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CNBC Exclusive: CNBC Transcript: Representative Paul Ryan, House Budget Committee Chairman, Speaks with CNBC's Larry Kudlow

Wednesday, 30 Oct 2013 | 8:14 AM ET

WHEN: Tuesday, October 29th

WHERE: CNBC's "The Kudlow Report"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Representative Paul Ryan (R-WI) with CNBC's Larry Kudlow. Following are links to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000212035 and http://video.cnbc.com/gallery/?video=3000212032.

All references must be sourced to CNBC.

LARRY KUDLOW: Now let's get right to my one on one interview with House Budget Chairman Paul Ryan last evening at the Kemp Foundation Dinner. Here's what he had to say about the Obamacare debacle that could actually be helping the future of the GOP.

PAUL RYAN: This so-called civil war, it's really quite overstated in the media. Tactics. We've had disagreements with each other on tactics. These are tactics. These aren't principles. I don't know a Republican that does not hate Obamacare, because of what it's doing to our country, what it's doing to health care, what it's doing to knock people off of what they already have.

I don't know a Republican that doesn't support comprehensive reforms to replace Obamacare with patient-centered health care. We've had differences of opinions on tactics. That's different than principles. And we will be putting out-- very specific ideas on how to replace. Just like Tom Coburn, Devin Nunes, Richard Burr, and I did back in 2009, HSAs, tax credits, patient-centered health care. You are in charge of your health care, not some distant bureaucrat or even an HMO bureaucrat. We want those providers competing against each other for our business as consumers, as patients. Not hoping the government will cut us a deal through their bureaucracy.

LARRY KUDLOW: I want to just talk for a second about this Democratic Party panic over the unveiling of Obamacare, which in my humble opinion is not really about lousy computer work --there's-- it's there. I understand that. And Obama may fire Sebelius and the information we got is that they knew for three years, they knew for three years about the, shall we say, elevated degree of cognitive dissonance they have been spreading regarding a simple thing like cancelling an insurance contract. They knew it was coming. And they talked about it. Now what I want to know is are you gonna let him off the hook with-- some kind of delay?

PAUL RYAN: The question's answered already in that the House Republicans passed and sent to the Senate delaying defunding the law, delaying the entire law, delaying the individual mandate. They voted those down. So they've already made that choice. They decided not to do that. So this law is coming into place. Why is that we advanced those ideas? Because the collateral damage is the American people. The collateral damage are the people who are seeing huge premium increases.

The collateral damage are the people who are losing their 40-hour work week. The people who are losing the job-based insurance that they have. The health care providers who are seeing iPads and all this other stuff packed into Medicare which is putting them out of business. That's the collateral damage.

But the point is, we already passed these in the House and the Senate rejected them. So that's over with. So now we're here learning to live with the law. And those of us who are in the majority in the House, who had oversight hearing after oversight hearing all year long, we had Kathleen Sebelius come to our committee at Ways and Means. We have the CMS director tomorrow --well, she wouldn't come to the Budget Committee. She-- for two or three months. And she still has yet to re-- to answer any of the questions we've had in oversight on that. So I can go on and on about that. The point is, they came and said, "Everything's fine. The law is gonna be okay. We're ready to roll it out. There won't be any problems."

They came to Congress and said, "No problem here," when we knew better, because we saw the same kind of analysis that NBC News is now reporting. Yet they said, "We're good to go. This is gonna be fine. Everything's ready." And look what's happening. It's more than a website. It's because this law itself is born from an architecture, a foundation that is just not workable.

LARRY KUDLOW: So let it sink of its own weight --and wait-- there's a midterm election in 2014. And this should bring out people in droves. Let the people decide. That's fine. Let the people decide.

PAUL RYAN: That's what's going to happen.

LARRY KUDLOW: And that's the way I want it, sir. I don't want to let anybody off the hook. They made--

PAUL RYAN: But people know, people should know that we tried to prevent this from happening in the first place by fighting the law in 2010. Then we tried giving people relief from this law in 2013, that was rejected. And so now we are living with this law. And then we owe the American people an alternative about, "Here's what you do if we win elections." And we want to-- win an election by acclamation. We want to win elections by saying, "This is not working for our country. This is not working for you. And there are better ways that are in keeping with our country's principles, that puts you in charge of your health care future, not some distant, cold bureaucrat in Washington."

LARRY KUDLOW: Congressman Ryan also had some very important comments last night about the upcoming budget negotiations on Capitol Hill. Amidst all my pestering questions, he assured everybody in that room that there will be no new taxes and the budget sequester spending cuts is the baseline policy for the GOP. We're gonna get more from Congressman Ryan a little later in the program tonight.

LARRY KUDLOW: With budget talks set to begin tomorrow, the Republicans keep the all-important spending cuts in the sequester in place without raising taxes. Last night at the Kemp Foundation Dinner, I asked one of the most important negotiators, that being House Budget Chairman Paul Ryan, those very questions. And here are his answers.

PAUL RYAN: If we spend our time focusing on our differences, we won't get anything done. And if we talk about some big grand bargain, which to me means fundamental pro-growth tax reform, the energy policy, balancing the budget, gettin' the debt under control by reforming our entitlements that are going bankrupt-- that's, to me, a grand bargain.

I don't think we'll get a grand bargain. And we're not-- talking about getting a grand bargain. Because then one party will require that the other compromises a core principle and we won't get anything done. Dealing with the entitlement programs that are the big drivers of our debt, that are hurting growth today, if we did something to deal with that, having smarter entitlement reforms to replace this sort of crude, across-board sequester, we'll do a couple things.

It would show the credit markets, the bond markets, it would show the world that America's getting ahead of its problems. We're beginning to see a bipartisan consensus, getting tax rates down by broadening the base and the crony capitalism and getting more competitive so the American economy can grow. Those things, we think, are encouraging. So we ant to have-- an agreement that helps foster these things. Common ground on spending cuts and entitlement reforms in place of-- what I call the crude across-the-board cut. And then focus on pro-growth policies.

LARRY KUDLOW: All right, I don't believe you can get anything like the deal you're talking about. I think, in fact, if there is some relief in the sequester, the Democrats in the Senate, particularly, and the president, will wish to use those savings for more spending.

PAUL RYAN: Yeah, so we're-- we're not interested--

LARRY KUDLOW: That's where that's going.

PAUL RYAN: We're not interested in doing something like that.

LARRY KUDLOW: I mean, that's what they want.

PAUL RYAN: Unless this involves net deficit reduction--

LARRY KUDLOW: You want to put this in military?

PAUL RYAN: Unless this involves-- smarter entitlement reforms and spending cuts to replace these spending cuts, the country's going to deal with entitlements. That's not the question. The question is are we gonna do it before we hit the debt crisis or after we have a debt crisis? And what we would like to do is get ahead of the problem.

LARRY KUDLOW: In the absence of any hope for serious pro-growth tax reform-- I would take the sequester. You have current law on your side. Unlike the--

PAUL RYAN: I agree with that. If we can't get something--

LARRY KUDLOW: That's all you have to do. That's it, boom.

PAUL RYAN: If we can't get anything better than sequester, then we'll--

LARRY KUDLOW: You would sequester?

PAUL RYAN: --keep the sequester. Absolutely.

LARRY KUDLOW: That's an important point.

PAUL RYAN: Absolutely. Oh, no two ways about it. That's our best case to begin with.

LARRY KUDLOW: Look, I-- I'm a growth guy, all right? I've never really obsessed about spending or deficits, to tell you the truth. But it's the kind of thing where I guess as you get older you take what you can get. And if that's what we got from two years ago, I would take it. And I would hold onto it. And kind of-- when they come in-- Harry Reid, come on. Harry Reid wants a trillion dollar tax hike.

PAUL RYAN: The point is-- we're not gonna sign up for tax increase. Look, if people see this effort as an excuse to raise taxes, it's not going to be successful. Because-- that's just not what we're here for.

LARRY KUDLOW: We just had--

PAUL RYAN: We didn't come here to raise taxes.

LARRY KUDLOW: --two huge tax hikes.

PAUL RYAN: Two huge tax increases. So we're interested in reforming the tax code, not as a measure of raising tax revenues. We think you can get better revenues through more economic growth, through faster economic growth. That's the kind of thing that we're in favor of. But we also want to get at the drivers of our debt.

So the Keynesians want up-front stimulus, which is not what we're going to do. Because it didn't work the last time. We believe in pro-growth economics, not this Keynesian, you know, sugar-high economics. Point one, point two-- the reason I like the Budget Control Act is it did put spending caps. Now because of the sequester we're going to even lower spending caps. The question is is in the interim, in this moment we're in, can we get even smarter and better deficit reduction that actually helps us get this debt under control to help us grow this economy--

LARRY KUDLOW: Would you take a deal? Would you take a deal, a revenue deal, to get some changes in the sequester?

PAUL RYAN: No, raise taxes-- we've been make-- we've been really clear about this. We're--

PAUL RYAN: --we're not in this business to raise taxes. We're not here to raise taxes.

LARRY KUDLOW: So the only conditions that--

PAUL RYAN: We'll take the spending cuts we have and we'll replace them with better spending cuts but we're not in this business to raise taxes.

LARRY KUDLOW: So the only condition-- I want to get this right. The re-- I'm a reporter.

PAUL RYAN: Rule number one is don't negotiate to the media, so no offense. But I--

LARRY KUDLOW: I'm not the media.

PAUL RYAN: Well, kind of.

LARRY KUDLOW: Well, no, it's a different game.

PAUL RYAN: No, that's right. No, but you and I have known each other well enough over the years.

LARRY KUDLOW: I understand. But you-- but--

PAUL RYAN: But to be really clear about this.

LARRY KUDLOW: Just to be clear.

PAUL RYAN: If people see this as an exercise to have tax increases to replace the spending cuts we already have, why would we do that?

LARRY KUDLOW: All right.

PAUL RYAN: Why are we doing this? We are doing this because we want to help improve people's lives. And what does that mean? That means upward mobility. That means opportunity. That means economic growth. That means get out of the rut we are in in this country. And if we can do that through this divided government, great. If we can't do that with this divided government, then we, in the minority party, the opposition party, owe it to the people of this country to show them how we would do that. What are our ideas? What are our ideas for upward mobility? What are our ideas for fighting poverty? What are our ideas for prosperity, for economic growth, for reigniting the American idea, as Jack Kemp so thoughtfully did.That's what we're all about.

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