Paul Ryan on the need to control spending and create jobs VIDEO TEXT

Mika Brzezinski: Joining us now from Capitol Hill Paul, Republican Congressman from Wisconsin and Chairman of the House Budget Committee, Representative Paul Ryan, who we like very much.

Joe Scarborough: He has made tough choices. You cannot say Paul Ryan has not shown courage.

Mika Brzezinski: He has shown courage.

Congressman Ryan: The feeling is mutual.

Mika Brzezinski: Paul, are there no tax modifications that you could sell to your base for the sake of your ultimate goal and the country—and that is to save trillions of dollars and avoid a default?

Congressman Ryan: Mika, take a look at our budget, and I think you've read our budget, we've proposed a deal. We say, let's go after all these loopholes to lower tax rates to clean up our tax code.

Look GE made a lot of money, but paid no taxes. UPS, another big company, paid a 34 percent tax rate while their competitors overseas paid something like 24 percent. Something's wrong with our tax system. It's making us uncompetitive. The Republican budget says, clear out all these loopholes, to lower rates, to provide for economic growth. We do agree with loophole closing. We don't want to make it a situation where it's used not to cut spending or to take pressure off spending cuts, but to fix our tax code to grow the economy.

You've got to deal with spending; that's the big issue Mika. Putting taxes aside, if we don't start getting spending under control, we will have a debt crisis. We see what happens with those things by looking at what's going on in Europe. We don't want those kinds of problems here. Spending is the problem and that's what we want to keep focused on.

Mika Brzezinski: Okay, that sounds reasonable.

Joe Scarborough: Very reasonable.

Mika Brzezinski: Now what about some of those tax loopholes being closed and other modifications to the tax code to raise money to put against the debt? Would that be okay?

Congressman Ryan: Well that's what I was just talking about. See the thing is, we believe tax reform is a critical ingredient to economic growth and job creation and we don't want to have deficit increasing tax reform. We don't want to do tax reform that raises the deficit, and so in order to do tax reform without increasing the deficit you need to use these loophole closers to finance tax reform because that's critical for job creation. That means we've got to focus on the spending side of the ledger to deal with cutting spending and getting the deficit down.

You see the ingredient we subscribe to, meaning the economic doctrine, is economic growth and spending controls. Those are the two things you want to get this fiscal situation under control because with economic growth people go from collecting unemployment to working and paying taxes, revenues go up, and you cut spending to get spending down. That's what we're trying to do.

Mika Brzezinski: I know you haven't seen a budget, so I don't want to hear there's no budget, they haven't put one on the table. Try another answer without using those words. Does it appear that from what the President is saying that he is willing to give on some major issues that are very challenging when it comes to his base and that deal with some of the things that you're talking about?

Congressman Ryan: I think you're talking about the "grand bargain" or such as it existed. And he did put some Medicare, Social Security, and Medicaid issues on the table. The numbers that we're thrown around, I'm not so sure they added quite up. I think it was more of a, two dollars for spending cuts for one dollar of tax increase, closer to one-to-one perhaps, but it never got to three-to-one as far as I understand it.

We never saw a paper from the White House on this by the way. But the point is, the kinds of things they were talking about in entitlements were not their structural reforms that actually fix these problems and make them permanently solvent and that get our debt under control. They do take money from those programs and they buy you temporary relief. They would buy you a few years. They weren't the kinds of structural reforms that actually save Medicare, make Medicaid solvent, prevent the bankruptcy of Social Security. They weren't the real structural reforms. They were kind of the nickel-and-dime stuff that saves money, but don't fix the problem.

Joe Scarborough: Paul, as you know I've been a big fan of yours, not because of what you've done when the Democrats were in power, but because of what you've done when the Republicans were in power. In fact you'll remember I wrote about you I think in about 2003 or 2004 in a book, and you've always made the tough decisions. You've always faced the reality of this crisis, which gets worse by the year.

But you do understand because of the district that you come from—a swing district that the Democrats usually win in Presidential elections—you've got a Democratic President, you've got a Democratic Senate, and if you're going to get a compromise that works. I'd love to get to a $4 trillion number—you may not be able to get rid of some of the loopholes while lowering the rates.

Is it a possibility—we're not asking you to negotiate here—is it in the realm of possibility that in exchange for Medicare, Medicaid, Social Security cuts that some of the Republican Conference in the House would say 'okay listen, we don't like it, but we're realistic. We' will get rid of the loopholes and keep the rates where they are—don't raise them, but we're not going to be able to lower them'. Is that a possible compromise?

Congressman Ryan: I don't see it happening Joe, only because the kinds of entitlement reforms that were offered were not real, fundamental entitlement reforms. Some of them were fairly structural; most of them were cutting providers and cutting benefits here and there. They weren't the kinds of structural reforms that actually fix our problem, like we proposed in our budget.

We want to permanently save Medicare and make it solvent, we want to put Medicaid on a sustainable footing so we pay off its unfunded liabilities—we have about $100 trillion of unfunded liabilities. We want to put in place a plan that pretty much takes care of that, so we can calm down the credit markets and never have a debt crisis.

The kinds of Medicare, Medicaid, and Social Security cuts and reforms that the President was being willing to offer are not the kinds of things that would have ultimately prevented a debt crisis. If we're in the area of talking about what's necessary to actually permanently fix these problems, preempt a debt crisis, and get this economy going then, yeah I want to negotiate on that. But those were not the kinds of reforms that we were being presented with.

All I saw coming from this "grand bargain," from my own personal perspective, were tax increases ultimately that would have hurt job creation and the economy, and not the kinds of structural reforms that would have fixed this problem and prevented a debt crisis. It would have bought us a couple of years, but it wouldn't have saved a generation.

John Heilemann: Congressman just to be clear, the reason you guys never saw paper on that stuff from the President was because you guys shut off conversation before there was a chance.

Congressman Ryan: I wasn't in the room. I wasn't a part of this conversation so I can't tell you.

John Heilemann: But your Conference made it clear when the President said that part of the "grand bargain" from his point of view had to be the repealing of the Bush tax cuts for upper income earners after 2012 and into 2013. That was just a no-go for you guys. That was the issue that made it impossible to have any other conversations on this.

Congressman Ryan: Yes, because here's why: I'm not sure who asked me that question, but we don't think raising tax rates in 2013 is helping the economy today. Not only is the actual rate going to 39.6 percent, when you take all the other stuff that were in Obamacare and everything else, the effective top marginal tax rate goes to 44.8 percent.

Here's the problem: 54 percent of workers in America get their jobs from these kinds of businesses that file as individuals, subchapter S corporations, partnerships. One-in-four people in America get their jobs from an S corporation. We are raising their top tax rate to 44.8 percent in 2013.

Their competitors aren't taxed like that. In Wisconsin we compete against Canadians, they're getting taxed at 16 percent. We're going to raise the taxes on our businesses, on the job creators to almost 45 percent? You throw the Wisconsin income tax rate on top of that and we're taxing them more than 50 percent.

We see it as a job killer and more importantly, yeah these taxes hit in 2013, they are going to hurt jobs today because businesses look forward—they're forward looking—and when they see this massive tax increase coming, they're not going to hire today, and so we think it's a job killer.

John Heilemann: I understand all of that Congressman, but the bottom-line is that because any kind of a substantial bargain is now off the table, the likeliest outcome we're now looking at is something like the McConnell plan, where we're going to have a debt-ceiling increase with no big changes. The changes that are being proposed, although they don't go as far as you would like to go, they're still much bigger than what we're going to get now—which is nothing—and at the end of 2012 the Bush tax cuts are going to expire anyway, and that's an argument that you guys may lose politically.

Don't you think it's kind of a mistake to not have gotten what you could get now, rather than ending up where we're going to end up where you guys could get a lot less. It just doesn't seem like politically this was a smart play from the Republican point of view.

Congressman Ryan: Well I'm not looking at what's good politics, I'm looking at what's good policy, and I really believe its bad policy to stack a bunch of tax increases. By the way, these tax increases are hurting jobs today, but this debt is hurting jobs today, and I don't think we're going to get nothing out of this debt limit agreement. We wouldn't do that.

We need to get spending cuts and I think we're going to get a down payment on spending cuts. I think we're going to get spending cuts on debt and we're going to help get the debt down. Now will our spending cuts be as high as we're asking for? Probably not, and if that's the case, then the debt limit won't be increased as much as the President wants it to be, and then we're going to have to figure out what to do on the rest of it because we will have another episode to deal with before these 18 months are out.

Mika Brzezinski: You know as this has been covered over the last couple of days, I think the optics, some would say, the Republicans look a little difficult. And that may not be the case, because you made a point about the reforms that you feel are being put on the table on the side of the President not being the right ones—not really saving, not really having the effect. If they were more appropriate, would then some sort of tax increases be on the table?

Congressman Ryan: I'm not going to get into all these hypothetical's Mika – I don't see the purpose of it. I don't think it's worthwhile to negotiate to media on such things.

Here's the problem Mika: put taxes aside, put the whole tax increase issue aside, we still have to cut a lot of spending, much more than what's being talked about right now, and the President is just unwilling to go anywhere close to the kinds of spending cuts that we're going to have to have if we want to avert a debt crisis.

Look, $4 trillion I don't believe is going to do it. I really don't think it's going to cut it. The President is proposing we spend $46 trillion over the next ten years. With the debt limit increase we're saying let's spend $43.5 trillion. That's not asking a lot over a ten-year period. It will be a small down-payment on what will be necessary to prevent a debt crisis, and the President won't even do that. What we have here is a lack of leadership from the White House on what we know is mathematically is necessary to fix this problem, and that is scary to me.

Joe Scarborough: Alright, Congressman Paul Ryan, thank you so much for being with us.

Mika Brzezinski: Nice to see you. Good luck with everything.

TEXT CREDIT: U.S. Congressman Paul Ryan Washington, DC Office. 1233 Longworth House Office Bldg Washington, DC 20515 Phone: (202) 225-3031 Fax: (202) 225-3393

VIDEO and IMAGE CREDIT: Morning Joe: MSNBC

Ronald Reagan Address to the Nation on the Fiscal Year 1983 Federal Budget

April 29, 1982 Good evening: My fellow Americans, you know the most important goal that all of us share tonight is economic recovery -- to see our factories reopening their gates, to see the unemployed return to their jobs, and every American enjoy the fruits of prosperity. To get our economy moving again, it's imperative that we enact a Federal budget that will bring down deficits and bring down interest rates.

I had hoped that when I addressed you tonight, it would be to give you the details of a bipartisan agreement on a budget and revenue plan for 1983. As you know, yesterday marked the end of a long series of discussions to help reach such an agreement. They ended, despite our best efforts to achieve a fair compromise. But before I discuss these talks and our plans for the future, let me give the background that led up to them.

In our budget proposal, we had continued the process we started last year of trying to get control of runaway government spending. Deficits over the last few decades have been literally built into the Federal structure. The rate of increase in spending was 17 percent when we took office. There's no way that government can pay for increases at that rate without gigantic tax increases each year or borrowing and adding to the national debt.

Now, this latter course has been followed for so many years that we now have a trillion-dollar debt. To give you some idea of how much a trillion is, if we started paying off the debt at a billion dollars a year, it would take a thousand years to wipe it out.

Now, if I may, let me take you back a little. In 1977, when the previous administration took office, inflation was 4.8 percent. It rose steadily, and in 1979 and '80 we had 2 years of back-to-back double-digit inflation. Unemployment started to increase, and by 1980 we were in a recession with nearly 8 million unemployed, inflation at 12.4 percent, and interest rates at 21\1/2\ percent. As those interest rates continued, home construction and automobiles were hard hit, because few could afford to take out a mortgage or buy a car on time. Unemployment continued to increase.

The 1981 budget was already in place when our administration began, and while we managed to effect several billions of dollars savings during the balance of the fiscal year, there was nothing we could do but set our sights on the 1982 budget, which would be our first. We had to reduce the built-in rate of increase. At the same time, we had to reduce the share of the people's earnings the government was taking in taxes.

Now, this may sound strange in view of the increased spending, and it was contrary to the philosophy of the Democratic leadership. But high taxes, destroying incentive, had contributed to reduced productivity and a reduction in savings, which left us without the capital we needed for industrial expansion. And because government always finds a need for whatever money it gets, the cost of government continued to go up.

Between 1976 and 1981, Federal tax revenues increased by $300 billion. Deficits ran $318 billion. There was no way we could get the rate of spending down to where it should be in one year. But our economic recovery program did manage to reduce the rate of increase in spending to nearly half of what it had been. We also proposed a 3-year program of tax rate reduction for individuals and for business. You helped us get both the reductions in spending and the tax reductions by letting your elected representatives know you wanted them.

During the debate on our economic program, we stated many times that there would have to be a second installment of budget reductions in 1983. That built-in, automatic spending increase I spoke of would otherwise give us a budget of $827 billion in '83, $918 billion in 1984, and more than a trillion in 1985.

What is our situation now, and how well have we done with our economic recovery program? Well, we're still in a recession, and unemployment has continued to go up, particularly in those areas affected by the troubles of the automobile and construction industries. Farmers, too, are hurt by the high interest rates. They borrow to plant and pay back at harvest, but that doesn't work when interest rates remain at too high a level. It is true, however, that those rates are down about a fifth from that high of 21\1/2\ percent. But they must come down some more, and they have every reason to, because that 12.4-percent inflation rate we inherited has been running at only 3.2 percent for the last 6 months. And last month, for the first time in 17 years, it dropped below zero. Prices actually went down.

Now, with all of this in mind, we introduced a budget for 1983 of $758 billion, lower than the built-in spending by a considerable amount. Still, it represented an increase over the '82 budget of 332 -- pardon me, $32 billion. Nevertheless, there were outraged screams of protest, and you were led to believe that we were actually proposing less spending than the present level. There's been an insistent drumbeat, aided by special-interest groups charging that our budget would deprive the needy, the handicapped, and the elderly of the necessities of life. I'm sure many of these people were sincere, well intentioned, but also misinformed.

Our original budget proposal would have funded 95 million meals a day for the needy, provided medical care for 47 million Americans, subsidized housing for about 10 million people. In addition, there would be 7 million loans and grants for college students, of which there are 11 million full-time. Social security, which was $122 billion in 1980, will be $188 billion in 1983.

But the drumbeat was too loud. Many in Congress criticized that budget and demanded that we send up a new one. Well, we worked many months with the Cabinet on the one we submitted and believed it could fulfill government's responsibility to those who, through no fault of their own, had to depend on their fellow citizens for help. Besides, I felt that some workable alternative to ours should have been suggested by our critics so we could begin arriving at a consensus.

As the talk grew of stalemate, I asked my Chief of Staff, Jim Baker, to contact the congressional leadership of both Houses and see if some means couldn't be agreed upon in which the matter could be discussed, with the idea of finding an area of agreement. A bipartisan arrangement was made whereby the Senate had five representatives, the House of Representatives had seven, and the administration had five.

This group, which began to be called the ``Gang of 17,'' held its first meeting on April 1st, and its 13th and last the day before yesterday, April 27th. The rule they followed was that nothing was binding on Speaker O'Neill, Senate Majority Leader Howard Baker, or myself. They would simply see if they could find enough agreement that actual negotiations seemed possible and practical. I, in turn, had told our representatives the areas I felt were nonnegotiable. They were that any changes in defense spending must not interfere with or delay our rebuilding of national security, and that spending must be significantly reduced, and that our tax reductions, adopted last year, must be preserved.

I received regular progress reports and was greatly encouraged. The Gang of 17 worked long, hard hours and deliberated in good faith. What they were doing couldn't really be called negotiation. That would come later. Speaker O'Neill referred to it once as ``dialoguery.''

Well, the projected deficits for the next 3 years continued to increase as the lower inflation rate reduced estimated revenues. Continued unemployment, which costs government about $25 billion for every added one percentage point, took its toll. And the persistent high interest rates added to the cost of government borrowing.

While I don't believe in the accuracy of long-range projections, we're required to acknowledge them in our budgeting. They stand at $182 billion for 1983, $216 billion in '84, and $233 billion in 1985 if we do nothing about reducing spending. Not only must those deficits be reduced, they must show a decline over the next 3 years, not an increase. Our goal must be a balanced budget. And our budget would have set us on that road. But, apparently, there was no meeting of the minds.

There's no question but that a difference in philosophy exists. While the Democratic leadership lamented about the deficit facing us, committees in the House of Representatives, controlled by them, were recommending increases above and beyond our proposed budget of more than $50 billion in higher spending. Apparently the philosophical difference between us is that they want more and more spending and more and more taxes. I believe we should have less spending, less taxes, and more prosperity.

There hasn't been too much opportunity in the last 40 years to see what our philosophy can do. But we know what theirs can do: the longest sustained inflation in history, the highest interest rates in a hundred years, eight recessions since World War II, and a trillion-dollar debt.

The day before yesterday, Jim Baker told me the group had decided they could come no closer to agreement than they were, and there would be no more meetings. So I called Speaker O'Neill and suggested we meet to take up where the Gang of 17 had left off. That meeting took place for more than 3 hours yesterday.

The worksheets of the committee showed that on our side our nondefense spending cuts had been reduced to about 60 percent of what we had originally proposed. There were some areas such as estimated savings from improved management practices which had been accepted. On the Democratic side they'd expressed a willingness to accept some cuts which they thought were a concession on their part inasmuch as they hadn't wanted any budget reductions except in defense.

On revenues we had originally proposed about $13 billion for next year, most of which could be obtained through changes in tax regulations. Some regulations have been regulated or interpreted in such a way as to provide tax advantages which were never intended. The group was discussing a figure of $25 billion, which meant actually increasing some taxes or passing new ones. Now, that figure would not have required eliminating or reducing the tax cuts in our economic recovery program. Still the $25 billion figure was almost double our original proposal.

In yesterday afternoon's meeting on Capitol Hill, Speaker O'Neill, Senator Howard Baker, myself, and five of the Gang of 17 participated. As I say, the figures on which the group had found some agreement were far from those we'd proposed in February. But I decided against trying to start the negotiations on the basis of that original budget. The most essential thing is to send a message to the money market that we, Democrats and Republicans alike, can agree on reducing the deficit and continuing to hold down inflation. Actually the Gang of 17 had come very close in their deliberations, and I was encouraged to believe that we could arrive at a settlement.

Our original cuts totaled $101 billion. They -- [referring to a chart] -- I can't make a big enough mark to show you -- but they were rejected, believe me. Our own representatives from the Congress proposed compromising at $60 billion. Their counterparts from the Democratic side of the aisle proposed 35. In our meeting yesterday, which went on for more than 3 hours, our compromise of $60 billion was rejected -- now my pen is working. And then I swallowed hard and volunteered to split the difference between our 60 and their 35 and settle for 48, and that was rejected. The meeting was over.

Now on this chart the red line is where we go in the next 3 years with regard to deficits if there is no compromise. It'll reach a deficit of $233 billion in 1985 alone, and as you can see, the line is still going up. And so will interest rates. The blue line is where we go if we settle on a reasonable compromise -- steadily down to a deficit by 1985 of only $44 billion. And you can see that a balanced budget is not far distant. And this blue line will, I'm convinced, start interest rates down from the moment there is agreement on the compromise.

It is essential that we have a prompt resolution of this budget debate. It is, of course, up to the Congress to act now. But I'll do everything I can to help in getting a prompt settlement. If American workers can show the statesmanship they've shown in redrawing their contracts to restrain their own wages to help in this time of recession, surely we in Washington can show some statesmanship, too.

I'm convinced we're in the trough, as it's called, of this recession and that we'll begin to see recovery in the second half of the year. There will be political pressure from some to turn on the printing presses and flood us with paper money. Well, that's been done before, and the answer is always the same -- a flush feeling for about 5 minutes, then more inflation leading toward a plunge into an even worse recession.

There is another road that leads to permanent recovery. It begins with a responsible budget now. In the coming days, I will do everything I can to help the Congress achieve this vital goal. And you can help, too, by letting your representatives know that you think this is no time for "politics as usual"; that you, too, want an end to runaway taxes, spending, government debt, and high interest rates.

Tomorrow I will meet with Republican members of the Gang of 17 to forge the beginnings of an acceptable budget initiative. On Monday I will meet with the full Republican leadership and with members of the Senate and House Budget Committees. I will also consult with responsible members of the Democratic Party in the Congress to make this a truly bipartisan effort in the national interest.

But our efforts must not stop there. Once we've achieved a balanced budget -- and we will -- I want to ensure that we keep it for many long years after I've left office. And there's only one way to do that. So, tonight I am asking the Congress to pass as soon as possible a constitutional amendment to require balanced Federal budgets.

This amendment will, of course, have to be ratified by three-fourths of the States. But I'm confident that the grassroots support for a balanced budget amendment is out there and will carry the day against the special interests. Most Americans understand the need for a balanced budget, and most Americans have seen how difficult it is for the Congress to withstand the pressures for more spending. This amendment will force government to stay within the limit of its revenues. Government will have to do what each of us does with our own family budgets -- spend no more than we can afford.

Only a constitutional amendment will do the job. We've tried the carrot, and it failed. With the stick of a balanced budget amendment, we can stop government squandering, overtaxing ways, and save our economy.

Time and again the American people -- you -- have worked wonders that have astounded the world. We've done it in war and peace, in good times and bad, because we're a people who care and who know how to pull together -- family by family, community by community, coast to coast -- to change things for the better. The success story of America is neighbor helping neighbor. So, tonight I ask for your help, your voice, at this turning point.

So often in history great causes have been won or lost at the last moment, because one side or the other lacked that last reserve of character and stamina, of faith and fortitude, to see the way through to success. Make your voice heard. Let your representatives know that you support the kind of fair, effective approach I have outlined for you tonight. Let them know you stand behind our recovery program. You did it once, you can do it again.

Thank you, and God bless you.

Note: The President spoke at 8 p.m. from the Oval Office at the White House. The address was broadcast live on nationwide radio and television.

TEXT and IMAGE CREDIT: www.reagan.utexas.edu