TOPICS > Politics

Rep. Ryan on Proposed Cuts: ‘Our Budget Literally Pays Off the Debt’

April 5, 2011 at 6:47 PM EDT
President Obama and Republican lawmakers failed to break their budget impasse Tuesday, hastening the threat of a government shutdown. Judy Woodruff talks to House Budget Committee Chairman Paul Ryan, who unveiled a plan calling for deep cuts and dramatic changes in federal spending on social programs.
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JUDY WOODRUFF: I sat down with House Budget Committee Chairman Paul Ryan this afternoon in his office on Capitol Hill.

Rep. Paul Ryan, chairman of the House Budget Committee, thank you very much for talking with us.

REP. PAUL RYAN, R-Wis.: It’s great to be with you, Judy. Thank you for having me.

JUDY WOODRUFF: You say your plan would cut more than $6 trillion from the Obama spending plan over the next 10 years. So the question I have is, what is it that Americans won’t get under the Paul Ryan plan that they would have gotten under the Obama plan? What do you eliminate?

REP. PAUL RYAN: Wow. Where do I begin? We go after lots of waste and duplication. We take lots of the recommendations from the president’s fiscal commission, which he disavowed, which we embraced. The General Accountability Office told us about hundreds of different programs that are duplicative. We’ve proposed reforms in many, many areas.

We propose to reduce the federal workforce by 10 percent over three years through attrition. We propose to reform farm programs. We propose to get rid of corporate welfare, a bailout fund in Dodd-Frank, a lot of the corporate welfare in the energy sector. We propose to move Fannie Mae and Freddie Mac off the taxpayers’ books. We also propose to cut discretionary spending. We get $78 billion out of the Pentagon. We also propose structural or entitlement reforms that are necessary to bringing solvency to our entitlement programs so that they are safe and secure for future generations.

So the president gave us a plan that spends so much more money. He doubled the debt by the end of his first term. And he proposed to triple the debt by the end of this budget. And what we’re offering is a different direction. In our plan, our budget literally pays off the debt.

JUDY WOODRUFF: One of the main things you do, as you just suggested, has to do with Medicare. You essentially end Medicare as we know it and you replace it with a system of subsidies to private insurers. Why is that better for seniors?

REP. PAUL RYAN: Yeah, I wouldn’t say it ends Medicare as we know it. Private insurers are already in Medicare. Medicare Advantage is nothing different than what I’m talking about, which is about 20 percent of Medicare beneficiaries get comprehensive private plans.

JUDY WOODRUFF: That’s one part of it.

REP. PAUL RYAN: Medigap is private plans. The Part D benefit is private plans. So what we’re doing is we’re taking a look at the lessons that have worked. The prescription drug benefit, for example, that came in 40 percent below cost projections. We’re copying that kind of a model.

So specifically, what we’re saying is, if you’re 55 and above, no changes whatsoever in Medicare. But if you’re like me, if you’re 54 and below, Medicare is going insolvent by the end of the decade. It’s going bankrupt. And it’s leading our country toward bankruptcy.

So future seniors, 54 and below, will get a list of Medicare-approved plans kind of like how it works today but for all of Medicare. And it’s a system that works identical to the one members of Congress and federal employees have. They choose among the Medicare plans for their business. And that choice and competition actually helps bring down costs and expand availability. And the actuaries at Medicare tell us that doing it this way brings Medicare into solvency and pays off the debt.

JUDY WOODRUFF: So instead of making payments directly to hospitals and doctors, the payments would go to the private insurer, insurance plans.

REP. PAUL RYAN: Exactly. The plans. That’s right.

JUDY WOODRUFF: In effect, moving toward privatization of Medicare.

REP. PAUL RYAN: No, I wouldn’t say that. If that’s the definition of privatization, then Medicare is already privatized, because already Medicare works through private companies to deliver services to Medicare beneficiaries. So if you’re calling that privatization, then it’s already privatized. If you’re suggesting that the federal employee health benefit system is a privatized system, then this is – we’re just basically copying the federal employee system.

The key is this -

JUDY WOODRUFF: That’s a plan that doesn’t have a cap on payments.

REP. PAUL RYAN: Sure, it does. No, no, the federal employee benefit system only pays so much. And then the federal employee pays the rest. They pay about – they pay about 75 percent of our cost and then federal employees pay about 25 percent of the cost. It works like that.

See, the key is this, Judy. We want to have choice and competition. And having these insurers compete against each other for the Medicare beneficiaries business. That gets savings. That roots out the billions of waste that we have in Medicare. The current Medicare structure is a structure that’s going bankrupt. It’s a source of health inflation. It involves billions of dollars of waste in Medicare and we can go after that kind of waste, and we can stretch our healthcare dollar farther by doing these kinds of Medicare reforms, which basically says to younger people, Medicare will work like the plan that I have, that congressmen and other federal employees have. That’s not a privatized system.

JUDY WOODRUFF: Let me ask you about Medicaid. You would turn over to the states more of the control and the costs for health care, people who are poor, who have disabilities – it’d be a lump-sum system. But the total amount of money would be less. So why is that better?

REP. PAUL RYAN: Yeah, so here’s the problem with Medicaid: It is a one-size-fits-all federally run program that is administered by the states. We have dozens of letters from governors saying give me the freedom to customize Medicaid to meet my states’ particular needs and problems. We’re telling the states how they run this program. And the program is not being run very well. It too is going bankrupt, putting pressure on state budgets. It’s growing at an unsustainable rate.

So what we’re doing is we’re growing Medicaid at a slower pace. Medicare and Medicaid grow every single year under this budget. There is more money next year than the previous year. The key is this: We’re giving the states the ability to free up reforms so they can customize their Medicaid to fit their population.

JUDY WOODRUFF: But is the ultimate goal fewer people on Medicaid?

REP. PAUL RYAN:    Well, hopefully, we have more jobs and more prosperity so people aren’t on Medicaid. Of course, we want less people on Medicaid because that means people are making more money and they’re having better lives and they’re having more income. This budget also has been scored by outside economists as increasing disposable income, increasing jobs, lowering unemployment, bringing more prosperity to America.

JUDY WOODRUFF: But in the sense that there’s less money going to Medicaid.

REP. PAUL RYAN: So this grows Medicaid -

JUDY WOODRUFF: People – these are the most vulnerable of our population – the poor, the disabled. Where else do they turn?

REP. PAUL RYAN: Right, so the key is to fix our social safety nets. What we’re trying to do here is couple Medicaid reforms with food-stamp reforms, housing-assistance reforms, education reforms or job training. We’re trying to couple these things by sending them back to the states in block grants, so states can combine these dollars to reform the tattered social safety net.

The problem we have, Judy, is the social safety net is tearing apart by the seams and we need to modernize the safety net for the 21st century, because these programs haven’t really been reformed since the 1960s.

JUDY WOODRUFF: Let me ask you two other quick questions. Revenues – even some people who like what you’re doing with regard to cuts – like Alice Rivlin, like some Republican senators who have said – who compliment what you’re doing – their view is that you can’t just go after entitlements. You also need to deal with revenues. And they’re saying you’re not doing that in the essential way that one needs to.

REP. PAUL RYAN: Sure. And I think that’s probably an accurate description. I don’t think raising taxes is a good idea in this economy. We need to have economic growth and job creation. Raising taxes on businesses at a time when they’re struggling to compete in the international economy doesn’t work.

The other problem, I’d say, is this: We don’t have a problem with these deficits and debt because people don’t pay enough taxes. The problem with our deficit and debt is because Washington spends far too much money. We’re spending all this money we don’t have. And it’s that spending that is the core root cause of our problem. And so we want to address the root cause of our problem – spending. And then, we want to reform the tax code so that it raises the same amount of revenue it does today but does it in a far more efficient way to get economic growth and job creation growing.

JUDY WOODRUFF: And very quickly, to the criticism from Democrats who say, yes, you’re addressing the deficit. But you’re doing it by letting the wealthiest Americans keep their tax cuts. But you’re balancing the budgets on the backs of the poor and the most vulnerable.

REP. PAUL RYAN: We’re getting rid of corporate welfare. We’re means-testing programs so we don’t subsidize wealthy people as much. And we are reforming the tax code to get growth. We’ve got to have spending cuts, spending reforms and economic growth and job creation. That’s the key and that’s what we’re achieving.

To Democrats, I’d say, please bring us a budget and let’s see what you have to offer. They haven’t done that yet.

JUDY WOODRUFF: And finally, you are asking for trillions of dollars in cuts. Today, President Obama, Speaker Boehner met just to talk about tens of billions of cuts, a disagreement over cuts in the current-year budget much less than what you’re talking about.

REP. PAUL RYAN: Yes, for sure.

JUDY WOODRUFF: Is that a fight that’s worth shutting the government down?

REP. PAUL RYAN: Well, look, we’re not trying – we don’t want to shut the government down. We’ve passed – we will have passed three bills by the end of this week to prevent the government from shutting down. But we do have to get a handle on spending. So we’re trying to get some spending reductions.

We’re talking about shaving 2 to 4 percent off this year’s deficit. The spending cuts we are talking about would bring our deficit from 1.6 trillion to 1.54 trillion dollars. Now, come on, these are not deep spending cuts. And so the question I have is, why hasn’t the Senate passed a bill to prevent a government shutdown? The House has three times now.

JUDY WOODRUFF: Rep. Paul Ryan, thanks for talking with us.

REP. PAUL RYAN: Thank you, Judy.