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Mike Gousha: Well, it’s here. The sequester. $85 billion worth of federal budget cuts are going into effect. Will the sequester be bad for the economy as predicted or is it all overblown? We’re talking now with Republican Congressman and House Budget Committee Chairman Paul Ryan. Congressman, good to have you back on the program.

Congressman Paul Ryan: Good to be with you.

Mike Gousha: Well which is it – is it a serious situation for the country or isn’t it?

Congressman Paul Ryan: Well, it’s 2% of federal spending. We have a $3.5 trillion annual budget. We have a $15 trillion economy and this is $85 billion. Now, to put it all in perspective from a macro-sense, even if the sequester occurs, federal spending will have gone up 18% since 2008 so what we’re not talking about are deep cuts. What’s wrong about the sequester is its indiscriminate nature, its across-the-board nature. This is why 300 days ago I wrote and passed legislation in the House to replace the sequester with smarter reforms and cuts in areas that needed to get cut: wasteful spending in government. This is why I did another bill in December to replace the sequester. Unfortunately the Senate has not acted, they haven’t passed a bill to replace the sequester. The President hasn’t proposed legislation to replace the sequester.

Now, I see the President is doing all these press conferences around the country bringing attention to the sequester at the last minute, in the final hour, but let’s not forget - he’s the one who proposed the sequester. He’s the one who designed the sequester in the first place. We approved it, but it was because it was the President who insisted on doing it this way to avoid a debt limit increase before the election.

Mike Gousha: So is there going to be pain for the American public or do you feel that is overstated?

Congressman Paul Ryan: I think it’s overstated because next week, we will give the President latitude to better direct the cuts to low priority spending and to more wasteful programs instead of the across-the-board cuts. So next week, Congress will give the authority to move money around in our accounts and give the President the flexibility to make sure these cuts go after wasteful spending instead of higher priority things.

Mike Gousha: You have said you can’t agree to the President’s call for closing tax loopholes because it would kill tax reform. What do you mean by that?

Congressman Paul Ryan: As you know, eight weeks ago, the President got the largest tax increase in history. He got a big tax increase just 8 weeks ago and that gives us a certain revenue line to do tax reform. We have long proposed, in all the budgets I’ve written, plug loopholes in order to lower tax rates, to bring down tax rates for Americans, for families, for businesses, to create jobs and to grow the economy. But you need those loopholes to plug to get the tax rates down, that’s what tax reform is – fewer loopholes, fewer special interests picking winners and losers in Washington, and lower tax rates. If you take those loopholes to fuel spending, then you can’t lower the tax rates and do tax reform. What the President is proposing is he wants these loopholes closed to fuel more spending in Washington instead of using it for tax reform. We think tax reform is incredibly important for economic growth and job creation. The businesses here in Milwaukee, throughout Wisconsin, they are being taxed at much higher rates than their foreign competitors are- 35% tax on say Caterpillar here in town, a 44% tax on successful small businesses in the industrial parks around Wisconsin. 15% tax on the Canadians, 25% tax on the Chinese - that hurts us in global competition. That’s why we want tax reform. What the President is saying is get rid of the things that get us to tax reform so we can spend the money in Washington. That’s our disagreement, Mike.   

Mike Gousha: You’re making a policy argument but there’s a political argument here and you know there’s risk to that - the President is portraying your party as being out of step with what America wants and you’re the party that is going to defend the hedge fund managers, the people with corporate jets….

Congressman Paul Ryan: We want to take away those loopholes and lower everyone’s taxes.

Mike Gousha: That’s not the way he’s portraying it – it’s that you’re standing up for the wealthy and willing to stick it to the not so wealthy.

Congressman Paul Ryan: This is what the President says; it’s clearly not what we’re proposing or doing. But you make a really good point that the President is out campaigning. You know, of all people, I know we had an election. I was on the other side than the President but what we would normally have in this country is the day after the election you go back to work and start governing. Unfortunately, the day after the election, the President started campaigning for 2014 all over again. And so that’s what concerns us, is the President seems to prefer campaigning to governing. He is flying around the country on Air Force One doing these political stunts with political props, going after the other party, rather than trying to bring parties together in Washington.

The reason why we have all these fiscal crises is because we have not had a budget in four years. The Senate hasn’t passed a budget in four years. The President hasn’t even offered a budget this year even though the law required him to do so by February 4^th. We’re offering budgets, we’re offering solutions, instead they are offering campaign slogans and that’s why things don’t get done. I’m not saying that all Republicans are great and all Democrats are bad, but what I am saying is to get stuff done, to get common ground, they should bring their solutions to the table in Congress so we can start finding common ground instead of running around the country campaigning against each other.

Mike Gousha: Real briefly, you have said you don’t think the President was ever seriously interested about a grand bargain. Can you say that given the negotiations that he had with John Boehner – you think that was a lot of show and he wasn’t serious about cutting a deal?

Congressman Paul Ryan: I don’t. I saw what he kept doing in those negotiations, where he’d keep moving the goalposts. Whenever John Boehner would come to an agreement, he’d call the next day and blow up the agreement. They had an agreement on a couple of things; he changed it the next day. What I also find, is the President was never willing to put these ideas in public. He was willing to talk about these behind closed doors but he was never willing to put anything on paper in public for the country to see. And that tells me you’re not as serious about legislating. Because if you’re a serious problem solver, you should not be afraid to present your ideas to the country. This is why we pass budgets. This is why I’ve done what I’ve been doing for all these years. So when the President has a behind the scenes conversation and then changes his story and he’s not willing to put these ideas out in public, it tells me he’s not as serious about solving these problems.

Mike Gousha: Bottom line, do you see any scenario where Republicans would agree to revenue increases?

Congressman Paul Ryan: No, because we just got a revenue increase. Remember Republicans did agree to a revenue increase, we did the fiscal cliff agreement. We just agreed to higher revenues, over $600 billion in tax increases just occurred on January 1^st. That’s what the President campaigned on. He got what he campaigned on. He got those revenue increases but remember this, they used to always say $4 in spending cuts for every $1 of revenue increases. They got the $1 revenue increase, where are the spending cuts? The sequester - we never thought it was a smart thing to do – we’ve proposed replacements for it and it’s a fraction of what you need to do to get this budget under control.  But unfortunately we have yet to see a single budget offered by the President that solves this problem or even a budget offered at all by the Senate. And that is why we’re frustrated because we’re worried we are going to have a debt crisis in this country, we’re worried that this debt is depriving people of better jobs and better lifestyles. And we’re really worried this is going to destroy the future of our kids. This is why we take this moment seriously. This is why I’m going to bring a budget that balances to the floor in the next few weeks to pass it. This is why we’re serious about spending. This is why we hope the President comes to the table in public, in earnest and offers solutions.