‘Notch Babies’ Seek Settlement With Uncle Sam

Ed and Carol Hale of Spokane figure they get shortchanged about $200 a month each on their Social Security.

That adds up to almost $5,000 a year - or roughly $60,000 since the couple, now in their mid-70s, retired about a dozen years ago.

On Ed’s side of the family, the men have a history of dying in their early 60s. And he’d sure like to see some of that money the government owes them before he goes.

So they’d settle for a one-time payment of just $5,000 apiece to wipe the slate clean, if Uncle Sam would be willing.

And that’s exactly the settlement that an organization called The Retired Enlisted Association Senior Citizens League is trying to get for them from Congress.

The Hales’ situation is far from unique. There are millions of retirees like them. They are the so-called “Notch Victims” of the quixotic laws governing different sections of the Social Security System.

Unbeknownst to most people, Social Security is not just a national pension system. The Social Security Administration is also responsible for the Supplemental Security Income (SSI) program serving minor children of deceased beneficiaries, and the Social Security Disability Insurance (SSDI) program for the disabled.

“There was a guy who used to live across the street who received Social Security payments for being disabled by substance abuse,” says Ed Hale. “And he got $300 a month more than I do.” That rankled Ed.

Even among just plain retirees, not all are treated equal. A 1977 amendment to the Social Security Act changed the formula for computing benefits for persons born in 1917 through 1926. When benefits to these people are charted on a graph along with other Social Security recipients, the result is a sizable “notch,” thus the name.

A “Notch Baby” receives a reduced Social Security benefit for no reason other than accident of birth. “How much less depends on the year of birth, work experience, and several other variables,” says Nelson Rivera, spokesman for The Retired Enlisted Association Senior Citizens League. “But $200 a month is probably a good average.

“Every year new bills are introduced in Congress to refigure the formula for paying the Notch Babies,” says Rivera. In all, some 116 pieces of reform legislation to correct the inequity have gone by the wayside. “The measures don’t get passed,” Rivera says, “because nobody knows how much it would cost to be fair.

“Social Security actuaries have estimated it could exceed $300 billion. But the country and the Congress probably just can’t accept that high a figure.”

So the league is proposing a cut-rate alternative.

A one-time lump-sum settlement of $5,000 each.

The U.S. Census Bureau and Congressional Research Office have determined that some 12 million individuals would be affected, according to the league. That would total $60 billion.

“So we’re trying to sell congressional lawmakers on that,” says Rivera.

The league says this cost could be fully offset and then some by enacting badly needed cost-saving reforms in the Social Security Administration’s SSI and SSDI programs, both of which are riddled with abuse, waste and misdirection.

Indeed, the league estimates that as much as $221 billion could be saved over seven years by adopting the series of reforms which it has spelled out in detail.

An overwhelming majority of the league’s 600,000 members favor the settlement rather than continuing to battle for full restoration of benefits, according to the league’s Rivera.

At the Wall Street Cafe, where Hale goes most mornings to drink coffee with the boys, that would play pretty well, he says.

“There are 10 or 12 Notch Babies like me who are part of the crowd,” says the 74-year-old. “Most of us are World War II veterans, and we’re getting fewer all the time.

“A $5,000 payoff isn’t anyway near enough,” he admits. “But I’m of the philosophy that something is better than nothing. I’ll take whatever I can get.”

, DataTimes MEMO: Associate Editor Frank Bartel writes on retirement issues each Sunday. He can be reached with ideas for future columns at 459-5467 or fax 459-5482.

The following fields overflowed: CREDIT = Frank Bartel The Spokesman-Review