Last year, when Democrats and Republicans were negotiating a short-term extension of the payroll tax holiday, multiple Republicans pushed the false idea that extending the payroll tax cut would undermine Social Security by robbing its trust fund of vital revenue. Those claims were repeatedly debunked by media outlets, members of Congress, and even the Social Security Trust Fund’s chief actuary.
Republicans, however, either missed that debunking or have willfully ignored it. With Congress nearing a deal to extend the cut through 2012, GOP leaders like Rep. Paul Ryan (R-WI), who as the House Budget Committee chairman has positioned himself as the party’s top budget and finance authority, is again pushing the false notion that the payroll tax cut will hurt Social Security, as The Hill reported today:
Ryan warned that the the move could erode the Social Security Trust Fund, which is funded by the payroll tax.
“Members on our side of the aisle are divided on this question. I personally have a problem with what happens with the Social Security trust fund. So people are divided on this; the Democrats agreed to it, I’d say I don’t really know what the number of Republicans are that agree to it, so they basically decided to bring it to the floor and let Congress work its will, and let people vote however they want to,” Ryan said during an interview with WLS Radio in Chicago.
As Jared Bernstein, the former chief economist to Vice President Biden, wrote in December, the payroll tax holiday was specifically crafted to protect Social Security by requiring the nation’s general fund to replace any lost revenues in the trust fund. The general fund, in fact, has made monthly transfers to replace the lost revenue since the holiday began, and Social Security hasn’t been touched. The proposed extension Congress is now debating contains the same protections.
And while Ryan now claims to have “a problem” with diverting funds out of the Social Security Trust Fund and worries about “what happens” if such a plan is followed, he didn’t have the same concerns last year, when he proposed a privatization plan that would divert $1.2 trillion — a whopping 1,200 times the size of the payroll tax cut extension — out of the Social Security Trust Fund, and would only restore that money over the next quarter of a century through deep benefit cuts.