Paul Ryan: Obama, White House showing 'arrogance of power,' trying to change subject with 'phony scandals' narrative

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!


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

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


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.

VAN SUSTEREN: Well, so the whole point of just -- just -- I mean, you would think they'd get rid of it totally, if that's the problem. Just putting off for a year, of course, then raises the sinister question that this is just done to get through the midterms.

RYAN: I personally believe that that's the case. I believe this was done for political reasons.

VAN SUSTEREN: Just because -- because it's midterm elections.

RYAN: I believe that's the case.

VAN SUSTEREN: I tell you what I...

RYAN: You know, we also think we have a better case to make getting rid of -- delaying the rest of the law, and that's the case we're going to prosecute.

VAN SUSTEREN: I'll tell you what I -- I'm suspicious of, that it was done on July 2nd, right before the 4th of July weekend, sort of in an effort to minimize the impact to the media. But even more importantly is that a lot of decisions of businesses based on that mandate. And I'm really curious when they made a decision to delay the mandate for employers because if it was back in February (INAUDIBLE) that affects people's jobs.

RYAN: Oh...

VAN SUSTEREN: If -- or unless they just made it on the 1st of July. If they made it on the 1st of July, fine. But if they made it earlier, you know, it hurts Americans.

RYAN: We had a hearing in the Ways and Means Committee. We had the Treasury Department testify. They would not answer the question when they made the decision to do this.

VAN SUSTEREN: What, did they just deny it, or (INAUDIBLE) say they don't know?

RYAN: They just -- they just -- they just -- you know, they just slow walk it. They just say they don't know. And here's the other point...

VAN SUSTEREN: Couldn't they give you an estimate?

RYAN: No. Here's the other point. Businesses are already making these decisions. I mean, you already know the story about the 40-hour work week getting shrunk to 20-something hours. So many businesses have already been making their decisions. So we already see a lot of businesses making these decisions, maybe not as many with the delay, but they're all getting ready to say, I can't afford this. I'm not going to offer health insurance to my employees.

Unfortunately, I think that's one of the biggest problems with "ObamaCare." It's a terrible disaster of a law, but it's going to cause so many people to lose what they already have and like in health insurance even if this delay occurs. If you keep the individual mandates, if you keep all the other parts of "Obama care," this thing really is going to be a train wreck.

And that is why we want to prosecute the case to defund and delay this law. I think if we can get it delayed and point out how bad it is, we can make a stronger case for ultimately replacing it. And we're making progress. We're making progress with the votes we're having. And we're going to bring specifics to the country and we're going to let Democrats in the House of Representatives get to choose on these individual provisions, whether they stand with the American people or (INAUDIBLE) they stand with this law that is going to be a train wreck.

VAN SUSTEREN: All right, let me tell you something I have a little bit of a rub with, and that's the continuing resolution that funds the government and the debt ceiling. Continuing resolution ends at -- or expires the end of September, and we have the debt ceiling that we're pushing up against.

And in spite of that, members of Congress, both sides, and the president all taking essentially August off instead of dealing with this right now. Why not -- why not deal with the continuing resolution and deal with the debt ceiling and take your vacation later?

RYAN: Well, I mean, people like me, as the chairman of the Budget Committee, I'm going to be working on this all August along with the people I work with on the Budget Committee on these issues. September 31st is when the continuing resolution expires. We'll be ready to go on September when we come back.

VAN SUSTEREN: But it sends such a bad message that everybody goes off! It has the appearance of (INAUDIBLE) even though you're working on it behind the scenes is that, you know, everybody's gone. We know where everybody's going. We know who's playing golf. We know who's going to Martha's Vineyard. We know all that stuff.

And the American people know that it's -- that the expiration date is the end of September. And you know, it's sort of you do your work first and then you play. And instead, we're going to have this big, huge, you know, burn the midnight oil and this crazy scene at the end of September trying to resolve it!

RYAN: I don't see it as a crazy scene at the end of September. I think we'll just, unfortunately, probably have a continuing resolution. We passed a lot of appropriation bills in the House already.

I think the debt limit is where you're going to see more negotiations occurring. We are not going to give the president a empty -- a blank credit card. We are going to insist on real debt reduction and economic growth policies as we get to these fiscal issues. We are not going to give him what we call a naked debt limit increase that he's asking for because simply, we've got to address the drivers of our debt.

VAN SUSTEREN: All right. All right, let me ask -- let me talk to you about the war on poverty, something you mentioned today, and we never hear a discussion about war on poverty, but I have to congratulate you talking about it because poverty is a major problem in this country for so many Americans.

RYAN: This is an issue I care a great deal about. I've worked on it quite a bit. I had a hearing on this today in the Budget Committee. Look, next year is the 50th anniversary of the War on Poverty. We have spent $15 trillion from the federal government fighting poverty, and look at where we are, the highest poverty rates in a generation, 15 percent of Americans in poverty. That's 46 million people.

The war on poverty has been fought with all this money and time, and poverty is winning. And so what we're trying to ask ourselves is, instead of measuring our poverty-fighting efforts on inputs, on how much money we throw at programs or how many people we put on programs, why don't we measure with results, with outcomes? How many people are we getting out of poverty on to lives of self-sufficiency on the ladder of life to enjoy the upward mobility that is -- that we know as the American idea? We're not measuring our poverty-fighting efforts based on outcomes and how we improve people's lives.

VAN SUSTEREN: I think many people think the Republicans, they don't care about poverty. And Republicans just want to starve people. They just want to do these horrible things to people. And I will say that, you know, since our poverty class has increased in the last 50 years, whatever we're doing is wrong. I mean, it's just not working.

Are you -- you know, are you willing to make a commitment, or can you make a commitment to the American people that -- you know, that we'll change this?

RYAN: Yes.

VAN SUSTEREN: We're actually going to get people out of poverty?

RYAN: Why do you think I'm doing these committee hearings?

VAN SUSTEREN: I don't...


RYAN: Why do you think I'm doing all this research?

VAN SUSTEREN: ... I was delighted you were.

RYAN: What we're saying is this is not working. We've got to do a better job on this. And let's figure out exactly what kind of policies. The problem is, if you try to measure compassion based on how much government you build in Washington and how many programs you spend and how many people you put on programs, then we'll never compete with that bidding contest.

And by the way, it's not working. It's actually trapping people in poverty. We need to go at the root cause of poverty to try and break the cycle of property instead of perpetuating poverty by funding the symptoms of poverty. And so these are the kinds of answers we Republicans in the House are going to go after to come up with better ideas for fighting poverty. This should not be a Republican/Democrat thing. This should be a what works thing, and that's what we're going to tackle.

VAN SUSTEREN: Prosperity beating poverty.

RYAN: Every time.

VAN SUSTEREN: Anyway, the president was speaking, at least today or yesterday, about reform, tax reform, in Tennessee. And he talked about things he wants to do for corporate taxes. And you call this, I guess, a raw deal?

RYAN: It's a raw deal, and I think it's more crony capitalism. The president likes picking winners and losers. He likes some businesses off the hook with "ObamaCare," but he's not going to let families and small businesses off the hook. He wants to help his green energy cronies, but he won't help us get the oil and gas we have in this country. Now he's saying he's willing to cut taxes on large corporations -- I'm all for that -- but not on small businesses.

VAN SUSTEREN: Why not? Why doesn't he want to cut it on small business?

RYAN: You're going to have to ask the president this question, but 80 percent of American businesses, they don't file their taxes as corporations...

VAN SUSTEREN: They do it as individuals.

RYAN: They do it as individuals. And the top individual tax rate now is effectively 44.6 percent. So a 44.6 percent tax rate on successful small businesses, that's where most of our jobs come from, and he's saying a 28 percent tax rate on large corporations. That's not fair.

And so we want fairness. And so when we do tax reform, as we are doing it in the House, we want fairness. We want tax rates coming down on everybody -- small businesses, families and corporations, not just corporations.

VAN SUSTEREN: What do you think about the way that Senator Orrin Hatch and -- over in the Senate has been talking about basically, you know, get rid of all the deductions and let every sort of member of the U.S. Senate come to him with deductions that should be included in.

RYAN: I think it's great. It's exactly the process we're going through in the Ways and Means Committee in the House, as well.

VAN SUSTEREN: So when are we going to see tax reform?

RYAN: This fall.

VAN SUSTEREN: What's your expectation?

RYAN: This fall, our -- I can speak for the House, the House Ways and Means Committee. We plan on rolling out tax reform this fall. And what that means is, get our tax rates down, close loopholes, broaden the tax base. The idea being it's your money in the first place, you keep it.

Instead of having really high tax rates with a bunch of loopholes, where you send your money to Washington, we switch it around in (ph) bureaucracy. And then if you engage in behavior that we approve of, we'll let you have some of your money back.

That's crony capitalism. It isn't working. It's hurting job creation. It's making it harder for families to get by. Lower everybody's tax rates across the board, you create more jobs, more economic growth, more take-home pay. That's what we're all about. And that's what we're going to be -- we're going to be bringing this out in the fall.

VAN SUSTEREN: All right, a quick question. Estate taxes, will that be -- what's -- what do -- what do you predict?

RYAN: Everything's on the table.

VAN SUSTEREN: Everything is?

RYAN: I'm not going to go into the specifics because we're still getting input from around the country and from our colleagues, just like Orrin and Max are doing in the Senate. We're gathering that input, we're putting it together. Everything's on the table.

VAN SUSTEREN: Congressman, we want to get your reaction to a new poll. Take a look. Your favorability is 65 percent. You're in first place. Senator Rand Paul is next with 55 percent, followed by Senator Marco Rubio with 50 percent, Governor Chris Christie with 47 percent.

What do you think about those results?

RYAN: I'm an Irish Catholic. I have a lot of relatives. They probably were part of that poll.

VAN SUSTEREN: No, seriously!


RYAN: I don't know.

VAN SUSTEREN: What do you think about that?

RYAN: It's very nice. Look, I really enjoyed going around the country and meeting a lot of people. My family loved it. We got to meet so many people who are passionate and care about their country. So I had this benefit of spending 90 days criss-crossing America, fighting for the American dream. We didn't win the election. We got close. But it was a real honor. So I'm just honored to have had this opportunity to get to know a lot of people.

VAN SUSTEREN: What -- what are your plans? I know you're going to say I -- let me guess. You're going to come back. You're going to say, We did the tax code, we can do the debt ceiling, all that. But I mean, seriously, long-term, what's your...

RYAN: I don't -- to be honest with you, Greta, I don't -- I'm not thinking long-term right now. I'm thinking right now. I'm thinking where the country is today. I'm thinking of the problems we've got. They're serious. And I'm thinking what can I do as a leader in the House, as the chairman of the Budget Committee, to make a big difference for my country, for the people I represent, to get people back to work, to get this economy growing, to bring accountability to the federal government, to try and reduce the arrogance of power out here in Washington.

Those are the things I'm working on. There are a lot of specific policies I can get into. But the way I see my job is to do it well and not worry about the next thing. I'm not focusing on that right now because we have a lot of work to do in the House.

VAN SUSTEREN: You know who I miss is Senator Proxmire from the state of Wisconsin with the Golden Fleece Award for all the ridiculous...

RYAN: I shook his hand...

VAN SUSTEREN: ... waste and fraud...

RYAN: ... every time I went to a Badger game.

VAN SUSTEREN: Yes, you know, it's, like...

RYAN: He was always there.

VAN SUSTEREN: ... we need to focus on waste on fraud, as well. Agreed?

RYAN: Absolutely.

VAN SUSTEREN: All right. Congressman, thank you. Always nice to see you, sir.

RYAN: You, too, Greta. Thanks.