Your World with Neil Cavuto, Fox News

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Neil Cavuto: It doesn't have to come to a House vote of contempt against the Attorney General of the United States, Darryl Issa says that vote can be avoided on the floor if some documents are handed over fast from the Attorney General's office. Speaker John Boehner, Eric Cantor, part of the republican leadership, are saying the same thing but if positions remain as they are, that House vote should be coming next week. Part of the Republican leadership joining us right now, Wisconsin Congressman and House Budget Chief, Paul Ryan. I know all of this is fast moving, Congressman, and glad to have you here, but do you subscribe to that view as well, the documents come in and a vote is avoided?

Representative Ryan: Yes, I do. Attorney General Holder brought this upon himself. He has been stonewalling Congress for sixteen months and, yes, he can avoid this if he just brings the documents that have been requested for months.

Neil Cavuto: Do you think, a lot of cynics are going to say very quickly this is pretty much along party line, that this is sort of like a Republican cabal to embarrass the Attorney General and embarrass the White House. What are you saying?

Representative Ryan: I think what’s embarrassing is "Fast and Furious." It is something that should never happen ever again and we need to get to the bottom of it. All Congress is doing, Neil, is its job, detailed in the Constitution, to conduct oversight of the Executive Branch. You know, we have a separation of powers for a very important reason – it is to preserve liberty and limits to government, and this is being infringed upon by this stonewalling, so we are just simply doing our jobs here in the Legislative Branch.

Neil Cavuto: Do you think this is this going to escalate to a full-blown Constitutional crisis?

Representative Ryan: I don't know. That’s up to Attorney General Holder. I really don’t know the answer to that.

Neil Cavuto: If you don’t mind, I would like did switch gears, sir, to Chuck Schumer and others who have been critical of you from beyond Medicare now, and I guess throwing granny off the cliff to throwing the middle class off the cliff. Saying a lot of your economic prescriptions benefit the high and mighty, the rich, and like Mitt Romney – a man with whom depending on the Republican operative, you might be running – saying it is just one tier and only one tier. We called Chuck Schumer to come on and talk to us, he refused, we’re happy that you did not, but what do you make of that?

Representative Ryan: Well, the Senate Democrats put out a report on our budget and it wasn't flattering. I am not really surprised about that, Neil.

Neil Cavuto: Alright, so that is the Fox News alert, but go ahead.

Representative Ryan: That is breaking news on some stations. First of all what we are talking about is tax reform. Here is the issue about this is, Neil, there are a lot of Democrats who actually agree with what we’re proposing, Erskine Bowles in the Fiscal Commission proposed the same kinds of tax reforms: lower tax rates by broadening the tax base and those people who get most of the tax loopholes are the people in the top brackets in the first place that we are talking about curtailing in order to give everybody, families and small businesses, lower tax rates.

Let’s not forget that our competitors around the world are lowering their tax rates. We have one of the most progressive tax systems in the industrialized world. We have among the highest tax rates and it is putting us at a huge competitive disadvantage. It’s costing jobs and it’s costing growth. Where I come from in Wisconsin, nine of ten businesses file their taxes as individuals. Chuck Schumer and Barack Obama are proposing that the effective top tax rate in January go as high as 44.8 percent. This is a job killer. It’s going to hurt prosperity.

What Mitt Romney is talking about, what he is proposing, is to get back to an American idea of an opportunity society with a safety net, turn economic prosperity back on, have a society of upward mobility not this redistribution tax, borrow, and spend mentality that has dominated Washington and has given us the worst recovery since World War II.

If those kinds of economic prescriptions that Chuck Schumer and the rest are talking about would be successful, if they worked, we would be entering a Golden Age along with Greece right now, Neil. We’re not. What we want is economic growth, we want to get spending under control, we want entitlement reform, we want to dodge a debt crisis and we want get people back to work. That is what Mitt Romney is talking about, he was in Janesville, Wisconsin on Monday talking about this. That is what we are talking about and bipartisan commissions, Democrats who are out of Congress are agreeing with us – get the tax rates down so you can grow jobs and the economy.

Neil Cavuto: But are you concerned that because both sides are so cemented in their positions, for whatever reason, that there is not going to be any middle ground and we will be facing a time bomb at the end of this year and that the closest prescription I hear both sides coming up with, is maybe, maybe, a one year extension of the Bush rates with the promise – I think it was Mitch McConnell on this very program who said – of serious tax reform next year. That, of course, springs eternal as hope but it is probably unrealistic, don't you think?

Representative Ryan: Well, the thing you are mentioning that the Democrats put out today was about our budget which says we want to do tax reform. A 10% bracket for low and middle income taxpayers and a 25% top rate, and a 25% corporate rate with a territorial system. We think that will ignite economic growth and you can do it in a way that does not cost revenue from what we raise already for the federal government.

Neil Cavuto: Would any of your plans, Chairman, look into what Jeb Bush has said – a balance? It does not even have to be a fair balance it could be $1 in revenue for every $9 or $10 in cuts, I think to quote him or paraphrase him, he’d “sign up for that.” Would you?

Representative Ryan: Here is the problem with this current dialogue: you never get the spending cuts. President Obama’s budget, his tax increases do not even pay for a fifth of his proposed deficit spending.

Neil Cavuto: So you would never even entertain that ratio because you don’t think you’d get the spending cuts?

Representative Ryan: I am not going to say or negotiate with myself. I don't see the point in negotiating with myself on ratios when we are talking about comprehensive tax reform, which we do believe would bring in higher revenues, and getting spending under control. The problem is our friends on the other side of the aisle want to pocket the higher revenues and never give up the lower spending. So what’s happening here is they just want to increase revenues and pile it into more spending, which drives us deeper into a hole.

Here is the point I would say: we are going to bring a bill to the floor in July that says extend the code for a year and yes, have a fast track procedure to actually get fundamental tax reform. We are working with Senate leaders on how to do that so that we can be really serious about reforming this tax code and not having these temporary rebates, not having all this uncertainty pile up at the end of the year.

So we are passing legislation this summer in the House to deal with this train wreck at the end of the year. Unfortunately, the Senate, because they have not passed a budget in three years, and the President has not offered a solution other than massive tax increases, we are going to have this impasse at the end of the year, so, yes, the lame duck will determine this stuff and who wins the election will largely determine how the lame duck plays out. The President wins, massive tax increase. If we win, tax reform.

Neil Cavuto: We shall see. Congressman, Mr. Chairman, always a pleasure. Thank you very much.

Representative Ryan: You bet, Neil.