Paul Ryan on Budget & Economy
Republican nominee for Vice President; U.S. Rep. (WI-1)
RYAN: I think these groups are valuable. The way I look at it is this--they're part of our conservative family. I'd prefer to keep these conversations within our family. I see the Tea Party as indispensable, invaluable in helping keep the taxpayer in the game, keep Washington accountable. And when I look at, when we lost our majority in '06, we deserved to lose it then. They helped us get out ship righted again by being fiscally conservative. We've got 2/3 of the House conservatives voting for this. I think this is a step in the right direction. It's not as far as I want to go, but it's a step in the right direction.
RYAN: We're not busting sequester caps. In just the next 2 years, 70% of the sequester is intact.
Q: But $60 billion more is going to be spent.
RYAN: 92% of the sequester over the life of the sequester is intact. The Democrats came to this saying get rid of the entire sequester. And we've now got them to agree to 70% of it now and 92% of it exists over the term of the deal.
Q: So you say "we don't bust the sequester," but you let it leak. The sequester, a lot of people feel, has imposed real budget discipline. And the critics say you're going back to the days of spending more and taxing more.
RYAN: There's no taxes in this. There are some user fees.
RYAN: I'm worried because the Federal Reserve is going to start tapering, we call it. They're going to start going back to normalizing their policy. Interest rates have a tendency to rise under those kinds of situations. And that makes our fiscal situation even worse. There are two ways of tackling this fiscal problem. One, grow the economy, get people back to work, and solid through economic growth. Two, do this kind of comprehensive entitlement reform that we've been long advocating.
RYAN: Don't forget it's the president that proposed the sequester and House Republicans twice passed legislation replacing the sequester with smarter cuts.
Q: I've heard this talking point for Republicans for a long time: "This was the president's idea" and on and on, but let's look at your own words in August 2011: "What conservatives like me have been fighting for, for years are statutory caps on spending, literally legal caps in law that says government agencies cannot spend over a set amount of money and if they breach that amount across the board sequester comes in to cut that spending. We got that into law." You were certainly suggesting it was a good idea.
RYAN: Those are the budget caps on discretionary spending. We want those. Everybody wants budget caps. The sequester now is backing up the super committee, to come up with $1.2 trillion in savings.
BIDEN: The two budgets the congressman introduced have eviscerated all the things that the middle class cares about. It will knock 19 million people off of Medicare. It will kick 200,000 children off of early education.
This is not what a real recovery looks like. You deserve better. Mitt Romney and I want to earn your support. We're offering real reforms for a real recovery for every American. Mitt Romney, his experience, his ideas, his solutions, is uniquely qualified to get this job done. At a time when we have a jobs crisis in America, wouldn't it be nice to have a job creator in the White House?
The choice is clear: a stagnant economy that promotes more government dependency, or a dynamic, growing economy that promotes opportunity and jobs. Mitt Romney and I will not duck the tough issues. We will take responsibility.
And here is what we got: Prolonged joblessness across the country. 23 million Americans struggling to find work. Family income in decline. 15% of Americans living in poverty.
The record is so uniformly bad that maybe you've noticed something: President Obama himself almost never even uses the word "record." In his convention speech, he didn't say the word "stimulus," either, because he wasted $831 billion of borrowed money. At a time of mass unemployment, he didn't even say "unemployment," because we're in the slowest recovery since the Great Depression.
On the path this president has set, by the time my kids are my age, the federal government will be far bigger and more powerful even than it is today. I've got a different idea. I want my children to make their own choices, to define happiness for themselves, and to use the gifts that God gave them and live their lives in freedom.
Say things like this, and our opponents will quickly accuse you of being "anti-government." Well, the results are in for that, too. Here we are, after four years of economic stewardship under these self-proclaimed advocates of the poor, and what do they have to show for it?
"Our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act."
S&P downgraded the US, in part, because of a revised expectation that the Bush tax cuts would remain in place. They assumed this because of Republicans' unwillingness to enact any measures raising revenue, and they completely slammed House Republicans--including Paul Ryan--for doing so.
So here we are, $16 trillion in debt and still he does nothing. In Europe, massive debts have put entire governments at risk of collapse, and still he does nothing. And all we have heard from this president and his team are attacks on anyone who dares to point out the obvious. They have no answer to this simple reality: We need to stop spending money we don't have.
Very simple. Not that hard. Before the math and the momentum overwhelm us all, we are going to solve this nation's economic problems.
"I remember Pres. Obama visiting it when he was first running, saying he'll keep that plant open," Ryan said, recounting the fact that his high school friends worked at the GM assembly plant. "One more broken promise. We used to build Tahoes and Suburbans. One of the reasons that plant got shut down was $4 gasoline. You see, the president's terrible energy policies are costing us jobs."
In fact, the plant halted production in December 2008, when Pres. Bush was in office.GM cited the low demand for SUVs and high gas prices during the Bush administration as the reason for closing the plant.
Obama did speak at the plant in Feb. 2008, and suggested that a government partnership with automakers could keep the plant open, but made no promises as Ryan suggested.
A week after Ryan's boast, the bishops sent letters to Congress saying that the Ryan budget, passed by the House, "fails to meet" the moral criteria of the Church, namely its view that any budget should help "the least of these" as the Christian Bible requires: the poor, the hungry, the homeless, the jobless. "A just spending bill cannot rely on disproportionate cuts in essential services to poor and vulnerable persons," the bishops wrote. In fact, Ryan would cut spending on the least of these by about $5 trillion over 10 years--from Medicaid, food stamps, welfare and the like.
Ryan didn't turn the other cheek, saying, "The work I do as a Catholic holding office conforms to the social doctrine as best I can make of it.
Upwards of 20 listening sessions took place. Ryan would lead off by producing his charts and graphs. "Our nation is $14 trillion in debt. Since Obama took office, nondefense discretionary spending has jumped 24%. The EPA's budget has gone up 36% in that time frame. Social Security, Medicare, and Medicaid consume over 40% of the budget and will soon crowd out everything else. If it stays on its current fiscal path, the US will be unable to afford its role as an economic and military superpower."
During the very first meeting, Biden made clear that Obama would only sign on to a deal that included revenue increases. Biden repeated publicly the stipulation that "revenues are gonna have to be in the deal."
It's true that domestic spending has increased, but not nearly as much as Ryan claims. The 84% figure is the result of a flawed partisan report. The nonpartisan Congressional Budget Office showed that domestic discretionary spending rose from $485 billion in 2008 to $614 billion in 2010, an increase of 27%, including stimulus funds.
Also, Ryan said the stimulus "failed to deliver on its promise to create jobs." It's just wrong to say that the stimulus didn't create jobs. Ryan can say that the program failed to keep unemployment at 8%, as projected by the administration when lobbying for the bill. But the nonpartisan CBO says the stimulus increased employment by between 1.4 million & 3.6 million people in 2010, compared with what would have happened without it.
Our debt is the product of acts by many presidents and many Congresses over many years. No one person or party is responsible for it. There is no doubt the President came into office facing a severe fiscal and economic situation.
Unfortunately, instead of restoring the fundamentals of economic growth, he engaged in a stimulus spending spree that not only failed to deliver on its promise to create jobs, but also plunged us even deeper into debt. All of this new government spending was sold as "investment." Yet after two years, the unemployment rate remains above 9% and government has added over $3 trillion to our debt.
We're rapidly approaching a point of no return; a tipping point after which we become a country most Americans have never dreamed we would be. If we keep spending like we're spending, American will become a place where unprecedented levels of debt overwhelm the budget, smother the economy, weaken our competitiveness in the twenty-first-century global economy, and threaten the survival of programs for the truly needy. Worse yet, we wil become a culture in which self-reliance becomes a vice and dependency a virtue; a place where so many American are dependent upon government that our country comes to reject individual initiative, entrepreneurship, and opportunity that made us great.
Pres. OBAMA: I want to just push back a little bit on the underlying premise about us increasing spending by 84%. The fact of the matter is, is that most of the increases in this year's budget, this past year's budget, were not as a consequence of policies that we initiated but instead were built in as a consequence of the automatic stabilizers that kick in because of this enormous recession. So the increase in the budget for this past year was actually predicted before I was even sworn into office and had initiated any policies.
Rep. RYAN: I would simply say that automatic stabilizer spending is mandatory spending. The discretionary spending, the bills that Congress signs that you sign into law, that has increased 84%.
Pres. OBAMA: The reason that I'm not proposing the discretionary freeze take into effect this year is, I am just listening to the consensus among people who know the economy best. And what they will say is that if you either increase taxes or significantly lowered spending when the economy remains somewhat fragile, that that would have a destimulative effect and potentially you'd see a lot of folks losing business, more folks potentially losing jobs. We'll have a longer debate on the budget numbers, all right?
"Currently, we are on a path of unsustainable Federal Government spending. The main problem, and greatest threat to our nation's economic future, is the looming crisis of entitlement spending. The well-intentioned social insurance strategies of the past century--particularly Social Security, Medicare and Medicaid--are headed toward financial collapse...compounding this problem is a tax code that discourages work, saving, and investment--and puts American companies at a significant disadvantage with business overseas."
Opponent's Argument for voting No:Rep. MAFFEI: The American people want us to work together--Republicans and Democrats--to reduce our debt, pay our bills, and avoid an economic catastrophe, which would result from default. This legislation presumes it will happen and maps out not if but what happens when the United States defaults. Their plan ensures that foreign creditors such as China, Japan, and OPEC countries Iran and Saudi Arabia would continue to get paid while we halt other payments to groups of Americans who have earned those benefits. This bill prioritizes Chinese lenders ahead of American seniors and veterans and college students. That's why it's called the Pay China First Act.
White House statement in opposition:American families do not get to choose which bills to pay and which ones not to pay, and the United States Congress cannot either without putting the nation into default for the first time in its history. This bill would threaten the full faith and credit of the United States, cost American jobs, hurt businesses of all sizes and do damage to the economy. It would cause the nation to default on payments for Medicare, veterans, national security and many other critical priorities. This legislation is unwise, unworkable, and unacceptably risky."
Proponent's Argument for voting Yes:
[Rep. Biggert, R-IL]: The HAMP Termination Act would put an end to the poster child for failed Federal foreclosure programs. The program has languished for 2 years, hurt hundreds of thousands of homeowners, and must come to an end. This bill would save $1.4 billion over 10 years. To date, the HAMP program has already consumed $840 million of the more than $30 billion of TARP funds that were set aside for the program. For this extraordinary investment, the administration predicted that 3 to 4 million homeowners would receive help. HAMP has hurt more homeowners than it has helped. The program has completed about 540,000 mortgage modifications. Another 740,000 unlucky homeowners had their modifications cancelled.
Opponent's Argument for voting No:
[Rep. Capuano, D-MA]: This is a program that I'm the first to admit has not lived up to what our hopes were. This program we had hoped would help several million people. Thus far we've only helped about 550,000 people. But to simply repeal all of these programs is to walk away from individual homeowners, walk away from neighborhoods. I'm not going to defend every single aspect of this program, and I am happy to work with anyone to make it better, to help more people to keep their homes, & keep their families together. To simply walk away without offering an alternative means we don't care; this Congress doesn't care if you lose your home, period. Now, I understand if that makes me a bleeding-heart liberal according to some people, so be it.
Proponent's argument to vote Yes:Rep. LEWIS (D, GA-5): This bipartisan bill will provide the necessary funds to keep important transportation projects operating in States around the country. The Highway Trust Fund will run out of funding by September. We must act, and we must act now.
Opponent's argument to vote No:Rep. CAMP (R, MI-4): [This interim spending is] needed because the Democrats' economic policy has resulted in record job loss, record deficits, and none of the job creation they promised. Democrats predicted unemployment would top out at 8% if the stimulus passed; instead, it's 9.5% and rising. In Michigan, it's above 15%. The Nation's public debt and unemployment, combined, has risen by a shocking 40% [because of] literally trillions of dollars in additional spending under the Democrats' stimulus, energy, and health plans.
We had a choice when it came to the stimulus last February. We could have chosen a better policy of stimulating private-sector growth creating twice the jobs at half the price. That was the Republican plan. Instead, Democrats insisted on their government focus plan, which has produced no jobs and a mountain of debt.
Proponent's argument to vote Yes:Rep. PETER WELCH (D, VT-0): Citigroup supports this bill. Why? They're a huge lender. They understand that we have to stabilize home values in order to begin the recovery, and they need a tool to accomplish it. Mortgages that have been sliced and diced into 50 different sections make it impossible even for a mortgage company and a borrower to come together to resolve the problem that they share together.
Sen. DICK DURBIN (D, IL): 8.1 million homes face foreclosure in America today. Last year, I offered this amendment to change the bankruptcy law, and the banking community said: Totally unnecessary. In fact, the estimates were of only 2 million homes in foreclosure last year. America is facing a crisis.
Opponent's argument to vote No:
Sen. JON KYL (R, AZ): This amendment would allow bankruptcy judges to modify home mortgages by lowering the principal and interest rate on the loan or extending the term of the loan. The concept in the trade is known as cram-down. It would apply to all borrowers who are 60 days or more delinquent. Many experts believe the cram-down provision would result in higher interest rates for all home mortgages. We could end up exacerbating this situation for all the people who would want to refinance or to take out loans in the future.
Rep. MICHELE BACHMANN (R, MN-6): Of the foundational policies of American exceptionalism, the concepts that have inspired our great Nation are the sanctity of private contracts and upholding the rule of law. This cramdown bill crassly undercuts both of these pillars of American exceptionalism. Why would a lender make a 30-year loan if they fear the powers of the Federal Government will violate the very terms of that loan?
Proponent's argument to vote Yes:Rep. DAVID OBEY (D, WI-7): This country is facing what most economists consider to be the most serious and the most dangerous economic situation in our lifetimes. This package today is an $825 billion package that does a variety of things to try to reinflate the economy:
Opponent's argument to vote No:
Rep. JERRY LEWIS (R, CA-51): Most of us would agree that the recent $700 billion Troubled Asset Relief Program (TARP) is an illustration of how good intentions don't always deliver desired results. When Congress spends too much too quickly, it doesn't think through the details and oversight becomes more difficult. The lesson learned from TARP was this: we cannot manage what we do not measure. We cannot afford to make the same mistake again.
Sen. THAD COCHRAN (R, MS): We are giving the executive branch immense latitude in the disbursement of the spending this bill contains. We are doing so without any documentation of how this spending will stimulate the economy. Normally, this kind of information would be contained in an administration budget. For items that have a short-term stimulative effect, most of us will feel comfortable debating their merits as an emergency measure. But there is a great deal of spending that is not immediately stimulative.
Proponent's argument to vote Yes:Rep. BARNEY FRANK (D, MA-4): Last year, after we responded to the urgent pleas of the Bush administration to authorize the $700 billion deployment of Federal funds to unstick the credit markets, many of us became very unhappy, [because Bush] repudiated commitments to use a significant part of the fund to diminish foreclosures. If we do not pass this bill today, we will make no progress in what is the single biggest economic problem we've been facing, namely, the foreclosure crisis.
Opponent's argument to vote No:Rep. RON PAUL (R, TX-14): There has been a lot of money spent to try to bail out the financial industry, and nothing seems to be working. I think it's mainly because we haven't admitted that excessive spending can cause financial problems, & excessive debt and inflation can cause problems.
Actually, the recession is therapy for all of the mistakes, but the mistakes come, basically, from a Federal Reserve system that's causing too many people to make mistakes. Interest rates are lower than they should be, so they don't save. That contributes to what we call "moral hazard" as well as the system of the Fannie Mae and Freddie Mac system. With the assumption that we're all going to be bailed out, people say, "Well, no sweat because, if there is a mistake, the government will come to our rescue." A private FDIC would never permit this massive malinvestment. There would be regulations done in the marketplace, and there would not be this distortion that we've ended up with.
Proponent's argument to vote Yes:Rep. BARNEY FRANK (D, MA-4): This economy is in the worst shape that it has been in since the Great Depression. This Congress voted 2 months ago to advance $25 billion to the auto industry to promote innovation. This $15 billion is an additional "bridge loan."
Opponent's argument to vote No:Rep. SPENCER BACHUS (R, AL-6): We all understand that the bankruptcy of either GM or Chrysler would have a cascading effect on other manufacturers. But I cannot support this plan because it spends taxpayer money without any real promise to return the industry to profitability. I see several glaring flaws. We are creating a new car czar to manage these companies from Washington; not a CEO, but a car czar. Second, this legislation actually imposes new and expensive mandates on our automobile companies. Third, this legislation imposes Federal Government management on the Big Three, the wisdom of Washington. It is clear that the management of these companies have made mistakes, many mistakes, but to set up a command and control Federal bureaucrat is exactly the wrong solution.
Rep. RON PAUL (R, TX-14): The problems that we are facing today date back to 1971. But we don't seem to want to go back and find out how financial bubbles form and why they burst. Instead, we just carry on doing the same old thing and never look back. We spend more money, we run up more debt, we print more money, and we think that is going to solve the problem that was created by spending too much money, running up debt, printing too much money. Today, we are talking about tinkering on the edges without dealing with the big problem.
Proponent's argument to vote Yes:Rep. DAVID OBEY (D, WI-7): Congress has tried to do a number of things that would alleviate the squeeze on the middle class. Meanwhile, this economy is sagging. Jobs, income, sales, and industrial production have all gone down. We have lost 600,000 jobs. We are trying to provide a major increase in investments to modernize our infrastructure and to provide well-paying construction jobs at the same time.
Opponent's argument to vote No:Rep. JERRY LEWIS (R, CA-41): Just 2 days ago we were debating an $800 billion continuing resolution. Now in addition to being asked to pay for a bailout for Wall Street, taxpayers are being asked to swallow an additional $60 billion on a laundry list of items I saw for the first time just a few hours ago. The Democratic majority is describing this legislation as a "stimulus package" to help our national economy. But let's not fool ourselves. This is a political document pure and simple. If these priorities are so important, why hasn't this bill gone through the normal legislative process? We should have debated each of the items included in this package.
It doesn't take an economist to tell you that the economy needs our help. But what does this Congress do? It proposes to spend billions more without any offsets in spending. The failure to adhere to PAYGO means that this new spending will be financed through additional borrowing, which will prove a further drag on our struggling economy.
Opponents argument for voting NAY: Rep. BARTON of Texas: [My first issue the bill is that by the bill's own definition], we don't have price gouging in the US today. We do have high prices. But the reason we have that price is not because of price gouging at retail. I am not aware of any pending State action on price gouging, and almost every State has State law to go after price gougers.
The second issue with the bill, it requires the declaration of a Presidential energy emergency. The bill doesn't give any definition as to why the President should declare an energy emergency; it doesn't define "unconscionably excessive"; it doesn't define when a "seller is taking unfair advantage."
I know there is a lot of pressure on the Congress doing something. I would state we would be better served to look at the underlying fundamentals that address the supply situation.
SUPPORTER'S ARGUMENT FOR VOTING YES:Rep. WATERS: This bill preserves public housing. The administration eliminated the one-for-one replacement requirement in 1996, effectively triggering a national sloughing off of our Nation's public housing inventory. Housing authorities have consistently built back fewer units than they have torn down and, as a result, over 30,000 units have been lost. I urge you to support our Nation's low-income families and to preserve our housing stock.
OPPONENT'S ARGUMENT FOR VOTING NO:Rep. HENSARLING: President Reagan once said that the nearest thing to eternal life on Earth is a Federal program, and I don't think there is any better case study than perhaps the HOPE VI program. If there was ever a program that cried out for termination, it's this one.
This program began in 1992 with a very noble purpose of taking 86,000 units of severely distressed public housing and replacing them, demolishing them. Well, it achieved its mission. But somewhere along the line we had this thing in Washington known as mission creep.
We already have 80-plus Federal housing programs, and the budget for Federal housing programs has almost doubled in the last 10 years, from $15.4 billion to more than $30 billion now. So it's very hard to argue that somehow Federal housing programs have been shortchanged.
LEGISLATIVE OUTCOME:Bill passed House, 271-130
Proponents support voting YES because:
Rep. FRANK: This legislation seeks to prevent a repetition of events that caused one of the most serious financial crises in recent times. We have a worldwide problem economically, with a terrible shortage of credit. Innovations in the mortgage industry, in themselves good and useful, but conducted in such a completely unregulated manner as to have led to this crisis. The fundamental principle of the bill is not to put remedies into place, but to stop future problems from occurring in the first place. We have had two groups of mortgage originators: banks subject to the regulation of the bank regulators; and then mortgage loans made by brokers who were subject to no regulation. The secondary market has been on the whole useful but, having been unregulated, has caused some problems.
Opponents recommend voting NO because:
Rep. HENSARLING: This is a bad bill for homeowners in America. There is no doubt that this Nation faces a great challenge in the subprime market, but this piece of legislation is going to make the situation worse. Clearly, there has to be enforcement against fraud in the subprime market. But what Congress should not do is essentially outlaw the American Dream for many struggling families who may be of low income, who may have checkered credit pasts, for whom a subprime mortgage is the only means to purchase a home.
Constitutional Amendment to prohibit outlays for a fiscal year (except those for repayment of debt principal) from exceeding total receipts for that fiscal year (except those derived from borrowing) unless Congress, by a three-fifths rollcall vote of each chamber, authorizes a specific excess of outlays over receipts.
On Jan. 23, 2009, House Republican presented an alternative stimulus bill to the $787 billion stimulus bill that was eventually passed by the Democratic Congress. The alternative stimulus bill was a simple, direct way to create jobs and help our economy by focusing on small businesses. Here are the highlights:
The U.S. House Committee on the Budget's responsibilities include legislative oversight of the federal budget process, reviewing all bills and resolutions on the budget, and monitoring agencies and programs funded outside of the budgetary process. The primary responsibility of the Budget Committee is the drafting and preparation of the Concurrent Resolution on the Budget, commonly referred to as the "budget resolution." This resolution sets the aggregate levels of spending and revenue that is expected to occur in a given fiscal year. Hence each session of Congress, a budget resolution by law must be enacted by April 15.
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