As some Republicans, including Majority Leader Eric Cantor (VA), are growing worried that opposing a payroll tax cut extension will undercut their message as anti-tax zealots, other Republicans have opposed the extension at every turn. Despite their staunch opposition to raising taxes on millionaires, these Republicans have cycled through the reasons to avoid providing a tax cut to the middle class that would allow the average family to pocket an extra $1,000 a year.
The latest argument to emerge from the GOP has been that extending the payroll tax cut would undermine Social Security, since payroll tax revenue goes directly into the Social Security Trust Fund. Multiple Congressional Republicans have adopted that theory of late, including South Carolina Sen. Jim DeMint (R), who put it to use on CNBC last night:
DEMINT: Republicans are always ready to cut taxes, as you know. We don’t think it’s a good idea to do it by raiding Social Security.
Kentucky Sen. Rand Paul (R) made the same argument on Fox News earlier in the day:
PAUL: Well, you know, Social Security is $6 trillion short of money. So the president is advocating reducing the amount of funding to Social Security when they’re already $6 trillion short. So it doesn’t really make any sense and it really argues that he’s going to bankrupt Social Security even quicker by reducing it’s funding.
Watch a compilation:
That argument, which has been adopted by members of both parties and perpetuated by news outlets like NPR, has one problem: it’s not true. Each of the plans under consideration is fully paid for, replacing revenue the Social Security Trust Fund would have lost from lower payroll tax receipts with money made up from either alternative revenue sources or spending cuts. The earlier payroll tax holiday, set to expire this month, was also fully-funded, and the program has thus far “been held harmless” from the holiday, as Reuters noted today.
And while the opposition from Republicans may seem like an impassioned defense of a vital and popular program, a look at their history with the program shows it is not. DeMint has supported privatizing the program while Paul is a proponent of means testing — “solutions” that are both bad policy and unnecessary. Despite Paul’s $6 trillion assertion, Social Security actually has a $2.6 trillion surplus and is solvent through at least 2037.
And if Republicans truly want to use the payroll tax to shore up its long-term viability, there is an easy way to do that. The payroll tax is currently collected only on the first $106,800 in income; raising or eliminating that cap would make the program fully solvent for the next 75 years.
If Republicans have a cogent reason for opposing a tax cut for the middle class that is meant to stimulate the economy, they should provide it, because their current line — that such a tax cut will weaken a program many of them have sought to undermine for years — simply isn’t true.
Stephen C. Goss, the Chief Actuary of Social Security, said today that the Social Security Trust Fund “would be unaffected by enactment” of a payroll tax cut extension, according to a statement circulated by Sen. Bob Casey (D-PA). The Congressional Budget Office agreed, saying all lost revenue would be offset.
Joe Sonka, a reporter for LEO Weekly in Louisville, Kentucky points out that in addition to means testing, Paul has also supported privatizating Social Security and called it a Ponzi scheme, making his strident defense of the program now seem even more insincere.