CHRIS WALLACE, HOST: I'm Chris Wallace.
Gearing up for the battle of the budget with new talk of a grand bargain.
WALLACE: As President Obama switches from the blame game to breaking bread with the Republicans, both sides prepare plans for the nation's economic future.
House Budget Committee chair Paul Ryan will give us an exclusive preview of his new budget. Plus, tell us what he discussed with the president, over lunch this week. Congressman Paul Ryan, only on "Fox News Sunday."
Then, Jeb Bush returns to the spotlight, to talk about immigration reform, and his political future. Will his new plan help or hurt prospects for a deal on immigration? And how serious is he about 2016? We'll sit down with Jeb Bush.
Plus, Congress takes on the White House over national security. We'll ask our Sunday panel about the controversy over drones and the New York trial of an accused Al Qaeda terrorist.
All, right now, on "Fox News Sunday."
WALLACE: And hello again from Fox News in Washington.
President Obama calls him a thought leader of the Republican Party. And this week, House Budget Committee Chair Paul Ryan will put out a plan to balance the federal budget in 10 years. On the heels of a private lunch with the president on Thursday, Congressman Ryan joins us to discuss all of it.
And, Congressman, welcome back.
HOUSE BUDGET COMMITTEE CHAIRMAN PAUL RYAN, R-WIS.: Thanks for having me. Good morning, Chris.
WALLACE: The plan that you are going to release Tuesday would balance the budget in 10 years, not 25 years, like your last one.
How do you do that? Do you have to make even tougher, deeper spending cuts?
RYAN: Actually, not really. We always got close to balancing the budget, but, not quite there. We don't have to do much simply because the new CBO baseline makes it easier, because the new baseline reflects the fiscal cliff, which is higher revenues and lower spending, making it easier to balance. We extend the BCA, the Budget Control Act, caps out another two years. We ask all federal employees to actually have their pension contributions like those in the private sector, at the end of the budget window.
So, we don't have to do huge things to get the balance because of the new baseline.
The point is, we think we owe the American people a balanced budget. We want to respect hard working taxpayers.
And we think we have a responsible plan to balance the budget, which the reason we do a balanced budget is not to make the numbers simply add up, it leads to a healthy, growing economy that creates jobs. It's a means to an end. And the means is to get to a good, growing economy to create jobs and opportunity.
I'm glad the Senate is doing a budget. It's the first time in four years. Our concern is that they may never propose to balance the budget and we think that's irresponsible.
WALLACE: Let's look, Congressman, at a couple of the reasons you don't have to make big changes in the new budget, to balance it in 10 years.
You include the $600 billion, as you mentioned, in tax increases, that came from raising rates in the fiscal cliff debate. You also include $716 billion in Medicare cuts through Obamacare that you opposed in the last campaign.
Question, is it fair to say at least those parts of the president's policies make it easier to balance the budget?
RYAN: It is fair to say that. What we also say is, end the raid of Medicare from Obamacare.
You have to remember, all of that money that was taken from Medicare was to pay for Obamacare. We say we get rid of Obamacare, we end the raid and we apply those savings to Medicare to make Medicare more solvent and extend the solvency of the Medicare trust fund.
And we don't want to refight the fiscal cliff. That's current law. That's not going to change.
And we also propose pro-growth tax reform which we think with this currents revenue line, we can have a very pro-growth tax reform system to bring all rates down. That's good for economic growth. That's good for job creation and hard working taxpayers, by having less loopholes in the tax code.
No more crony politics and stop picking winners and losers and pro-growth tax reforms, those things are still achievable and we achieve it in the budget and reflect those realities that you just mentioned.
WALLACE: In your last budget, you cut spending about $5 trillion over 10 years. How much do you cut spending in this new budget?
RYAN: Basically the same, about $5 trillion. Instead of growing spending at 4.9 percent a year, which is the average under the current path we're on, we grow spending at 3.4 percent, each year, over the next decade. That gets us on a path to balance, and results in about a $5 trillion spending cut.
WALLACE: So, when you talk about cuts, you're talking about cuts in the rate of growth, not actual, absolute cuts?
RYAN: Exactly. Instead of spending $46 trillion over the next 10 years, we'll spend $41 trillion. That's means we'll grow spending on average 3.4 percent a year instead of growing it an average 4.9 percent a year, which is the path we're on, which takes us from ever balancing the budget which produces a debt crisis.
That's the problem. The president has us on a path toward a debt crisis that hurts everybody, that brings us to a recession, that gives us a European kind of experience which we want to avoid.
We want people going back to work. We want higher wages, more jobs, a growing economy. We get that by balancing the budget.
WALLACE: Well, you know, there are two sides to this argument. Of course, the president would say that all of these spending cuts, the sequester and the cuts that you are going to propose in the short- term could actually hurt this kind of slightly improving recovery and throw us back into a recession.
Let me ask you about a couple of the specific cuts that you made last year, and tell me if they're not in the new budget -- I assume that they are. You cut Medicaid by $770 billion, over the next 10 years. You cut $134 billion from food stamps. You cut $166 billion from education, training and social services.
Democrats say that that makes you the party of austerity. That, one, this is going to hurt people who depend on these programs. And, two, they say that rather than spur growth, it's going to hurt growth.
RYAN: Well, we have 49 different job training programs spread across nine different government agencies, lots of bureaucracies. They don't work.
What we propose is to consolidate these programs into flexible grants that go back to the states, to actually get people into jobs and into training so that they can get back to work. So, we get rid of the bureaucracy in Washington. We send the money back to the states, so that people can actually get the skills they need to get the jobs they want.
On food stamps, we basically say, you actually have to qualify for the food stamp programs to get the food stamp benefits. With our reforms, food stamps would have grown by 260 percent over the last 10 years, and 270 percent, like they did grow.
And, with respect to Medicaid, we think the Obamacare expansion of Medicare is reckless. We are pushing people, 20 million people, into a program that's failing. More and more doctors and hospitals don't even take the program. And we want to reform Medicaid by giving states the ability to customize the Medicaid program, to meet the unique needs of their Medicaid population.
WALLACE: But, Congressman, do you really say --
RYAN: These are good reforms that we think will make the programs better.
WALLACE: Can you honestly say by turning Medicaid into a block grant and giving it to the states that you can cut $770 billion --
WALLACE: -- out of that program, over the next 10 years, and that's going to have no impact on legitimate recipients?
RYAN: These are increases that have not come yet. So, by repealing Obamacare, and the Medicaid expansions which haven't occurred yet, we are basically preventing an explosion of a program that is already failing.
So, we're saying don't grow this program through Obamacare because it doesn't work. Prevent that growth from going because it's not going to work, it's going to hurt people who are trying to help, it's going to hurt hospitals and states and, give the states the tools that they are asking for.
Indiana is a perfect example. They have a fantastic Medicaid program that Mitch Daniels created in Indiana that is popular, that's successful, that's working well, but Obamacare prevents it from going forward. We want to give states like Indiana, states like Wisconsin, the tools they need to make these benefits work for their populations and we don't want to push more people into a failing program. And by not pushing people into this failing program, we do save these kinds of dollars.
WALLACE: I'm going to pick up on this because I must say I didn't understand it. Are you saying that as part of your budget, you would repeal, you assume the repeal of Obamacare?
WALLACE: Well, that's not going to happen.
RYAN: Well, we believe it should. That's the point. That's what's -- but this is what budgeting is all about, Chris. It's about making tough choices to fix our country's problems.
We believe that Obamacare is a program that will not work. We believe Obamacare will actually lead to hospitals and doctors and health care providers turning people away.
It's a program that basically puts Medicare under the control of 15 people on a board that will determine what kind of benefits people get. That's a rationing board. However you slice it. We don't think health care is going to be improved in this country. We think it's going to look ugly over the next couple of years and that's why we're going to propose replacing Obamacare with patient-centered health care, with a better system for everybody, for the poor, for people in the states, for Medicare, so that we can actually have affordable health insurance for everybody, including people with preexisting conditions, without costly government takeovers which is what Obamacare represents.
And yes, our budget does promote repealing Obamacare and replacing it with a better system.
WALLACE: All right. I want to pick up on this Medicare because what you would say is starting with people who are now 54, and you reportedly wanted to raise it to 56, but then there was some political push back, starting with people who are now 54, that you would start to give them, when they become of age, a government subsidy, a voucher -- whatever you want to call it -- premium support, to help them pay for their health care costs.
Now, you know, I don't have to tell you, this was a big issue in the campaign, between Romney-Ryan versus Obama-Biden. They think they won and they think that's one of the reasons they won. And there are, Congressman, a lot of independent strategists that say if you put this into effect, the net effect economists will be that seniors will end up having to pay more a share of their health care costs.
RYAN: Well, first of all, it's not a voucher. It's premium support. Those are very different.
A voucher is you go to your mailbox, you get a check and you go buy something. That's not what we are saying.
RYAN: We are saying, let's convert Medicare into a system that works like the one I have as a congressman, as federal employees. You have a list of guaranteed coverage options, including traditional Medicare for your future needs. Medicare subsidizes your plan based on who you are, total subsidy for the poor and the sick, less of a subsidy for wealthy seniors.
Doing it this way, harnessing the power of choice an competition, where the senior gets to choose her benefits that's comprehensive is the best way to save Medicare for future generations. This guarantees that Medicare does not change for people in or near retirement and it also guarantees for those who of us who are under the age of 55 that we actually have a Medicare program when we retire.
The problem is, Medicare is going broke. The other problem is, Obamacare does such damage to Medicare that it's going to damage the program for current seniors. We don't want that to happen. That's why we are proposing these reforms, which save and strengthen the Medicare program, not just for my mom but for my generation as well.
And I would argue against your premise that we lost this issue in the campaign. We won the senior vote. I did dozens of Medicare town hall meetings in states like Florida, explaining how these are the best reforms to save the shrinking Medicare program and we are confidently this is the way to go. It has bipartisan support. It's an idea that came from Democrats in the first place.
And we think it's really the best way to go, because, the alternative here, of having a choice system where you choose the plan that meets your need, is 15 bureaucrats making these decisions in Washington which are the new Obamacare board which we repeal in this budget.
WALLACE: Well, this brings us to the lunch that you had on Thursday with President Obama, at the White House. And I want to explore the question as to whether there's a basis for a compromise here, because I've got to say, I don't hear it so far.
Let me start this way: from your view, after having lunch with the president, do you think that his so-called "charm offensive" is sincere? That he is really looking for compromises on issues that still seem like there is a big divide? Or do you think it's more political theater to at least appear to be reaching out?
RYAN: I think the answer to that question will be determined based on how he conducts himself in the coming weeks and months. This is the first time I've ever had a conversation with the president lasting more than, say, two minutes or televised exchanges. So, I've never really had a conversation with him, on these issues before.
I am excited that we had the conversation. We had a very frank exchange. We come from different perspectives. I ran against him in the last election.
So, we exchanged very different, frank, candid views with one another that were very different, but at least we had the conversation. And I think the answer to your question will be determined by how he conducts himself in the coming weeks and months.
Will he resume the campaign mode? Will he resume attacking Republicans and impugning our motives? Will he resume what is long believed to be a plan to win the 2014 elections?
Or will he sincerely change and try and find common ground, try and work with Republicans to get something done? That's what we hope happens.
WALLACE: Well, let me --
RYAN: We want to get a down payment on the debt crisis.
WALLACE: Let me pick up on that. You talk about coming from different perspectives. One of the last times you and the president were together was two years ago, almost exactly two years ago, when your last -- your budget that year had come out and with you in the audience, the president took apart the proposed spending cuts you wanted to make.
Take a look.
(BEGIN VIDEO CLIP)
PRESIDENT BARACK OBAMA: These are the kinds of cuts that tell us we can't afford the America that I believe in, and I think you believe in. I believe it paints a vision of our future that is deeply pessimistic.
(END VIDEO CLIP)
WALLACE: The vision he's talking about, of course, is the Ryan budget.
Did that come up at the lunch, Congressman?
RYAN: It didn't, but that's basically what I was saying. If you impugn people's motives, if you say these draconian cuts, which by the way we are increasing spending an average of 3.4 percent a year, that does no good to get to common ground, that makes it impossible for parties to come together and bridge the gaps.
And so, if that kind of rhetoric resumes, then we will know that this was for show and it wasn't sincere. I hope that this is sincere. We had a good, frank exchange. But the truth will be in the come weeks as to whether or not it's a real sincere outreach to find common ground.
Look, Chris, I think there are things that we can do that don't offend either party's philosophy, that doesn't require someone to surrender their principles to make a good down payment on getting this debt and deficit under control.
WALLACE: But let me --
RYAN: That's what I'd like to achieve for the sake --
WALLACE: Let me pick up on that with you, Congressman, because -- I mean, there are basic disagreements that remain. The president would like to raise $600 billion at least in added revenue by clearing out so many of the deductions and loopholes for upper income people, and you want not nips and cuts but structural reform to entitlements.
Did you get a sense -- first of all, are you willing to give up one to get the other? And did you get the sense he was?
RYAN: Well, look, we already had a tax increase. We think it's unfair to ask hardworking taxpayers to pay more so Washington can spend more. We think we should balance the budget. We have a spending problem, not a taxing problem. So --
WALLACE: But you know that's what he wants.
RYAN: We do have a different -- so we do have a difference of opinion on that.
The other problem is this: by continuing to raise taxes to fuel more spending, you'll never get tax reform, which is critical for economic growth and job creation. And, so, yes, we have an impasse right now, which is the president wants to continue raising taxes, not for deficit reduction but to fuel more spending, and, we see tax reform as incredibly important goal, and policy, to getting pro-growth economics, to getting businesses growing again and hiring people.
Tax reform to us is an economic growth-generating exercise.
Tax reform to the president, so far, seems to be a spending growth exercise, to spend money, revenue-generating exercise.
WALLACE: So, bottom line --
RYAN: So, there is an impasse there. But so, bottom line is don't want --
WALLACE: Let me ask you --
RYAN: -- because we did raise taxes.
WALLACE: But let me ask you this: bottom line, what do you think of the chances of a big deal this year to try to get the deficit under control?
RYAN: I think it is going to determine -- be determined by the temperament and the posture that the president and all of us take over the next few weeks. We have spending problems and I like to think we can find common ground on where and how to cut spending and get some entitlement reforms.
Will the president take our premium support program and block- granting Medicaid? My guess is he won't. We think that's the best way to make these programs work better, but are there things you can do short of that, that gets you closer to balancing the budget, that delays the debt crisis from hitting this country? Yes, I think there are.
And I do believe that there's a consensus for tax reform. There are a lot of moderate Democrats, especially in the Senate, that are in favor of lowering tax rates by closing loopholes. That's what we're proposing.
Stop picking winners and losers in Washington, let people keep more of their hard-earned money, you don't lose revenue for the federal government, and you make it easier for small businesses to create jobs and hire more workers.
WALLACE: Congressman --
RYAN: We think there's a bipartisan consensus for that and I'm hoping the president comes to join that consensus.
WALLACE: Congressman, I don't mean to interrupt but I've got a couple of more questions, political questions to ask in very little time.
Did you come away from your experiences, as the vice presidential candidate, in 2012, thinking that the prospect of running for president for two years would be appalling or exciting?
RYAN: That's a good question. Actually, I enjoyed the experience. It made it more realistic in my mind, that something that I much better understand.
And Jen and I were talking about this just the other day. We look back at it as a very positive experience. We actually enjoyed it. We got to meet hundreds of thousands of people who care so much about their country and we learned a lot. Just about the great, greatness of this country, how hardworking people want to get ahead and make a difference.
So actually I found it a pleasant exercise to be candid with you.
WALLACE: And, finally, what's more attractive as you sit here today, running for president or staying in the House, doing the important work you do there, and maybe someday becoming speaker?
RYAN: Yes. So, I have no plans to be in House elected leadership. If I wanted to be in elected leadership like speaker, I would have run for these jobs years ago. I've always believed the better place for me is in policy leadership, like being a chairman.
With respect to running for president, I honestly think that we have a problem right now. That's a budget mess. That's a debt crisis coming.
I'm the chairman of the Budget Committee, and I represent the first district of Wisconsin. I should focus on that. That's to me is the most important thing and I shouldn't be clouding my judgment today by thinking about some political thing four years from now. I should not be clouding my judgment by thinking, how did this position mean (ph) to run for president. I got to think, do what you think is right, how can I help Wisconsin, how I can close this budget gap?
And then we're through that moment, I'm going to give serious thought to these other things, but not until then.
WALLACE: Congressman Ryan, we want to thank you so much for joining us today and we will, of course, be track whether this time, there really is a grand bargain.
RYAN: Thanks, Chris.