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Notch Could be Resolved Without Money From Trust Fund
By Michael J. Zabko, Executive Director, TREA Senior Citizens League A record $87 billion federal budget surplus, the portion that does not include Social Security, is of vital importance to those born during the Notch years. That surplus makes it possible for the government to settle the Notch benefit disparity, without siphoning money from the Social Security Trust Fund. Although Congress has considered correcting the Notch in the past, concerns about the cost of providing improved benefits presented obstacles. Critics feared this would siphon-off too much money from the Social Security Trust Fund. That money would be needed to finance the retirements of aging baby boomers as well as those already receiving benefits. The surplus means the time has come for Notch Reform opponents to reconsider. The cost of resolving the Notch has dropped substantially. A recent legislative alternative, `The Notch Fairness Act,` is estimated to cost about $45 billion or $11.25 billion per year over four years. Supported and lobbied for by TSCL, `The Notch Fairness Act` would provide those born from 1917 through 1926, or their surviving beneficiaries, with their choice of improved monthly benefits or a Lump-Sum totaling $5,000 payable over a four-year period. Notch Babies are the generation that fought and sacrificed during World War II. When it came time to retire, they were called upon to sacrifice again, paying the price of `saving Social Security` by receiving lower-than-expected benefits. Social Security was expected at the time to go broke in 1980 Although the benefit reductions of 1977 were expected by Congress, neither a special transitional benefit formula, nor the short-term economic assumptions used in the new 1977 benefit formula, worked as anticipated. Because wage growth was lower than assumed, and price inflation was higher, benefits for those born during the Notch years were even lower than original expectations. Although Congress put off compensation to Notch Babies in 2000, they did not resist the allure of pork barrel spending. We simply cannot allow this to continue or there will be no surplus left. Contact your Members of Congress as well as the new President, and urge them to make 2001 the year in which the sacrifice of Notch Babies is finally recognized. This article first appeared in Volume 6, Issue 3 of "The Social Security and Medicare Advisor" newsletter (February/2001). To receive future editions of "The Advisor" in its special, free e-mail version, please click here. | ||||||||
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