Congressman Paul Ryan: 'We have a moral obligation to balance the budget'

This is a rush transcript from "On the Record," March 21, 2013. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Tonight, Congressman Paul Ryan is here, fresh off a party-line budget victory in the House of Representatives!


REP. JOHN BOEHNER, SPEAKER OF THE HOUSE: Every family in America must balance their budget. And today, House Republicans our bold plan to balance the federal budget over the next 10 years.

REP. PAUL RYAN, FORMER VICE PRESIDENTIAL CANDIDATE: We still have no budget from the president, in violation of the law!

UNIDENTIFIED MALE: It's interesting that the president's brackets, they're always on time. His budgets not so much.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm going to have to go to Ohio State.

I'm going with Florida.

I don't want people thinking that I'm only Big 10 all the time.

UNIDENTIFIED MALE: Crazy that it's been four months since the election and he still needs Florida and Ohio to win.


UNIDENTIFIED MALE: Breaking news, Nicole, out of Washington, with the House approving Congressman Paul Ryan's budget.

BOEHNER: This budget does more than just balance.

UNIDENTIFIED MALE: Can we reduce our deficit and debt and still help those who are the neediest in America? Can we have a safety net that survives and still reduce the deficit? Paul Ryan says no.

RYAN: At least budgets are passing around here, for a change. Government's going to have to learn to do more with less. It's not government's money, it's the people's money.

BOEHNER: The budget that Senate Democrats are considering never balances, ever.


VAN SUSTEREN: And House Budget Committee chair Paul Ryan telling us Republicans and Democrats are still worlds apart. Well, that is an understatement! We saw that just an hour ago, the Democratic-led Senate defeating the Ryan House budget 40 to 59. So is there any hope left? Here's Congressman Paul Ryan.


VAN SUSTEREN: Mr. Chairman, nice to see you, sir.


VAN SUSTEREN: OK, I want to talk about the budget that passed today. I imagine you're pretty happy.

RYAN: We're very happy about it. Look, we passed a balanced budget. We think it's important. We owe the country a balanced budget. It's a reasonable plan. It grows the economy. Balancing the budget is not just a statistical exercise, it's the necessary means to a healthier economy, creates more jobs, helps people keep more of their own hard-earned money. And it's a big contrast to the other budgets that are passing.

At least budgets are passing around here, for a change, but all the other budgets have trillion-dollar-plus tax increases and have net spending increases. And when he you have a trillion-dollar deficit, we need to work on our spending. And when the other side's offering even more spending increases and even more tax increases, more borrowing, we're still kind of worlds apart.

VAN SUSTEREN: All right, I went through the budget, at least, and it's very complicated. At least I think it's complicated. I'm trying to understand it. I want to go to different provisions so that I understand.


VAN SUSTEREN: Let me start first with Medicare. As I understand it, under your program, it doesn't affect anyone over the age of about what, 55?

RYAN: Right. So if you're born 1958 or earlier, it doesn't affect you, meaning you stay in the current Medicare program just as it's designed now. In addition, we get rid of the "ObamaCare" Independent Payment Advisory Board. That's the board of 15 bureaucrats next year that are in charge of cutting Medicare in ways that Medicare tells us will lead to denied access to current seniors. And so we don't think we should change Medicare for current seniors, which is what "Obama care" does.


RYAN: And so we proposed a new system for younger people that works like what we have in Congress.

VAN SUSTEREN: All right. As I understand it, there are two choices under your provision, if you're under 55. You can either have Medicare as is or you can have a federal subsidy so you can go out and buy your own. Is that correct?

RYAN: In a Medicare exchange, meaning you have guaranteed coverage options within Medicare. So they're comprehensive private plans. Just like the prescription drug plan works today or like federal employees buy their insurance. So it's guaranteed. You can't be denied. You get to pick among these plans. They have to meet at least Medicare's criteria. And then you get to choose among these benefits. Or if you want the traditional program, you can do that.

VAN SUSTEREN: How is that a savings? Because either it's a savings because you're getting less services if you're under 55, or it's -- or some -- or- or- there's less money being put into it by the federal government. So which is it?

RYAN: So what we do is we give people basically the average amount that Medicare gives you today, but with a couple of changes. Number one, if you're wealthy, we don't give you nearly as much. If you're poor, you get an additional subsidy to cover all your out-of-pocket...

VAN SUSTEREN: Or you can stay in Medicare as is.

RYAN: And that -- but you get a finite amount of money to go into Medicare. And so we adjust it, based on sickness, based on wealth, we means test it, more for the poor, less for the wealthy. That saves money at the end of the day. But the choice and competition was what really drives down the cost increases.

Like Medicare part D -- that's a program that came in 49 percent below original cost estimates because seniors got a choice of plans. If they don't like their plan this year, they can fire it and go to a new one next year. Those plans compete against each other, and that drives down costs and increases quality. It's a bipartisan idea, and we want to apply that idea to the rest of Medicare for the younger generation.

And what this shows is you can make Medicare solvent and sustainable. You can make sure that you don't change it for current seniors and save it for the next generation by doing these kinds of reforms.

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...


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.


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...


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...

RYAN: No, I've seen those studies.

VAN SUSTEREN: But I mean...

RYAN: Staffers and people from the IRS and other government employees.

VAN SUSTEREN: Is -- I mean, what -- that's sort of a side issue, but I mean, you know, what effort is being made? I mean, I know there's some bills have been introduced, but -- to do something about the tremendous amount of waste in government, whether it's empty buildings, people getting payments who shouldn't, people getting unemployment who are in jail. I mean, the numbers are sort of staggering. There's so much fat in our government!

RYAN: Each of those things you just you said right there -- empty buildings -- we have a process in this budget that says, Let's dispose of all this excess property. Let's sell some of the federal excess lands and buildings that we don't need. That saves money.

What about -- we call it program integrity. We've got to invest in going after the waste and the fraud and abuse that is occurring in these government agencies. Those are components of our budget, well.

The point we're trying to get it is we're not trying to take a meat axe, some kind of a formula, like the sequester that says across the board. No, we're saying let's use a scalpel to go after the wasteful Washington spending to make sure we reform these programs that are going bankrupt so they fulfill their promises.

And let's have a leaner federal government that respects states' rights. Every community is different. We shouldn't cram one size fits all programs on all our different communities and say that that's how we're going to fight poverty and other problems we have in America. We want to respect the Constitution, respect federalism, limit the size of the federal government so that we can keep economic freedom going and pay off our debt.

The debt is crushing our economy. It's slowing us down and it's guaranteeing the next generation has a diminished future. And we believe we have a moral obligation to balance the budget to get a healthier economy and create jobs.

VAN SUSTEREN: What I don't understand is that -- I mean, I know your mother's -- you talked about Medicare with your mother during the campaign, and I think it was Senator Stabenow today who said that the Ryan budget eliminates Medicare. I mean, good people are saying, like, you know -- you know -- how do we know who to believe? You know, and Senator Stabenow is a good, decent, hard-working U.S. senator. I mean, why is she saying it eliminates Medicare? Is that -- have you not spoken to her and explained your system, or does she think that way...

RYAN: You know, I don't know. I would say why don't you talk to your fellow Democrat, Ron Wyden, who's been supporting these reforms for a long time. Why don't you talk to Alice Rivlin, the head of the Clinton administration Budget Office, who worked with me on crafting these reforms.

I think they think they can get political advantage by scaring seniors into supporting their program. You know, the dirty little secret about this, Greta, "Obama care" changes Medicare as we know it. "Obama care" is the law that puts a board of 15 bureaucrats in charge of cutting Medicare that leads to denied access to current seniors.

What we say -- get rid of this board, make sure that all the savings from Medicare goes to Medicare solvency, not to pay for another program by raiding it. And oh, by the way, people who are on Medicare, they organize their lives around this program. And before a debt crisis, the moment we're in right now, we can put reforms in that guarantee the program doesn't change for those who are in and near retirement, but we must reform it for our generation and the younger people so that we can keep that promise.

If we keep kicking the can down the road, if we keep borrowing and spending like we are, we will have a debt crisis, and then everybody gets cut in real time. That's what's happening in Europe.

VAN SUSTEREN: All right, so the Senate has a budget now. The House has a budget. The president doesn't have his budget. But now the whole idea is that the two budgets will have to be somehow reconciled.

RYAN: Right.

VAN SUSTEREN: If -- if you have different sides of the aisle saying things about each other, whether they're exaggerated, not true, political advantage, or -- you know, they're mistaken, or whatever, how in the world do we ever get the two sides in conference to work and really take your budget, the Senate's budget and figure out a solution?

RYAN: That's the question of the hour. Look, we had to threaten withholding members' pay for not budgeting to get the Senate to do a budget this year. Whatever it took, I'm glad we've got the Senate actually doing a budget. We're worlds apart. And I think what people are, they're stuck in the old campaign rhetoric. They're stuck in the old, This horrible plan ends Medicare as we know it, to try and scare seniors because that's what they're been saying for four years, even though it's the only bipartisan idea to actually save and strengthen Medicare. Now, we don't like "ObamaCare." So we talk about, you know, how we don't like that.

VAN SUSTEREN: You talk about getting rid of it.

RYAN: Right. So here's what I see. I see a process going like the law requires. The House passes a budget, the Senate is passing a budget. First time we've seen that in four years. That's a good thing.

So the question now is, can we start looking for common ground? Can we start advancing toward a compromise? And the way we look at this as House Republicans, we understand that our budget probably won't become law in every great detail, but hopefully, we can get a down payment on this problem.

VAN SUSTEREN: So are you...

RYAN: Hope we get a down payment on the deficit and the debt to try and buy the country time and prevent a debt crisis.

VAN SUSTEREN: So there's some compromise built into your budget.

RYAN: Yes. We cut $4.6 trillion. So somewhere between zero and $4.6 trillion in savings, I'd like to think there's a compromise. What makes this a little different is the Democrats actually increase spending. They net increase spending at a time when we have record deficits. And they want another trillion-dollar tax increase on top of the $1.6 trillion tax increase that has now already occurred in law.

VAN SUSTEREN: Well, the biggest...

RYAN: And so that's why we have a big difference of opinion.

VAN SUSTEREN: Well, the biggest trick in the book of negotiating is, I mean, if you were the -- under your theory, is the Democrats would say, you know, they want a gazillion tax increase and you say you want a gazillion cut in spending. You know, the father out you put your numbers, the more likely it is that you look like you give when you go to the table.

RYAN: Well, we'll find out. But look, people are tired of paying more taxes. We shouldn't be paying more taxes just to fuel more spending this Washington. We should be cutting our spending because you know what? For every $2 we bring in, we spend $3. You can't keep doing that.

VAN SUSTEREN: Is there a role for the president in this process?

RYAN: Well, normally, you would think that the commander-in-chief would lead by example by putting a plan on the table to say, Here's how I fix America's economic and fiscal problems. He hasn't done that. He hasn't done that yet.

More to the point, his budget was due the first Monday in February and he still has yet to deliver it. I think cynical observation would be he's playing politics. He's waiting for Republicans to go so he can beat them up, and then he'll do something later.

Whatever his motivations for delaying his budget are, I hope that he begins to engage. I think the charm offensive is helpful. The question is, is it real and will it last? If it is real and if it does last, then I think we've got a chance of getting a down payment on the problem fixed.

VAN SUSTEREN: All right, let me ask you the final one dopey media question we always ask. What are your plans for 2016?

RYAN: My plans are to work on this problem right here.

VAN SUSTEREN: I know, I know, I know.

RYAN: No, seriously...

VAN SUSTEREN: But have you thought at all about the presidential race? Is it in the cards?

RYAN: It is in the cards from -- I'm going to take a look at this seriously later. But the way I look at this is, I should not be clouding my judgment in doing my job right now. I'm the head of the Budget Committee. I represent Wisconsin's 1st district, and I should not be putting into my mind, you know, some kind of political consideration three-and-a-half years down from now because I think that will cloud my judgment.

What I need to do is look at the moment we have right now. We're on the cusp of a debt crisis. We have a fiscal problem. We have an economic problem. I need to focus on that and I need to make sure that I make the right decisions for the right reasons on dealing with this issue.

Then when we've dealt with that, then I'm going to give serious consideration to these other things. But I for the life of me don't think I should be focused on some political promotion or whatever down the road when I have an important job to do right now.

VAN SUSTEREN: Safe to say, Go Badgers, though, right?

RYAN: Go Badgers. Go Packers. Go...


RYAN: You know, think 10. I'm excited about the big 10 this year.

VAN SUSTEREN: I'm just teasing you.

RYAN: Go Badgers. Don't forget Marquette. You know, they're -- they're -- they're...


VAN SUSTEREN: Yes, I understand that. Anyway, nice to see you. Thank you, sir.

RYAN: Thanks, Greta.