HH: Right now, I’m going to talk with one of the people who is making the weather in America. Paul Ryan is chairman of the House Budget Committee. And huge storms burst upon Democrats last night, and part of that reason is because Paul Ryan and his colleagues have changed the conversation. Paul Ryan, welcome back, Congressman, good to have you.
PR: Hey, thanks for having me, Hugh. How are you doing today?
HH: I am great. I have posted your latest video over at Hughhewitt.com on how to reform the tax code, but I want to talk hardball politics, first. Last night’s New York 9, and in Nevada, how did your budget, the House Republican budget, fit into this?
PR: It was basically what they talked about for the last five weeks in these campaigns. I mean, it was Mediscare ad after Mediscare ad. And the Republicans defended themselves, they stood up for our budget, they stood up for cutting spending, taking on entitlements, reforming the tax code, relimiting government, embracing free enterprise, and all the kitchen sink scare tactics came thrown against them, and we came away with resounding victories. So look, what’s happening is people are seeing through this stuff. They’re seeing through the scare tactics, they’re seeing through the class warfare, and they’re realizing that the path we’re on is not the right path, that it isn’t working. I mean, this was Chuck Schumer and Geraldine Ferraro and Anthony Weiner’s district. And it was a referendum on the President’s path, on the President himself, and on all their Mediscare tactics. And it was resoundingly defeated.
HH: You know, Paul Ryan, the debate on Monday night as well, where we saw Republican after Republican grappling with the future of Social Security, would never have happened even five years ago.
HH: No one would have touched it. Do you think in this supercommittee that there is a possibility that we might actually get a resolution to Social Security, maybe Medicaid, and maybe more?
PR: I don’t think so. First of all, I’m not, I’ve never been a fan of creating the supercommittee, to be honest with you. It’s one of the reasons why I didn’t go on it, because these big issues shouldn’t be a deal cut by twelve people in a back room. They should be done the right way in front of everybody. But more importantly, I don’t think they’re going to do much. There is a possibility they could do Social Security reform, but it’s not the great budget pressure. The driver of our debt are health care entitlements. Now it’s not unforeseeable that they will do Medicaid reform. I think there could be some Medicaid reform, and maybe some Medicare reform. But I have a hard time believing the Democrats will put anything close to Obamacare on the table. And don’t forget, Obamacare rewrote Medicare and Medicaid, so it wasn’t just creating this new Obamacare entitlement. It put this new board of bureaucrats, fifteen of whom will be appointed next year by the President in charge of Medicare, starting next year. It grew Medicaid by a third, and I don’t think they’re going to be willing to do any restructuring of those things. Maybe some tinkering at the edges, but I really don’t think they’re going to do that. A grand bargain, in my opinion, is we get rid of Obamacare. We get rid of all the damage that that will do to our health care market and our debt. And I don’t think the President and his party are willing to do that, and that’s why I don’t think you’ll have some big package coming out of this thing.
HH: After the electoral disaster for Democrats last night, though, Chairman Ryan, aren’t there going to be people across the aisle from you in the House who are worried about hanging onto their jobs, and who realize the American people are watching, measuring, and have already added up the deficit totals, they’ve already added up the unemployment numbers?
HH: And as a result, they’ve got to make the gang of 12 work. They’ve got to give in.
PR: So it’s a question of do pragmatics trump ideology. And with some Democrats, it does, but with the leading ones, it doesn’t, from what I can tell. And so what we decided to do, when we put out our budget this year, was give America a choice, and take on problems and offer solutions to get us out of this debt quicksand we are in, this debt crisis that we have on our horizon. And what we learned was people are hungry for that kind of leadership, and they’re not so susceptible to the kind of demagoguery that they’ve experienced, the kind of Medicscare campaign they’ve experienced lately, and the facts are getting out there. People are beginning to learn what it actually is that we’ve proposed, and how the other side is just basically trying to play politics. So you know, look, both parties have done this to each other. I’m not saying the Republicans have halos over our heads throughout history. But we’re taking on this debt challenge, we’re putting out specific alternative fixes, and people see that, and they’re rewarding that. But I have a hard time believing that after they spent the first two years of the Obama administration working so hard to create these new entitlements, and to sweep Medicare and Medicaid more firmly under the control of the federal government, that they would be willing to undo those things. I have a hard time believing that they would do that, and I think it’s because they’re primarily motivated by ideology.
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HH: Now Congressman, the President has proposed a second stimulus, Stimulus 2.0.
HH: He doesn’t call it that, but that’s what it is. Is that dead on arrival?
PR: Yeah, look, if you want to look at what this is, take the last stimulus package, divide by two, and that’s what this is. It literally is the same components. It’s more bailouts to state governments, it’s more temporary tax rebates, and more spending on jobs, infrastructure, things like that, which have proven to not be so shovel ready. The same economic models that they’re using to justify this sort of booster shot economics, or sugar high economics, have already proven to completely fail. It didn’t create the kind of jobs they promised. And so I just don’t think it’s a good idea to advance ideas that we have recently proven have failed. Look, George Bush tried some of these ideas, too. He did the rebate thing as well, and it didn’t work. So it’s not just President Obama, these have been tried by both parties, and these ideas have failed. And so they’re a poor substitute for just the basics – sound money, sound regulations, low, permanent tax rates, getting the debt and deficit under control. And what this bill does is it’s all this temporary stimulus that have proven to fail, paid for by permanent tax increases, which just injects more uncertainty into businesses, into small businesses. We’re already seeing a big tax increase coming in 2013. This just piles on top of the tax increase that they have coming at them in 16 months, and it sort of, the whole notion of this thing is predicated upon the belief that businesses only look at just what’s happening today, and they don’t look at what’s happening tomorrow. That’s just not true. Ask any business leader, any business owner. They look to the future to make their decisions for the present as to whether they’re going to take a risk, whether they’re going to invest. And what this bill does is it raises the specter of higher interest rates, bigger deficits and higher taxes. And that’s just not good for growth.
HH: If we need some kind of stimulus and the federal government has no money, what about…there is $7 trillion dollars in private retirement accounts, Congressman Ryan. Why not remove the penalty on early withdrawal? Why not allow people to invest it in their own houses, to save their houses and pay down their mortgages? Why not let Americans use their own money?
PR: Well, I think we should tax income once at its source and never again. I think we should have a tax system that allows you, once you pay your income tax, just, you can do what you want with it. It’s your money. You can save it, and then use that savings for whatever it is you feel fit, because it’s your money. So anything that goes in that direction, Hugh, to me, is a step in the right direction. So whether it’s allowing for withdrawals on money you already paid taxes on that you’ve been saving, we should do that on a universal basis in perpetuity, in my opinion, because it’s just good tax policy.
HH: I’m talking about if you’ve got money in an IRA and 401K, you haven’t been taxed on it. But if you release it right now, or allow people to use it on their houses, you’ll stimulate that sector.
HH: And you will, I mean, it’s a free stimulus. It’s their money. You don’t get the taxes from it, but it’s not a tax cut, the CBO can’t score it badly, because it’s more than ten years out. Just a thought. Let me ask you about, in terms of the idea factory up there, I’ve got your new video on tax reform. Are we stuck now until 2013? Is anything interesting going to happen?
PR: One of the reasons why I put this video out is I see a glimmer of a chance of hope on corporate tax reform. It’s pretty clear to me the President’s not interested in what I call individual tax reform, because he wants higher tax rates. And they’re going to invest their campaign into a class warfare mantra. But on corporate reform, which is business tax reform, it’s a cesspool of interest groups. It is so many loopholes, which gives us a really artificially high rate. That makes our businesses less competitive. There’s an area where I think we have a shot. The President says good things about these ideas, a lot of Democrats are in favor of it. Erskine Bowles, Clinton’s former chief of staff, the head of the Fiscal Commission, is a big champion of this idea. And so what I’m saying is let’s stop playing crony capitalism with the tax code in Washington, let’s get rid of all these loopholes, and lower tax rates across the board. It’s fair, it’s simple, it’s competitive. That…and it doesn’t raise the deficit. It actually grows the economy. That, to me, is just sort of a no-brainer idea that we should be able to act on, because there are, granted, not leading Democrats here today in favor of it, but a lot of Democrats in favor of this idea. And so the reason I put this budget, this video out at www.budgethouse.gov, is to show an idea whose time has come, which clearly works, which has bipartisan support, and it’s not too late to do something like this. Now we might lose our opportunity within a few months, and perhaps the supercommittee might be willing to do this kind of a recommendation. But if we don’t do something like this, then yeah, I’m afraid, Hugh, you’ve got to wait another 16 months before we can get something like this done.
HH: Sheesh. Now I know markets will not react positively until they have some sense that there’s going to be a change in Washington, D.C. But if, in fact, the supercommittee comes out, they might go for that. Let me ask you, Congressman, in terms of the President’s plan. He wants to cripple the charitable deduction, which would destroy education, health care, a great part of the not for profit sector. And some people talk about the mortgage interest deduction. When you talk about corporate tax reform, what do you think about those two specifically, since I think it would be a nightmare if the Republicans attack either of them.
PR: Those don’t apply to that. Those are on the individual side of the tax code.
PR: So corporate tax reform is for corporations and their loopholes – solar panels, and you know, you name the stuff, all this renewable stuff. That doesn’t apply to an individual’s tax benefits like a charitable deduction or a mortgage deduction. Different side of the tax code.
HH: All right, so I just want to be clear. You would not support those ideas?
PR: Yeah, no, that’s not what we’re talking about.
HH: Now let me ask you about the presidential debate, and we’ve got a minute to the break, and then we have three minutes left, and I want to make sure we get to this. First of all, I was out of the country when you decided not to run for president. How close were you? And is there any glimmer that you might yet do so?
PR: No, there’s not a glimmer. You know, Jan and I have a 6, 8 and 9 year old. I feel like I can make a big difference where I am, and our kids are just at that formative stage in their lives where I feel like in any other job in politics, you can have good family balance. But I’m just not sure you can have that with this job.
HH: Don’t you wish you were on the stage Monday night?
PR: Well, yeah, believe me, that gets tempting sometimes. I like to debate. You know, a lot of people from the conservative movement approached me in July and August to reconsider this thing. Jan and I, you know, went and took our kids camping in Colorado in the National Forest, and did consider it, talked it through, but became at peace with our decision, and we just moved on.
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HH: Congressman Ryan, you watched the debate. What were your thoughts on how the Republican candidates did? And what do you want them to do going forward?
PR: Well, I was pretty happy with them on entitlements. They weren’t afraid to talk about it. They weren’t afraid to offer ideas. They weren’t afraid to embrace what used to be thought of as the third rail. I’ll tell you what, if we don’t take on these challenges, they’re going to get us. And the sooner we talk about fixing these programs, and coming up with ideas, the better we are. So that, I was really encouraged by. You know, I’m just getting to know these candidates like you are, and anybody else watching this debate. So to me, it’s interesting, the interaction between these people. Who knows if this is a two man race or not? I’ll leave that up to the pundits to speculate. But what I got out of this is the party, and the conservative movement, is unifying around some core principles – number one, free enterprise, liberty, self-determination, and taking on these big, massive problems, these fiscal problems we have. It was in the old days where people used to just duck these things. And now, it’s becoming clear to me that we have really advanced this debate. When we put the budget out, our goal was to move this debate forward. And one of the reasons we were hoping to do that was to make sure that whoever emerges as our nominee, is someone who has the guts and the fortitude and the intellect to champion taking on these challenges, and not hiding from this. And I think that that debate is showing that that’s the kind of debate we’re getting.
HH: Last question, though, you are the budget guy and the economics guy, but I’ve got to ask you. There’s creeping isolationism – Ron Paul is its cutting edge, and he was booed, but there were other answers on the stage that made me think Ronald Reagan is spinning around in Heaven.
HH: Especially when our friends, the Israelis, are threatened on all sides…
HH: And I think that mattered last night in New York and Nevada. What’s the Republican Party got to do about this isolationism?
PR: Yeah, I share your concern about that. I’m obviously not in that camp. Ron’s always like that. Ron Paul is, you know, I’ve known Ron for years. That’s who Ron is, and there are a few folks playing to that, because there’s just war fatigue. I’ve got to tell you, if America folds up its tent, a huge vacuum will occur in the world, which will be filled by other countries that do not have our best interests in mind. And the values we believe, and the principles we espouse, are threatened by that. So to me, having a strong America, meaning a strong economy, strong balance sheet, and being competent in able to project our power, and protect our principles, and those of our allies like Israel, is just incredibly important to maintaining exceptionalism. And you know, I think that’s a smaller part of the party, and I’m not that worried about the isolationism. I think you hear it on the stage, but by and large, most Republicans don’t share that, I don’t think.
HH: Chairman Paul Ryan of the House Budget Committee, thanks for spending time with us today, always a pleasure to get an extended conversation with you.
End of interview.