Notch Reform Bulletin: Support Continues to Build for Lump-Sum Notch Reform

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Notch Reform Bulletin: Support Continues to Build for Lump-Sum Notch Reform

The support for Lump-Sum Notch Reform continued to grow in 2002. By the end of this session, over one hundred Members of the House of Representatives signed on as co-sponsors of “The Notch Fairness Act.” The legislation would provide Notch babies born from 1917 through 1926 either an improved monthly benefit or a $5,000 Lump-Sum payable in four annual installments.

Despite the support, Congress failed to take up any major Social Security legislation in 2002, in addition to repeatedly failing to pass a Medicare prescription drug benefit. Rather than address serious needs, lawmakers seemed more intent on using Social Security and Medicare as election year bats to beat up their opponents.

Meanwhile, the financial divide between fair benefits and affordable health care continues to grow for millions of seniors, while the federal budget outlook has deteriorated dramatically. Already, some 80 million seniors have been affected by back-door Cost-of-Living Adjustments (COLA) cuts as the government implements changes to the Consumer Price Index (CPI). According to the Congressional Budget Office (CBO), these cuts will continue.

A recent policy brief by Alan Auerbach, William G. Gale, and Peter Orszag of the Brookings Institution warns that even the sobering official budget projections of the CBO are overly optimistic. In addition to growing spending pressures as the nation ages, they note the government now also faces growing spending needs for defense and homeland security. “These trends imply that future taxes must rise, future spending outside of defense and the elderly must decline, or obligations to the elderly and to defense must be reduced,” the authors say.

The authors estimate the shortfall in the Social Security Trust Fund over the next 75 years will be 0.7 percent of the Gross Domestic Product. Freezing the 2001 tax cut at 2002 levels, rather than making it permanent, would save sufficient funds to eliminate the imbalance in Social Security through 2075 and “would be a major step toward fiscal responsibility,” they conclude.

Our government faces tough choices. With a new session starting soon, it’s imperative to communicate with newly elected or re-elected Members of Congress to demand action on closing the divide between fair benefits and affordable health care.

Sources: The Budget Outlook: Options for Restoring Fiscal Discipline, by Alan Auerbach, William G. Gale and Peter R. Orszag, The Brookings Institution, Policy Brief #100, 2002.

For a related story, see “Members of Congress Trade Charges over Scaring Seniors” at http://www.tscl.org/NewContent/101598.asp.

December 2002