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Ryan Says Politics Prevents ‘Grand Slam’ Agreement on Reducing U.S. Debt

House Budget Committee Chairman Paul Ryan said he doesn’t expect a “grand slam” deficit-cutting agreement that addresses the main drivers of the long-term debt, mainly Medicare, before Congress votes on raising the debt limit.

Any agreement should focus on discretionary spending cuts, reductions in programs such as farm aid, and some form of budget process overhaul without revenue increases, the Wisconsin Republican said at a Bloomberg Breakfast in Washington yesterday.

“I’m hoping the debt limit is an opportunity to get a down payment on some spending cuts, to get a down payment on some spending reform,” Ryan said.

Last month he proposed a plan to privatize Medicare, the federal health program for the elderly, as part of his 2012 budget blueprint. The proposal, passed by the House, has become a flash point for Democrats who say Republicans are trying to balance the budget on the backs of the poor and elderly.

Vice President Joe Biden today will host talks with a bipartisan group of House and Senate members seeking common ground. Two Republicans who will participate in the talks, House Majority Leader Eric Cantor of Virginia and Senator Jon Kyl of Arizona, sent a letter to the vice president asking that President Barack Obama submit a specific proposal that can be analyzed by the nonpartisan Congressional Budget Office.

Photographer: Jay Mallin/Bloomberg

“I don’t think you’re going to see everything fixed,” Representative Paul Ryan said at a Bloomberg Breakfast in Washington. Close

“I don’t think you’re going to see everything fixed,” Representative Paul Ryan said at... Read More

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Photographer: Jay Mallin/Bloomberg

“I don’t think you’re going to see everything fixed,” Representative Paul Ryan said at a Bloomberg Breakfast in Washington.

Congress needs a “straitjacket,” Kyl said yesterday in an interview on Bloomberg Television. “We’ve got to constrain the spending.”

‘Balanced and Evenhanded’

Max Baucus, a Montana Democrat and chairman of the Senate Finance Committee, told reporters that some sort of mechanism to constrain the deficit “makes sense,” while cautioning that whatever is enacted has got to be “balanced and evenhanded.”

Four congressional Democrats will join the talks led by Biden: Baucus, Senate Appropriations Committee Chairman Daniel Inouye of Hawaii, House Assistant Democratic Leader Jim Clyburn of South Carolina and Maryland Representative Chris Van Hollen, the House Budget Committee’s ranking Democrat.

Also joining the meeting will be Treasury Secretary Timothy Geithner, White House budget director Jack Lew and Gene Sperling, director of the National Economic Council, Biden’s office said. The group will meet at Blair House, across the street from the White House.

Ryan said a less ambitious agreement to raise the debt limit is unlikely to include changes to programs like Medicare that are the long-term drivers of the debt.

“My hope at this moment is to get a single or a double,” he said, using baseball terminology. “We’re not going to get a big comprehensive agreement because of just the political parameters that have been set.”

Other areas for potential compromise are the mandatory spending programs outside of Medicare and Social Security, such as farm aid, Ryan said.

“We should means-test these programs,” he said. “We shouldn’t be giving corporate farms these large agribusiness subsidies. I strongly believe that.”

Doubts About Deal

Indiana Governor Mitch Daniels, a potential 2012 Republican U.S. presidential candidate and former budget director for President George W. Bush, said he opposed raising tax rates as part of a vote to increase the country’s debt ceiling.

Still, Daniels said, “We ought to have more tax revenues and the way economists, really, of both sides seem to agree is fewer preferences, lower and flatter rates.” He was interviewed on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend.

Many lawmakers consider the debt-limit vote their best opportunity this year to force significant changes in the federal budget. The Treasury Department said this week that lawmakers will need to raise the $14.3 trillion debt cap by Aug. 2, three weeks later than Treasury officials had previously predicted.

Republican Skepticism

Ryan’s pessimism about the prospects for a “grand slam” accord was echoed this week by Senate leaders, casting doubt on the likelihood of such a deal. Mike Crapo, an Idaho Republican who is part of a bipartisan group of six senators seeking to strike a deal, said May 3 that he may not agree to a proposal in time for the debt-limit vote.

The Republican leader in the Senate, Mitch McConnell of Kentucky, said the lawmakers meeting with Biden today were more likely to agree on a deficit-reduction plan.

Ryan said his view is shaped by the approaching 2012 presidential election campaign. He said he believes that Democrats aren’t likely to agree to cuts to Medicare and Social Security because they are more interested in creating a political narrative that works to their benefit.

He said he “fundamentally” disagrees with former Federal Reserve Vice Chairman Alan Blinder’s recent critique of his budget as “reverse Robin Hood,” attributing that view to “a different opinion” on the role of government.

“We believe we should focus on upper mobility and equal opportunity, not an equalization of outcomes,” Ryan said. “We believe the government’s role is not to equalize the results in people’s lives, but to help people get on their feet and make the most of their lives.”

In an April 19 opinion editorial in the Wall Street Journal, Blinder contended that Ryan’s plan would redistribute wealth by cutting funding from programs serving low- and moderate-income Americans while the rich would gain from tax cuts.

To contact the reporter on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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