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MS. FELDMAN: Okay everybody, I think we're going to start. good morning. I'm Linda Feldman from the Christian Science Monitor, filling in for Dave Cook, who's off watching his son graduate from the Navy's officer candidate school today. Thank you to our guest, Congressman, Republican Congressman Paul Ryan of Wisconsin, who is making his first appearance at a Monitor breakfast. Congressman Ryan was first elected to the House in 1998 at the tender age of 28. He is a member of the President's Debt Commission and is in line to become the next chairman of the House Budget Committee. The Congressman grew up in Janesville, Wisconsin and graduated from Miami University of Ohio. Before his election to Congress, he worked for the Ryan Construction firm, which was founded by his great grandfather in 1884, and also as an aide to Senators Bob Kasten and Sam Brownback, and as a speech write for drug czar William Bennett and Jack Kemp. Congressman Ryan is married to Janet Ryan and has three young children, whom he always invokes when asked if he'd consider running for President, as in no. Paul Ryan also does workout sessions with a bipartisan group of Congressmen involving push-ups, pull-ups, karate and yoga. CONGRESSMAN RYAN: Did it a half hour ago. MS. FELDMAN: But enough about abs. Now, onto process. As always, we're on the record. Sorry about that. It's better that way actually. There's no embargo. There's no live blogging or tweeting. Again, no live blogging or tweeting. But after the session is over, go for it. As always, if you'd like to ask a question send me a signal and I'll put you on the list, and as the substitute teacher today I apologize in advance if I don't remember all your names. I'll do the best I can. Congressman, if you'd like to make some brief opening remarks, you're more than welcome, and then we'll move to questions from around the table. Thank you again for doing this. CONGRESSMAN RYAN: Thank you. I have a fast metabolism, so I'm going to keep fueling myself. I appreciate the breakfast. I don't really want to give a long talk or a big speech of any kind, only to say that this is a very monumental time in our country. Watching Europe is a scary foreshadowing of things that could come here. We've got to wise up to that. The election was a monumental election, a repudiation election. But we Republicans should be under no illusions that this was a vindication or a validation of how popular we are. That's not what it was. It was really a repudiation of the direction the President and his party took the country the last two years. We have a lot of work ahead of us, namely earning the trust of the people who send us here, earning the trust of the people who gave us this majority. We can't do, we can't be like we were the last time we were in the majority, where we ran as one kind of person and then governed as another. We can't do that. And so we're serious about this. We're serious about fiscal conservatism; we're serious about economic growth and prosperity, and we're also serious about, you know, making Congress work like the way the founders intended it to, an open process, a transparent process, a process with accountability. I mean I hate to say it, but I've been in Congress 12 years now, and I remember when I first came to Congress, open rules on appropriation bills, the ability as a new member to actually write an amendment, come to the floor and go fight for it, and we haven't seen that for at least four years, and that's wrong. So what we intend to do is clean this system up. We clearly have a governing philosophy that motivates us. That's what we ran on, and now it's our chance to turn an obligation, to implement it. We have divided government. That's going to be challenging. I would like to think we're going to get something done in the next two years. Things have to happen. Progress does need to made on a lot of issues, but not all, you know, us against them ideology issues. So hopefully, rhetoric will be -- the rhetoric on the other side of the aisle, and granted, I'll give you the perspective as a conservative, was pretty harsh in the build-up of the campaign. Previously, it was a lot of strawmen arguments, a lot of counterfactual arguments, which I found to be not very conducive to actually getting things done, and understanding each other. Hopefully, more communication will occur; hopefully, the rhetoric will calm down, and hopefully the President will say Look, I agree with you Republicans on A, B and C, so let's try and get something done on that. But on X, Y and Z, you know, we're just going to agree to disagree. Then in those cases, it's our obligation to offer the country a choice, a different alternative, and then go to the people with that. So that's kind of how I see it coming down, at least how I hope it comes down, meaning that there's some A, B and C's out there. But we'll see, and with that, I'll have another piece of sausage and answer your questions. MS. FELDMAN: Okay. Well, I'll take the first question and when we'll open it up to the floor. At yesterday's meeting of the Debt Commission, you declared the Commission a success, but also obviously expressed reservations about, especially about the health care piece. So how are you going to vote tomorrow, and are you concerned that if the report doesn't get 14 votes, that the issue will just fade in public consciousness, and how are you going to vote? CONGRESSMAN RYAN: No, I'm not. So obviously I'm not going to vote for it. I think I pretty much telegraphed that. I think Brian Thaler (ph) already reported that. It is a success, because what they did was they put a plan on the table. I mean as the person who's had a plan out there for about three years, the only one, I'm really happy that I've got some company now. I'm very happy somebody put a plan out there. My new favorite Democrats are Erskine Bowles and Alice Rivlin. These are wonderful human beings who really care about the country, who bring a left of center perspective to things, but they're people you can work with. I just, I hope there are more people like that, that can from a coalition in this country to fix these problems. So it was a success because (a), they advanced this conversation to the adult level that some of us have been struggling to get it to for a long time. (b), there's some really good policy things in there I like a lot, and that I plan on picking up and moving, you know, in the future. (c), the reason I can't vote for the thing is because it not only didn't address the elephant in the room, health care, it made it fatter. So here's what I mean when I say that, and I understand. Look, the President appointed most of these people. They're not going to turn around and repudiate his health care law. He just -- yeah, sure, I'll take some, that he just struggled to pass for two years. The reason why I say they expanded this thing so much is because if you repealed the tax exclusion, which I actually do that in my bill. But if you repeal the tax exclusion for individuals, while maintaining the infrastructure of Obamacare, this actually enhances it in a few ways, then all you're doing is you're accelerating the expansion of Obamacare. You're going to accelerate the dumping of people from employer-sponsored health insurance into these exchanges. The exchanges will grow and magnify far faster than what CBO or anybody else projected. The subsidies in the exchanges generally are overall, in the aggregate, are bigger and more expensive than the tax exclusion. So we're going to expand and blow up a new entitlement, which even the actuary, Rick Foster, is telling us is now not paid for, is actuarially unsound, and makes the health care cost curve go up, not down. So if you're going to fix this fiscal crisis, you've got to take on health care. This is why Alice and I put the Rivlin-Ryan plan out there, because we saw the big gap in this plan, which I think Alice, I'm not going to speak for her; I think she's supporting it. MS. FELDMAN: Right. CONGRESSMAN RYAN: But I saw the biggest gap in this plan was health care. It was pretty much just avoided, and that's why Alice and I put this plan out there on Medicaid and Medicare, which is not included in this. I think that shows a consensus is developing on how to tackle these issues personally. So this just makes the fiscal situation worse in my opinion, by not just keeping Obamacare, but actually entrenching it more and expanding it and accelerating it. So that's -- and there's also the revenue issue. Baselines get a little complicated, but they used a baseline that assumes the President's budget, which is a fairly, you know, bold assumption, and if you use the President's budget baseline, the numbers come out the way that the Commission portrays them to. We use CBO, and I think the more clear way of budgeting is to use current policy baseline. You know, the policies we think that we want and that we're going to carry through, under any kind a circumstance in Congress. So I would say the more honest and accurate thing to do is use a CBO-based current policy baseline, and under that baseline, this thing is a $2 trillion tax increase, and it's $2 of tax increases for every $1 of spending cuts, which is not, in my opinion, the right mix to have. More importantly, if you look at the timing, and we're still running numbers at Budget Committee on this, I've been around long enough to see if you start with tax increases now, with the promise of spending cuts later, those spending cuts almost never materialize. I think this plan is a little more heavy on early tax increases and heavy on late spending cuts, most of which are from discretionary, not from mandatory. So I just don't think this thing has the ability to last in policy, and it simply buys us time. I'd rather fix the problem, with the boomers starting to turn 65 this year, fix it once and for all, so we can really get this thing fixed, and I just -- But again, I don't want to be too critical of it, because it's a good effort on Erskine's part and Alan's part, and they've done a lot of good work. So I won't give as long an answer on every question, I promise. That's a thick one. MS. FELDMAN: Paul Crosshack (ph). MONITOR BREAKFAST: Congressman, you've said the way to promote economic growth is not through spending programs, but through spending cuts. Can you explain how -- CONGRESSMAN RYAN: I do. MONITOR BREAKFAST: --spending cuts would promote growth and (inaudible). CONGRESSMAN RYAN: Yeah. So I don't think Krugland's (ph) going to like it when I say that. Look, I'm not a demand-sider; I'm not a Keynesian, so no surprise there. But what I mean when I say that is spending cuts per se is not a growth producer. But in the context of where we are in the credit markets, in the context of where we are with this debt spiraling out of control, in the context of where are with low interest rates, which will not be sustained, if we actually show discipline on spending, cutting spending, controlling spending, reforming the spending structure, meaning entitlements, that would be one of the best things we could do in the near term. If we show the credit markets in the world that America is getting its fiscal house in order, that over time we're getting this debt structurally paid off, that's going to help our economy right now. That's going to give confidence to entrepreneurs; it's going to give confidence to businesses, that interest rates will be stabilized, that inflation will be in check, that the dollar will maintain its value, and that taxes will not have to explode to pay for this dangerous spending trajectory we have. That's what I mean when I say that. So it means we're getting the structure of our finances under control, which right now are getting really, really -- they're perilous right now, bordering on ruinous, and that's what I mean when I say that. So I'm not saying that there's some new economic doctrine that we've all grabbed onto, which is cutting spending per se grows the economy, but cutting spending in this era means lower tax rates, stable interest rates, sound money and a more stable economic environment for the future. MS. FELDMAN: Brian or Ray. MONITOR BREAKFAST: Ray. You said that you wanted to look for the A's, B's and C's where Democrats and Republicans agree and do those things. Do you agree with the Democrat's position that leave people making above 250,000 aside, that everyone below that should get the tax cuts extended -- CONGRESSMAN RYAN: No. I get these questions eight times a day. No, I don't think we should decouple these things. Look, we've got to watch a couple of things. Number one, growth. Marginal tax increases do hurt growth. Top rates, raising the top rates hurt growth the most, because that's the job creators, that's the job producers, that's the entrepreneurs and small businesses. The other thing we have in this century is a global economy, where American is no longer the undisputed leader of the world in the economy, and we've got to be competitive with our tax rates. So it's really important to have low tax rates. This is why the Commission has done a really good job of acknowledging, sort of centrist consensus coming here, that low tax rates and a broad tax base is necessary for competitiveness and prosperity and economic growth. So I think that's good. So if you listened to the Commission yesterday, you had Democrats and business people like Anne Fudge saying lower the tax rates. We should not be debating raising tax rates. We should be lowering tax rates and figuring out how to accommodate this in a fiscal package. That is a very reasonable position, and so no, I don't think we should decouple these things. More importantly, spending is taxing. I mean why do we raise taxes? Because to pay for all the spending. Let's get the spending under control and borrowing is just taxing our kids. So let's get our spending under control, so that we can have low tax rates. So I would not decouple them. MS. FELDMAN: Francine. MONITOR BREAKFAST: (inaudible) Euro crisis in your opening remarks. One thing Alan Simpson talks about over and over again is it's not going to be a slippery slope, you know. The day the markets wake up, kaboom, it's over. My question is if even the bipartisan commission can't reach a compromise on this plan, what's going to win, compromise or crisis? CONGRESSMAN RYAN: So let me join that with Linda's original point. Even if they get 14 votes, which is still, I think, a possibility, what does that mean? I don't know what, if it means anything, because the original idea was a bill goes to the floor in a lame duck, you know. Reid brings it up and then if it passes, Pelosi brings it up. That's not going to happen, and that's not a sinister thing. I'm not blaming Democrats. It's a logistics things. You literally can't get a bill written and scored that fast. So even if you get 14, I don't know if this thing's going to move anyway. But that's not the point. The point is that plans are advancing, adult conversations are occurring and there are some really good ideas that this thing floated. So again, success has already been declared as far as I'm concerned. What's going to happen? If, you know, we have to offer ideas up too in the next session of Congress, about how to preempt a debt crisis. It's in everybody's interest to preempt a debt crisis. What my road map is all about is preempting a debt crisis and doing it on our own terms. Meaning with entitlements, if we act soon, you can grandfather people in in near-retirement. You can grandfather the grandparents, like we like to say, and avoid a European type of austerity, and you can keep tax rates low and focus on growth. We need to control spending and focus on growth. Economic growth, spending discipline to me is the best combination, and if we don't get a down payment on that, then watch the bond markets. I mean right now, we're the best thing out there bond-wise because it's all relative. Europe is --look at the yields, look at the spreads between the German bonds and everybody else in Europe. Look at the German bonds, look at the credit default swap markets. Those things are really sending a lot of alarm bells. I would argue that the current bailout package in Europe is just buying more time. It's not structurally fixing their problems. So this will come around to us sooner or later. I don't think it's a question of if but when, and my hope, going back to my earlier answer on the ABC's is hopefully the President will say, you know, this or that. I mean I'd love to get a deal with the President on Social Security. I mean I'd love to get a deal on something. He's probably not going to do health care with us, because we have just such different perspectives on that issue. That's the big one, and that's probably going to be a big 2012 issue. But I'd love to get something passed that says Okay, these Americans aren't crazy. Their political system isn't broken. They're actually doing something in the right direction of fiscal consolidation and debt crisis preemption, which I think then would give us, give the bond markets more confidence and buy us more time, and that's what we should be focusing on right now. MONITOR BREAKFAST: But how do you get the public to really get the problem and take the pain? CONGRESSMAN RYAN: Look, the public -- this isn't pain. Look, the pain is -- MONITOR BREAKFAST: There's no pain involved in fixing this problem? CONGRESSMAN RYAN: Not for people who are on these programs right now, if you do it now. MONITOR BREAKFAST: No I know, but down the road. CONGRESSMAN RYAN: So the point is austerity is what's going to happen if we keep procrastinating and that's pain. That's cutting benefits for current retirees, raising taxes on everybody now, slowing down the economy. That's what Europe's doing; that's what we will do if keep procrastinating. It's what we can prevent from having pt o happen if we act soon. So look. I've been, you know, Craig Gilbert, he knows my district really well. It's not a Republican district. It's a 50-50 -- it's literally, Charlie Cook rates it as the 218th district in the country, you know. Yeah, it was Les Aspin's seat, Barack Obama won it, you know. It's not, you know, Republican land, and I've got to tell you, people are ready for this. If you go and give people the straight talk, give them the truth, tell them what your ideas are, they'll cut you slack. People are ahead of the political class. I'm just convinced of this, on these issues, and they're ready to hear it. They're ready for an adult conversation, they're ready for some solutions. In fact, they're sick and tired of us not doing it. So I just don't think there's a problem with moving forward on these issues. I really don't. I mean maybe I'm -- you know, look at the election. Name me a new Republican who ran that didn't have entitlement ads run against them pretty much based on my road map. But you know, they all won. You know, Sean Duffy had two months of ads run against him on social security and all these entitlement reforms, and he won, one-handedly. So I'm basically saying is the third rail is not the third rail anymore. The political weaponization of entitlement reform is no longer as potent as it used to be, and the best evidence is this last election. MS. FELDMAN: Okay, Jill. MONITOR BREAKFAST: You said that some pieces of the plan are very good and you're going to move on them. Could you tell us what you're planning to -- CONGRESSMAN RYAN: Well, I think the tax direction is good, broaden the base, lower the rates is good. I think they did some good, and they put a lot of my things on budget reforms in there. (inaudible) proposed ways in which you construct discretionary caps and you have enforcement mechanisms behind them. Those are really good. I think the firewalls were done in probably the wrong way. That was more to get Democrats to vote for this than us. So budget process reforms that are in there are stuff that we helped write and give to the commission. Social Security, I don't like everything that's in there, but it was a serious plan and a good step in the right direction on how to make Social Security solvent. You know, I like personal accounts. I think they're the best thing, to give younger people a choice if they want to have them, and it makes for better benefits. That's not in here, of course, and raising the tax cap doesn't really do anything. I mean it doesn't buy you much solvency, just a few years, and it's a big marginal tax increase on self-employed people. So I'm not a big fan of that either. But having said that, they did a good job, generally speaking on Social Security. A good job on budget process reforms, and generally a good job on moving the tax debate in the right direction. A territorial system, a lower corporate rate, broad-based lower rates on individuals. That's all really good stuff. MS. FELDMAN: Morton? MONITOR BREAKFAST: I somehow missed the Rivlin-Ryan -- CONGRESSMAN RYAN: That's all right. Everybody else did too. MONITOR BREAKFAST: --replacement for health care. But so explain that a little bit. So secondly, suddenly the Republican party, it seems to me, has adopted the previous Democratic mantra of scaring old people over Medicare. Now how does that square with what you propose? CONGRESSMAN RYAN: I didn't do that. MONITOR BREAKFAST: No, you didn't do it, but your party has done it, and furthermore, old people are now your constituents, the Republican constituents. CONGRESSMAN RYAN: They were before the election too. MONITOR BREAKFAST: Okay, but (inaudible). So you say that you're going to voucherize Medicare. Will your party go along with that? CONGRESSMAN RYAN: So I don't know the answer to that. When I write a budget, I've got to 218 votes, you know. I don't know. I mean I honestly, I don't know. Give you your last point. First point. Here's what we said about Obamacare with respect to Medicare to begin with. They took $522 billion out of Medicare, not to make Medicare more solvent, and Rick Foster gave a nice appendix to his trustee's report to attest to that, but to use it as a piggy bank to pay for this other entitlement program. So they proverbially raided Medicare to pay for a new program. That's what we're protesting. Here's the problem. Republicans, you know, I was saying you're raiding it to pay for this new program, not making it more solvent. A lot of people just dropped that second half of the sentence and just said you're cutting it. That's where I think, like it speaks to the point you're making. They said they were cutting it, not to make it more solvent, because it's got an enormous -- Medicare's the biggest problem of them all, from a fiscal standpoint, and that's where the rhetoric fell short, I think. What Alice and I did, look Alice and I were in charge of -- we were the co-chairs of the Health Care Working Group of the Debt Commission, and so she and I spent a lot of time working together, talking together about how can we agree on what to do to fix this thing. We agreed that we should block grant Medicaid to the states, and give the governors, who are the laboratories of ideas and innovation in democracy, give the governors freedom to customize their Medicaid reforms to their Medicaid populations. We agreed on that, and that was Part 1 of Rivlin-Ryan. Part 2 was we agreed on premium support, which is you grant, in our particular plan, and it's a little different than the road map. We grandfather people on current Medicare 55 and above. So if you're 55 and above, meaning ten years away from retirement or in retirement, you stay in the current system exactly as it is. If you're 54 or below, we transition the system over towards the premium support model, which is what John Breaux and the Clinton Commission in 1999 produced -- MONITOR BREAKFAST: Is that the vouchers (inaudible) -- CONGRESSMAN RYAN: Well, and CBO calls them vouchers. Whatever you want to call them. It's a payment to an individual, and here's what we do. It's actually a defined benefit safety net with a defined contribution system on top, and it works similar to the federal employee health benefit program, like I have as a federal employee. That has proven to work pretty darn well. What you do is you get a payment and you get a list of plans that are Medicare-certified in the Medicare exchange, that can't deny you coverage in Medicare, that you could choose for your benefit. We do three things to that payment. We, if you're a low income person, we give more money in an account for you to cover all of your out of pocket costs. So we actually improve the safety net for health care for low income people. If you're sick or you're getting sick, we risk-adjust your payment upwards to reflect your deteriorating health, to make sure that your premiums are stabilized. If you're a wealthy person, you just don't get as much money. We copied the means testing formula that we already did on Part B. It starts at $160,000 of income for a couple, 80 for an individual, I believe, and then grows, you know, to inflation in the future. And so that's how the payment's adjusted. Doing that makes Medicare solvent. Rick Foster's run these numbers a million times for me. CBO's run these numbers. CBO scored this for us. We grew this at a rate different than we grew it in the road map. We grew it at GDP plus one, which is what the commissioners were shooting for. Here's the two ways of doing Medicare reform or just health care reform. Price control the thing to death, put a new formula or IPADS (ph) and commissions, and tell physicians what they can and cannot do, tell patients what they can and cannot have, and just tighten the screws, and grow it at GDP plus one. That doesn't work. We've been doing this for decades, price controlling, and it just doesn't work. It doesn't work because Congress undoes it later. The SGR is a perfect example of how we just keep undoing these things. We did it in 1997, which was a price control fix to Medicare, and we passed two bills subsequent to that, BBRA and BIPRA, which basically undid a lot of those things. It doesn't work, it's not sustainable, and it's bad for medicine and health care, and it ripples through the private market in very bad ways. And so what we believe is a system where, instead of running the money through the government and then bringing it down through a price control system, which is proven to fail, run the money through the individual, and give the individual more power. Give them power in the insurance markets, like the Medicare exchanges, and if they're lower income or sicker, give them even more power so that they can be held harmless. If they're a wealthy person, don't give them as much money because they have money to supplement their health care costs. Doing it that way dramatically lowers the cost for the program going outwards, according to whoever you look at, CBO or the trustees, and that's what -- MONITOR BREAKFAST: You're depending on the market to develop that? CONGRESSMAN RYAN: It's either the market does it, which we have proven in the small areas where we've tested it, which do work and I can go on and on, but I don't think you want me to. The market or the government price controlling and rationing. I would argue let's go with the market versus the price controlling and rationing scheme. MONITOR BREAKFAST: Can I have one follow-up? You just don't create markets in health care, because people who are sick don't know what to buy and you know, they don't know how to anticipate what they're going to get sick with, and it's all too complicated so somebody's got to arrange it for them. CONGRESSMAN RYAN: Under the current third party payment system, I would agree with that. Under the world that the health care experts understand today, I think it's exactly right. That's not the world we want to get to. Look, exchange is not a dirty word. It's a word that's been used in many different things. Tom Coburn and I put this bill out last year, in the Patient's Choice Act, which is also in the road map. That creates state-based exchanges to simplify these systems, simplify these markets, give people more freedom, more choices, and then robust high risk pools to cover those with pre-existing conditions. You and I have had that conversation. To me, that is the way to fix this market problem, so that it's simply to buy insurance. Look, right now an insurance company's incentive is get healthy people in your pool, make a good spread on your premiums, and then when they age into a category where they're sicker, dump them and then start all over again. We need to change the incentive structure for the insurance markets, so that they jibe with that of a consumer, and that's not what we've done, and that's what I think we should do and that's what we try to do in the Patient's Choice Act. Obamacare, look I -- we have to find a way. I don't mean to call it Obamacare and I don't' mean to be disrespectful by calling it that. We have to find -- we need a way, Medicare, Medicaid, I don't know what we call this thing. So whatever this new health care law is, goes in the complete opposite direction. It shuts down insurance competition. It shuts down consumer patient choice, and it corrals everybody into a government-run one-size-fits-all system, which I just don't think will work. MS. FELDMAN: John. MONITOR BREAKFAST: Congress, I had a question about the debt, but just as a preface to that, I wasn't sure this may be an ignorant question. It seemed like in the exchange between you and Mort, there was some possibility of including a voucherization of Medicare in the budget. Is that -- CONGRESSMAN RYAN: I don't know the answer to that. I don't. I mean we did premium support in the last year's Republican budget. I really wouldn't call it a voucher. I mean I know CBO uses that terminology. It's kind of misleading, because it makes you think like here's some money, go get them. Good luck. That's not what we're talking about. We're talking about an exchange for Medicare, exactly like I have as a federal employee. I get a book or I go online every year. I get about, I don't know, 12, 13 plans to choose from that have met OPM, Office of Personnel Management's criteria, regulated by OPM, and I pick the plan that meets my needs, and if I want something more, I pay more out of pocket. If I want something less, I do, I benefit. My employer, you, the taxpayer, you know, subsidizes my premium. That's what we're talking about for Medicare. So when he used the word voucher, to me it's a little misleading under the vision of what a voucher is in most people's minds. It's a payment on a defined contribution basis, with a defined benefit safety net underneath it. MONITOR BREAKFAST: Do you think that the President and the administration share that view in any way, or do you think that you and the administration have a similar view of the debt threat and its consequences? CONGRESSMAN RYAN: I don't know. They don't talk to us, so I don't know what they think. I've talked to the President and Tim Geithner since November, and that's the only person over there I've talked to. You know, I used to -- we knew Orszag pretty well because he was CBO. We knew Rahm because he served with us, and I was on Ways and Means with Rahm, and we talk to Larry every now and then, Summers But those guys are gone. So we don't talk, they don't talk to us. So I don't know. I don't know what they're thinking. MONITOR BREAKFAST: Are you trying to get some dialogue going? CONGRESSMAN RYAN: Yes, I'm trying to get dinner with Lou, and I think, I don't know. We're trying to find the time. I called, we called over there last week to see if we can get dinner, and get to know him a little bit. I'd like to get to know him like I knew Orszag, you know. I think it's helpful to know each other. But I don't know what they're thinking. I really don't. They don't really talk to us. Look. I mean I'm not saying it's a mean thing. They didn't need us, they didn't want us in the last session, so they didn't talk to us. We'll see what, you know, how it goes going forward. But as to your other point about the debt, that that is overblown, no way. Look. This thing, look at -- I could do a death by PowerPoint presentation if you want to, but look at the debt going forward. It is incredible. It is -- we've had debt before. We went to 109 percent of GDP with World War II. But that's okay, because we knew it was temporary for a war and that it was going to go back down. You can build up debt if you know and the markets know convincingly that it's a temporary thing. This isn't. We go from 62 percent of GDP this year to 800 percent of GDP by the end of the century. It is on a tear, and the problem is the interest on the debt. The interest is 200 billion right now. At the end of the budget window, the current budget we're in, it goes to a trillion, assuming we have these low interest rates. You know, I had CBO do some runs. I'm going to have them do some new ones, because it's a little older data. If rates go back to where they were in the 80's, which is a plausible scenario, that's another 5$.4 trillion right there. If they just go to the blue chip consensus, that's another 1.4 trillion, and interest payments. You've got to pay your interest on your debt. The interest will suck us down. That puts us in a trap. So that even if our economy starts growing, which then interest rates will gradually rise up obviously with economic growth, we might not be getting enough revenue in through growth to even service our interest, and we are trapped like Japan. So this thing could get out of control. That's why time is of the essence. MS. FELDMAN: I'm sorry, I don't know your name. MONITOR BREAKFAST: Do you support the zero option of eliminating tax expenditures? CONGRESSMAN RYAN: I would do it a little bit differently. So what I did in my road map is similar to the zero option. I gave the taxpayer the choice. You can have the current system with all of its bells and whistles. You've got ten years to make your mind up. So if you're deep in a mortgage or something like that, you can keep that, or you can flip over to a dramatically simplified, you know, postcard size tax return with two rates, with generous exemptions for families and individuals, and then I keep the health care credit, which I believe in over. So it's not totally dissimilar to what I've proposed, but I just think transition to tax systems is the big issue, and I've been doing this on Ways and Means for a long time. How do you get, how do you transition, and it's difficult to write a one-size-fits-all rule for everybody. So what I did in road map is we'll let people elect how to transition on their own terms and their own timing, if they choose to do so, and so it's in the same vein as the Zero Act. The other thing is I would have -- they raised the tax rates on capital, which I think is real dangerous. Very bad for economic growth, very bad for investments. We need an investment-led recovery, not a consumption-led recovery. So they should have applied the extra money to keeping the tax rates lower on capital, is what I would have done, if I was like amending the Zero Act or something like that. MS. FELDMAN: John Gizzie. MONITOR BREAKFAST: Thank you, Linda. The 15 cent per gallon increase on the gasoline tax, what is its status right now? CONGRESSMAN RYAN: Well, I think it was an option in the -- I think they floated it as an option to be considered later. Obviously, I don't think it's going to go anywhere in this Congress in the House. It was very rarely discussed actually. I don't think anybody, and I don't know if it really ever even came up in the Commission, to be candid with you, yeah. Because the way Erskine said it, it was like this is just an option we're putting out there for you all to consider later on. So I don't think it had a lot of discussion. I don't see it happening in this Congress. I know we can't talk about the Senate, but I don't see it happening in the House. MONITOR BREAKFAST: The other thing is that I thought about this when you mentioned Alice Rivlin. She was the first staff director -- CONGRESSMAN RYAN: Of CBO. MONITOR BREAKFAST: Right. CONGRESSMAN RYAN: Yes. MONITOR BREAKFAST: And also when the House, since the House Budget Committee was created in the 1970's and oversight over the budget was given a bigger hand (inaudible), the budget has caught up each time. Will you commit to being the first Budget Committee chairman to bring the size of the federal budget down? CONGRESSMAN RYAN: You mean nominally? MONITOR BREAKFAST: Yeah. CONGRESSMAN RYAN: I can't say that. I can't say that I would commit to that, because of interest payments and all these other things. Look, entitlement reform. Brian, you and I had this conversation. Entitlement reforms take time to kick in. Entitlements grow and they're going to grow. The question is how fast do they grow, and at what rate. So I can commit to that on discretionary, you bet. That's not an issue with budgeting. It's just you have to have the will to do it. But even if you have the will to do an entitlement reform, these things will continue to grow. They'll just grow at slower rates. MS. FELDMAN: Susan. MONITOR BREAKFAST: Congressman, I want to ask you a more philosophical question, which is we hear Republicans all the time talk about Ronald Reagan as an icon and as a model. But Reagan, of course, made all kinds of deals with Congressional Republicans, even on -- CONGRESSMAN RYAN: Democrats. MONITOR BREAKFAST: I mean Democrats, even on big, tough issues like Social Security. I wonder, do you think that President Reagan would be comfortable with the way that both Democrats and Republicans -- CONGRESSMAN RYAN: How am I supposed to say that? Am I supposed to channel Ronald Reagan now? (Laughter.) CONGRESSMAN RYAN: You know, what would the Gipper do? MONITOR BREAKFAST: But we -- CONGRESSMAN RYAN: Didn't he used to say Well, what did John Lane do? MONITOR BREAKFAST: You Republicans talk all the time about they're acting -- CONGRESSMAN RYAN: I can't, I don't, it's not my place to say that. So compromise is not an ugly word, let me say that. As far as I'm concerned, compromise is fine, necessary and proper, so long as you're not compromising your principles. So the way I see it, is if you're getting an inch in the right direction, take the inch, even though you can't get the mile. So this is a different kind of time in this country, philosophically speaking. It's even different than when Ronald Reagan came in, and my mentor is Jack Kemp, who was one of the sort of architects of the Reagan revolution. You know, he and Steiger and those guys in `78, you know, really sort of paved the way for the Reagan revolution, from an intellectual and policy standpoint. I kind of see that's where House Republicans are right now. But the time is different. You had stagflation then. You had all these economic, you know, misery index issues, but you didn't have this fiscal crisis. You didn't have these entitlements blowing up. This is different, and so this is a time where I think, instead of muddling the differences philosophically speaking between the two parties, we need to accentuate them. Not in a mean and sinister way, but in a constructive way, to give the country a real clear choice. We will be choosing what kind of future we want to have for the rest of the century in the very near future in this country, probably in 2012. So I believe we owe it to the country to give them an alternative choice than the path that we're on right now, and I really sincerely believe, and I'll back it up all afternoon long if you want me to, we're on a path to being a social democracy, a cradle to grave European type welfare state, because of the policies that have been pursued, that are being pursued, and just the tipping point we have on debt crisis and more and more people becoming more dependent upon the government than upon themselves. We owe the country an alternative, based upon first principles, the American idea, which to me is a prosperous opportunity society built on top of a solid safety net. This is not a Hobbesian choice. This is not, you know, which I think the other side tries to portray. We're just going to -- the Republicans just want to feed you to the wolves and leave you on your own, and there's no security whatsoever in your life, or take our entire security doctrine. No, no, no. That's not the choice. The choice in my mind that we have to offer the country in 2012 is do you want the opportunity in society with the safety net, that catches people from slipping through the cracks, people who can't help themselves, people who are down on their luck, help them get up and growing, but with a limited government free enterprise society, where the goal of government is promote equal opportunity, versus a doctrine where the goal of government is equalize results of people's lives. Equal outcome is not equal opportunity, and more of an entrenched managed decline, debt-laden, you know, welfare state. So we owe that to the country, and that does mean not necessarily blurring the differences, but accentuating these differences. MONITOR BREAKFAST: But Jack Kemp for instance -- CONGRESSMAN RYAN: I feel more comfortable channeling Jack. MONITOR BREAKFAST: We're channeling Jack Kemp, also not here to speak for himself. Would he look at what's happening now and say this is good, because both sides are accentuating the differences, or would he say -- CONGRESSMAN RYAN: I think he would. MONITOR BREAKFAST: He would not say this kind of sharp partisanship is just not -- CONGRESSMAN RYAN: Well, Jack taught me, and I hope I never learn, forget this lesson is, engage dramatically -- engage energetically in the battle of ideas, but don't impugn another person's character or motive. Go after the ideas, and not after the character. That's the kind of civility we need to have. That doesn't mean that we shouldn't have spirited debate on ideas. We should just stop ripping each other apart and doing character assassination. I really, really try to conduct myself that way. MS. FELDMAN: John Dickerson. MONITOR BREAKFAST: Congressman, along the lines of what Susan was talking about, we were having a conversation about bipartisanship and what that means. You said the White House doesn't talk to you. The President admitted as much in his meeting with GOP leaders this week. He said I should have reached out or I'm going to try to. Is there nothing that the Republican leadership did over the last almost two years that contributed to this condition of gridlock bipartisan unhappiness and unpleasantness? Is there nothing? Is it all the President's -- CONGRESSMAN RYAN: No, it all them. We're great. We've got halos over our heads. How do you want me to answer that? MONITOR BREAKFAST: Truthfully. CONGRESSMAN RYAN: That was a good comeback. I think they made a decision, and I don't blame them for making this decision. I think the President and his party leaders, you know, believe in their philosophy, and then I think they represent the progressivist liberal wing of the party, and they feel that it's the right thing to do. So they had to make a decision. Do we work with these Republicans and meet in the middle, but we don't have to because we've got all the votes. So why don't we do what we believe we should do and do it, and that's what they decided to do. Look, Tom and I, Coburn and I, we put the first health care reform bill out there that was introduced last session. We sent it to the President. He called them. He has a better relationship than I do. We sent them letters, we called people, you know. I was talking to Daschle and then he wasn't the secretary. You know, we kept really trying to say let's do this, and just a thud. So they made a choice to go it on their own, and then that choice was clear to us, that's when we had to fight for our point of view, and that's when the differences got really sharp. MONITOR BREAKFAST: So that's what you're saying, it is basically all their fault? CONGRESSMAN RYAN: I think they made a choice, because they had the power and the majority to do it on their own, and yeah. I think once they made that choice, then the rest was what you know. MONITOR BREAKFAST: A quick follow-up, which is you mentioned that compromise isn't a dirty word. Yesterday in the Commission meeting, a lot of people said you know, I don't like a lot of stuff that's in there, but I'm going to vote for it anyway, which is kind of novel idea in the way things are discussed now in Washington. When you see a final deal here maybe on getting at this deficit problem, will it be one in which Republicans have to accept some Democratic ideas that you don't like? It's part of putting the bargain together. That's not a sign of capitulation. CONGRESSMAN RYAN: No. No one party is going to fix this debt problem. It's just not going to happen. That's why Alice and I labored together to try and do something, you know, a Democrat and a Republican, and she's a pretty prominent well-known Democrat, and she and I don't agree on a lot of stuff. I mean we agree on many things and it's not everything. You know, she's more of Keynesian and I'm more of a classical economics guy. So yes, of course. This fix to our debt, whenever it happens, will have to be bipartisan, no matter what, I believe. I would like to shift the emphasis of the debate and the policies more toward a center right coalition than a center left coalition. MS. FELDMAN: Dale. MONITOR BREAKFAST: How do you deal with two of the issues that are likely to come up this week, one, a stand-alone vote in the House to extend the tax cut, but only for the middle class? CONGRESSMAN RYAN: Right. I think that's today. MONITOR BREAKFAST: Exactly. How do Republicans not end up looking like they're willing to sacrifice the middle class for the sake of people with high incomes? CONGRESSMAN RYAN: I think the reason that vote's coming is because of that very question. It's to put us in a box. MONITOR BREAKFAST: Right. So tell me what it's like inside the box. CONGRESSMAN RYAN: I've been in the box for so long, it doesn't really matter anymore. MONITOR BREAKFAST: How would you explain to someone I just voted against extending the tax. CONGRESSMAN RYAN: I just voted against raising taxes on small businesses. I just voted against a tax increase that's going to slow down our economy and cost us jobs. CBO is telling us it could cost us 1.2 million jobs next year. I voted against partisanship; I voted against slowing -- I fundamentally believe if you allow those tax rates to go up, you're going to slow down the economy. You're going to cost jobs. The revenue, the $700 billion, that's not going to materialize like it's being projected. There's no way it's going to materialize. So that's what I'm going to say. MONITOR BREAKFAST: Related question. How do you make a case to people that it's okay not to the 700 billion to raise taxes, but you need an offset for say 50 billion to extend unemployment insurance, the social safety net? CONGRESSMAN RYAN: So taxes are where they are. We're not talking about cutting taxes. You've got to remember, let's get the nomenclature right here. We're not talking about cutting taxes. We're talking about keeping them where they are. So if your mind is on the growth of government side of the coin, then you think of this as the government's money, and we're spending it back to people. I see it the reverse of that. This people's money. These are the current tax rates. So we shouldn't have to be paying for the current tax status. UI is a spending program. UI is something that I would have -- I voted for the extension when we had an offset. Do you know how much money we spent lately? There's plenty of room to cut spending to pay for UI. Base domestic discretionary spending went up 24 percent over the last two years. You throw stimulus on top of it, it's an 84 percent increase. There's a lot of money to be cut to pay for more, higher priority spending and I would argue that's higher priority spending. MONITOR BREAKFAST: Does your budget projection assume that cuts are extended or that they expire? CONGRESSMAN RYAN: What baseline are you looking at? I mean so the President's does not. The President assumes middle class goes and upper -- middle class stays the same and the upper 250 and above expires. That's the President's baseline assumes. MS. FELDMAN: Okay. We've got about ten minutes, so I want to get everybody else in. I'm sorry, I don't know your name. MONITOR BREAKFAST: I'm Susan Davis, the National Journal. I'm going to try and switch topics a little bit. When you started, you talked about 2010 and what the lesson was, and you said one of the things is that it was not an endorsement of the Republican Party but of -- CONGRESSMAN RYAN: Yeah. MONITOR BREAKFAST: So my question is more politically what do you think is happening in Wisconsin? Is this more of a probationary thing or do you think the political winds of the state are fundamentally shifting, and maybe projecting that a little forward, of what you think that means for the 2012 Presidential race? CONGRESSMAN RYAN: That's a really good question. I would like to say it's shifted for good, but that would be -- I'd be leaning too far forward to say that. I spent, you know, a lot of time campaigning in Wisconsin. I spent all of September and October and November pretty much, you know, traveling Wisconsin. I spent a lot of time with Sean Duffy up there in the Northwest. What I saw happening in Wisconsin, and my district, you know, because it's been redistricted now, so I've had two different kind of districts. It went for -- it went for Dukakis, Clinton, Gore and Obama. According to the AFL-CIO, I have the eighth most unionized district in the country. So it's not as if I've got, you know, Red America. So what I see happening is people are beginning to, the Reagan Democrats are becoming Reagan Democrats again. They're beginning to see what's happening and they're getting disgusted by it, and it's the financial stuff, it's the fiscal issues, it's the debt, the spending, the taxes. They just think it's untethered, it's become unhinged and they're really upset about it. They think government has gone so out of control that they don't recognize it and they don't have faith in it. That's happening, whether it's my neighbor who's a buddy of mine who lost his job at the Janesville GM plant, or you know, the small business guy who's struggling to keep his business, his doors open. We needed four seats to win the assembly in Wisconsin and we got 14. We needed two seats to get the State Senate in Wisconsin and we got four. We won the governor's race by ten points, and we beat Russ by five, what was it, five points? MONITOR BREAKFAST: It was five. CONGRESSMAN RYAN: Five points, with a guy who none of us knew the guy before May. So what happened was that agenda was really repudiated, and everybody running for the assembly, the senate, the U.S. Senate, the Congress and governor, all said the same thing, all the same message. Economic liberty, fiscal conservatism, get the fiscal house in order. That is why we had a -- I think Wisconsin probably did -- you know this stuff. We grew the most from left to right of any state in the country, did we not? MONITOR BREAKFAST: In terms of the (inaudible). CONGRESSMAN RYAN: Yeah, so and Craig knows this stuff better than anybody. So Ohio was pretty strong too, but Wisconsin, you know, we were bluer. Obama won Wisconsin by 13 points. So just two years ago. So it flipped big time, and the reason it flipped is because the people said okay, that's not what I want. So we had this rich tradition in Wisconsin of progressivism, pretty much came from the Germans to Madison and then out to the rest of the country. I grew up right around Madison. I spent a lot of my life in Madison, and so those ideas, conservatism and progressivism, or classical liberalism versus progressivism, have been paying off of each other in Wisconsin for a long time. It's a debate that matured, and I think it's a debate where that other point of view, the progressive point of view, has been sort of exposed as just not working, not credible, not feasible. Now obviously that's my opinion. Progressives are going to hate that, the fact that I said that. But I think just from spending a lot of time talking to Wisconsinites, they say this stuff doesn't work, and I'm shutting it down, and that's basically what they did when they voted. MS. FELDMAN: Matt. MONITOR BREAKFAST: The first is what do you think the chances are right now of the current tax rates being extended for however long, before the end of the year? The second is when Congress has to vote to raise the debt ceiling next year, how do you plan to vote and -- CONGRESSMAN RYAN: How do I plan to vote? No, we're not going to raise the debt ceiling. We're going to default. (Laughter.) CONGRESSMAN RYAN: Dammit. Yes. That was a joke, that was a joke. Yeah, right. I think what's going on today is just political theater. Political theater, they still run the place. They're trying to give their members something that they want and put Republicans in a box. It's all for show, it's not going to go anywhere, and I'd like to think we're going to extend the tax rates for some period of time, of which I don't know, and not decouple them. Look, if they decouple and they let these tax -- you know what's going to, the market? The market's expecting these things to be extended. Do you know what the market would do and small businesses would do? It would be very ugly. I mean even a Keynesian, for different reasons, comes to the same conclusion. Ask Zandi, ask Orszag, don't raise these tax rates. So the debt ceiling, the question ought to be what do we do between now and then to get ourselves going in the right direction, so that when this -- if you're worried about it right now, it's too late. It's going to be penetrated, it's going to hit, you know, somewhere in the spring, probably May. Who knows? Treasury can do some things to kind of move it along or delay it. But the question is what do we do, what do we get for it? What do we get in exchange for raising it, and what kind of fiscal controls can we put in place? MS. FELDMAN: Jackie. MONITOR BREAKFAST: Are you going to, as a House Budget Committee chairman now, incorporate the road map into your first budget resolution, and if not, when? When? CONGRESSMAN RYAN: I don't know the answer to that, Jackie. I mean I've got to get consensus. I don't even know who's coming on the Budget Committee yes. I've got to get consensus. We have about 85 new people coming. I haven't met half of them. So you know, we have to start talking to each other. We have to start going through the budget. The last budget, the last three budgets I brought to the floor had elements of the road map in it. Premium support for Medicare. We block granted Medicaid, which is a little different than what Coburn and I had done on Medicaid, but it's the same kind of concept. So we have brought elements of it in our budgets in the past. You know, the tax reform, you know, that's really more of a Dave Camp call, what the tax policy looks like that we go forward with. So you know, I've got to work with these chairmen, with Commerce, with Ways and Means, with the Aggies, with the appropriators, to get consensus on how to write a budget going forward. So I just don't know the answer to your question, because there are too many people I have to work with and get consensus with. When I wrote the road map, I wrote it to get the consensus of one person, me, not 217 other people. Now I've got to get the consensus of 217 other people. So I just don't know the answer to your question. I know what I want to do, but I don't know what I can do. MONITOR BREAKFAST: Are they going to be any more likely to -- CONGRESSMAN RYAN: I believe so. MONITOR BREAKFAST: --now that you are in power and you're -- CONGRESSMAN RYAN: I believe so. The reason I believe so, look, when I ran in `98, I ran on personal accounts. Toomey and DeMint did as well. The three of us were running for the House then. We got just pasted with ads and mailers and push calls for like months on this stuff, and it didn't work. So we survived that. We went through the baptism by fire, and then when we got in office, we said look, these things aren't toxic. Let's go forward. So my experience, when they try to turn entitlement reform into apolitical weapon to use against you in a campaign and it fails, you're not as intimidated by the issue. Well, we just had 63 -- what did we have, 63 is it now? I mean -- yeah, we're at 63 now. 63 new people in tough races. We have, you know, retiring we had 85, 86. They just went through all that. You know, I watched the ads against Duffy, against all these people across America. I was talking to Nan yesterday up in that New York seat. She had all this stuff run against her. She campaigned on the road map and she won handedly. So look at Rubio in Florida, you know. Endorsed it, campaigned on it, won handedly. So all this stuff was thrown at these people, and it didn't work. So I believe that there -- I believe that the nerve is stronger than it ever was before. Say that again? MONITOR BREAKFAST: Where will you find $100 billion for a single fiscal year in discretionary savings? CONGRESSMAN RYAN: I'd get it from everywhere. But if you want to look at where, you know. My job is to set the caps and let the appropriators make that decision. I try not to do other people's jobs. But if you want to look at where we're probably going to go, just go back to pre-binge, pre-crisis spending levels, and that's probably a good starting point, you know, pre-`08 discretionary levels, and that's probably a pretty good starting point. But then the appropriators, I'm sure, are going to make changes from that base, to reflect priorities, and I can't tell you exactly what we're going to do. MS. FELDMAN: Okay. We're going to squeeze in one more question. Dana Milbank. MONITOR BREAKFAST: but then, even though you like all these things about the Debt Commission, you're going to vote against it. Why -- CONGRESSMAN RYAN: Yes, because I think it goes backwards. MONITOR BREAKFAST: You really think this would be a negative? CONGRESSMAN RYAN: I do. MONITOR BREAKFAST: Do you think you can possibly get a better deal in the next two years? CONGRESSMAN RYAN: Well, I don't know about that. MONITOR BREAKFAST: Why not start with that and build on it? CONGRESSMAN RYAN: Because I think it makes health care dramatically worse. And look, I'm trying to be guarded in my comments, because I really respect what Erskine and Alan have done. They should be commended. But they didn't deal with health care. The GAO, in 2009, told us our unfunded liabilities were 62.9 trillion. Then a year later, they told us it was 76.4 trillion. Two weeks ago, they said no, it's 88.6 trillion. 5.3 trillion of that is Social Security. The rest are health care programs, federal health care entitlements. You cannot fix this problem without taking on health care. This exacerbates the health care problem. It doesn't even take a step in the right direction. It takes many steps in the wrong direction, from my perspective. So I think it makes it worse. I think it accelerates and entrenches the Obamacare system, which to me is a huge step in the wrong direction. MONITOR BREAKFAST: So it will make the whole budget thing worse? CONGRESSMAN RYAN: I think so. I think in time it will make it worse. What this does is it takes a few steps forward, on Social Security and taxes and discretionary, but it takes many steps backwards in health care, and health care's the big thing. So that's the point I'm trying to make. MONITOR BREAKFAST: Do you know how Inserling (ph) and Camp are going to vote? CONGRESSMAN RYAN: I can't speak for those guys. MONITOR BREAKFAST: You can't channel them? CONGRESSMAN RYAN: No. They're living, yeah. MS. FELDMAN: All right. We're going to have to end. (Whereupon, the breakfast was concluded.)