Feb 12, 2012
FACT CHECK: Paul Ryan Falsely Claims Payroll Tax Cut Would Bankrupt Social Security
On ABC This Week, Republican Budget Chairman Paul Ryan falsely claimed that extending the payroll tax cut would accelerate “the bankruptcy of Social Security.”
In reality, the Chief Actuary of the Social Security Administration wrote that the “trust funds would be unaffected.” Non-partisan FactCheck.org ruled Ryan’s claim “not true.” Ryan himself has opposed the payroll tax cut in the past and called those tax cuts for middle income families “sugar-high economics.” Now Ryan and House Republicans are blocking the payroll tax cut for 160 million middle income Americans in order to protect tax cuts for the ultra wealthy.
Extending the Payroll Tax Cut Will Not Affect the Social Security Trust Fund. According to the Chief Actuary of the Social Security Administration, extending the payroll tax cut would not affect the Social Security Trust Fund. “While the tax cut would reduce revenue flowing into Social Security, the Treasury Department would credit the trust funds–dollar-for-dollar –with the money that would go into workers' pockets. It would then simultaneously deduct that amount from the government's general revenue fund. In other words, the Social Security trust funds would be made whole. ‘We estimate that the projected level of the [program's Old Age and Disability] trust funds would be unaffected,’ Social Security Chief Actuary Stephen Goss wrote in a letter to Treasury Secretary Timothy Geithner and White House budget director Jacob Lew.” [SSA Letter, 12/6/11; CNN, 12/8/11]
Extending the Payroll Tax Cut Will Not Cause the Social Security Trust Fund to Suffer. “Reducing the Social Security payroll taxes paid by employees by 2 percentage points (to 4.2 percent) obviously brings in less money for Social Security. But the trust fund isn’t suffering as a result. The government must cover the shortfall with general fund money. The Social Security and Medicare Boards of Trustees said in its 2011 report: ‘The loss of payroll tax revenue due to this one-year reduction will be made up by transfers from the General Fund of the Treasury to the OASI and DI Trust Funds and will thus have no financial impact on either program.’” [FactCheck.org, 12/19/11]
Paul Ryan Called Extending the Payroll Tax Cut “Sugar-High” Economics. House Budget Committee Chairman Ryan “rejected the idea of making further short-term changes to the payroll tax” and called payroll tax cuts “sugar-high economics.” [The Hill, 6/16/11]
House Republicans are Refusing to Budge on Payroll Tax Positions. According to Bloomberg News, “Congressional negotiators are refusing to budge from positions that could stall talks to extend a payroll tax cut through 2012… Democrats want to impose a tax on income exceeding $1 million and are warning Republicans against seeking to attach policy proposals that aren’t linked to the tax cut, such as loosening rules on industrial emissions. Republicans oppose the tax on high earners to pay for the extension, while insisting that the full $100 billion package must be offset.” [Bloomberg, 1/19/12]