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Special Report

Politics behind Ryan plan to lower deficit

This is a rush transcript from "Special Report," March 20, 2012. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

REP. PAUL RYAN, R - WI HOUSE BUDGET COMMITTEE CHAIRMAN: We propose to sav e and strengthen Medicare by taking power away from government bureaucrats.

REP. XAVIER BECERRA, D - CA.: It ends the Medicare guarantee for seniors. It cuts obviously benefits to seniors who need health care.

RYAN: We propose to collapse the six different tax brackets into two rates, a 10 percent bracket and a 25 percent bracket for individuals.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Hey, I'm going to give you a tax break and, hey, I'm going to eliminate the AMT, and then have no details on how you would pay for them.

REP. JOHN BOEHNER, R - OHIO HOUSE SPEAKER: Our budget will protect seniors and really begin to deal with these tremendous deficits that have been driven up by this administration.

CARNEY: It is not a plan that this president could support.

(END VIDEOTAPE)

BRET BAIER, ANCHOR: The reaction today to House Budget Committee Chairman Paul Ryan laying out a sweeping reform. The Republican budget includes, as you heard there, bringing down the tax brackets from six to two, 10 and 25 percent, corporate tax rate at 25 percent and federal spending cuts of $5.3 trillion over the next 10 years.

What about this, the way forward politically and in this policy? Let's bring in our special expanded panel from Washington. Bill Kristol, editor of The Weekly Standard, Mara Liasson, National Political Correspondent of National Public Radio, syndicated columnist Charles Krauthammer, and Brit Hume, Fox News senior political analyst.

Mara, start with you, your thought of this budget and what it means politically?

MARA LIASSON, NATIONAL PUBLIC RADIO: Well, I think what it means politically is Republicans now have something to rally around. It's simple in terms of tax reform, two rates. Cuts spending a lot, which is something that Republicans want.

The big piece that's missing really is they say they want to get rid of tax expenditures that's how they're going to do this tax reform, they're going to broaden the base while they're lowering rates, but they don't say what tax expenditures they're going to cut. So I think that's a question that still remains to be answered. They haven't said yet exactly what income levels will go into the tax bracket. But I do think it's clear. It does say that it's going to solve the problem and it gives Republicans something to run on, and that's important.

BAIER: Bill?

BILL KRISTOL, EDITOR, THE WEEKLY STANDARD: Yes. I think it is what the Republican nominee's going to run on and I suspect it's what the Republican president, if there is one in January of 2013, will govern on. So I think in some very important way this is now Paul Ryan's party, at least when it comes to budgetary matters, fiscal matters, debt, deficit and Medicare reform, which is an awful lot of things. And incidentally, he also addresses defense. As you know they're this sequester which is hanging over everyone which would impose brutal cuts on the defense budget next year. And he didn't have to do this as budget chairman, but he also shows a way to get out of the sequester, take the cuts out of mandatory, domestic spending programs, so you get to the same deficit reduction number, this is in next year, without destroying defense, which is something that is awfully important to a lot of conservatives, including me.

So I think what Paul Ryan has done is really a task of intellectual and political leadership, and it will now be up to him and his colleagues and above all to the Republican presidential candidate to make the case that this is a better way forward than President Obama's.

BAIER: To that point, Brit, two reactions, one from Mitt Romney about this budget plan, saying, quote, today, "The House Republican budget rejects the out-of-control spending and higher taxes proposed by President Obama in his budget last month, by imposing prescriptions that will strengthen Medicare for generations to come. It also highlights President Obama's failed leadership on entitlement reform." Newt Gingrich saying, "The House GOP budget is a courageous plan that correctly understands the key to returning to a balanced budget is robust economic growth, spending control, and bold entitlement reform," a much different answer from Newt Gingrich, for example, from a year ago.

BRIT HUME, FOX NEWS SENIOR POLITICAL ANALYST: That's true, Bret. And let's underscore what is really critical about what Paul Ryan is proposing here. The big driver of deficit spending, the big out of control program is Medicare. He proposes to change Medicare from a program of an open-ended program of basically unlimited benefits where the only way you can press the cost is by taking out of the hides of medical providers, which really doesn't work, it makes medical care less available, and he imposes limits on it.

It is going to be very hard to pass that. It won't pass this year, certainly won't pass this year. It will never pass with Democrats in control of the Senate and the White House. Paul Ryan clearly believes that at some point a day of reckoning is coming. Medicare will collapse of its own weight if something isn't done to change it. He is betting that it's time to put himself and his party on the side of avoiding what he calls the most predictable fiscal crisis the country's ever faced.

That is the key here. It's going to take guts for these House Republicans to go along with it. It looks like the presidential candidates are going to support it. That's an encouraging sign for what Ryan is trying to do. But make no mistake about it, the big item here, the tough one is Medicare because that's the big driver.

BAIER: We should point out there was no statement from Rick Santorum. Ron Paul said that the budget doesn't really cut anything, any spending.

Charles, the political danger here is that Democrats, obviously, and they already started today, will pounce on this and try to turn the discussion. How successful can they have doing that -- will they have, doing that in this environment?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, they already had a campaign on last year's Ryan budget, the "Medi-scare" campaign, which was in part, dishonest. They said it abolishes Medicare, in fact it just changed it, amended it, and changed it in different ways.

They're gonna have a harder case today because the new Ryan approach makes one major tweak. He got Ron Wyden, the Democratic senator of Oregon, to join him in a joint proposal where you do change Medicare from a guaranteed program of provider payments, meaning fee-for-service, into one where you guarantee the premium, the cost of the insurance.

However, what he added now in this budget is a provision that if you want to choose the old traditional Medicare, you can do that. So now any Democrat who charges that it abolishes current Medicare is not speaking the truth. They will try that. They will say it. They said it today already. But it simply isn't so. It's one of the options that is offered. And that was a very important change.

And remember, the House Republicans approved the budget last year without a provision of that sort. So now I think they have some kind of political protection. And it will make the argument -- the dishonest argument of the Democrats of abolishing Medicare a lot more it difficult.

BAIER: Mara, you look at this chart and Paul Ryan used this today, citing the OMB and CBO numbers and he says it's the two paths that go forward. And basically this budget calls for federal spending reductions over the next 10 years of $5.3 trillion, and he points out that the current path continues to go up as a percentage of GDP to debt.

LIASSON: Look, what he is doing is trying to get the discussion, the election-year debate, back onto the deficit. It's kind of remarkable. We went through this whole year of one commission after another laying out paths to bringing the deficit under control, how you could do tax reform, how you could raise revenues with tax reform, how you could cut spending, how you could do this, that, and the other thing. And they all laid out more or less the same plan with slightly different tweaks.

And then it dropped, it just disappeared into a black hole, and you haven't heard these candidates talking much about it. But I do think now that Ryan has come out with this, I think this will get more talk from the Republican candidates.

BAIER: Bill, the Senate has not passed a budget in quite some time.

KRISTOL: Right.

BAIER: I think it's 1,060 days. There is probably very little hope that this budget has a chance anywhere near the Senate.

KRISTOL: No. But Republicans really need to make the case that it should be passed. And Mara's right that they need to get back to the urgency of the deficit and the debt. The debt has gone up from slightly under $10 trillion when Barack Obama became president to slightly over $15 trillion. It's gone up 56 percent. It is totally unsustainable. And under Barack Obama - under President Obama's budget, the debt continues to go up at almost that rate.

And the Republicans reduce the rate of growth of the debt. It turns over in a couple of years, so to speak, as a percentage of GDP, and starts to go down. I think the Republicans and presidential candidates are busy squabbling with each other and worrying about things and they're not making the case for the urgency of the kinds of Medicare reforms and other reforms that the Ryan budget presents.

HUME: Let's not forget Bret, that this issue of spending and out of control debt is what drove the 2010 election. So I think that sentiment that drove that is still out there to be tapped.

BAIER: Panel, thank you very much for the Brady Bunch version. Next up here from Chicago, Illinois political experts on today's big primary.

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