Even as Congress considers deep new cuts in social spending, a group of beneficiaries is planning a march on Washington to demand higher benefits. The self-styled "notch babies" -- what a term! -- claim that, by virtue of having been born in the years 1917-1921, they have been unjustly deprived of higher Social Security pensions. In fact, their treatment has been perfectly fair. The only unfairness is that excessive benefits were paid to slightly older retirees.
The Social Security marchers point to the fact that people in their age group are having their initial retirement benefits calculated according to a formula that is less generous on average than the one applied to persons a year or more older than they are. As a result, they claim, they are victims of a government program "notch" -- a quirk in social policy that makes one group of people substantially worse off than other people from whom they differ only slightly.
The shift in program rules came about because in 1977 Congress belatedly corrected a faulty formula added to the Social Security law in 1972. That error, which involved the way benefits were adjusted for inflation, had already resulted in a sharp -- and unintended -- increase in benefits received by people retiring in the late 1970s. If the error had not been corrected, people retiring in this decade would have received benefits equal, on average, to 50 to 60 percent of their prior earnings as compared with an average rate of only 36 percent when Congress put the inflation formula into law. If this situation had continued, Social Security would have been put into permanent bankruptcy in short order.
However, by the time Congress realized what was the matter and got around to fixing it, many people had already been overcompensated. Since taking away benefits from people who already have them is very harsh treatment, Congress decided to leave alone those people who had already retired or passed the age of 62 under the faulty rules, but straighten things out for following generations -- starting with the "notch babies."
Inevitably this meant that younger retirees would get somewhat less on average than those slightly older. But the marchers' claim for special compensation lacks merit because they have not received any less than they were entitled -- the people before them simply got too much. Congress even included transitional rules giving the 1917- 1921 generation somewhat favored treatment compared with those, with comparable earnings records, who are younger than they. In fact, like all Social Security retirees to date, the marchers can expect to receive benefits far exceeding their actual contributions. Instead of demanding extra benefits, they should be glad that Congress corrected an error that might have put all Social Security benefits in jeopardy -- including their own.