• With: Rep. Paul Ryan, R-Wisc.

    This is a rush transcript from "Journal Editorial Report," February 18, 2012. 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 budget illusion. He is promising lower spending, higher taxes and sinking deficits? We'll tell you what you will really get, and ask House Budget Chairman Paul Ryan how Republicans plan to respond.

    As Rick Santorum's surge continues, Mitt Romney is fighting back, attacking the former Senator as a pro-union, big spending Washington insider. So, is he?

    (BEGIN VIDEO CLIP)

    PRESIDENT BARACK OBAMA: We've got to do everything in our power to keep this recovery on track. Part of our job is to bring down our deficit. And if Congress adopts this budget, then along with the cuts we've already made, we will be able to reduce our deficit by $4 trillion by the year 2022.

    (END VIDEO CLIP)

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

    That was President Obama Monday unveiling his $3.8 trillion budget fiscal for 2013. There are lots of promises in those 2,000-plus pages, including, as you heard, a $4 trillion deficit reduction allegedly over 10 years. So can the president deliver?

    Republican Congressman Paul Ryan is chair of the House Budget Committee. He joins me now from Capitol Hill.

    Welcome.

    REP. PAUL RYAN, R-WISC., CHAIR, HOUSE BUDGET COMMITTEE: Hey, Paul. How are you?

    GIGOT: So you have been severely critical of the president's budget this week for its spending increases, no serious entitlement reform and tax increases. What can House Republicans do about it this year?

    RYAN: We're going to offer an alternative path. Look, if you strip away all the president's budget gimmicks, accounting tricks, it gives you $400 billion in deficit reduction over 10 years and it increases spending, net spending increases by $1.5 trillion, and because he raises taxes by $1.9 is how you get this $400 billion figure. An average of $40 billion of deficit reduction every year when we're racking up trillion dollar deficits. So it's --I don't know how to describe that --

    (LAUGHTER)

    --other than it's not serious.

    (LAUGHTER)

    GIGOT: Well, that's OK. So --

    (CROSSTALK)

    GIGOT: -- if he's proposing --

    RYAN: We're going to put up an alternative, Paul. we thing, look, if we don't like the direction the president is taking the country, the direction for debt and decline, we owe the country an alternative choice by putting specific solutions on the table, how to reform the tax code, how to reform entitlement spending, how to cut government spending, how to get the debt under control. And we'll do that, Paul, just like we did last year. We'll do it again this year. So voters, meaning Americans --

    GIGOT: Right.

    RYAN: -- are going to have a choice two futures from which to choose from this fall. That's what we see our job as being.

    GIGOT: Are you going to put the Medicare reform plan, the same one you passed last year, in this bill this year? As you know, many privately, in the Republican conference -- I don't want to make that again. You are going to put it in again?

    RYAN: Yes, we are not backing off on any of our policy reforms. If you are not serious about taking on these entitlement issues, about dealing with the unfunded promises to Americans, then you are not serious about fixing our fiscal situation. We need to have half of our government, the Republican side, being serious about fiscal situation. If we duck this responsibility, then no one is being responsible in Washington and we'll have a debt crisis, and we can't let that happen.

    GIGOT: If Republicans do pass a budget and the Senate, which has already said they're not going to pass one, doesn't, where does it leave you? How do you get more spending reduction this year than you got last year? Unless -- you got none, basically. It was flat. You held it flat, which was better than the increases of the previous two years, but you didn't cut a lot of spending?

    RYAN: No, and that is the problem, Paul. When you are the minority party in divided government, with the Senate not doing any budgeting for three years now, the president doing this, there is no more opportunity. I think after this last week, it doesn't look like, according to at least the White House, that much more is going to get done. The way we look at it is, we need the American people to help us break this logjam. We need the American people to give us the ability to fix this problem. So in election, we need owe them a very clear, sharp, legitimate choice of two futures, so we can have an affirming election, not where we win an election by default and then split differences and muddy everything. An affirming election where the country says get us back to the American idea, get us back to solvency. So we need to put a budget out there. No, it's not going to pass into a law this year, as you just described. And, no, we won't be able to get a lot of savings because the Senate's gridlocked and the president won't cut spending. So we'll have to kick this upstairs to the American people and let them decide.

    GIGOT: So you're saying, for this year, the best the American public can probably expect from you guys is basically hold things level, no more increases, status quo?

    RYAN: If you want to change that, you have to pass budgets to change it. We will pass a budget that shows how we will change it, but if the Senate chooses thought to pass the budget for the third year in a row, which Senator Reid already announced, then no budget ever occurs. The way it works is --

    GIGOT: Right.

    RYAN: -- the House and Senate have to pass a budget by April 15th. We have a law that says we have to do this. If one of those breaks down, then no budgeting occurs, so nothing happens. And the Senate didn't do a budget in 2010 and 2011, and now they have already announced they aren't going to do a budget in 2012. So that's the frustration. You understand our frustration now. So we'll just take it to the country and let them decide.

    GIGOT: You tried last year and you promised in the campaign to cut about $100 billion worth of spending. What lessons did you learn last year from the hard slog where it didn't succeed, that you might be able to use to at least get some better performance this year, better outcome?

    RYAN: The lesson we learned is divided government is very difficult. The whole payroll thing is an example of that. Democrats wouldn't agree to $100 billion of spending cuts over a 10-year period. The president wouldn't agree to spend $46.9 trillion instead of his planned $47 trillion over the next 10 years over just this issue. So we passed budgets that cut those spending levels, but when you have a White House and Senate that is just unwilling to cut spending, that is the gridlock we have. When you have a Senate that won't do any budgeting, that's the problem. We have to break this gridlock and get back to dealing with this problem in a serious way. We feel we have a moral and legal obligation to show the country what we would do if they gave us the permission and the power to do it by giving the House, the Senate and the White House.

    GIGOT: All right. We'll look to see what you propose in that budget.

    Thanks for being here.

    RYAN: You bet. Take care, Paul.

    GIGOT: Still ahead, congressional Republicans may not be buying what President Obama is selling in his budget. But with his approval rating on the rise, is the American people ready to sign on to his second-term agenda. Our panel weighs in, next.

    (COMMERCIAL BREAK)

    GIGOT: Paul Ryan and his fellow Republicans may not find much to like in President Obama's budget, but with his approval back up at the 50 percent mark, is the American public buying into an his agenda for a second term?

    Let's ask Wall Street Journal columnist and deputy editor, Dan Henninger; assistant editorial page editor, James Freeman; and Washington columnist, Kim Strassel.