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CNBC's Kudlow Report - Paul Ryan on The Kudlow Report discussing pro-growth economic solutions, and the War on Poverty

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Larry Kudlow: We're honored as always to be joined exclusively by an old friend of The Kudlow Report, Paul Ryan. Congressman Ryan: great to see you again. Thanks for coming on.

Paul Ryan: Good to see you, Larry. Congratulations by the way.

Larry Kudlow: Thank you. Nine years. You know I ran longer than most soap operas and I appreciate your helping out here. Can I just get a real quick take on how you see this Ukrainian story? John Kerry up on the Hill today said sanctions probably on Monday. What do you think?

Paul Ryan: Obviously, European buy-in on those sanctions is really important, Larry. The question is how much do they bite. Do they get the people that are close to Putin? I also think there's a huge energy play for us to make here with respect to exporting LNG, natural gas, that would do a lot to send the signals that Putin is not going to have that kind of grip on energy in Europe like he intends on having. This has to be costly. He has to show that the world is not going to stand by and let these things happen. I'm encouraged from what I've heard reported on this. Let's see what the sanctions are, but I think that's to John Kerry's credit if he can get Europe to buy-in on a very robust sanction package, that's a good step in the right direction.

Larry Kudlow: Thank you for that. Second point, you've done this a lot and I don't know why the left got on your case all of a sudden. You've been in inner cities, you've been to the projects, you've talked about the importance of the culture of work and you've talked about poverty traps for everybody - men, women of color and so forth - but now the left wing blogs are all going against you and accusing you of being a racist. I tweeted against that. I think it's the stupidest thing I've ever heard but I want you to give you a chance to tell these left-wing bloggers a thing or two, go ahead?

Paul Ryan: I was clumsy in making a point so my words came out a little wrong but the point I've been making all year long is this: If you take a look at the War on Poverty, which is in its 50th year now, let's assess what's happening and where we are. And if we do that, we'll find that we have isolated the poor from the rest of America in so many ways. We have almost quarantined people in poor communities and now we have inter-generational poverty and people are trapped in poverty, not to mention the inadvertent problems associated with the government's response on poverty has created barriers to work. We have high marginal tax rates for people trying to get out of poverty -- 80 to 100%. You and I talk marginal tax rates all the time so we have created these barriers to work. The government's response is inadequate. We're isolating people from poverty and what we need to do is reintegrate people from poverty. We need to reintegrate our communities and we need to have better strategies aimed at outcomes. Do these ideas and policies get people out of poverty or are we just measuring success by inputs, how much money we throw at programs? That's the point I'm trying to make which is we need to rethink this approach. What we are doing right now is not working, point number one. Point number two, growth is key. Growth is king, but we don't have growth going into these communities the way it's working right now. That's where the reintegration needs to happen.

Larry Kudlow: You know it's almost like there's no hope. These left wingers, you know who they are and I'm not going to go through the laundry list. These guys call any of us pointing out the perverse incentives and offering to change the incentives and to change the whole culture, calling us racist is insane. That doesn't help the poor people out there who need a cultural change. It's time somebody put some fresh eyes on this. I've been talking to our friend, yours and mine, Robert Woodson about this very same project. Anyway, I don't want to spend too much time on it.

Paul Ryan: Let me tell you, Bob Woodson can show you that there are some phenomenal, great stories going on in our poor communities of people fighting poverty successfully. We have a lot to learn from them. There are phenomenal stories across this country of people who are doing this, who are succeeding. We need to learn from them so that we can replicate this and clear the barriers out of their way so they can flourish and succeed and replicate the success stories. That's what we're learning and that's the message we're trying to get. Sometimes we are clumsy in talking about our beliefs and what we're trying to communicate but the status quo is indefensible. We need new ideas and we need to have a debate about how to improve these things.

Larry Kudlow: All right. Next question: Big win for the Republicans on Tuesday night in Florida, a big win. My question to you, Paul, is can the GOP make this into a real cycle year, a real wave year by connecting to the middle class for what Ronald Reagan used to call take-home pay or after-tax income? The GOP didn't seem to do that in 2012. I'm not here to point fingers. I'm just saying here's an opportunity. Everybody knows that everybody is pissed off about Obamacare but can you all connect with the middle class and show them a better life and better wages and more hours worked?

Paul Ryan: I just had a vision of the last campaign. The words on the bus I drove around the country on said: "More take home pay." So look, obviously we didn't win the election so there's more things we have got to do. Here's the key. You're right about this. We've got to have a growth agenda and a growth plan. Dave Camp put out a tax reform plan out there the other day, lowering tax rates. People have issues with the details but we're talking about ideas and we are debating solutions and the models show us, just the Joint Tax Committee model, shows us $1,300 in more take home pay for families, 20% increase in economic growth, 1.8 million new jobs. We're talking about an energy boom that could turn this country around, turn around manufacturing. We're talking about job training reforms to get people into the career and curriculum that they need, to get the skills they need, so they can get really good jobs in this country because we can have more careers in manufacturing and high skilled manufacturing. This is a boom that's in front of us if we get these government policies out of the way. And that's what frustrating. Balance the budget, get this debt under control, take pressure off of monetary policy, stabilize interest rates in the out years, tax reform, regulatory reform, clear, transparent, predictable regulations, and more importantly, sound money as you and I have often talked. And let's get this education system turned around. This debate we're having on poverty, we're having a great, vigorous debate about education reform. We're having a great debate about charter schools and choice and skills. We've got to succeed in this debate, implement these reforms, and there's no stopping this country, as far as I'm concerned.

Larry Kudlow: It's so bizarre to me. I don't think people in this country are worried so much about the minimum wage as they are getting a good wage. I mean, median wages have been falling. I don't think it's a question of overtime. I think it's a question of working more time, not 25 hours but 30 hours or back to a 40 hour work week and to me that has to be done with macroeconomic reforms that would just put some torque behind this which is the worst recovery since the post-war period.

Paul Ryan: But look at the headwind. We've got the 40 hour work week because of Obamacare getting cut down to a 30 hour work week. We have regulation after regulation. We have a chilling effect on this energy boom that we have before us. We have tax rates that are all-time high, higher than all of our foreign competitors are, and we have a government that says we will not pay down the debt in fact we're going to take this debt from $17 trillion to $25 trillion, a63% increase in spending. Obama's budget says I want another $1.8 trillion tax increase. Those are the signals that are being sent to investors and entrepreneurs and workers and business owners, small business owners across this country. It puts a chilling effect on growth and that's why we're limping out of this recession. That's why it's an anemic recovery. We're walking into a lost decade if you ask me. But the good news at the end of this Larry is we know what we've got to do to fix this. We've got to win elections and we've got to show the country a real choice, here's a vibrant agenda to create jobs, to increase take take-home pay, to increase upward mobility and make sure that everybody in this country, no matter where they are or stage of life they are in, we have better ideas to help them improve their lot and reach their potential.

Larry Kudlow: You've got to reach out to everybody. We don't have time to talk about immigration reform. Anyway, House Budget Chairman Paul Ryan, thank you ever so much for coming back on.


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