[Congressional Record Volume 140, Number 145 (Friday, October 7, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 7, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
              SOCIAL SECURITY NOTCH ADJUSTMENT ACT OF 1993

  Mr. DeCONCINI. Mr. President, I introduced the Social Security 
Adjustment Reform Act of 1993 early in the 103d Congress. I have been a 
longtime supporter of legislation to correct the glaring inequity in 
our Social Security System known as the notch problem. In previous 
Congresses dating as far back as the 99th Congress, I have cosponsored 
legislation to address this notch disparity.
  Mr. President, I had hoped to offer this legislation for a vote prior 
to the end of this Congress. However, our former colleague, Senator 
Sanford and I made a pledge on the floor of the Senate in 1992 that we 
would not force a vote on this matter until the Senate and the House 
received the recommendations of the Notch Commission. In turn, the 
opponents of this legislation agreed to allow passage of legislation 
establishing and funding a commission to study and report its 
recommendations to Congress. While I am very frustrated over the long 
delay in the appointment of members of the commission and the late date 
for the completion of their work, I have kept my word. As I am fast 
approaching the end of my term in the Senate, I wanted to lay out my 
arguments one last time in hopes my words will be an impetus for others 
to champion this legislation next year.
  Mr. President, Social Security payroll contributions and benefits are 
based upon wages earned. However, because of inflation, increases in 
benefits are needed to maintain an adequate standard of living for 
retirees. In 1972, the Congress sought to ensure that these increases 
would occur automatically in response to rising prices, rather than 
being dependent upon a mandate from Congress, which might reflect 
partisan politics. With this intention, Congress changed the formula 
used to calculate increases so that it would be based on prices, rather 
than wages. Economic theory which had held true for some 50 years or so 
suggested that wages tend to rise nearly twice as fast as prices. So if 
increases were based on prices, benefit levels would keep pace with 
inflation, but the contributions being paid into the trust funds would 
increase faster, keeping pace with wage levels. This would ensure the 
solvency of the trust funds.
  Unfortunately, that wage-price economic theory failed. Wages were 
rising only slightly faster than prices and the Social Security pension 
fund began to pay out more than it had available and was in danger of 
bankruptcy. Congress soon realized its mistake and in 1977 it again 
adjusted the formula for calculating benefits to prevent the Social 
Security trust funds from going broke.
  However, since the 1977 formula provides a lower benefit than the 
benefit provided by the 1972 formula, and since activating that change 
immediately would have caused a reduction in benefits for people 
already receiving Social Security, Congress provided for a period of 
transition in an effort to be fair to new and near retirees.
  Mr. President, individuals in the notch group understand too well the 
importance of equity in ensuring long-term confidence in the system. 
The notch group knows it has been disenfranchised by its own 
Government. Worse yet, many in their Government have portrayed them as 
greedy geezers merely attempting to squeeze yet another buck out of old 
Uncle Sam. I strongly disagree.
  The problem does not stem from anything which the notch group did or 
said. It was the Congress and the President who enacted the 
transitional fix which provided them with lower benefits than their 
peers. It was the Congress and the President who chose not to reduce 
the benefit levels of those bonanza babies born before 1917 whom they 
argued were getting a windfall. In short, Congress and the President 
corrected an earlier mistake which resulted in another. Like it or not, 
thousands of individuals in the so-called notch group have a legitimate 
beef with their Government.
  Mr. President, I have consistently maintained that the original 
transition period, 6 to 10 years, was far too short to give adequate 
notice to the people who had or were in the process of making 
retirement decisions. This short timeframe has worked to the detriment 
of those retirees who fall in the notch category and receive the middle 
benefit, but who at age 56 to 60 were too close to retirement to change 
decisions they had made based on their expected Social Security 
benefits. The notch benefit level as it exists today is simply not 
fair. It is plainly not fair to the many honest, hard working Americans 
who responsibly planned for their retirement and is it not fair to 
others in the notch group who had less opportunity to save for whatever 
reason.
  Mr. President, if Social Security is indeed a social compact with the 
working class, then the Government owes those who pay into the system a 
duty of good faith and fair dealing. The opponents of fixing the notch 
problem argue that these beneficiaries are treated better and will 
continue to be treated better than those who are post-notch babies. 
This is not true. Some in the notch group were treated better than 
others, but many receive lower benefits and their loss has nothing to 
do with how much an individual worked or paid into the Social Security 
System in his or her lifetime. The transitional rules were supposed to 
guarantee against large discrepancies in benefits, but these new rules 
proved as unsound for that purpose as the bedrock economic theory that 
would have prematurely bankrupted the system.
  Mr. President, the Congress had intended in the seventies to delegate 
its duty to manage the benefit computation authority in order to 
minimize the chance that benefit levels would be altered for political 
gain by any party or President. I believe that the Congress and the 
President did the right thing. I also believe that the Congress and the 
President were trying to do the right thing in 1977, but fell short of 
the mark. However, I now believe that the Congress and the President 
are doing the wrong thing by refusing to correct the problems the first 
fix created.
  The legislation I offered in this Congress, and my dear friend 
Senator Sanford in the 102d Congress, would correct much of this unfair 
situation by enhancing benefit levels during the transition years and 
extending the transition period to also protect anyone born between 
1922 and 1929. Few bills are ever perfect and this bill is not perfect. 
The bill does not fully compensate those who were not helped by the 
transition fix and it probably true would enrich some in the notch too 
much. But, the bill is no worse than the 1977 legislation that created 
the problem. In short, this bill is a fair compromise and it is high 
time we face up to our mistakes and fix the notch problem.
  In conclusion, I would like to thank my friends and colleagues who 
have steadfastly supported despite the enormous weight of criticism by 
the notch opposition forces. Their courage and integrity have provided 
me with a great deal of personal satisfaction and hope for the future. 
I would note for the record that the following Senators cosponsored my 
bill in the 103d Congress: Senators Harkin, Heflin, Hollings, Shelby, 
Daschle, Burns, Mikulski, Pressler, Pell, and Bryan. I certainly wish 
them Godspeed in the efforts to resolve this problem in the coming 
Congress.

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