• This is a rush transcript from "The Journal Editorial Report," November 20, 2010. This copy may not be in its final form and may be updated.

    PAUL GIGOT, HOST: This week on the "Journal Editorial Report," President Obama's bipartisan deficit commission is coming under bipartisan fire. But can some good come out of it? We'll ask Wisconsin congressman and commission member, Paul Ryan.

    Outrage grows over the TSA's new airport screening measures. Has our government gone too far or is this the price we pay for security in a post-September 11th world?

    Welcome to the "Journal Editorial Report." I'm Paul Gigot.

    When the co-chairs of President Obama's bipartisan deficit commission, Erskine Bowles and Alan Simpson, released their preliminary report last week, it was met with howls from both the left and the right, with some conservatives claiming it promotes a one trillion dollar tax increase.

    Republican Congressman Paul Ryan of Wisconsin is a member of that commission. I spoke with him earlier and asked him what those conservative critics are missing.


    REP. PAUL RYAN, R-WIS.: Well, they're missing that Erskine Bowles, a Democratic appointee by President Obama, former Clinton chief of staff, is saying we need to lower tax rates. We need to lower tax rates in corporations, go to a territorial tax system, and lower taxes on individuals if we want economic growth and international competitiveness.

    So, yes, there's part of this I would change clearly. I would have taken that extra trillion dollars and put it into lowering capital gains and dividends. And that's what I would have done and that's what I will continue to advocate. But what we have here is centrist consensus among Democrats, centrist Democrats, that we should not be playing class warfare, that we should not be raising tax rates, that we should broaden the tax base, lower the economic rates for economic growth and prosperity. That's a pretty cool thing, I think.

    GIGOT: Yes, the goal of lower tax rates, and I think one of their proposals — in one of their proposals, they reduced the top rate to 26 percent.

    RYAN: That's right.

    GIGOT: That's been a goal of an awful lot of conservatives for a long time.

    RYAN: Many of us.

    GIGOT: Is this the basis, do you think, for potentially a bipartisan tax reform between Republicans and President Obama, the kind we saw in the 1980's, under Ronald Reagan and the Democratic Congress?

    RYAN: Well, I don't know about that. you know, Alice Rivlin, Erskine Bowles, they're in favor of this lowering the tax rate, but I think the president really does believe more in economic redistribution, he's clearly a class warfare guy, and so I don't think he likes the idea of lowering top tax rates. Whenever we've had conversations with him, he bristles at the thought of it. He believes capital gains rates, dividends rates should be higher. He believes we should repeal the furl (ph) and do other things to corporate income taxes which makes us less competitive. So I don't know that if this is within the president's ability from just his own ideological perspective to do something like this. It's clear that there are Democrats who believe in this. I just don't know if President Obama is one of them.

    GIGOT: OK, so, you think that perhaps the Republican presidential candidates going into 2012, some of them might — one or two of them might want to pick something like this out?

    RYAN: Yes, we need to be a pro-growth tax reform party and so we're not the green-eye shade austerity party. That's what the Democrats are doing with this borrow-and-spend agenda, which will lead us to European- levels of austerity. We want to be pro-growth. We want to preempt the debt crisis by having real entitlement reform. And so tax reform is a key element, along with money, and we can get into that, a key element of a pro-growth policy. And so, yes, our presidential guys — and we'll be advancing these kinds of ideas as Republicans in the House as well.

    GIGOT: But the flip side of lower tax rates, as you know, is broadening the base —

    RYAN: That's right. That's right.

    GIGOT: — which means doing away with some of the major loopholes. One of which is the home mortgage interest deduction. And the commission suggested no more mortgage interest deductions for second homes, for vacation homes, for —