Context: Michael Scott is upset that the office has allowed Phyllis, a woman, to be the office Santa instead of himself. He decides to to dress as Santa anyway and tries to lure his employees away from her, beginning his pitch with the quote below.
Michael Scott: Ho, Ho, Ho! Why pay more to sit next to old Tranny Claus over there, when you can sit on my lap?
The Office, S6e13: Secret Santa
December 10, 2009
The problem here isn’t with what Michael’s doing, but that the show is using the word “tranny” as a joke.