considering the mountain of business facing legislators when they reconvene on Sept. 5, with only about 20 working days remaining before the scheduled end of the session on Oct. 6, the Notch Babies have exactly two chanced of getting help from Congress this year -- slim and none.\

Reference Links

'Notch Babies' Seek Social Security Payment Increase
CNN All Politics -- July 6, 1998

Clarifying the Notch Baby Distortion
Washington Post -- March 2, 1999

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