Social Security: Whats New; Whats Not; and, Whats Notch? Part III Notch: An Issue Without a Home

This is the third and lastarticle in a three part series on Social Security. In part one, I flushed out the debate on Social Security Reform-focusing primarily onprivatization. Part two of this three part series focused on theconcept of a "lock-box" and its effect on securing left over tax revenuefrom the cost of Social Security benefits. Part three will focuson the "Notch babies" issue.

It is my hope that this three part seriesserved as an education tool as well as the catalyst to spark the debatearound Social Security among the residents of the 6th Congressional District.

On the trend towards privatization, itis critically important that Americans fully comprehend the human, financialand political costs of moving this entitlement system, which depends solelyon the contribution of workers to thrive, toward one based on the whimof the market and the integrity of corporate entities. The projectedimpact of such a system on women, minorities and those currently contributingto the system could be exponential in its devastation.

The greatest proponents of privatizationhave had to admit that they are unable to conceive of a plan to implementa partial or total privatization scheme that would not dismantle the systemand result in existing beneficiaries losing their benefits. The Houseis expected to debate and consider a measure this week to bolster the confidenceof the system- as a prelude to privatization- by legislating enrolles'access to benefits. Smoke screen at best!!! We can only providebenefits that we can pay for and we can only pay for benefits with fundscontributed into the system.

On the "Lock-box," we have establishedthat surplus Social Security dollars can neither be contained or protected. Although various pieces of legislation have been proposed to protect thesurplus, not one has reached the stage of law. In order to protectthe system, Congress often times must intervene on a legislative level.

Congress has, for years, tried to mitigatethe impact of statutory changes on beneficiaries of Social Security. Because of its entitlement status, major changes to the Social Securityprogram must be in the form of a law. Congress has entertained theprospect of revising the age of retirement and sought to recalculate costof living adjustments. In 1977, Congress sought to correct,by law, a flaw in the Social Security benefit formula. As a resultof this legal action, Congress created and has been struggling with the"Notch babies" issue.

I am going to take some time to singleout the "Notch" issue, as I am aware of its great interest among the seniorsin our District. In 1977, Congress set out to adjustthe Social Security benefits calculation to account for wage growth andinflation indexing problems. Without the adjustments, some beneficiarieswould have entered the system with benefits that exceeded the earningsthey had in their last year of work. The changes became effectivebeginning with people who became eligible for Social Security benefitsin 1979. However, many complained that the changes caused benefitdisparities between those born within the 5-15 year period after 1916 (notchbabies) and those born before and after them. After much debate,Congress mandated a Commission to study the "Notch babies" controversywhich released its report in December 1994. The Commission concludedthat "benefits paid to those in the "Notch" years are equitable, and noremedial legislation is in order."

Many legislative initiatives have beenintroduced in Congress since 1981- up to and including this current Congress-to address the "Notch" issue. Many NGO's (non-governmentalorganizations) as well as retiree associations have proposed dollar figuresto compensate for the "Notch" dilemma. It is important to note thatnone of the legislative initiatives have become law. In spite ofthe many predictions around how much is adequate compensation forbeneficiaries and spouses, they are just that: predictions. The governmenthas not agreed to any compensation scheme and, at this time, has not passedany laws to address the "Notch-babies" complaints.

I am planning a neighborhood seminaron the "Notch-babies" issue. I have received many inquiries on theissue and have instructed my staff to conduct a survey of legislative activitiesaround the issue and bring this information to the constituents.

It is my hope that I have generated adebate around Social Security reform that highlights the thoughts and thewill of the residents of the 6th Congressional District. In light of the "lock box" phenomenon and its effectiveness toward solvencyof the Trust Fund, the debate should prove rich and rewarding. Thiswill be, perhaps, one of the most significant and far-reaching legislativeinitiatives undertaken by the Congress this year. If real reformof the Social Security system is to take place, then we must provoke aspirited debate among ourselves- between those who currently contribute,and those who currently receive benefits. In the wake of ENRON, privatizationmust reflect a sensitivity for the need to have guaranteed funds to keepthe system afloat.

As I develop my position on the futureof Social Security and what reform scheme is feasible- if any, I want theinput of my Constituents so we reflect both the times and the traditionof maintaining our quality of life in the golden years.

For additional information on the SocialSecurity reform issue, "lock boxes", Notch-babies, or any other SocialSecurity related issues, please contact any one of my offices and staffwill provide further information.