• With: Rep. Paul Ryan

    VAN SUSTEREN: In theory, hypothetically, if everyone stayed as is, there wouldn't be any change in cost, right?

    RYAN: No, so -- but competition -- you have to understand, Medicare plans, traditional Medicare, the Humana plan, the Blue Cross plan -- I'm using an example -- they have to compete against each other for a senior citizen's business. And...

    VAN SUSTEREN: But that's under the subsidized one.

    RYAN: That's under the new plan I'm talking about...

    (CROSSTALK)

    VAN SUSTEREN: What if you're just taking Medicare as is? That's one of the options.

    RYAN: That's one of the options, but...

    VAN SUSTEREN: If everyone went into the Medicare as is, it wouldn't - - it theoretically shouldn't change cost of the Medicare program.

    RYAN: Yes, but Medicare has to compete with these other plans, and they bid based upon what it costs to deliver the services.

    VAN SUSTEREN: So you think that driver down the price. OK.

    RYAN: Yes, so -- it's just like having a monopoly. If a monopoly is going to bid for your business, they'll set the price however they want to. If you have competition that has to bid against either other for your business, they'll compete and bring down prices.

    Forcing insurers and government to compete for your business has proven to bring down costs and increase quality.

    VAN SUSTEREN: All right, Medicaid -- under your budget, there will be block grants to states and states would then administer it. Would the federal government be giving less money in block grants than it's currently spending on Medicaid?

    RYAN: It would, but in exchange, states would get more flexibility. Medicaid spending would grow at inflation plus the growth of each state's population. So we've heard from a number of governors who said, Look, I can deal with less cost increases, less payment increases if you give me more flexibility to customize my Medicaid program to meet the needs of our state's population.

    VAN SUSTEREN: So you're saying that because the states, just so I understand it, would be more efficient with the money...

    RYAN: That's right.

    VAN SUSTEREN: ... because the governors want to do whatever they want, that the federal government would be giving less money, but you think you'd get more for your dollar.

    RYAN: Well, it will still grow, it just won't grow as fast.

    VAN SUSTEREN: OK, but that's where the -- that's where the decrease in cost is.

    RYAN: That's right.

    VAN SUSTEREN: OK.

    RYAN: That's right.

    VAN SUSTEREN: All right, the monster bite in spending -- do you have a strict formula? Is everything being cut across the board, or have you chosen different programs and actually decided what you think should be cut?

    RYAN: Right. That's right. So we have all of these different reforms. We have welfare reforms, just like we put in 1996, work requirements, time limits, things -- flexibility for the states to get people off of welfare and back to work. We apply those lessons to our safety net welfare programs because we think it's a better way of fighting poverty.

    I just mentioned state flexibility on Medicaid. We just mentioned choice and competition for Medicare. We mentioned -- there are a lot of other areas, and we put spending caps on government agencies' budgets, which makes them prioritize their spending.

    The Appropriations Committee ultimately decides every little program within a government agency's budget, but we're putting the caps on those spending. At the end of the day, we're taking $4.6 trillion dollars out of the budget that would otherwise be spent.

    What does that mean in real sort of annual terms? Under our budget, spending still will increase on average 3.4 percent a year each year, instead of the current path, which is 5 percent a year. That difference gets us to a balanced budget. That difference gets us to a balanced budget without raising taxes.

    And we think it's extremely reasonable to balance our budget. Families have to balance their budgets. Local governments and businesses have to balance their budget. We should be able to get the government to restrain its growth of spending in order to balance the budget so that we can get this threat off of our economy.

    These big deficits, this debt -- not only does it hurt today's economy, it destroys it for the next generation! And we think this is necessary to do that -- to fix that.

    VAN SUSTEREN: Somebody's got to get hurt when there's a spending cut. Someone's going to...

    RYAN: Yes, government.

    VAN SUSTEREN: Government?

    RYAN: Government. Government...

    VAN SUSTEREN: I mean, but theoretically, government gives services, whether it's entitlements or jobs to people, whatever, I mean, some -- someone's going to feel the pain.

    RYAN: We spend $115 billion each and every year, according to the General Accountability Office, on payments to people that aren't even supposed to get the money, on government agency...

    VAN SUSTEREN: I'm with you on that...

    (CROSSTALK)

    VAN SUSTEREN: I was going to get to waste and fraud. I was going to get to waste and fraud.

    RYAN: We have 49 different job training programs spread across nine different government agencies. Government's going to have to learn to do more with less. It's going to have to learn how to be more efficient. You know what? It's not government's money, it's the people's money and our children's money because we're borrowing from the next generation to pay for all of this!

    VAN SUSTEREN: I was going to ask you about, you know, waste and fraud, and even things like here on Capitol Hill, I don't know if you know, but there are a number staffers who owe back taxes. I mean, it may seem chump change...