Ryan Opposed Debt Reduction Plan Romney Used as a Model

By Heidi Przybyla
August 14, 2012 4:53 PM EDT 73 Comments
House Budget Committee Chairman Paul Ryan works with Republican members of the committee on Capitol Hill in Washington before introducing his "Path to Prosperity" debt-reduction plan.
Photographer: J. Scott Applewhite/AP Photo
House Budget Committee Chairman Paul Ryan works with Republican members of the committee on Capitol Hill in Washington before introducing his "Path to Prosperity" debt-reduction plan.

Representative Paul Ryan was a pivotal figure in killing the 2010 Bowles-Simpson agreement, which Republican presidential candidate Mitt Romney now points to as a model for putting America’s fiscal house in order.

The 18-member panel needed 14 votes to send a 10-year plan for trimming the debt to the U.S. Congress for a vote. As his party’s top member on the House Budget Committee, Ryan led a bloc of three House Republicans who denied the additional votes needed.

All three Senate Republicans on the panel backed the plan and one of them, former New Hampshire Senator Judd Gregg, said he thinks the House Republicans who rejected it were beholden to an anti-tax-increase pledge sponsored by Americans for Tax Reform President Grover Norquist, who opposes the plan’s tax blueprint that raises revenue by ending popular expenditures.

“All of the House Republicans were disproportionately affected by the Norquist group on the issue of tax reform,” said Gregg, now a senior adviser at New Mountain Capital LLC. Ryan “clearly was the leader” of the House Republicans in setting terms of a grand debt bargain, said Andy Stern, a panel member and Democrat.

Debt Reduction

Ryan, now Republican Mitt Romney’s vice presidential running mate, was joined by Republican Representatives David Camp of Michigan and Jeb Hensarling of Texas and four Democrats in opposing the panel’s blueprint. It would have reduced the federal debt by $3.8 trillion through a 3-to-1 mix of spending cuts and tax revenue increases.

Ryan’s support probably would have drawn a vote from Camp and possibly Hensarling and made it almost impossible for the president to reject a plan created by his self-appointed commission.

Brendan Buck, a Romney campaign spokesman, said in an e- mail that Obama is the one who ignored his panel’s recommendations. “While Congressman Ryan has worked tirelessly to solve these challenges, President Obama has racked up record debt and deficits, and under his failed leadership America saw an unprecedented credit decline,” Buck said.

The efforts by the commission, composed of 12 members of Congress and six other officials, set the stage for a series of failed attempts over the next year by the White House and Congress to reach a bipartisan deal to address the debt. That included an ill-fated try late last year by a congressional supercommittee that ended in deadlock.

Midterm Election

Illinois Representative Jan Schakowsky, a Democrat on the panel who opposed its plan because of cuts in Social Security benefits, said she thinks Ryan was less inclined to compromise after the November 2010 election that handed Republicans control of the next U.S. House session and put him in line to push his plan to overhaul Medicare as House Budget Committee chairman.

“As his perception of the politics became clearer, I don’t think he felt any need to go with anything less than he would propose,” she said.

That view of Ryan’s role on the debt panel stands in contrast to the profile the Romney campaign is advancing that the 42-year-old lawmaker from Wisconsin is an intellectual leader on economic policy who is immune to the politics that affect many other members of Congress.

Schakowsky was one of four Democrats who opposed the plan, joining Stern, Senator Max Baucus of Montana and Representative Xavier Becerra of California. Each acted on their own objections to the plan, rather than voting as the bloc that Ryan led.

Leads With Chin

Oklahoma Senator Tom Coburn, a Republican commission member who voted for the Bowles-Simpson plan, called “nonsense” any claim that Ryan acted out of political expediency.

“Paul Ryan doesn’t do things politically, he goes out and leads with his chin,” Coburn said.

The House Republicans’ “price for a grand bargain was ‘do something on health care,’” Coburn said.

In a Dec. 3, 2010 statement explaining his vote, Ryan said he didn’t support the plan’s blend of defense and non-defense spending cuts, that it “relies too heavily on revenue increases,” and “facilitates an explosive growth of health care spending.”

The Bowles-Simpson plan would have reduced the deficit by $870 billion in 2020, from a projected $1.15 trillion without action.

Tax Overhaul

It also would have reversed the growth of the debt held by the public from 71.5 percent of gross domestic product in 2013 to 60 percent by 2023 by limiting domestic and defense spending and overhauling the tax code. It would have eliminated itemized deductions and replaced some with refundable tax credits while reducing income tax rates.

In an Aug. 2 Fox News interview, Romney, who has criticized Obama for not embracing the debt reduction package, said “my plan is very similar to the Simpson-Bowles plan.” The two plans have significant differences, including the fact that Romney’s proposal wouldn’t raise new revenue.

Alan Simpson, the panel co-chairman who continues to promote the budget plan, said he met with Ryan, Camp and Hensarling immediately after the December 2010 vote on it.

“I said ‘I’m going to tell you something, if you guys voted against this because you’re afraid of Grover Norquist, I’ve lost all respect for all three of you,’” said Simpson, a former Republican senator from Wyoming.

Medicare Objections

The three explained that their opposition was instead grounded in the plan’s failure to address revamping the nation’s Medicare health program for the elderly, said Simpson. He said he believes that rationale.

Coburn said he opposed many parts of the plan and that he voted for it to “get it on the floor of the Senate” and keep the debate over the national debt alive.

Norquist, the anti-tax advocate, said the House Republicans understood that the plan amounted to a tax increase, and he noted that the Bowles-Simpson plan would have taken taxes from about 18 percent of gross domestic product to 21 percent.

“The House Republicans intuitively understood that a $5 trillion tax increase is a bad idea, and two, they’d all signed a commitment to their voters,” he said. “They took that pledge seriously.”

Hensarling and Camp, through their spokesmen, David Popp and Sarah Swinehart, declined to comment.

Political Prospects

As it became clear that Republicans had a strong chance of taking control of the U.S. House, Ryan began in September 2010 to reject main components of the emerging plan and to push his proposal to convert Medicare to a voucher program, according to two former commission aides familiar with the meetings.

“He was very aggressive in carrying the position that we needed fundamental reform in our entitlement accounts,” said Gregg, the former New Hampshire senator.

There was no chance the Ryan plan, which is now a flash point in the presidential campaign, could win approval on the commission; and even if it did, the president would have surely vetoed it. “The instruction for Bowles and Simpson was to leave health care alone,” Coburn said. “Obama didn’t want it touched.”

Stern, the former president of the Service Employees International Union, said he recalled “two Paul Ryans” on the commission. “There was the pre-November-election Ryan and the post-November-election Ryan,” he said.

Ryan, Camp and Hensarling were in line for leadership positions following the 2010 election, with Ryan as budget committee chairman, Camp at the helm of the tax-writing Ways and Means Committee and Hensarling as chairman of the House Republican Conference.

“After the election the House members became more interested in their own leadership and the opportunities to be significant leaders in their own caucus,” Stern said. Signing on to the plan would have invited Republican criticism, he said. “That took priority over the commission.”

To contact the reporter on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net

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