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Ryan Says U.S. Tax-Cut Bill Unlikely to Be Revised (Transcript)

Representative Paul Ryan, a Wisconsin Republican who will become chairman of the House Budget Committee in January, said in an interview on “Political Capital with Al Hunt” airing this weekend on Bloomberg Television that Congress will pass this week’s tax-cut deal and he doubts it will be revised.

(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)

AL HUNT: We begin the show with soon-to-be chairman of the House Budget Committee, Congressman Paul Ryan of Wisconsin. He joins us now from his office in Janesville.

Welcome, congressman. Let me start off -

REPRESENTATIVE PAUL RYAN: Thanks for having me, Al.

HUNT: - by asking - you’re supporting the tax cut deal. It does add about $850 billion to the deficit over the next two years. Will it be enacted, do you think? And will it be changed at all?

RYAN: I don’t think it will be changed. I think more often than not, yes, it will be enacted. We’ll see what Nancy Pelosi does.

Look, they’re throwing a fit. A lot of that number that you cited is just simply results from keeping taxes where they are.

HUNT: Right.

RYAN: We are opposed to raising taxes. Look, there’s a lot in this deal I don’t like, Al. There’s a lot of stuff I don’t like. But what I don’t like the most is a huge tax increase in January that’s going to put a lot of volatility in the economy and do damage to the economy and job creation.

So I do support this deal. It’s the best we’re going to get, I think. A deal is a deal. We have an agreement. And that ought to be honored, and it should pass soon, so we don’t create this volatility in the economy.

HUNT: What they are really creating a fuss over, as you say, is the - is the provision to lower the estate tax. And what that $14 billion over two years, it affects very, very few, wealthy heirs. The Democrats claim that, while working-class Americans are struggling, why give this kind of break to the very wealthy, what the conservative economist Irwin Stelzer calls affirmative action for the rich?

RYAN: Well, first of all, this is money that people already paid taxes on. We don’t think -

HUNT: Not - not capital gains.

(CROSSTALK)

RYAN: - there should be an estate tax. You already pay taxes on this. So - so - so - well, first of all, with the zero estate tax, you have a step-up in basis, carryover, and then you do pay capital gains when you sell the asset as an heir, so you do actually end up paying capital gains.

But put that point aside for a moment. This is the biggest killer of intergenerational transfer of businesses. We’re not talking about, you know, Bill Gates here. We’re talking about successful family businesses and farms that are big employers having to be cut in half or liquidated in order to pay a tax when the owner dies. This is not right.

HUNT: Let’s turn to the deficit. A Bloomberg national poll this week shows Americans by big numbers, they oppose cutting domestic spending, they oppose cutting defense. They’re against any entitlement reductions. They want to keep tax breaks, like the mortgage deduction, and farm subsidies, against any gasoline tax. All they seem to favor is higher taxes on the rich and means-testing of Social Security.

Given a lack of public support -

RYAN: That’s not enough.

HUNT: Yeah, I know. Do you think you really can get anything significant done in the next Congress?

RYAN: I hope so. I really sincerely do hope we can get something significantly done in the next Congress. Look, we have divided government. Health care is the biggest source of our budget and fiscal problems, and my guess is we’re not going to get agreement on the president on that, and you know the story about that.

But hopefully on these other issues, Social Security, perhaps, discretionary spending, budget controls, spending caps, things like that, we can get something done. We’ve got to get a dent in this problem. We cannot accept that for just two years we’re not going to do anything to improve our fiscal situation.

So we’ve got to put a dent on this problem. And that’s why I’m hoping, you know, to get something with the president under this divided government scenario in the right direction.

HUNT: Early in that next session, as you know, Congress is going to be faced with a prospect of raising the debt ceiling. How much in the way of spending cuts do you think have to be achieved - or do they have to be achieved before you can address that issue?

RYAN: Well, quite a bit, to be candid with you. We intend to do lots of spending cuts and lots of spending reforms as soon as we take over in January, leading up until that moment, which will be anywhere from March to May. And so hopefully by then we will have done a lot of good things to cut spending, to put controls on spending, and then hopefully accompanying a debt ceiling increase, we’ll get some kinds of real fiscal controls that can get this thing turned around.

The debt ceiling, obviously, is going to have to be increased if we’re not going to default, so the question is, what do we get in exchange for that? And what kind of fiscal controls? Look, we don’t think we have a revenue problem. Even keeping taxes where they are, revenues go back to their historic levels, what we have is a massive spending problem that’s the source of our problems. And if we chase higher spending with higher revenues, we’re going to shut down this economy and hurt job creation.

HUNT: Can you give us an idea of the scope of that spending cut you’re talking about, size and scope?

RYAN: Well, so we - the budget itself doesn’t occur until spring, so before the budget, you can deal with current fiscal year spending. So we intend on doing some rescission bills. And we want to bring spending back to something like pre-binge, pre-spending levels of 2008.

So that means we want to go after a good $100 billion down payment on discretionary spending before the spring occurs, because the budget doesn’t occur until April, so that’s why we have to go after discretionary spending now and current levels of discretionary spending.

HUNT: How about tax reform? That could be on the Obama agenda next year. Is it a good idea? And could it raise revenues?

RYAN: It is a good idea. Tax reform is a good idea. The question is, what kind of tax reform? I was on the Bowles-Simpson commission, and they did some great things on tax reform. I would have done things a few - a few things differently. But they acknowledged that high tax rates kills growth and jobs. We need lower tax rates.

So the idea of a broader tax base and lower tax rates, which is good for economic competitiveness, international competitiveness, and job creation, is something that - that people from the center-left and the right are acknowledging together.

So I would like to think that there’s becoming a centrist solution here, more internationally competitive corporate tax rates, more internationally competitive small-business tax rates, lower tax rates on all Americans, a broader tax base, so you get the revenue you need to fund the government.

Where we might have disagreement is, what is the proper level of revenues? Because, again, we just have a different view on the size of government. We think it ought to be limited, it ought to be back toward its historic levels, and that’s what we want to do.

HUNT: Congressman, you have said that Barack Obama practices class warfare, yet your roadmap, some critics say, involves a massive transfer of wealth, they would argue, to the rich. It eliminates taxes on capital gains, dividends, estates, lowering rates and offsetting some of this with a new consumption tax.

Now, the Tax Policy Center says the richest one-tenth of 1 percent would get an average tax cut of $1.7 million a year. Isn’t this class warfare for the rich?

RYAN: No, no, I don’t see it that way. Look, you might be confusing me with someone who thinks we should use the tax code as a tool of economic redistribution, social engineering. I don’t see it that way.

We should have a tax code that maximizes competitiveness, job creation, economic growth and raises the proper amount of revenue for the government. And I do maintain a progressive tax code for individuals; I just don’t do it as much as what we have right now, because I think it’s hurting growth. And we have a very internationally uncompetitive tax system.

What I also do, though, Al, that you’re not giving me credit for is I means-test our entitlement programs. I say to people who are wealthy, you’re not going to get as much of a subsidy for Medicare or for Social Security as everybody else in America gets.

HUNT: You do do that, congressman -

(CROSSTALK)

HUNT: - and I -

RYAN: - wealthy people as much as we do everybody else.

HUNT: And I would point out, that’s one of the few things that gets support from the public in our poll. Let me ask you a final question. One of your bosses and your mentors - and I think one of your political heroes - was the late Jack Kemp. And you’ve certainly picked up his mantle in championing tax cuts and economic growth.

Kemp also stood against his party establishment sometimes in publicly identifying with specific efforts to help African-Americans and Latinos. Are you going to take up those causes, too, and will you?

RYAN: Yeah, you know, I do believe in that, of course. Look, Jack - nobody can match Jack’s passion and zeal for bringing the ideas of economic growth, liberty and freedom, pro-growth economics to people who have not seen it before. I do believe that we need to have a pro-growth opportunity message that goes to those people who’ve never seen it before.

We need to lower the rungs of the economic ladder so people who’ve never seen it before can climb up and make the most of our lives. So I really do believe that this is a message that we’ve got to take. And, yes, I - I’m just happy to be mentioned in the same sentence as Jack on this moment - on this issue.

HUNT: Well, chairman-to-be Ryan, joining us from Wisconsin, thank you very much. And when we come back, we’ll talk with the Senate Budget Committee chairman, Senator Kent Conrad.

***END OF TRANSCRIPT***

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#<610771.1204164.2.1.69.30975.25># -0- Dec/10/2010 20:51 GMT

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