‘Notch Babies’ Continue Fight for Increase in Their Benefits

About 18.5 million Americans between the ages of 65 and 74 contend they are being shortchanged by the Social Security system.

Senior citizens who were born between 1917 and 1926 have been flooding Congress with complaints and demanding redress--in the form of increased benefits and retroactive “catch-up” payments.

They even have acquired a name: the “notch babies.”

BACKGROUND: The problem stems from a glitch in the formula that Congress enacted in 1972 to provide for automatic cost-of-living increases in Social Security benefits. Because of this flaw, some beneficiaries qualified for higher retirement benefits than lawmakers intended.

Before Congress changed the formula in 1972, retirement benefits for most Americans had hovered at about 41% of the average monthly income they had earned during their working lives. Under the new legislation, however, the percentage for some categories of retirees surged to 55%.

Analysts said that, if the error had gone unchecked for very long, the percentage eventually would have soared to 100%--and quite possibly would have jeopardized the entire Social Security retirement system.

Not surprisingly, in 1977, Congress moved to correct the error, enacting a new formula. But the plan did not work as expected; it halted the runaway benefits, but it also lowered benefits for those born in the “notch”--at least as those recipients see it.

THE ISSUE: Ever since the revised formula was adopted, notch babies and their special-interest organization, the National Coalition to Preserve Social Security and Medicare, have been demanding action.

“I don’t think there is an issue in the 1980s that Congress received more mail on than this one,” said Allen Johnston, a spokesman for the organization, which held yet another press conference earlier this month to complain about the problem.

“Whereas the (failed Robert H.) Bork nomination (to the Supreme Court) and abortion come and go, this one ranks in the top five,” Johnston asserted--”month after month, year after year.”

THE CONFLICT: The Social Security Administration flatly denies that the issue even exists, arguing that the problem is really with the generation before the notch-baby group: Some retirees who were born before 1917 are getting more than they should.

“We don’t see it as a legitimate problem,” said Frank Battistelli of the Social Security Administration. “Unfortunately,” he added, “people hear what they want to hear.”

And a 1989 study by the General Accounting Office, the congressional watchdog agency, contends that notch babies never receive less money than those born in other periods--and often receive more.

“The facts suggest that the argument that the notch represents a major inequity is not compelling,” the GAO report declared.

THE OUTLOOK: In the House, 232 of the 435 members are co-sponsoring a bill to increase benefits for the notch babies--at a cost of $5 billion a year.

That does not guarantee that the measure ultimately will be passed. For one thing, the Social Security Administration and the powerful American Assn. of Retired Persons oppose it.

Phil Gambino, spokesman for Social Security Commissioner Gwendolyn S. King, charges that the current notch-baby relief bill would be “fiscally irresponsible and would jeopardize the financial stability of the Social Security trust funds.”

And Battistelli warned that, if the notch babies receive their money, it would only create another group wanting new benefits--those born in 1927 or later.

But the real stopper may be a provision in last year’s budget resolution requiring a lopsided 60-vote majority in the Senate in order to make any changes in the Social Security system.

At last count, only 30 senators had lined up in support of the bill.