Speeches and Floor Statements
E21 Event: Ryan answers Obama
MR. WEHNER: I'm Peter Wehner, managing director of the Washington office of e21. It's a nonpartisan, nonprofit organization that's dedicated to economic research and innovative public policies for the 21st century. And I just encourage you to go to the website if you can at www.economics21.org. I think you'll find the work there to be serious, intellectually serious. It's based on empirical evidence, not ideology, and we're proud of the work there and we would just encourage you to go there.
And we're proud as well to be hosting this event. Last week, Paul Ryan, chairman of the House Budget committee, released a budget that was historic. It was politically and intellectually a very impressive document, and it reshaped the public debate in Washington.
Among other things, it smoked the President of the United States out. He had been something of a passive bystander in this debate, but I think it's fair to say that the House budget forced him to come forward. And yesterday, at George Washington University, in a speech he struck back.
And we thought it would be a good idea to have Paul Ryan as the author and the architect of the House budget proposal to have a chance to respond to what the President said, and the venue that we chose is to have a conversation with one of America's most distinguished journalists, Fred Barnes. So they will be speaking, having a conversation for about 40, 45 minutes, and then we'll open it up to Q&A from all of you. So without further adieu, I'll turn it over to Fred.
MR. BARNES: Thank you, Pete. Congressman Ryan, before we get to the President's speech yesterday, let me ask a quick question about the continuing resolution that's going to be voted on this afternoon for the rest of the 2011 budget. Is it going to pass?
REP. RYAN: I think so.
MR. BARNES: Good. We'll leave it at that. You were invited by the President to show up for his speech, sat in the front row at George University. What were you expecting and what did you get?
REP. RYAN: Well, I was expecting from actually speaking with some Democrats that it was going to be an olive branch speech, that we were going to see the President get engaged in the issue of our time, our fiscal crisis, offer some details and specifics. In particular, we thought he was going to offer some solutions on Social Security which I thought was going to be a concrete step in the right direction. And I ‑‑ the impression we were given was that, you know, we had an agreement on the CR, hammered out agreement and we're going to build on that success going forward with debt limit in the budget and the rest.
So Jeb Hensarling and Dave Kemp and I, members of the Fiscal Commission, members of Congress on the Republican side in the House went with a little bit of optimism. And what we ended up finding out is we got front‑row seats to President Obama's reelection campaign speech. We basically realized fairly quickly that this wasn't about building bridges, it was about partisanship. It was about basically what his 2012 election speech is going to be all about.
You know, when I put this budget out, believe you me, I've been doing budgets for a long time, I knew that we were going to get a lot of partisan attacks. This is what parties do to each other, unfortunately, but it is ‑‑ and both parties do it. I expected Nancy Pelosi and Harry Reid to come out, you know, with attacks. We didn't expect it from the Commander in Chief, and when the Commander in Chief sort of brings himself down to the level of the partisan mosh pit that we've been in, that we are in, it makes it more difficult to bring that kind of leadership.
I would just simply say ‑‑ and I suppose you want to get into these details, but he gave us a budget the other day in February that has been roundly panned as fundamentally unserious. And it is. Last year, he created a commission with certain goals and benchmarks to address the fiscal crisis. The commission came up with a plan. I was on the commission. I took dozens of the recommendations and put it on our budget. I didn't agree with the final product of the commission, but there were lot of things I did like. And that's why we're carrying them forward. He disavowed the commission in his plan, didn't put any of their substantive recommendations in his budget.
And so we thought he was going to kind of go back on that and offer commission‑like plans. We thought he was going to embrace some of the commission proposals. Instead, what we got was he wants another commission, the Biden commission, where he wants to delegate yet again to other people to make the tough decisions of our time which is the most predictable economic crisis, this debt crisis, he wants to delegate that to other people. And this new commission has even more modest benchmarks than the last commission he created. So, to me, it just makes it harder to close the gap than easier.
MR. BARNES: What are the prospects for a grand bargain?
REP. RYAN: Well, this definitely damages them. I think when you go after your political adversaries with the kind of demagogic terms and comparisons that the President did, that makes it harder.
I forgot whose quote this was. Maybe it was Churchill. But he was basically a pyromaniac in a field of straw men. I mean, to set up all these straw men arguments and then to tear them down, it's almost as if he wanted to paint his political adversaries, supposedly us, in a cartoonish kind of a way, in a caricature as if we want to hurt people's grandparents, were against families who have children with autism and disabilities and we don't want kids to go to college. I mean, that's basically what I got out of the President's speech yesterday is that what we believe.
How do you have a serious debate about this? This coming from a President who came to our Republican retreat about a year and a half ago and said what we were hoping to hear: We've got to do entitlement reform. We, House Republicans, have put out some credible, serious ideas, and we can't demagogue each other. We can't go after each other.
And, look, I'm saying both parties do this, but when the President came and said, "We can't treat the other party as if they're hurting seniors and hurting people and using this demagoguery," that's what he told us when he came to talk to us in 2010 in Baltimore. What we got yesterday was the opposite of what he said is necessary to fix this problem.
And so I think what we got yesterday was a reelection campaign speech. I guess it sort of tipped it off to me this last weekend when we heard he was floating a speech, not a plan necessarily, but a speech and he sent his campaign manager out to discuss it, not his budget director, not his Treasury Secretary, not his, you know, chief council of economic advisors. But he sent his campaign manager out to announce this.
We've asked ‑‑ you know, we have a good relationship with OMB. Our budget staff, a lot of them came from OMB. We talk to them on pretty much nearly a daily basis, and we called OMB yesterday to find out, okay, what do these new numbers ‑‑ what is this plan, show us the benchmarks, the data, the points. And they basically referred us to the President's budget and the press secretary's office ‑‑
MR. BARNES: So there is no ‑...‑
REP. RYAN: There is --‑‑ this was really a speech, not a plan, as far as I can tell. So speeches aren't plans. Speeches isn't action. It's speeches.
MR. BARNES: The President said, "There was nothing serious about a budget that would cut taxes for millionaires and billionaires by $1 trillion." He was referring to your budget.
REP. RYAN: I guess he was. We do not include in our budget his tax increases. As you know, he's proposing an additional $1.5 trillion in tax increases, and we don't include that. We keep revenues where they are, and we reform the tax code much along the lines that were recommended by the Fiscal Commission. I was on the Fiscal Commission. I just said I like a lot of the things the Fiscal Commission did.
A lot of Democrats and Republicans have come to a consensus view ‑‑ Erskine Bowles is a good example ‑‑ that for America to be competitive, for America to create jobs and prosperity, we need to be internationally competitive, we need a flatter, fairer, simpler tax system. And the way you do that is you broaden the tax base by getting rid of loopholes and deductions and you lower tax rates. Now, we do that at the current revenue levels we are today. So we're not cutting taxes. We're just not calling for the increase in taxes that he's calling for.
So by failing to agree with his premise of increasing taxes, he's calling this a tax cut. We can get into all of this baseline stuff, but I'll just simply say the people at the high end of the income scale are the people who use the deductions, the loopholes. If you take away their loopholes, then you're subjecting more of their income to taxation. Now, granted, they'll be subjected to a 25 percent tax rate in the current statutory tax rate of 35, but they're not paying any taxes on money they're sheltering.
And we have a tax system where big companies are making billions of dollars in net income and pay no taxes legally, and then we have companies struggling to survive making some money and paying a lot of taxes. It's not a fair system. And what we've learned from international comparisons, looking at states, is high income tax rates on individuals, businesses end up giving you wide fluctuations in revenues which makes it harder to plan, harder to budget, harder ‑‑ it gives you bigger deficits.
Broadening the tax base and lowering the tax rates gives you a more sustainable and reliable revenue stream and therefore, less big economic and deficit shocks. And so for many reasons, budgeting reasons, economic growth reasons, fairness reasons, we think this is the better way to go.
MR. BARNES: Where do we go from here? Your budget is likely to pass the House tomorrow. Then it'll go to the Senate. You have the Biden commission, so‑called. Where do we go in this debate?
REP. RYAN: You know, I think the President tried to frame it along his terms and along his premise yesterday, and I think he's basically putting all the chips on his reelection here. I was hoping that we could get to the presidential campaign later and stick with governing now. Yesterday, it seemed like the President just wants to get into reelection mode.
It's as if his reelection is getting in the way of the next generation because we have the most predictable economic crisis in front of us right now. It impacts today's economy. It impacts our children's future. And he is pouring on the political rhetoric.
And so I still hold ‑‑ I think the debt limit is a must pass. You know, that's one of those bills that's going to move through. There's an opportunity there to get a down payment on fiscal controls, on spending cuts, a down payment on a plan. But with this kind of hyper‑partisanship that's been injected into the debate from the President himself, that makes it much harder.
But the broader question is, is the size of all of government, and that's what we're going to get into.
MR. BARNES: I want to show you‑...
REP. RYAN: May I? You know me, Fred, I'm kind of a‑...
MR. BARNES: Congressman Ryan travels with charts. He carries them himself.
REP. RYAN: I travel with charts. I have them in my truck. Okay. So I was going to bring a PowerPoint, but I didn't want to hurt you all with PowerPoints.
Here's what we're basically saying. We're saying let's keep government spending basically where it has been historically as a share of our economy. For the last 40 years, we've basically taken 20 cents out of every dollar made in America to pay for the federal government. Well, this is the path we're on. This is the path the President keeps us on.
His budget exacerbates this path, and so by the time my three kids ‑‑ my wife and I live in Janesville. I'm 41 years old. Our kids are 6, 7 and 9 years old. By the time they're my age, the federal government is going to be double in size them compared to what is today. So instead of taking 20 cents out of every dollar made in America to pay for the federal government, my children have to take 40 cents out of every dollar. That means double the tax burden. That means a diminished future.
And the President is basically saying those people in Congress who want to keep this government size relative to where it has historically been, who want to keep it ‑‑ we want to keep it basically limited, are crazy. They're hurting grandparents. They're hurting children with disabilities, college education, meaning this future is un ‑‑ you can't get it. He's basically denying the chance, the discussion, the debate, the possibility that this future of a limited federal government is gone. And we have to agree to this normal, a government that is dramatically growing and bigger in size.
Let me just show you what it means in other terms. Deficits, this is our deficit path right here. Our budget puts us on a plan ‑‑ on a path to paying off ‑‑ not only balancing the budget but paying off the debt. And these are CBO numbers, nobody else's numbers, CBO numbers. The path we are on gives us just massive deficits. We go into a deficit spiral in this country. We go into a debt crisis in this country. And he's basically saying the only way to deal with this is that government must grow dramatically larger. We must have the government take more control of healthcare. We must pay lot more in taxes. Get used to the new normal because it's a government that is much, much larger.
At the end of the day, what this really means is what are we doing to confront this? This is the crushing burden of debt that is coming to America. These are CBO's numbers. This isn't Paul Ryan's numbers. These are CBO's numbers. And the point I would simply make is, we've had debt before in America. We've managed debt before in America. Everybody understands debt. You borrow money to buy a house, a car and start a business and what really matters is how much money are you borrowing for your house relative to your income, meaning how much can you afford to put on debt and cash flow your debt.
Well, gosh, back in World War Two, our debt went as high as a little over 100 percent of our economy. Back then, we owed to ourselves because we basically bought T bills, and then we ‑‑ after the war, we went back down and managed our debt pretty well. Here's where CBO is saying we are today. We're at about, you know, almost 70 percent of GDP, like 67, and we just go on a tear upward. This is the path we are on. So when my kids are my age, for every dollar everybody makes in American, for every dollar this economy produces, we'll be borrowing two.
I asked the CBO ‑‑ and they do this every year, their long‑term projections. They have a computer model that simulates the economy going forward. What they are telling us is their computer shuts down, it crashes in the year 2037 because of debt burdens. It can't conceive of a way in which the economy can continue in 2037. Last year, that number was 2054.
And so we believe we have a moral obligation to our constituents, to our country, to do something about this. And so what our plan does, according to CBO, it's the green line here. We keep ‑‑ the debt peaks in two years as a share of the economy, and it goes precipitously down after that and it's paid off. And ‑‑
MR. BARNES: The President said ‑‑ the President said that this would break the social compact in America.
REP. RYAN: That's the next point. Thank you for bringing that up.
So he says doing this, basically putting in place a plan to keep the economy growing, to keep the government the same relative size as it has historically been, to keep our tax burden the same as it has historically been, that that ends the social compact. So basically, it's a statement that says there is no way America can be what it ever was before. It has to be something profoundly different than ‑‑ in the future.
And so let's get to the social compact issue. What he's basically saying is stick with me, America, I will give you security. I will give you the security you need for everybody, for healthcare, for education, for a safety net. And if you go with these Republicans, they're going to feed you to the wolves. It's going to be some Hobbesian state of nature.
That is a false premise. That is a false choice. Here is what we are proposing to do with our budget. It's basically four things. Economic growth and job creation, that's Priority No. 1. And we fundamentally believe getting deficits and debt down takes pressure off of interest rates, takes pressure off of inflation. And you've got to remember ‑‑ and businesses know this very, very well ‑‑ today's big deficit means nothing more than tomorrow's big tax increases.
So the existence of these perpetually high deficits and debt and no end in sight to getting them under control hurts the economy today because businesses and entrepreneurs, forward thinkers, markets, they are worried about America's future. They see high taxes and high interest rates in the future. And so, A, getting that under control helps growth. B, fundamental tax reform, fundamental tax reform along with the lines of what the Fiscal Commission itself, you know, says we should do gets us growth, number two.
And here's the kicker. We believe it is important ‑‑ now that we can do this before a debt crisis hits ‑‑ to keep the promise to current seniors. Millions of seniors have organized their retirements around Medicare and Social Security, Medicaid. People within 10 years of retiring are getting ready to enjoy these programs. We preserve this. We protect it. We actually are coming up with a system to be able to guarantee that these promises that were made to them will, in fact, be kept.
And the way and reason we can do that is by reforming these programs in the future, we can preserve them for the present. And so with Medicare, we're basically saying for 54‑year‑olds and below, we need to convert the program to one that works better to get at costs.
Any criticism measuring any reform plan against the status quo is really a dishonest exercise. It's against a fiscal fallacy. Nobody, including President Obama, is saying that Medicare can grow at the rates that it's growing at.
In fact, the President did give us one idea. It's not a new one, but he injected one idea into the debate which is when it comes to healthcare, he wants to delegate ‑‑ especially with Medicare, he wants to delegate more power to a board of 15 unelected bureaucrats that he appoints to do healthcare pricing controlling, healthcare rationing. That's his solution to Medicare. Have this board called the IPAD, the independent payment advisory board, and they figure it out. These 15 people will figure out how to run Medicare and how to cut costs and how to restrict prices and access.
MR. BARNES: Yeah, the President said that your plan would cause Medicare recipients to pay $6400 a year more on their own for their healthcare.
REP. RYAN: Again, that, too, is a fiscal sleight of hand. It's an implicit acknowledgement that we are grandfathering current retirees and people soon to be retired into the current system, meaning they don't have any changes.
We repeal the IPAD, by the way. So our answer is not to ration, not to delegate to unelected bureaucrats who have no oversight from Congress to ration. We want to get competition in the system like it worked in the prescription drug bill, like it works in other areas.
And so what he's doing is the first year that the premium support plan starts, you have 65 ‑year‑ olds in the system. You don't have 70 ‑year ‑olds. You don't have 80 ‑year‑ olds. You don't have 90 ‑year olds. You have 65 ‑year ‑olds. And the average current ‑‑ at that time, the average per beneficiary reimbursement price rate is $8,000. Well, when the program is up and running, when you have a whole panoply of age brackets, 95 ‑year ‑olds and 65 ‑year ‑olds, that averages $15,000. So it's really an apples to oranges. He's basically saying no, it's not giving people the $15,000 average because there's only 65 ‑year ‑olds in the system, not 85 ‑year ‑olds. It's a cut.
And so it's really kind of a dishonest fiscal sleight of hand, but I would simply say this: When it comes to healthcare, there's basically two ways to go. Turn it over to the bureaucracy, have the government control more of it and ration prices, ration care, price control. We already learned that that doesn't work. Price controls don't work to arrest costs. It's not working in Medicare now. It's definitely not working in Medicaid today. And so we think there's one person that can fix this ‑‑ the American consumer.
We think by adding competition and choice in the delivery of medical care, by giving the consumer more power is a better solution. The prescription drug bill, which works like this, came in 40 percent below cost projections. Why? Because it has choice and competition.
Lots of plans that people have to choose from that compete against each other for the seniors' business. It has high satisfaction. Premiums are lower than what everybody anticipated and so are prices. So it's not as if these ideas are just wild theories. They're practical ideas that have proven to work and we think that's better than having some bureaucracy ration care.
MR. BARNES: Did you get a chance to talk to the President at all yesterday?
REP. RYAN: No.
MR. BARNES: Have you talked to Vice President Biden?
REP. RYAN: No.
MR. BARNES: Are you going to join that commission or participate in it?
REP. RYAN: I have no idea.
MR. BARNES: I mean...
REP. RYAN: I just don't even know. We've had so many commissions. I've spent hours and months in the last one. Why don't we just do our jobs? I mean, why do we keep punting decisions to other people to do our jobs for us? Why don't we just do our jobs? That's what we're doing.
Look. I understand the President is hesitant and is missing in action on leading on this, on the biggest economic issue of our time, and he's choosing to delegate to successive commissions. He disinvolved the last one. Who knows what this Biden Commission will do, but why don't we just do our jobs?
We put out a budget that fixes the problem and I was expecting the President to give a substantive, principled, legitimate critique of our ideas and then to propose his own ideas. We didn't get that. We got a partisan broadside. We got a dramatic distortion of what we were trying to do.
I'll simply add one more to the last point you made, is the social safety net. I want to say something that I feel so strongly about.
We believe you need to have a social safety net in this country. I really believe that this nation has come to consensus on this particular issue, on having a social safety net, and what do we mean when we say that? We really believe you have to have a social safety net to catch people from slipping through the cracks, to help people who cannot help themselves, to help people get back on their feet when they're down on their luck, but we don't want the social safety net to turn into permanent welfare, and so what we're trying to do with these reforms, by empowering states, much like we did in the 1990s with welfare reform, that only addressed one of 77 welfare programs, we want to take those kinds of successful reforms and apply it to the other welfare programs, give the states more control, more ability to customize, but also have the kinds of incentives and have a welfare safety net system that is geared not toward keeping people on benefits but getting them on their feet.
This is why we collapse all the different job training programs into career scholarships, to give people a chance and an ability to go from welfare and job training back into work. So we just have possibly a fundamental disagreement about the goal and the result. We want equal opportunity. We want America to continue to be defined by the characteristic of upward mobility and we believe in equality of opportunity, not equality of outcome.
We don't want to be a food stamp nation, we want to be a paycheck nation, and so I think if you're talking about who is ending the social contract in this country, what we're trying to do here is keep the social contract, a limited government, free enterprise system, a government that lives within its means, a government that keeps its promises to the most vulnerable in our society, to the seniors in our society, but a government that continues the idea of America, the characteristics of America, like I said, equal opportunity, upward mobility, prosperity.
MR. BARNES: You know, one area where the President seemed to agree with you is you called right now a defining moment for America. He seemed to agree that there is a fiscal crisis in his speech.
REP. RYAN: I saw an acknowledgement of that. I don't know how anybody could say otherwise because it's what every independent expert tells us. We have this fiscal crisis coming.
These are the times where you need leaders to step up and lead, not follow. These are times where, on the biggest ideas of our day, we should not be delegating decisions to other people.
Look. We're going to have to make some tough choices and the sooner the better because our children will have to make much, much tougher choices and the point we're trying to make with our budget, get jobs growing, fulfill the mission of retirement security, repair the safety net so that it works for the 21st century, and lift this burden of debt off our children so they can have a more prosperous future. Those are the four objectives.
I guess the point I'm simply making is if you do it now and fix this problem, we do it on our own terms. We do it in a very gradual way. We basically have to get government to reorient its policies so American citizens don't have to dramatically reorganize their lives and that is what we're trying to do here. That's very ‑‑ I think that's very conservative in a small "c" way. I think that's the right thing to do and what we want to do is preempt bitter austerity.
We want to preempt pain and sacrifice from people who are relying on these government programs. In a debt crisis, it's indiscriminate. In a debt crisis, it's urgent. In a debt crisis, it's immediate. It's across‑the‑board to everybody. Look at our friends overseas. They're cutting current seniors. They're pulling the safety net out from under them. They're raising taxes on their productive sector of their economy. They're raising taxes on young families who are just beginning to build their nest eggs.
We don't want to do that. We want prosperity. We want young families to have opportunity. We want people who are down on their luck to get back on their feet and we want to be able to keep promises to current seniors and you've got to reform these programs for the future so we can keep them going in the present.
MR. BARNES: Would you like to discuss your budgets one on one with President Obama?
REP. RYAN: Of course I would.
MR. BARNES: Is there any prospect of that?
REP. RYAN: He doesn't ‑‑ I mean, I don't think that's how it works with the White House. I just don't think they do that.
MR. BARNES: You know, one of the things that the President said was in the year 2000, America was fiscally sound, was in a great situation, but now he seemed to blame the Bush Administration mainly for the problems.
REP. RYAN: Yeah.
MR. BARNES: He cited two wars. He cited the Medicare prescription drug benefit and the Bush tax cuts and saying the first two were unpaid for and then you had the tax cuts, that that has created the situation. Do you agree?
REP. RYAN: No, I don't. I mean, I can go back and forth on these things. I remember being on the Ways and Means Committee at the time and on the Floor. We had a $400 billion drug benefit bill and the Democrats proposed an unpaid $4 trillion drug benefit bill.
Our structure, the way we did it, came in 40 percent below cost but, you know, put all that stuff aside, we still had these compounding unfunded liabilities. We still had these enormous building unfunded liabilities, Medicare, Medicaid, Social Security, I mean, the big drivers of our debt. I don't know if I brought that chart with me, our entitlement programs.
MR. BARNES: I hope not.
REP. RYAN: You know, basically the issue is this. When these programs were created, you know, men lived in their 60s, women lived in their 70s. Now men live in their 70s, women live in their 80s and 90s. You know, when these programs were created, especially the healthcare ones, baby‑boomers were babies and teenagers. Now they're retirees and they're doubling the amount of retirees going on these programs.
You know, these programs are one of the biggest contributors to skyrocketing healthcare costs. They're not helping us fight healthcare costs, they're actually exacerbating healthcare costs, and so we've got to fix that. We have to deal with that and this was a problem back in the early part of this decade. This was a problem in the year ‑‑ in the 1990s and it's a pronounced problem now that we're getting closer to the doorstep of a fiscal crisis. So these problems were there then.
In 2006, before we lost the Majority, I remember the deficit was like a $163 billion. Now it's bigger than that every month and so, you know, we have ‑‑ and, look, both parties are to blame for this stuff. So I don't want to say we're good, they're bad, no. Both parties are to blame. You can't casually dismiss this enormous fiscal problem based upon a couple issues like that and we've just got to be serious about this so we can fix this problem.
MR. BARNES: I talked to a number of your Republican colleagues earlier this morning and a number of them are worried about the politics of your Medicare reforms, in particular, the ones that Democrats have focused on the most. Will they be a political problem for Republicans...
REP. RYAN: Of course, yes.
MR. BARNES: ...seeking re‑election...
REP. RYAN: Yes, absolutely.
MR. BARNES: ...in 2012?
REP. RYAN: I mean, look, I'll just simply say, and I've been asked this a million times, if we are afraid of giving our opponents a political weapon to use against us, then nothing will ever get done in Washington.
Look. Hopefully we can change the political calculation around here from a generation of rewarding politicians making empty promises to voters to rewarding political leaders who speak honestly with voters, who tell them the truth about what's going on, who get us to a fact‑based conversation to the fiscal problems we have.
We're not having that fact‑based conversation, especially yesterday. We need to get there, but I will simply say this. I really do not believe that this is a political liability and here's why.
People know that this country is in trouble. People feel it in their guts that there's a fiscal and economic problem. Most people in America think this country is on the wrong track. So they know this. Specifics maybe not so much but that's why we do town hall meetings. That's why we talk to our constituents. That's why we help educate people and speak to people with the truth.
I'll just simply say this with respect to Medicare itself. Because the President did ‑‑ of all the ‑‑ he gave ‑‑ basically gave us one new idea or one new proposal. It's not a new idea. Here's what he's saying with Medicare. He wants to have this board of unelected appointees who can unilaterally put price controls and rations on Medicare on current seniors to fix the problem through rationing of price controls and what we want to do is get rid of that board, keep the promise to current seniors, people 10 years away from retiring, so they get what they think they have coming to them, so it's a promise that's made, and then reform the program for my generation on.
I gotta tell you. I'm in the X generation. Nobody believes in my generation these programs are going to be there for them when they retire and you know what? They're not the way they're going right now. So I think a program that works like what I have in Congress, a program that works like the prescription drug benefit, which is proven through choice and competition, reduces costs and gives people more ‑‑ a more personalized Medicare option, is one that's actually attractive.
And here's the other point. The way we look at healthcare, whether it's for the under‑65 population or the Medicare population, going forward, we want to have a system that can keep its promises and the way we propose our subsidies in this premium support system, which I think the President knows is not a voucher, it's a premium support, there's a distinctive difference there...
MR. BARNES: You've made that clear to me.
REP. RYAN: Yes. Is, let's make sure low‑income people are totally protected and so under our proposal, a low‑income person not only has their premium support payment, which is equal to the average per beneficiary cost of Medicare with growth, but we give them more money in the medical savings account to cover all their out‑of‑pocket costs, their co‑pays and deductibles, and then as people get sicker, their payments go up to protect them from premium increases.
But what we also say is the wealthy, because they're wealthy, don't get as much of a subsidy. So where are the values here? I mean, we're saying let's have a system that's sustainable, that harnesses the power of choice and competition, a more personalized Medicare system for the future generation that works like what members of Congress and the federal employees have, and let's have more for the poor, more for the sick, and less for the wealthy.
I think that Democrats, people from all across the political spectrum, would sort of agree with that set of principles that guide us and this makes Medicare solvent. This makes Medicare sustainable and this prevents you from having to turn over Medicare to 15 unelected political appointees to run the system through rationing and price controls.
MR. BARNES: Let me ask you about Social Security. In a moment here I'm going to turn to the press and let them ask questions.
The President didn't deal with Social Security reform in his speech and you didn't deal with it either in your budge. Why not? I mean, in late 1997, President Clinton and Newt Gingrich agreed...
REP. RYAN: Right.
MR. BARNES: ...on a reform plan that never came to pass. Monica Lewinsky intervened.
REP. RYAN: Yeah. That was unfortunate.
MR. BARNES: But why did you not deal with it?
REP. RYAN: We kicked this around a lot and this is, again, yesterday what I was hoping was that was a step forward on Social Security and obviously we didn't get that.
The reason, there are a couple reasons why we did what we did. First of all, we put a trigger in for Social Security that says when the trustees conclude that it's insolvent and in cash deficits, which it is now, that requires the President to submit a plan to Congress, the Senate and the House to submit plans, so we get to fixing the problem.
My concern was if we put a plan in there, it would just be too tempting for Harry Reid and Nancy Pelosi to tear off after it with demagoguery and that would divide us more. That would make it harder for us to come together on a set of ideas to fix the problem because I think a lot of us agree on some rational proposals to fix the problem: longevity, a more progressive benefit structure. Those are all in the bills I proposed. They're in the ‑‑ versions of that are in the Fiscal Commission's bills, and so we were worried if we put a plan out there that it would be too tempting for Democrats to use it again us and that would bring us farther apart.
What we didn't anticipate was that the President also would do the same thing and we thought, given the "Gang of Six and other things that were happening, that that would help us set the table and move us toward getting to a bipartisan solution and make it easier for the President to join us. Obviously we got that wrong.
MR. BARNES: Last question. As you said, the President's speech was the first campaign speech of his re‑election campaign. Did he help himself politically?
REP. RYAN: Well, I don't think so, but apparently he does because he otherwise wouldn't have done it.
Look. We're going to have plenty of time to have a presidential election. We don't need a campaigner‑in‑chief right now. We need a commander‑in‑chief to lead to help fix these problems and to avert a debt crisis and, you know, I just wish we could push this presidential ‑‑ I mean, it's not until November of 2012, you know. We're in ‑‑ it's April of 2011 and so obviously the President launched his campaign last week. The irony is not lost on me that's the week we launched our budget to try and put ideas on the table and get a dialogue going and then yesterday he launched his own ‑‑ his campaign narrative, his campaign stump speech.
I just don't think that works anymore. I don't think you can intimidate and scare voters to voting for you anymore. I just don't think that stuff works anymore. I know class warfare has always proven to be effective politically and I know tapping in to people's legitimate emotions of fear, envy, and anxiety can be powerful political weapons and tools, but it makes for really bad economics, it's not aspirational, it's not hopeful. It's not inspirational, and I just fundamentally don't believe that that is politically successful at the end of the day. So I just don't think he'll succeed in that.
MR. BARNES: Richard?
QUESTION: Good morning, Mr. Chairman. Thank you.
I wanted to have you talk a little bit more, if you could, if you could address how things stand in your day job with the budget resolution. You said that --‑‑ you nodded that -- you expected it would pass.
REP. RYAN: Yeah.
QUESTION: We understand that there is perhaps a dozen Republican members in the House, who might be voting against that, and quite a few more are still undecided.
REP. RYAN: Actually...
QUESTION: If that's correct, what does that say about the plan? And are their concerns chiefly about Medicare or other issues?
REP. RYAN: Our whip count is looking really good actually. I was visiting with Kevin McCarthy, our Whip, yesterday, where he said this is one of the better-‑looking whip counts we've had all year long.
So we're looking good on our budget. We feel very good. I've been spending a lot of time just you know, walking members through the details and things like that.
So we feel very good about our budget resolution.
I think the President helped us yesterday, by the way, by getting votes. And the CR is the question that, you know, the Whip is more consumed with today.
But I feel very good about it. There's going to be what, four or five substitutes, and that's how we do it.
I think the Blue Dog? No, Jim Cooper on his own, Van Hollen --‑‑ which, by the way, Chris Van Hollen ought to get credit for putting up a budget. It's easy for the minority not to do a budget.
There's a lot of pressures for the minority not to do a budget. And Chris deserves credit for actually putting up a plan.
MR. BARNES: Is it the same as the Obama budget?
REP. RYAN: No. I don't think anybody wanted to put that up.
And then there's the Progressive Caucus, and I think the CBC has one. Yeah, the CBC and the Progressives. And the RSC. Yeah.
So that's typical of how we do it. We feel really good. The Whips look great. And I'm very confident about it.
QUESTION: And is Medicare an issue with many of your colleagues?
REP. RYAN: Not really. We've spent lots of time with other, going through Medicare, its financing problems, its unsustainable trajectory.
You got to remember, Rich, CBO was telling us Medicare goes insolvent in about nine years. So I think members feel pretty good about where we are in Medicare, what we're proposing in Medicare.
And juxtaposing that to where the President is now on Medicare, I mean, I've just got to tell you, the biggest threats to Medicare are the status quo and the people who are clinging to it.
So, you know, it is an unfunded program making lots ‑‑ meaning tens of trillions of dollars of empty promises to people ‑‑ and members of Congress on our side of the aisle know this, understand that, and are now willing to speak candidly with their constituents about it.
And so I feel good about it.
MR. BARNES: Yes, ma'am, right here?
MS. ROSENBLATT: (Off mic.) Jennifer Rosenblatt of the Post.
REP. RYAN: Hey, Jennifer.
MS. ROSENBLATT: Hi. Thanks. Two questions, if I might.
One, I spoke last week to Bill Gross of PIMCO.
REP. RYAN: Say that ‑‑ oh, you talked to Bill Gross?
MS. ROSENBLATT: And he laid out a time line of one to two years for a debt crisis. Do you agree with that, and do you think the administration ‑‑
REP. RYAN: I talked to Bill Gross last week. I didn't hear you. He told me two to five years. What did he tell you?
MS. ROSENBLATT: He said one to two we're going to have a problem.
REP. RYAN: Okay.
MS. ROSENBLATT: So I don't know what happened.
REP. RYAN: Oh, gosh, last week he told me two to five.
MS. ROSENBLATT: See how badly we're doing?
REP. RYAN: See what a week does.
MS. ROSENBLATT: First of all, do you share that view, whether two to five or one to two? And do you think the White House has that same sense of urgency?
And then separately, the President didn't really talk about the Gang of Six. Is there a Gang of Six budget? Is there something substantive there?
REP. RYAN: Okay. So I'll take your last question first. I have no idea about the Gang of Six. I don't know if there's a budget. I don't know what's coming of that.
I don't know if Ken Conrad's going to do a budget, if he can get one out of committee. I really just don't know.
I'm the wrong guy to ask that. Bill Gross is the head of PIMCO ‑‑
MR. BARNES: Yeah, I know who he is.
REP. RYAN: Yeah.
MR. BARNES: But what does he say happens in one to two years?
REP. RYAN: So, yeah, I spoke to Bill, I want to say a week ago. I speak to lot of bond market watchers, bond market economists, traders, buyers, because I'm very concerned about the bond markets.
And the way I look at this is it's like the financial crisis of 2008. That caught us by surprise. And you know, people have heard me say this before, but you know, out of that came really ugly legislation, but more importantly or more devastatingly, millions of people lost their jobs, trillions of dollars of wealth was lost and people's and seniors' nest eggs.
And that caught us by surprise. And look what happened. Well, like I said, imagine if your Congressman or your President knew that that was going to happen, why it was going to happen, when it was going to happen, and knew what to do to prevent it and had time to prevent it, but didn't, because of politics?
I mean, God. Give me a break. That's where we are right now.
And so we have all these bond traders, all these experts in the bond telling us you've got one to two years, two to five years.
In the budget committee testimony we had experts come. The range was two to three years, from them.
So what they're not disagreeing on is that a debt crisis is coming. What they're disagreeing on is in how many few years under five, meaning one to five years, it's going to occur.
Nobody knows this. I mean, I had a long conversation with Allen Greenspan about this the other day, which he doesn't think the models today can accurately predict these things.
The models did not predict the last financial crisis.
And so knowing this, that's why we have a sense of urgency. This is why we put out a plan that we knew would give our political adversaries a weapon to use against us, but we cannot worry about the next election.
We've got to keep worrying about the next generation, and about our constituents and their livelihoods. And playing politics with each other, which is what the President did yesterday, is just fundamentally irresponsible, given what we now know about this upcoming fiscal crisis.
So what Bill says is, you know, you got to produce some confidence builders to show the bond markets that the Americans aren't crazy, that the American government can do something.
This is why I was hopeful for a social security agreement. This is why I was hopeful for some cuts and caps on spending as part of the debt limit, which I'm still hopeful for, as confidence builders in the markets to buy ourselves time and space in to the credit markets to avert a crisis.
Because when a debt crisis hits ‑‑ and we write about this a lot in our budget ‑‑ what happens? Huge spike in interest rates. Economy goes down. Consumers shut down.
Businesses can't borrow. Housing, you know, you can't get money for housing, for cars. The economy locks down.
Inflation can start getting out of control. You can have some really ugly problems. And in order to turn the crisis off, government has to do emergency measures, huge indiscriminate spending cuts.
And what Europe is doing is tax increases.
And also what we have learned from looking at the experiences of other countries around the world over decades is the countries that went after controlling their spending, not raising their taxes, are the ones that emerged from their debt crises far better, with faster economic growth, with more stable economies, with more lasting fixes to the problem.
You try to tax your way out of this. I guarantee you it's just a mathematical thing. You can't do it.
MR. BARNES: Yes?
QUESTION: Thank you, Congressman. I'd like to pick up on the question of generational responsibility.
REP. RYAN: And let us know who you are. I can't see you.
QUESTION: Kathleen Connell, University of California at Berkeley, writer for the Monitor.
The question I have is related to the D.C. TAG Program.
REP. RYAN: The what?
QUESTION: The D.C. TAG, which is the Tuition Assistance Grant program?
REP. RYAN: Oh, you mean the voucher, the D.C. Opportunity Scholarships?
REP. RYAN: Yes.
QUESTION: Yes, which allows current college students in the District of Columbia to receive up to $10,000 a year funding to go to college.
Under your 2012 budget plan, Congressman, you take away that subsidy and put an income means test on it. So any student graduating from a public high school or a private high school here in the District won't get the same subsidy that a resident in your state does as an in‑state student or Maryland or Virginia.
REP. RYAN: Yes.
QUESTION: It's a way of offsetting not having a four-‑year college here.
REP. RYAN: So this is going to be decided by the appropriators obviously and the authorizers.
When we put budgets out, we put ‑‑ from a line item in the budget, that's not a very large piece. But we're putting certain assumptions in our numbers that justify our numbers.
Because I think it's important, you can't just throw numbers out there, without any justification of those numbers.
And that's ultimately up to the committee of jurisdiction to decide how those thresholds are set.
I thought you were talking about that opportunity scholarships, which are for the K through 12.
QUESTION: My question is ‑‑--
REP. RYAN: Let me go onto Pell Grants. Pell is a program that has grown at unsustainable rates, and we need to bring that program back to sustainability.
What we've also learned ‑‑ and I know I'm going off ‑‑ so I don't know what the ultimate result of that particular program in D.C. will be. That will be up to the appropriators and the authorizers.
So, as you know, this is an authorizing legislation and a budget resolution. The authorizers end up doing that.
But what we've learned through things like Pell is every time you crank up Pell, what happens is tuition just goes up.
So we're feeding tuition increases, we're giving more money to education bureaucracies, and so the student is getting money in one pocket, only to lose it in the other pocket.
And the taxpayer is worse off.
QUESTION: Well, I'm in agreement with that, Congressman.
REP. RYAN: So we've got to do more fundamental education reforms, I think, to get at the root cause of education inflation.
And as far as the D.C. program, you know, I just don't know what to tell you what it's going to be, going forward, because that literally will be up to the committee of jurisdiction.
QUESTION: The question is: Is it fair to impose an income limit, a means test, for D.C. students that is not going to be imposed on Wisconsin students, or ‑...
REP. RYAN: I don't think we do that in our budget. So I don't think we do it like that. I don't believe that we have that assumption in there.
MR. BARNES: Yes?
REP. RYAN: I maybe stand corrected, but I don't think we do that.
QUESTION: Oh, hi, Chairman. It's Erik Wasson from the Hill.
REP. RYAN: Say it again?
QUESTION: Erik Wasson from the Hill newspaper.
REP. RYAN: Okay.
QUESTION: Yeah. Just regarding the debt ceiling, you talk about possibly attaching caps on spending. Can you describe a little bit about what you mean in particular? And how would it differ from this what seems like a soft trigger that Obama was talking about, linking debt to GDP?
REP. RYAN: Well, we asked the OMB for specifics. All we have is a speech. We don't have a plan.
We've been referred to the press secretary's office. So I don't know if you can even say what that plan is.
As I read the speech and see it, if you exempt, I don't know, 65 or 70 percent of government spending from your trigger, then you're just going to raise taxes.
So basically that debt fail‑safe after his re‑election means just automatic tax increase triggers, is what I read out of that.
I don't know how else you can get to where he's saying he wants to go to with these triggers.
We don't think it's a good idea, especially for this economy.
Look, right now there was a lot of uncertainty plaguing the economy. Businesses weren't sure what their taxes were going to be.
Well, now he made it certain yesterday, they're going up. I mean, do you think that's going to help businesses, entrepreneurs higher more people if now the President is committing to them that their tax rates are going to go up?
You got to remember, most successful small businesses ‑‑ no small businesses file their taxes as individuals. The President's budget raises their tax rates to 44.8 percent, the top tax rate.
It sounds like he wants to go higher than that now, with what he threw out yesterday.
And so there's an economic consequence to this. What we want are spending caps, not tax increase triggers, but spending caps.
Now there's different ways of writing it. We have three different caps in our budget resolution. We have statutory discretionary caps. We have total government‑wide caps, setting much like the Bob Corker ‑‑ basically it's the Corker Cap Plan, which is a percent of GDP the size of government.
And then we have debt trigger caps, which is unlike what looks like the President's tax increase trigger, we have if you don't meet your debt reduction targets as a share of the economy, then you have across‑the‑board spending sequesters that kick in; or Congress has to enact spending cuts to live within it.
Those are the caps we propose. I called it the belts‑and‑suspenders approach. You kind of have to have a redundant systems of cost and spending control to really fix this thing, in my opinion.
And so those are long the lines of the things we're talking about, when talk about the debt limit.
What we want with the debt limit. I mean, I could speak for myself. We want to bank real spending savings, and we want those real spending savings to be carried out into the future, so we can demonstrate that we're getting a downpayment on debt reduction, on deficit reduction.
MR. BARNES: Yes? James?
QUESTION: Jim Pethokoukis, Reuters Breaking Views.
Do you think the President's plan can keep the debt stable past ten years, 12 years ‑‑
REP. RYAN: No.
QUESTION: Without raising taxes on the middle class, which he has promised not to do?
REP. RYAN: It's not mathematically possible. It's literally inconceivable.
You know, I get to bring a chart out.
So if you look at the ten ‑year window of the President's plan versus our plan? The President's budget ‑‑ and by the way, yesterday was a speech, not a plan ‑‑-- when they refer you to his budget, that's what we have is his budget.
He keeps the size of government spending ‑‑-- right now it's at 25 percent of GDP. You know, it's historically at 20. So the public sector now has five percent of GDP more than what it typically had.
He basically keeps it there.
His plan dips kind of organically in the baseline and then goes back up. So he's basically saying for the rest of this decade, permanently he wants the public sector to take about five percent of our economy in its control.
We get spending down back toward its historic level, and that's the difference is $6.2 trillion in savings or spending cuts off the Obama budget.
But going in the future, that is really ‑‑ then you'd leap off a cliff. Then spending just goes up on a tear. It's mathematically impossible, if you agree with this kind of spending, to not tax everybody.
Look, I think ‑‑ correct me if I'm wrong, Jim, because you know these numbers really well ‑‑ if you confiscate the wealth of everybody making more than $100,000 this year, you still can't pay off the deficit.
I mean, so it's impossible mathematically. And this is why I'd say our politics have to change to stop rewarding the politician making empty promises to voters, and rewarding the political leaders who speak straight with them.
And that's what we're trying to do.
Spending drives all of this stuff. And if we stick with the spending path the President is proposing, everybody ‑‑ look, I asked the CBO what will the tax rates in the future out here be when my kids are raising their families?
They actually said, "Well, we can do this, you know." And so they gave me a letter back that said income tax rates would go like this:
You know, they run models to theoretically do this. The ten percent bracket, which is what lower income payers pay, would go to 25 percent.
The middle income tax brackets would go to 63 percent.
And the top tax rate would go to 88 percent.
And then they euphemistically say in the next sentence, "This could have some severe negative effects on the economy at that time." (laughing).
Look, mind you, the economy crashes before that even happens. But that just shows you a flavor of the tax rates that Americans will have to pay if we want to stick with the path the President's proposing.
MR. BARNES: Yes? John?
QUESTION: John McCormack, the Weekly Standard.
Congressman Ryan, yesterday the President said that republicans "want to give people like me a $200,000 tax cut that's paid for by asking 33 seniors to each pay $6,000 more in health care costs."
Is that true? Is that how you pay for these tax cuts? If not, could you go into more detail?
REP. RYAN: (Laughing) It's tee‑ball time. Yeah. No, it's not true.
Look, if you torture statistics enough, eventually they'll confess and give you what you want.
The $6,000 thing I can only conceive of is they're playing with Medicare numbers, you know, where the 65 population versus the older population, when the premiums for it is fully phased in.
So I think that that's what it is.
Look, this is nothing but scare tactics. This is trying to win an election by intimidating people, by putting fear into people.
Again, if the election is going to be "Stick with me, and I'll give you security. You just have to give me more of your money, you just have to give the government more of the private economy, I'll give you security;
You go with these crazy Republicans and they're going to feed you to the wolves," that is a false narrative. That is not what we're talking about here.
And so I think it's just more of those kinds of politics.
And it doesn't take a boy from Baldwin, Wisconsin to get this. You know. That's where John McCormack's from, by the way.
You know, I think again it's sort of a "Throw the Mama from the Train" political attacks.
And it's the very kind of political attacks the President told us needs to stop, when he came and spoke to us at our retreat in Baltimore, that he is now engaging in.
QUESTION: Could you go into a little more detail about how those tax cuts are paid for, then?
REP. RYAN: Oh, yes.
QUESTION: What deductions are taken away?
REP. RYAN: So I can only assume what he's saying is:
Because we're not signing up for his tax increases that are being proposed in this budget, which are $1.5 trillion, by the way ‑‑ and I don't know what he's throwing on top of it now, maybe another trillion. It's not clear to us ‑‑ so if we're not agreeing to his tax increases, then we're cutting taxes?
No. What we're saying is: Keep tax revenues where they are. We're not talking about cutting taxes. We're talking about keeping taxes where they are, and cleaning up the tax code;
Getting rid of loopholes and deductions, which by the way are enjoyed by the top‑rate filers, the people in the top two brackets, in lowering tax rates;
A flatter system, a fairer system, a simpler system. One that's more internationally competitive.
Look, the average corporate tax rate for companies around the world in different countries is 25 percent. Ours is 35. Japan is even lowering theirs.
Ours is going to be the highest in the industrialized world; meaning when we tax our small businesses at 44.8 percent, we tax our corporations at 35 percent, and our foreign competitors are taxing theirs around 25 percent, who do you think wins in global competition?
So what we're trying to do is get America ready to compete, thrive, survive, and lead in the 21st Century economy.
This is why we want job training scholarships. This is why we want a safety net that is geared toward getting people on their feet, in good education, so they can get careers of the 21st Century, so we can innovate.
This is why we want fundamental tax reform, which doesn't cut tax revenues. It fixes the tax code, so we can compete.
Look, if I would just simply say this: Do we want more revenues to come into the federal government? Of course, we do. We want to get this deficit under control.
But the way we want revenues to come into the federal government is through economic growth and through job creation. Not raising tax rates on a shrinking economy.
We want a growing economy and that will get us more revenues.
So are we interested in trying to divide up the slices of an ever‑shrinking pie? No. We are interested in growing the pie for everybody, so we have more prosperity, more job creation.
And yes, then we get more revenues.
QUESTION: And if you put up a detailed plan on which deductions are going away?
REP. RYAN: So that's what the Ways and Means Committee is doing. They are going to have hearings throughout the summer on this.
The architecture of the tax system we're proposing with the top rates of 25 percent, was given to us by the Ways and Means Committee, and then they are going to go down the path of filling in the details as to how they accomplish doing that.
MR. BARNES: Right here?
QUESTION: Jonathan Nicholson with B&A.
REP. RYAN: Hey, John.
QUESTION: Kind of one and a half questions, if I may.
REP. RYAN: One and a half questions?
QUESTION: One and a half.
REP. RYAN: I've never heard of one and a half questions.
QUESTION: One I figure will probably be very...
First of all, I just want to get to the baseline thing. To me, it's interesting in this debate, how both your proposal and the President's are being talked about as $4 trillion in savings over the deficit.
But both of those seem to ignore the '01-‑'03 tax cuts, SGR, AMT, estate tax relief. Can you talk a little about like why that shouldn't be counted, that the actual numbers shouldn't be 1.6 versus say maybe $1 trillion?
REP. RYAN: The President's?
QUESTION: Both. Yours is being touted as 4.4, but if you take away the other stuff, you're talking about 1.6 versus the baseline.
REP. RYAN: Yeah.
QUESTION: And then also how are you going to vote on the Cooper proposal, which is his interpretation of what the Fiscal Commission ‑‑
REP. RYAN: I'm going to support my budget, not the Cooper budget. So I think that's pretty easy to conclude.
The reason I didn't support the Fiscal Commission, is it didn't address the drivers of our debt, health care.
You're whistling past the graveyard. You're ignoring the problem. And so I don't want to suggest that we're going to fix this problem by ignoring the drivers of our debt.
And that's why I didn't vote for the Fiscal Commission.
The baseline issue. This stuff gets kind of complicated. I know you know all this stuff.
Number one, let's talk about baselines. Yesterday the President said he wants to save $4 trillion over 12 years. A big difference than, you know, over ten years.
The metric that the Fiscal Commission accomplished as to get what they call primary balance mid decade ‑‑ we do that, the Fiscal Commission does that. The Obama budget never does that ‑‑ and save $4 trillion over ten years.
He's saying 12 years. So they don't have numbers to back this up. They can't show us this, but I assume it's about $3 trillion in ten years.
We save $6.2 trillion in ten years. We have $4.4 trillion in deficit reduction alone.
The baseline. Okay, here's how our baseline works. We assume the AMT is patched, that we're not going to hit middle‑class taxpayers with the AMT.
We assume the extension of the '01-‑'03 tax cuts. The Obama baseline assumes the extension of all of those tax cuts, except for the top rates, as you know.
We assume the Obamacare taxes go away, meaning because we're repealing because of the President's health care law.
As you know, through organic bracket creep, even inflation-‑protected bracket creep, you know, the baselines go up.
So we are targeting our tax reform to hit a revenue level consistent with those assumptions in the baseline consistent with our historical average, which is about 18.3 percent of GDP.
That's how we arrive at where our baseline is.
The President's baseline assumes, you know, not only the Obamacare taxes, but another $1.5 trillion in tax increases, he moves this window out to 12 years.
And I have no idea what the new ‑‑ I guess his version of tax reform now is not what the Fiscal Commission recommended, which was broaden the tax base by going after tax expenditures and lowering rates; I think he just wants to broaden the tax base and go after tax expenditures and raise tax rates, or keep them higher.
I'm not exactly sure. But I don't think his version of tax reform is the same that we in the Fiscal Commission think it is.
Oh, SGR. So yeah, sorry. I knew there was a third part to it.
So like we've done before, we've always believed in revenue‑neutral or deficit‑neutral SGR fixes. We have a reserve fund, and as you know, in budgets, if you want to prioritize an issue for budget procedures, we set up these reserve funds, and we have an SGR reserve fund.
MR. BARNES: What is SGR?
REP. RYAN: The SGR is the sustainable growth rate for the docfix.
QUESTION: It's the docfix.
REP. RYAN: So we don't think we should just keep deficit financing a docfix. And we do believe, obviously in fixing the docfix there's pretty much big agreement on that.
And so we set up a reserve fund of fix the docfix. And we believe the committees of jurisdiction ‑‑ I think we fundamentally have to just fix the way this program works.
This formula is broken, it doesn't make any sense. And what we want to do is get the committees to come up with a fix, final fix to fix this thing.
MR. BARNES: Yes, sir?
QUESTION: Thank you, Mr. Chairman. John ‑‑ Fox News.
You had said that the Whip count for the 2012 budget looks good in the House. It's probably a pretty safe bet to say that the Whip count is not so good for it in the Senate?
REP. RYAN: You know, I don't know the answer to that. I'm not a Whip guy, I've never been on the Whip team.
QUESTION: Well, you said ‑‑
REP. RYAN: And the CR, you're asking me about the CR?
QUESTION: Well, but my broader point is that in order to come to an agreement on a 2012 budget, you're going to have to compromise at some point with Senate democrats.
REP. RYAN: I didn't catch the last part of your question.
QUESTION: At some point you're going to have to compromise with democrats in the Senate to come up with a 2012 budget.
REP. RYAN: Oh, right. So ‑‑
QUESTION: So my point is: Is there any chance that a tax increase in any way will be part of that compromised negotiation?
REP. RYAN: So our interest is not raising taxes. As I've said repeatedly, look at the problem. It is spending, it's not tax revenues.
Spending is going up at an unsustainable rate. Not taxes. Taxes go back to their historic levels under our budget.
So we're not even cutting taxes. And spending is the problem.
And so we think if we go down the tax increase route, we do two things:
Number one, we take our eye off the ball, which is spending;
Number two, we sacrifice the economy.
We believe that there are two ingredients that are necessary: Spending cuts and controls, and economic growth and job creation. We don't want to sacrifice one for the other.
And so I don't know that the Senate is going to even pass a budget resolution. So I am not holding my breath for a budget resolution conference report.
We will pass our budget resolution, and under our rules, the way the it works, is we will police ourselves with our budget resolution, and then we'll wait and see what the Senate ends up doing.
MR. BARNES: One more question. Yes, sir?
QUESTION: Thank you. Noah Green. Frum Forum.
Since your own budget was released, it's received a lot of criticism, not just for the programs that you reform, but also for some of the numbers that you use to back up your reforms, such as Heritage Foundation's 2.8 percent unemployment rate in 2021 ‑‑
REP. RYAN: Sure ‑‑
QUESTION: And CPPB also says that of $1 trillion of the savings you take credit for really just come from ending the Iraq and Afghan wars.
My question is: Are there any aspects of your own analysis and the evidence that you present to your budget that maybe in hindsight you didn't include or you wish you could have ‑‑
REP. RYAN: Yeah, no, see there's a big misperception. We use CBO numbers. Our budget doesn't use anybody else's numbers, but CBO's numbers.
QUESTION: Right, that's your baseline.
REP. RYAN: So yeah, no, but our score of all our policies that we include in our budget are all CBO numbers.
See, here's the thing. CBO does not do economic analysis of budget resolutions. They do fiscal analysis. And every policy we claim savings from in our budget resolution is all CBO‑scored.
So we asked the Heritage Center for Data Analysis to do a separate economic analysis. We don't use their numbers in any way to write our budget.
It's a separate analysis that was done to look at the economic effects of our budget. And what the Heritage analysis says is: About a million new jobs will be created next year, about 2.5 million jobs will be created in the private sector by the tenth year;
It will increase economic growth by $1.5 trillion. It will increase wages by $1.1 trillion. It will increase family income annually on average by $1,000, as a result of stronger economic growth as a result of this plan.
There's one number that they ran that they've since revised, because they had a glitch in their model. Every other number I just mentioned, the ones I just mentioned, they stand behind. That is their unemployment rate numbers, which had a glitch.
And 2.8 percent is an inconceivable rate. They've since revised those numbers, and the unemployment rate goes down to around five percent, which is the pre‑recession levels, by mid‑decade.
So what they say is: Unemployment will continue to remain steady and high if we stay on the path we are on. If we pass our budget, we will get unemployment back down to basically pre‑recession levels by about 2015.
So that's with the revision.
It is wrong ‑‑ and I noticed some journalists have done this ‑‑ and I think, you know, I don't know if it's intentional ‑‑ it is wrong to suggest that our budget numbers were written on or based upon those Heritage models, those Heritage assumptions.
Our budget was written on CBO numbers. Heritage did it as separate analysis, which I just referred to. And they revised that one statistic that their model had a glitch in.
MR. BARNES: Congressman, thank you very much.
REP. RYAN: Thank you.
MR. BARNES: Thank you all for coming. And if you didn't get a question, maybe you can grab Congressman Ryan before he gets out the door.
REP. RYAN: Oh, thanks.
MR. BARNES: If you're lucky. Thank you.