• With: Rep. Paul Ryan

    This is a rush transcript from "On the Record," July 31, 2013. This copy may not be in its final form and may be updated.

    GRETA VAN SUSTEREN, FOX NEWS HOST: Why do President Obama and his administration insist on sticking with the "phony scandal" script? Congressman Paul Ryan joins us. Nice to see you, sir.

    REP. PAUL RYAN, R-WIS./FORMER VICE PRES. CANDIDATE: Hey, good to be back with you.

    VAN SUSTEREN: All right, phony scandal -- even today, press secretary Jay Carney sort of downplaying this. Is it a phony scandal?

    RYAN: You know, this is just arrogance of power. They're in campaign mode, and they're ignoring this. Look, you need to have trust in the government for the government to work effectively. And when our government knowingly targets people based upon their political beliefs to the tax code, when our government misleads the country about a terrorist attack, that erodes trust.

    And then when our commander-in-chief said that this is phony, that there's no reason to be concerned about this, there's nothing to see here, that's just arrogance.

    And so I think the president's basically trying to change the subject. It's not going well for him. "ObamaCare" is a train wreck. This is the worst economy since World War II, stagnant jobs, stagnant wages. And these real scandals that are eroding trust in the government, I think he's basically trying to change the subject.

    VAN SUSTEREN: You know, I just can't get it, though, because in early May, when it first broke about the IRS, he said this was very serious and he had empathy and he said he was going to get to the bottom of it, and he seemed to understand that, you know, Americans do get scared when they're targeted. And then all of a sudden, something happened and it's -- you know, the switch was flipped, and all of a sudden, almost demeaned these people who had real problems, who believed that they were wronged, who went through these horrible audits, where they get all these questions.

    RYAN: That's right.

    VAN SUSTEREN: They didn't know why they were -- (INAUDIBLE) sort of mysterious, almost like a Franz Kafka investigation, had no idea, you know, why they were being targeted. And now he demeans them! And I mean, what's the strategy, to really just to change the subject?

    RYAN: I think it's to change the subject. Look, at the IRS, there are two political appointees that the president appoints, the commissioner and the head judicial official, the legal counsel. These orders came from the legal counsel. We already know that. That's who oversaw this targeting, one of the two political appointees that the president puts over there at the IRS.

    I can go on and on about this. I'm part of this investigation. But the administration is not being as forthcoming as they need to be with the documents that have been requested. We're going to get to the bottom of this. We're going to see this thing all the way through. We're going to be very methodical about it.

    But you can't suggest that this is phony when we already know and have on record that they targeted people based upon their political beliefs. And think of the chilling effect of that. This is why this week, we're having a vote to make sure that the IRS has no role in "ObamaCare." We're going to vote on this in two days, the IRS get out of "ObamaCare" because we simply don't trust this agency with not only our tax -- you know, with what they're doing in our tax information but with our personal health information.

    And so this is really an erosion of trust, and the president does not serve himself well. I would -- if I were advising the president, I would say, Get to the bottom of these scandals. Get to the bottom of them quickly. Hold people accountable, and then restore some trust in your administration and in the government.

    VAN SUSTEREN: What do you achieve by these votes? Because you can vote until you're blue in the face...

    RYAN: I know.

    VAN SUSTEREN: ... the House Republicans, and then it goes over to the Senate and there's -- I mean -- I mean, you have two different parties running two different branches -- or two different parts of the government.

    RYAN: We're chipping away at this law. See, he's already signed seven different bills chipping away at this law.

    VAN SUSTEREN: He has? President Obama has?

    RYAN: President Obama has. So these votes matter. And we're already getting Democrats to vote with us on many of these things. We had 35 Democrats on the employer mandate, 22 Democrats on the individual mandate repeal or delay. We're getting Democrats to come along and agree with us. So we're seeing a crack in the foundation because we're making people in Congress make a decision.

    You want the IRS overseeing health care, or do you want to get the IRS out of it? Do you want this rationing board on Medicare or not? Do you want the medical device tax? Do you want the individual mandate?

    We think this is an effective strategy at our ultimate goal of getting rid of "ObamaCare."

    VAN SUSTEREN: All right, what Democrats on Capitol Hill -- when they hear the president say that the scandals are phony, do they roll their eyes, or are they -- you know, are they solidly behind the president on that?

    RYAN: No, they're pretty quiet, actually because I think -- especially the Democrats that are involved in these investigations, that know what's going on. I don't think they're going to call them phony scandals. And I think they're actually kind of walking away from that label.

    VAN SUSTEREN: Congressman, let's talk about "ObamaCare." You just mentioned it. And of course, the new Congressional Budget Office report showing the one-year delay of the employer mandate will cost $12 billion. Is that true?

    RYAN: Yes, it's because of fees. It will cost $12 billion, according to the Congressional Budget Office, because of fees. Here's what they don't quantify that we need to get more information on. Now that we don't know how to verify whether a person has credible employer-sponsored insurance, now that the "ObamaCare" -- that the Obama administration is saying, We'll let people self-attest to their eligibility for "ObamaCare" subsidies...

    VAN SUSTEREN: Is that like the honor system in grade school?

    RYAN: It's the honor system!

    (LAUGHTER)

    VAN SUSTEREN: Oh, yes, that worked real well in my grade school!

    RYAN: They call it self-attestation, meaning...

    (CROSSTALK)

    RYAN: ... you just say you're eligible for all these subsidies, and you'll get these subsidies. Think of the fraud and the confusion that's going to follow from this! This is why we think we have a very good case for delay. This is why some Democrats are starting to agree with us on delay. And this is why we're going to make a methodical case all year long to pull apart this bill and to delay this bill because think of the kind of fraud that's going to follow when you only delay the employer mandate and not all the other (INAUDIBLE)

    VAN SUSTEREN: I mean, that's another thing. I mean -- I mean, why -- I mean, why delay the employer and not the individual? It's just -- I -- what's -- what's the sort of the reasoning behind that? Because the first thing I think of is, well, like, you know, that doesn't seem fair. It's either (INAUDIBLE) or not.

    RYAN: Remember -- remember this line? If you like what you had, you can keep it. We were about to witness as many as tens of millions of people losing their employer-based health insurance in 2014. They were worried that...

    VAN SUSTEREN: Because of the mandate?

    RYAN: Because of the mandate, because of what it was going to do to employers. It was going to encourage employers to dump their employees onto the government program off of their employer-sponsored health insurance.

    VAN SUSTEREN: So how's it going to get any better in a year from now, then? I mean...

    RYAN: It won't.