This is a rush transcript from "Your World," September 27, 2012. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST OF "YOUR WORLD": We interrupt this so-called recovery for something that's more like reality, this durable turnaround, well, not so durable.
In fact, when it comes to durable goods orders, not much ordering going on at all. The appetite for what they call big-ticket items that cover everything from planes to pasta makers caving more than 13 percent last month, the same month we learned that pending home sales reversed after hitting a two-year high, the same day we learned delinquent mortgages were down, but home foreclosures were up in the latest quarter, and that growth was cut to 1.3. percent in the same quarter.
All volatile numbers, to be sure, but they point to problems with a recovery that now is not looking so sure, especially in a week we heard 55 percent of small business owners surveyed say they wouldn't start a small business today, and 69 percent of manufacturers and other business owners say regulations are killing their businesses today.
Add 'em up.
To the Republican vice presidential candidate who says it's the U.S. economy that's headed down.
Welcome, everybody. I am Neil Cavuto.
And Fox on top of a number two back to issue one: jobs. Not happening. Paul Ryan making his case on the stump that America has hit a big bump and it ain't pretty.
But the man Republican operatives have reportedly been urging the Romney campaign to get out there and get blasting is here and now talking.
Congressman Paul Ryan joining me from Memphis, Tennessee.
Congressman, very good to have you.
REP. PAUL RYAN, R-WIS., VICE PRESIDENTIAL CANDIDATE: Good to be back with you, Neil.
CAVUTO: What do you make of these latest numbers? I know you've been talking about weakness in the economy. But prior to the data today, congressman, we had seen a pickup in consumer sentiment. We -- obviously, markets tend to go all over the map, but month over month, we have been seeing a pickup in the markets and investor confidence as well.
What did this signal?
RYAN: We've been seeing slow growth. Now we see that it is even slower.
Look, a downward revision from 1.7 to 1.3 percent that is a pretty big drop. The drop in durable goods is just an enormous drop. Look, Neil, this is not what a real recovery looks like. And as you just mentioned from the survey of businesses and manufacturers, they see more clouds on the horizon.
It's because of the president's failed policies. Look, Mitt Romney and I are proposing very specific pro-growth solutions to get real growth back in this economy. There is no reason why we can't get this economy growing at its potential and get people back to work.
That's why we are proposing pro-growth tax reforms, lower tax rates across the board. That gives us more take-home pay. That gives businesses an incentive to hire because they're keeping more of what they earn, regulatory reform, which is a cloud of uncertainty, a hidden tax on businesses.
We've offered a specific energy policy to unleash American energy, to be energy-independent in North America by 2020, job training reform, more trade agreements to promote trade and get the fiscal house in order.
We've put out specific plans on how to prevent a debt crisis, how to reform entitlements, how to cut spending, how to get growth, how to grow the economy and get people back do work.
That's the choice we're offering the country. We need to do four more years of these kinds of policies, which are producing these pitiful results, or we can get back to real growth, get people back to work, get back to that society of upper mobility. That's what Mitt Romney and I are offering.
And we have the specific solutions that we are giving the American people. And in the final analysis, I think they're going to like this choice they have.
CAVUTO: You mentioned the specific solutions. And I was a little bit confused yesterday, congressman, when Mitt Romney was talking about the tax cuts he was envisioning, that they wouldn't be as big as you think, that when you factor how we would phase out I guess exemptions and allowances in the deductions, and he didn't specify which, that it might not be the big tax cut a lot of folks were looking forward to.
Was he trying to brace us for some bitter news?
RYAN: No, not at all.
Look, what we're saying is lower tax rates through a broader base triggers economic growth. That's what we're talking about. And when people ask us about, well, whose tax loopholes are you going to go after, what we've been saying is by closing tax shelters for higher-income earners, which is what he's referring to, that allows us to lower tax rates for everybody.
Middle-income taxpayers get higher take-home pay. Businesses have lower tax rates, which helps them, compete globally, which helps them keep more of what they earn on the next dollar they make, which encourages job creation.
And so what we're saying is, by denying some of the tax shelters to higher-income earners, more of their income is subject to taxation, which means we can lower tax rates on everybody without losing revenue. And, in fact, we'll get more revenue because we know this will grow the economy.
These kind of pro-growth tax reforms, Ronald Reagan and Tip O'Neill did it. Bowles-Simpson proposes it. We're proposing it. Lower tax rates. Broaden the tax base. That is a pro-growth solution to get people back to work. That's what gets you higher take-home pay.
That's what lets people in the middle income keep more of what they earn. Under the current code, you send a bunch of your money to Washington and then if you do what we approve of in Washington, we might let you keep some of it back. That's picking winners and losers. Both parties are guilty of it.
CAVUTO: But you mentioned Bowles-Simpson, sir. And you voted against that. So your critics say...
RYAN: I liked that part of Bowles-Simpson.
CAVUTO: OK. But your critics are saying, well, you talk a good game, but you don't deliver the goods. What do you say?
RYAN: No, but what -- here's what people do.
If you don't like the plan that someone has put on the table, then put your plan on the table. That's what I've done. I have passed a budget through Congress. Mitt Romney's offered a plan.
President Obama has doesn't any of that. He disavowed Bowles-Simpson and offered no alternatives. What we did is we took what we liked in Bowles-Simpson and then added more reforms to it. The reason I didn't support Bowles-Simpson is because it didn't address the primary driver of our debt, health care programs, health care entitlements that are going bankrupt.
I don't want to pass a bill to fix the fiscal crisis when I know it doesn't fix the fiscal crisis. That's why we took the good ideas from Bowles-Simpson and combined it with the necessary reforms that truly prevent a debt crisis. That is what Mitt Romney and I are proposing.
You need three things: pro-growth economic policies. That's tax reform is all about. That's what regulatory reform, energy policy is all about. Spending cuts. And we've proposed lots different spending cuts and critical entitlement reforms that are market-based, that give people more control over their lives when it comes to health care, not some bureaucrat, and that doesn't make any changes for people in or near retirement, but reforms programs for my generation so they're there for my generation when we retire.
That is how you get ahead of this problem and that's how you prevent European-like austerity.
CAVUTO: A lot of people do look at what's going on in Europe, congressman, and Mitt Romney -- I believe you had said so yourself -- that, if we're not careful, we could follow that path of what's going on in Greece and what's going on in Spain.
But you said something interesting a couple of minutes ago, congressman. That is that by closing loopholes and special breaks and all that prevent some from paying any taxes at all, that that is a productive step forward.
Many conservatives in your party -- a year ago, when I was in Washington, as we were haggling out this budget mess, they looked at that as a tax increase and wouldn't countenance it. Are you saying that they better countenance it now?
RYAN: No, we're talking about revenue-neutral tax reform.
Conservatives across the board, and many Democrats, by the way, Democrats from the mid-'80s who worked with Ronald Reagan, some Democrats recently have said, pro-growth tax reform. We're saying revenue-neutral tax reform, which says, in exchange for some loopholes, everybody gets lower tax rates.
See that's what creates growth, Neil. By lowering the marginal income tax rate, you get a better return on your next dollar of investment, on your next dollar of work. This means middle-income families get higher take-home pay.
This means they get to keep more of what they earn in the first place, without having to send their money to Washington. This means small businesses. Don't forget, Neil, eight out of 10 businesses in America file their taxes as individuals.
This -- their tax rate's going above 40 percent in January according to President Obama's plans. That's where current law is going. Well, a lot of countries around the world are cutting their tax rates.
The average tax rate on businesses in the world is 25 percent. Canada lowered theirs to 15 percent. And President Obama wants the top tax rate on successful small businesses to go above 40 percent in January.
And that particular tax increase, Neil, it only pays for 8 percent of his proposed deficit spending. That's not a ticket to recovery. That's why we have the problems we have today.
CAVUTO: Now, you brought that argument across forcefully, very clearly.
The rap against the guy at the top of your ticket is that he has not. He's very smart, knows what he's doing, et cetera, but he lacks the passion. There are these stories -- I am sure you have heard them, Congressman -- that a number of GOP money guys and operatives have been saying, get Ryan out there, get him on the stump, get him going.
Is that true? Is this part of an effort to showcase the passion of the ticket?
RYAN: I do so many TV interviews, Neil. I've done over 100.
Here's the deal. I am doing them with regional. I'm talking to Dayton TV, Cincinnati TV. I'm talking to Richmond TV. I'm talking to, Neil, various North Carolina TVs, Wisconsin TV, Colorado Springs yesterday, and Fort Collins yesterday talking directly...
CAVUTO: Well, you mentioned Wisconsin. Are you troubled by the Wisconsin polls?
And they're just polls. And you always remind me of that.
RYAN: No, I'm really not.
CAVUTO: But for a while, it looked like you could take that state. And this is just a snapshot of the moment, but trailing further in that state.
RYAN: I don't actually believe the validity of that particular poll. I won't get into all the methodologies of that.
CAVUTO: Right. Right.
RYAN: Here's the deal. Here's the deal.
We are going to give the country a choice. The country deserves to have a choice. And the choice we're offering is, do you want the traditional American idea of limited government, economic freedom, opportunity, upward mobility, and a government that lives within its means that embraces the private sector, pro-growth policies to get us out of malaise?
Or do you want four more years of the same, more crony capitalism, more corporate welfare, more...
CAVUTO: This strategy is nothing new for you, right, sir? In other words, we might be thinking this is part of Paul Ryan unleashed, but you've always been unleashed. Now we're paying attention.
RYAN: Neil, I've been saying the same thing for years.
RYAN: Mitt Romney asked me to join this ticket because I am who I am.
You know me well enough to know that I'm not trying to be anybody other than who I am. And this is what we're offering the country, a very clear choice of two futures. We already know what Barack Obama's done.
RYAN: We already know about his broken promises. We don't want four more years of this.
We don't want four more years of 1.3 percent growth. For every person who got a job last month, four, nearly four of them stopped looking for a job. We can do better than this. And we're offering specific pro- growth solutions to get out of this malaise.
CAVUTO: OK. I'm sorry, congressman.
Switching gears very quickly, because I know you have to go to foreign policy. I know you've had now a security briefing. And I obviously don't expect you to reveal the details of that.
CAVUTO: But Benjamin Netanyahu -- well, you could, by the way, but that's I guess separate.
But Benjamin Netanyahu was, as you know, at the United Nations today, congressman, and warning in the starkest terms about how bad this Iran thing is getting. What would be the position of you and Mitt Romney as to how to handle Iran that's different from this administration, short of just going to war?
RYAN: Well, first of all, our policy is to prevent Iran from getting a nuclear weapons capability.
The best way to prevent war is to be resolved, is to have peace through strength, is not to gut your military, which is what the president is doing. I would have pushed -- we pushed for these sanctions three years ago that are just now coming into place only because of bipartisan opposition to the Obama opposition.
President Obama tried to backslide on these sanctions, fought us for years in Congress. We finally got them in place. They're beginning to work. And I also don't think the president is speaking with credibility when he talks about all options being on the table, because his administration sends mixed signals on this front.
And, therefore, we don't -- we're not seen as credible. I fear that the result of the Obama foreign policy is to project weakness, complicity, moral equivocation abroad. And look at the results. Iran is four years closer toward a nuclear weapon.
We said Bashar al-Assad needs to go a year ago just after we called him a reformer, and he's slaughtered 20,000 of his people with Russian weapons. And we are letting Russia basically veto our resolutions at the Security Council.
So this is not going well for us. We're seeing our flags being burned around the country -- around the world. And I would argue this is a large part because we look weak.
We won't be like that. The Romney foreign policy will be a peace- through-strength foreign policy. We will speak with clarity for freedom, for individual rights, for women's rights, for religious freedom, freedom of speech. And we will support those democracy movements. We will support those yearning for democracy. And we will not gut our military. We want to have the strongest military unquestioned. And I fear that all these cuts the president's pursuing, all this complicity that's projecting weakness.
CAVUTO: Paul Ryan, thank you very much. Good seeing you again.
RYAN: You bet. Take care, Neil.
CAVUTO: All right, the Republican vice presidential candidate, Paul Ryan.
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