This is a rush transcript from "On the Record," May 19, 2010. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX NEWS HOST: Now an "On the Record" road trip. We went to Capitol Hill and Congressman Paul Ryan from the great state of Wisconsin "On the Record" about the economic disaster in Greece and why you should care.
VAN SUSTEREN: Congressman nice to see you.
REP. PAUL RYAN, R-WIS.: Thanks for having me back.
VAN SUSTEREN: Greece, why should I care, your constituents in Wisconsin or anybody care about Greece?
RYAN: The contagion is the biggest concern we have right now, which is Greece, then the rest of Europe, and the fear in the credit markets contagion will come us to and raise our interest rates.
If people who buy bonds and countries who buy our bonds are worried about our ability to pay it, that means we will have to pay people a lot more money to lend us their money. That's the problem
VAN SUSTEREN: You say fear. Is this realistic and like likely to happen?
RYAN: The second point I would make is that we are on the same path as Greece. We're just not where we are right now. If you look at the finances of the U.S. federal government, our debt is just as high as theirs. Our deficit is just as high as theirs.
And if you look at where we are headed in America with more of a welfare state society, we are on the path to Greek-like finances. That's the point we make here, which is let's get off this Greek-like path and back on to living within our means as a government and having a cradle -- not a cradle to grave welfare state society but the American idea.
We want to basically have a safety net instead of a welfare state, and if you look at logical extensions of that means, we are going to look like Greece.
VAN SUSTEREN: Are you saying we are going to look like Greece because we are creating the same sort of economic environment, or because of the contagion aspect, that Greece's problems will be visited on us? Those are two different things.
RYAN: Exactly. Both points I'm making. The biggest fear right now is possible contagion and what that will do to the credit markets and our bonds and borrowing costs and our economy.
VAN SUSTEREN: You described that as fear. Is that likely?
RYAN: We watch the risk spreads, the credit markets. Right now they are calmed down because they did a massive TARP on the entire European continent.
What you have with this new trillion dollar bailout in Europe is northern Europe bailing out southern Europe that has calmed down the credit markets. Hopefully that calm will stay, but they have a bumpy road ahead. If the credit markets destabilize further like they were a week ago, that could give us contagion.
VAN SUSTEREN: As I understand it, this bailout is a temporary fix. In order for it to sustain itself Greece isn't just supposed to take the money but needs to change.
RYAN: That's' right. It is called us austerity measures, lots of spending cut us and unfortunately lots of tax increases.
What this bailout of Europe is more borrowed money to bail out the fact that they borrowed too much. I don't think in the end this works. The problem they have in Greece, Portugal, Italy, Spain and other European countries which is now they have to crank up taxes which will slow their economy, and they are having to cut spending and having a hard time doing that. Look at the riots occurring.
We don't want to go down that path. It is not too late for America to switch and get off this trajectory we are on, which is exactly like where they are, and prevent this from happening in this country.
That's why I put in roadmap plan out there which shows you it is not too late for America to get its finances right and prevent that situation from coming here in this country.
VAN SUSTEREN: Big picture, and that sounds bleak and horrible unless we change. But if you are sitting home tonight and watching this, what does it have to do with me? How does that affect me as I'm going to work every day, feeding my family, sending the kids off to school? What is the hands-on impact?
RYAN: The budget we are living under now doubles the debt in five years and triples it in 10 years. This Congress raised taxes $670 billion and is spending $1.8 trillion. The point I'm making is we can't keep going down this path because it is going to cost us jobs, result in much higher taxes, much higher interest rates and inflation. And inflation hurts the middle class.
VAN SUSTEREN: It is not necessarily a long -- short term problem?
RYAN: The short term is it is going to result in slower economic growth, higher taxes if we don't get spending under control. That's the problem. In the long term we know our next generation going to have a lower standard of living. We know the debt he we are giving the next generation is unsustainable.
VAN SUSTEREN: What you tell me is we need to get our own house in order, do our own spending cuts, sort it out. But we also need to make sure because of the contagion aspect, we need to make sure Greece, Portugal, and Spain and all the other troubled countries, what do we do to handle that problem so it doesn't contagiously come back here?
RYAN: That's the biggest wakeup call if there ever was one. And the best thing we could do is start controlling spending. Start cutting spending. Us, Americans cut spending in the federal government to show the credit markets that we are going to get our act together and that problem is not going to happen here.
VAN SUSTEREN: Are you telling me Greece can have its problem, even Spain, Italy, and anybody else, but if we get our situation in order it is not necessarily contagious?
RYAN: That's right. We can stem and reduce the risk if we get our fiscal house in order and put our finances on the right track.
Unfortunately, our finances is on the wrong track. The government right now is proposing so much more borrowing and spending, which spreads the fear that we're not going to get our fiscal house in order, and the things happening in Europe could more easily happen in America.
We have to prevent that by switching over to a more spending control. The problem in Washington is not revenue or tax problem, it is a spending problem. If we actually show the courage of getting spending under control we are much more likely to weather this storm and prevent these kinds of European problems from washing up on our shores.
VAN SUSTEREN: Value added tax?
RYAN: A bad idea.
VAN SUSTEREN: Why?
RYAN: If you basically say we are going to have a new revenue tax system on top of the current tax system we will have, then we will have European levels of taxation, and guess what you have in Europe? A lower standard of living than in America. It means less jobs, less prosperity, lower standard of living.
Again, we don't want a new tax system on top of the current tax system to fuel growth of spending because that means less prosperity, lower jobs.
A lot of us conservatives are for consumption-based tax reform, replacing the current tax system, not on top of the current system. So all of the talk today about VAT is throw that on top of the taxes we have now which simply means don't address spending, just raise taxes. That will kill our economy.
VAN SUSTEREN: Congressman, thank you, sir.
RYAN: Thank you, appreciate it.
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