STATEMENT OF CONGRESSMAN STEVE NEAL SUBMITTED TO THE WAYS AND MEANS SUBCOMMITTEE THE SOCIAL SECURITY "NOTCH" I Mr. Chairman, thank you for holding hearings on the General Accounting Office's study of the Social Security "Notch." appreciate the opportunity to submit my testimony for the record and I am doing so in support of correcting the "notch" problem. I had been eagerly awaiting the release of the GAO study because I hoped it would be useful in educating the public and Congress and would help us to solve the "notch" problem. However, after reviewing the study, I must express my disappointment. The GAO puts too much emphasis on the cost of correcting the disparity, instead of addressing the severe consequences of inaction · the loss of public confidence in the Social Security system and the blatant injustice of denying a vulnerable group of Americans the benefits to which they should be entitled. In 1977, we in Congress sought to rectify the over-indexed 1972 Social Security benefit formula. We tried to create an equitable situation where the replacement rate, which was flawed, was lowered to make the Social Security trust funds secure. We believed that the transition period we built into the 1977 amendments would protect from a sudden loss of benefits those individuals retiring as the new formula was implemented. Yet, when we look at the benefit levels for those people in the transition period, we see that they are receiving a substantially lower benefit (about 20% less) than we intended. I believe it would be tragic for Congress not to act to restore benefits to the notch group. One piece of legislation that would restore benefits, while maintaining the solvency of the system, is the Ford-Sanford bill. It would not negatively affect the long-term health of the system, and it would bolster public confidence in the program. The price tag we are talking about is one we can afford; it amounts to about two percent of the annual Social Security budget. If we I am a strong believer in the Social Security system. do not respond to this inequity, I am afraid it will undermine the entire system for generations to come. How can we expect young workers of today to be willing to pay taxes into a program that discriminates against their grandparents just because they happenend to be born in a certain year? How can we possibly refuse to correct an inequity we in Congress unintentionally created? We addressed the problem facing Social Security in the fairest way we knew at the time. We now see that we made a mistake, and we need to correct it. Mr. Chairman, I urge you to favorably consider the Ford-Sanford legislation in this Congress, so that we can do justice to those born in the notch years and resolve this issue now. Thank you. STATEMENT OF HONORABLE BILL NICHOLS MR. CHAIRMAN, I very much appreciate the fact that you are holding this hearing to address the problem referred to as the Social Security "notch". I am on record as voting against the conference report to the Social Security Act Amendments back in 1977, which brought this into effect in 1981. Because the inflation rate was very high during those years it caused an even wider disparity in Social Security benefits given to so-called "notch babies," or, retirees born between 1917 and 1921 and other Social Security recipients born before those years. In March of 1982 I, along with former Congressman Jack Brinkley of Georgia, wrote to President Reagan asking that he support our efforts to correct this disparity and a copy of that letter is enclosed for the record. In their reply, officials at the White House informed us that our request had been referred to the Special Commission on Social Security which apparently reported to the Congress without addressing the notch problem. Mr. Chairman, at virtually every town meeting I have had in recent months, the question arises as to what the Congress is going to correct the disparity in earnings received by those Social Security reciepients born in the notch years. And, considering the fact that one retiree with an identical work history as another but born one day earlier than the other can receive over $100 more per month in Social Security benefits, we should understand the concerns raised by these retired persons, many of whom rely on Social Security check as their sole source of income. In a sense of fairness and equity, the Congress should address this issue and I am hopeful that this hearing today will be positive step in this direction. We would like to call to your attention the plight of a substantial number of recent retirees who are suffering the effects of the social security benefit disparity known as the "notch" problem. Simply because of their birthdates, they are receiving as much as 10% less than their friends with similar work histories. This inequity is the unforeseen result of the social security amendments passed by Congress in 1977. They were enacted in an effort to correct the formula then in use. However, during the floor debate which preceded that vote, members were assured that the ensuing reduction would stabilize future recipients' replacement rates at a level no more than 5% below their 1979 levels. Unfortunately, that projection has not been realized, and many recipients today are suffering a reduction twice as great as was anticipated. Therefore, we invite your consideration of the attached legislation, which would assure that reductions are kept within the range envisioned by Congress in 1977. Together, we can demonstrate that, even as we face difficult decisions with respect to the budget, our government's compassion and commitment to fairness remain undiminished. I regret that I am unable to attend the Committee on Ways & Means, Subcommittee on Social Security meeting on April 14, 1988 in Washington, D. C. I telephoned the Social Security office in San Luis Obispo, Ca. and asked: I was born on March 4, 1921, contributed to the Social Security Trust Fund for 43 years, my Social Security benefit (because of the "notch" inequity) is $607.80 per month, A WHOPPING $181.50 PER MONTH LESS. I was shocked and angry to say the least. I believe my constitutional rights have been violated. I am not being treated equally because I was born at the wrong time. As Co-President of the "NOTCH BABIES" COASTAL CHAPTER of San Luis Obispo County, California, and whose 647 members have experienced 13% to 30% reductions in Social Security benefits, just as I have, I ask THEREFORE, BE IT RESOLVED, that the Sub-Committee on Social injustice and inequality to 7.2 million "Notch Babies," creating Sincerely yours, Elsene R. Marten Elaine R. Martin Co-President |