Cuniberti’s column needs clarification
April 26, 2013
The piece by Marc Cuniberti that ran Monday was filled with half-truths and misrepresentation, the sum of which gave a very distorted view of Social Security. First, the acts creating Social Security have always required that investment of funds must be in securities, which have guaranteed principal and interest. There is only one such investment — U.S. government securities. That was true in the 1940s and is true today. It was not just in the good old days that the money was in a trust and invested.
Second, while he is correct that President Clinton signed an increase in taxes on Social Security benefits, from 50 to 85 percent of benefits being subject to income tax, it was President Reagan who signed into law an increase from 0 to 50 percent. On the other hand, the vast majority of retirees pays no tax on Social Security benefits because income is not high enough.
Then he claims that Clinton and Bush “raided” the trust fund. That is — they borrowed money from the trust fund that would not be needed for many years, and in return, the trust fund got government securities … just as had been the case in the good old days when Cuniberti referred to it as investment.
Finally, the payroll tax was about 5 percent at the end of the Johnson administration and was raised to over 7.5 percent during the Reagan years. That increase, however, was the bipartisan effort that recognized that the baby boom generation was going to retire in years to come. Up to that point, most benefits were paid out of current payroll tax collections.