had. >> rose: welcome to our program. today in washington, the president laid out his deficit reduction plan and we'll hear this evening from the director of the office of management and budget, jack lew. >> there is no perfect solution. what we did in putting this plan together is we went to the maximum we could in each area to put together what we think is a credible plan to start a discussion so that we can work on a bipartisan basis to actually make some progress this year, and i believe we can. we proved in december that we can. we proved just these last two weeks that we can, and i think this is a serious and immediate problem for the american people that we're going to have to make progress, even if we can't solve the whole thing even

this year. >> rose: we continue this evening with congressman paul ryan. he is the architect of the republican house deficit plan. >> i guess what we're going to have to do is do this without the president. we're going to have to talk to our colleagues here in the house and the senate and congress can and try to get something done because we're not get anything leadership from the president, and when the president gives these speeches it's basically a partisan gauntlet. >> rose: we conclude with the analysis of steven pearlstein of the "washington post." >> where was he lt year when this could have been done in a much better context, and by the way, in the context of an election year, as opposed to in the context of the clock ticking on the debt ceiling, where, you know, we're playing with fire. and the other side may be quite willing, quite willing to, you know, send this over the edge in order to make their point. >> rose: lew, ryan, pearlstein, when we continue from washington.

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additional funding provided by these funders: captioning sponsored by rose communications from our studios in new york city, this is charlie rose. had had had. >> rose: president obama unveiled his plan for long-term deficit reduction today in a 43-minute address at george washington university. he offered a plan that would cut the deficit by $4 trillion in the next 12 years. >> so today i'm proposing a more balanced approach to achieve $4 trilion in deficit reduction over 12 years. it's an approach that borrows from the recommendations of the bipartisan fiscal commission that i appointed last year

and it builds on the roughly $1 trillion in deficit reduction i already proposed in my 2012 budget. it's an aroach that puts every kind of spending on the table, but one that protects the middle class, our prise to seniors, and our investments this the future. >> rose: the president recommended more cuts to domestic and military spending but steered clear of fundamental changes to med character medicaid, and social security. he reiterated his support for an overhaul of the tax code and he called for an end to the bush tax cuts for the wealthy. >> in december i agreed to extend the tax cuts for the wealthiest americans because it was the only way i could prevent a tax hike on middle class americans. but we cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. we can't afford it. and i refuse to renew them again. >> rose: at several points the president criticized the house republican proposal unveiled last week. >> ronald reagan's own

budget director said there's nothing serious or courageous about this plan. there's nothing soorss about a plan that claims to reduce the deficit by spending $1 trillion on tax cuts for millionaires and billionaires. and i don't think there's anything courageous about asking for sacrifice from those who can least afford it and don't have any clout on capitol hill. that's not a vision of the america i know. >> rose: the g.o.p. leadership fought back calling the president's speech political and partisan. >> i thought the president's invitation to mr. camp, and myself was an olive branch. instead, what we got was a speech that was excessively partisan, dramatically inaccurate, and hopelessly inadequate to addressing our country's pressing fiscal challenges. >> rose: president obama's speech comes as congress nears a critical vote on whether to raise the debt ceiling to allowhe government to borrow more money to cover its obligations. joining me here in washington is white house

budget director jack lew. i am pleased to have him on this program for the first time. >> good to be here. >> rose: tell me what you can tell us about how the president approached this, what he hoped to accomplish, and whether you think he did everything that was necessary. >> charlie, i think that the president set out to do a it number of things. there's been a debate for some time now about how to get ourandsround the long-term fiscal challenges. over the crse of two-plus years that he's been in office, he's had to go from putting forward a recovery plan to end a deep recession, to now looking ahead to a future where we need to get back to the business of fiscal discipline. in the course of getting through last year's business, we just this week completed the work on-- with congress-- on last year's budget, and congress will, hopefully, be passing that

this week. the president thought it was very important to turn immediately to the long-term challenge ahead of us. it's important to get our hands around it, and i think one of the things that was very important today is he made it clear that there is a general agreement on the size of the challenge. this $4 trillion challenge is consistent with what the ball-simpson commission defined. it's consistent with the shacht net save nths republican budget. and it really gets down to a question of the composition. what choices you make. and this was a speech that was as much about choices in values as it was about numbers. and those are going to be hard issues to work through. they're quite fundamental. and i think he laid out a vision of a plan where we can do a very significant amount of deficit reduction without abandoning some very important values of shared responsibility in this country. now, he also said we can't leave it to chance. we have to make policy and we have to put a fallback in

place so that if we don't achieve the goal, we achieve the deficit reduction through an automatic series of spending cuts and tax increases. >> rose: that was a new element and unexpected by many people, i think. >> well, i think it reflects the reality of the importance and the immediacy of getting our long-term deficit under control. we have the world looking at us now saying when the is the united states going to go through the fiscal consolidation to get itsinous order? and we need to make those decisions, and we need to start making them soon. i think one of the other things that's important about the speech is that for all of the big differences, there are many areas where we should be able to agree. i think if you look at the last several mopgz, in december, i think it beat expectations how much the president and congress was airplane to do in the lame duck session, from passing an important tax bill to finish the job of putting a recovery plan in place, to passing the start treaty. and i think this last week, achieving savings of $78.5 billion in one fiscal year

on the spending side, the discretionary spending side, i think is considerably more than most people thought the two sides could agree on, consistent with both of our values. i think he's now put a challenge out that we have to take the long-term challenge and move ahead and find the areas where we can agree on the spending side and hopefully on the tax side but if we can't agree on everything let's at least define the prospect exprb agree what we can agree on and set in motion a process so we can have the kind of debate that gets the job done. >> rose: you have heard the republicans, including congressman paul ryan, congressman eric cantor, who said this was more a partisan political speech and it was as if the president was kicking off his campaign, and that these are the issues and the values he's going to talk about for the next two years. >>un, i-- i actually don't think that's what this speech was about. it's true in part. i think there will be a presidential campaign where the questions of should we be cutting taxes for the very wealthy and cutting medicare benefits for senior

citizens, if the choice is between the two, is that the right choice? and the president clearly made the case today that we shouldn't be cutting medicare benefits for senior citizens if we don't have to. and he doesn't think that the tax burden on the very wealthy is as important an issue right now as the issue of health benefits for the elderly. >> rose: but he did speak clearly about the cost of health care as an issue that concerns him. >> and that's what i was going to actually say. if you look at what he said, he said i want to get $500 billion in savings out of our health care programs, out of medicare and medicaid, without cutting benefits. now that is a lot of change. that is a lot of change in the system. >> rose: one of the arguments that is made by congressman ryan, the architect of the house budget, which is the one that's out there in specificity, is that they are going to create a medicare system, not by vouchers but-- he used the term "premium" and you keep calling it a voucher, which it's not. >> well, the plan is to provide what they call

premium support. >> rose: right, right. >> it looks a lot like what people in the past have called vouchers. but they call it premium support which will leave senior citizens where they are left at risk for all the costs of health care and for the average senior citizen it could mean a $6,000 difference for the cost they pay out of pocket when this is implemented just a little over 10 years from now. that is a lot more like the system before medicare than it is the system now. right now, we have a defined benefit system. it means everyone gets the same set of benefits. if you have $6,000 in your pocket to buy health insurance because you got your premium support, and you can't afford to pay the $6,000 to get the current package, what are you left with? you're left with a scaled-back package. >> rose: fair enough. they argued, as you know much better than i do-- not only will you be able to afford it but you'll get

more because the insurance companies will be more competitive about providing it for you because you'll have choices. >> it didn't work that way before medicare. senior citizens generally didn't have health insurance, and if you're not working in an employer-- in a place where there's an employer-sponsored plan, it wasn't working so well for most individual americans to go out there into the marketplace. and if you're working on & your employer is paying a considerable amount of the premium and you pay 20% of it and the risk of cost growth is shared, that's a very different world than it is to say to a senior system, "you get a certain amount and if the cost goes up, it's your problem." >> rose: one of the big debates that will come up here is what is the most effective program to provide medical care for the poor and senior citizens? that will be one of the debates. which program will do that best? >>un, i think that-- i think that if one break down into its parts, the question starts being, what can we do to control health care costs

in this country? that's even more fundamental than medicare ask medicaid bought bauz if you look at the way health care costs are growing, medicare and medicaid are actually not growing faster than health care costs generally. >> rose: right, right. >> ask we do have a fundamental problem in this country that health care costs are growing too fast. one of the things that the affordable care act does is sets in place a system where we for the first time have a systematic way to try to get our hands around that by bringing knowledge and expertise to bear. you know, if you're a parent, and your child is sick, and you go to the doctor, and the doctor says, "i can do this procedure and"-- you don't ask the price. just do it. you have insurance. it pays for it. if the doctor knew it was a procedure that tended not to be very effective, where the risk of a secondary infection was very high, and, therefore, the reimbursement rate was lower because of that, maybe the doctor would actually be making judgments based on what is the best

practice. and we have an information system set up so doctors can make judgments and patients can make decisions, and we think that that will actually inform the system in a way that it's never been informed, so individuals can make the best decisions for themselves. and we think that that's-- that should be given a chance to work. >> rose: so when will you lay that out so the issue can be joined on that particular question of health care? cost containment, access, cost of premiums. choice, or-- >> in fars-- fairness, the aurmz were laid out in the affordable care act and one of the things the president has said is it's very important we stick with the implementation of the affordable care act. and actually, one of the things we're pleased with coming through the budget negotiations this week is that we will be able to proceed and implement the affordable care act. >> rose: you're saying to congressman ryan and others who argue on this program that there are not enough specific thagz the specifics were there, and by looking at the affordable care program, they can see the specifics that you believe in, that will contribute to

deficit reduction over the next 10 years? >> i think if you look at the area of health care savings, the plan of president unveiled today called kaulz for $500 billion of save necessary medicare and medicaid, and he has given detail as to how those savings can be realized. some build on the affordable care act, and adjust the payment mechanisms in medicare and medicaid but we do describe them. it's a different approach than saying we're going to take the medicare system and completely change it to a premium-support system or the medicaid system and say we're going to block grant it to the states and let beneficiary benefit goes way down if that's what-- where the funding goes. i think that there is a very serious set of policies, but it's a different set of policies than the premium support or the medicaid block grant. and that's a battle of ideas. and it should be, it should be. >> rose: but the republicans are saying let's join the battle of ideas. >> yeah. now, i would hope even if we

can't agree on some of the long-term changes-- the president made it clear today he was not going to agree to ending medicare as we know it-- that we could still agree on the sensible steps we could take to control the way we pay for things in medicare. i mean, if we're paying for pharmaceuticals more than we need to, that we can reform the system and use our purchasing power as the largest purchaser to get a better deal for the taxpayer, you should be able to do things like that, even if you have to differ the debate on restructuring the entire medicare program. other areas of our proposal, to some extent tbuilds on what we've been able to do together, like bring the $78.5 billion of savings in the budget that's being debated this week, we say let's carry forward savings for the next 12 years. that's one of the ways we've produced savings in this budget. we've said we have to look at our defense budget. and the president made it very clear that as commander in chief he's not going to lightly make decision but

he's instructed all of us to take a review, led by the pentagon -- >> secretary gates has already taken lead on that. >> he's taken the lead on looking at what is wasteful, the systems he didn't need because they were mandated by congress. but the president said something a little more. he said he need to reevaluate our roles and missions and capabilities and in light of what our role in the world is. and that's a tougher set of decisions because it means, perhaps, having less of a capability. he's not going to make any decision that sacrifices our national surity but after 10 years of growth without any constraint, he's saying we need to take another look at that. >> rose: social security what, is the president's proposal on social security? another thing republicans are arguing after the speech today, the president didn't mention social security. now, he mentioned it. >> he mentioned it he repeated what he said before which is that we should be concerned about dealing with social security because we need to make social security sound for the next 75 years.

>> rose: everybody agrees with that. >> everybody agrees with it, but it's-- we shouldn't wait until we're a few years away from a crisis to deal with it because we all know that the right way to deal with social security is way in advance when there is a lot of time for adjustments to be made. the president said it should be a parallel process we discuss on a bipartisan basis. he has indicated the principles he will bring to the discussions. and he has-- he has said it's not causing the current deficit problems we have. it's not the cause of it. but it's a serious issue that we need to address. in my experience-- i've been working on social security for most of the last 30 years-- it's never really moved the debate forward for one side or another to put a plan out there. it's only really worked well when the parties come together. that's what happened in 1983. in 1981, when president reagan put a plan out there, it didn't get the job done. >> rose: since you have spent so much time looking at social security, tell me what your best idea is to reform social security and make it healthy down the

road. >> well, i think that it starts with looking at what the base of the financing of the system is. and whether it's kept pace where w where it's been in the past with terms of percentage of payroll that people pay in. and there are a number of commonsense changes that i think it, if you look at the 1983 plan, that people could, again, put together a set of options very quickly. i don't-- i don't think it's helpful to list out specific options at this point. i do think it's important to sit down and have that conversation, though, and to do it soon. >> rose: explain to my audience, beyond the sort of-- the idea that it's unfair to ask the middle class and the poor in some cases to bear a burden, that those who earn more than $250,000 should

bear. >> well, if you start with the -- >> the unfairness and sort of the american spirit. >> if you look at where income growth in this country has been, it's been at the very high end. we've had stagnant or negative wages in the middle and lower income levels, and very, very dramatic growth at the top 2%. if you look at the effective tax rate for people with those very high incomes, it's very low. >> rose: because of deductions. >> because of deductions, because of income that's taxed at a preferential rate. what the president has said is we need to broaden the tax base and the vast majority of the benefit of tax exemptions and exclusions and special tax rates falls on people with a lot of income. he was very careful in the speech today to not engage in class warfare. he didn't say people who earn large incomes are bad people. said we admire success in this country. >> rose: but he did say they should pay more and that

there was an unfair expwrnd that they were not-- >> he also said that he doesn't hear the complaints from people who are in that tax bracket as much as he does in the political system, which has ideological view about taxes. a lot of people who are wealth nethis country actually feel rather privileged and are grateful for it. it's not the case that-- that one has to say that they're reluctant to step up. i think it is the political system that is failing us here. >> rose: the argument made by some economists and some republicans and i assume some democrats as well at certain times, it is that a lot of people who fall in the $250,000 category are small business owners who don't-- they have a subchapter s, income flow-through, and if you tax them-- if you eliminate their tax cuts given by the bush administration, it will affect job creation. is that a valid argument?

>> this issue came up last year when we debated whether or not to extend the upper income tax rates. >> rose: but it's still there because the president has basically said i'm not going to extend them two years from now. >> it's interesting when you look at the composition of income in that top bracket. an awful lot of the small businesses are doctors and lawyers and investment bankers who have small shops. a lot of the income is not in mom and pop businesses. and it's not as big an issue at the mom and pop business level as it is in these areas where it's not what people think of when they think of small business. >> rose: but the president said-- >> the president has had a pretty aggressive set of proposals to target benefits to small businesses so that you can benefit what are truly small businesses without having the effect being reducing taxes on people who are very successful but not prototypical small businesses. no one thinks of somebody with a small boutique hedge

fund as being a small business. >> rose: how viable do you think the itemized deduction issue is? i mean is that something that will get bipartisan appeal? >> in the commission, the social security-- it was, i think, very important-- there was a consensus, a bipartisan consensus there that tax expenditures need to be treated like all other expenditures, and scaling back on them should be part of any solution. and the president is trying to build on that. he's trying to are-- he's not arguing for broad tax increases. what he's saying is we need to broaden the base. get rid of these tax expenditures -- >> jon: is it fair to say without revenue enhancement-- whatever word you want to use, taxes, revenue enhancement-- you cannot get at the deficit at the level that it is? >> i think it's fair to say without revenues being part of the solution, without everything being part of the solution, you're left with untenable choices. the president was actually trying to be gracious in saying that he thought the house had taken on an

approach that dealt with the problem, you know, clearly. he doesn't agree with the choice they made. by saying we are not going to raise taxes on wealthy people, it means that you have to look somewhere else for a trillion dollars or more of savings. >> rose: the next step is? >> well,he process the president met with the bipartisan leadership of the congress on today would call for the vice president convening leaders from the house and the senate, democrats and republicans -- >> four in all? >> we suggested a number of four from each. there was a discussion at the meeting this morning what the right number was. frankly, they're going to have a better idea of what the right composition is to meet the needs of the congress. our concern is to get a serious group together that can sit down starting immediately when the congress returns the first week of may and to work towards having progress by memorial day, and action by the end of june. there's an immediacy here that is not just driven by politics but it's economics.

the markets are looking for action. and certainty would be a good thing. getting even a framework agreed to where we agree to what we can agree to, we define the problem and we take the first step, that would be enormously important. >> rose: thank you. >> thank you. good to be with you. >> rose: we'll be right back with congressman paul pine. stay with us. joining me now is republican congressman paul ryan. he is the chairman of the house budget chiti and he crafted the republican budget proposal that was unveiled last week. the congressman joins me now from the capitol. i am pleased to have him here at this moment. welcome. >> charlie, it's great to be back here with you. you attended the speech. was it what you expected? >> quite honestly, charlie, it was pretty much the opposite of what i expected. i had thought that with this invitation and this talk about bringing more developments and more of an olive branch on budget that he was going to extend an

olitch branch so he could get down the path the bipartisan solutions. we got anything but that. we got bitter partisanship. we got dramatic distortion of our budget proposal. and, you know, i guess i was thinking at the beginning of the week when he sent his campaign manager out to mention he was going to do the speech, rather than his budget director or treasury secretary a little red flag rose in my mind but i disposed of it and when i heard the speech, it was extremely political, very partisan. i guess what we're to have to do is do this without the president. we're going to have to our colleague in addition the house and senate and congress and try and get something done because we're not get anything leadership from the president and when the president gives these speeches it's basically a partisan gauntlet. so we're very disappointed. we thought maybe he was going to do smog soc security, find a way to bridge the gap with us in other areas but we got nothing but real partisanship and basically a reelection speech. >> rose: let me talk about some of the things he said. talking about your plan he said, "the way this plan achieves those goals would

lead to a fundamentally different america from the one we've known throughout our history." he talked about the cuts you suggested. he said, "these are the kind of cuts that say we can't afford the kind of america we believe in and paint a vision of our future that's deeply pessimistic. it's a vision that said if our roads and bridges collapse we can't afford to fix them." so he continues to prepare your vision and his vision saying that you're presented with a vision from you that says the united states of america, the greatest nation on earth, can't afford any of the things that it should do in terms of building a future. and then finally, he says this vision that says even though americans can't afford to invest in education and clean energy, we can't afford to care for seniors and children, we can afford $1 trillion in tax breaks for the wealthy. he said that's not right and it's not going to happen. is that the core issue? >> i don't know what to say about that. we're not talking about cutting taxes. we're talking about cleaning up the it tax code.

we're not talking about cutting taxes. we're just not talking about raising taxes like he is imposing. i guess if we don't go along with his tax increases that means we're cutting taxes. we want to keep the tax revenue where's they are and fix the tax code. the partisan spending rhetoric, if you don't fix entitlements, charlie, if you don't get spending under control, there's not going to be any money left for those other things, for roads, for bridges, for education, for the environment. by fixing the drivers of our debt and get the entitlement programs, saved, sustainable, and secure you free up the money for other priorities in the government. if you don't address the drivers of our debt-- which clearly the president is not. he's not making a proposal to do that-- then you don't have money left for everything else. so i'm amazed that he would use that kind of hyperbolic, hypervendalating rhetoric to describe a plan which we clearly don't do that. we call our plan a path to prosperity because it's

welfare reform to get people back to work, economic growth and job creation. it's getting medicare, medicaid, social security saved. we want to save these programs. and by the way, our proposals don't change a single benefit for anybody the age of 55 or above. if you're in retirement or 10 years away from retiring, no change whatsoever and we're change it for the next generation, and by the way, if you're in my generation you don't think you're going to get these benefits because that's what the acuaries are telling us. that's unamerican giving our children a crushing burden of debt, a lower standard of living. >> rose: he does say he can save money with health care over the next 10 years by reducing the cost of exphurk it is more important to reduce the cost of health care than it is to do something that would simply, as he said, threaten a voucher program which you don't call it a voucher program, bubutt he says that would threaten the ability of seniors to get health care 10 greerz now. >> i actually believes he knows this is not a voucher program.

his experts know that this is a premium support program. vouchers give the money to the person with and & they go out in the marketplace. that's not what this is. they get a chair of comprehensive plans to pick from and medicare subsidizes the plan just like medicare advantage would work ors the plan i have as a congressman. that's what i'm talking about. there is a dins of opinion here and this is where he did show us some acknowledgement of the fact ask the acknowledgement is health care costs are going too fast and we have to deal with this. there are two ways of dealing with this, charlie. the prd said he wants this unelect the bureaucracy with no oversight or control from congress to just indiscriminately cut medicare reimbursements to medicaid, meaning price controls from governments. that doesn't work. we've fought inflation in the past and costs controls don't fight inflation successfully. they just make resources more scarce. they deny people care.

we believe competition is the better way to go. we believe competition and choice is the best way to go and the reason we say this is the service clear. the prescription drug benefit and the design of which we're trying to replicate, came in 40% below projections. seniors get to choose among a list of medicare preapproved plans and those plans compete against each other for the seniors' business and that trch competition has resulted in lower premiums andlessness cost to the taxpayer and better quality for the senior citizen. >> rose: do you have a difference in opinion about the social exact between this country and its citizens? >> i would say yes, and let me explain why. we believe that we need to repair our social safety nets. we very much believe we have to have one. and if the social safety net adapts to the 21st century and that the goal of our social safety net should not be to keep people on welfare but to get people back on their feet and

self-sufficiency. this is why we're saying let's take a look at the fact we have 49 different job training programs across nine different agencies. let's collapse them into a career scholarship so people can use that to go back to school to get job training to go back into a career. we believe this our safety net should be geared toward getting people back on their feet and helping them and it should be there for people who cannot help themselves. but we don't want a safety net that creates a whole generation of dependency, of complacency. we don't want to turn the safety neck into a hammock. it drains them of their incentive and will that makes the most of their lives. the social contract we believe in upward mobility, equality of opportunity, not equality of outcomes. there is a difference of philosophies here. >> rose: he says the following is, the fact is about reducing deficit and changing the social contract. it makes this point over and over about your proposal, coming at you head on. he says there is nothing serious about a plan that claims to reduce the deficit by spending a trillion

dollars on tax cuts for millionaires and billionaires. there's nothing courageous about asking for sacrifices from those who can least afford it and don't have any clout on capitol hill. and also this is not a vision of the america i know, said the president. >> does that sound like a leader who is trying to bridge partisan gaps? does that sound like a leader who is trying to get the two parties to come together for bipartisan solutions? or does that sound like somebody who just relaunched his election campaign? who's making partisan arguments? i'll let you be the judge of that. but i would simply say this-- class warfare, i will grant you, can be good politics. exploiting people's emotions of envy, fear, and anxiety can make for good electoral outencourages but i have to tell you, charlie, it's really bad economics. we need to be competitive globally. we tax our businesses a whole lot more than our foreign competitors tax theirs. you have to remember, most small businesses file their taxes as individuals, and most of our jobs come from

successful small businesses. so we've got to be mindful of the fact that we're not just competing against each other in the states. we're competing against india and china and other countries who have lowered their tax rates on their corporations, on their businesses, on their entrepreneurs. >> rose: he has said as you know ask he even alluded to in the speech, that he wants to reduce the corporate tax at the same time-- >> right. but you have to remember, charlie, most of the jobs come from small businesses who don't file their taxes as corporation. they file their taxes as individuals. i agree with him on corporate tax reform. there's one area where we seem to have some agreement. but on the class warfare side, you can't get jobs if you go after job creators. you have torm, almost three-fourths of our jobs come from small business and they arehe ones who pay the individual tax rates. he is proposing in his tax, in his budget to raise the top tax rate on these successful small businesses to 44.8%.

you throw a state income tax on top thereof and you are taxing t jobriations in america over 50% in this country, and when our competitors are taxing theirs at about 25%, they win, we lose. we want jobs. we want prosperity, and with higher economic growth the more job creation, you get more revenues into the federal government and that helps us with our deficit and that's the path we want to go. >> rose: but aren't you drawing a red line and saying the republican party, the speaker of the house, we will not accept any tax increases at all? and so you are basically saying we don't want to negotiate on that. because we don't believe that that is the way to go. he's essentially saying i don't want to do what you want to do to medicare bought i don't believe that's the way to go. so how are you going to come together to do something about what everybody agrees is america's biggest problem. >> he said he didn't want to do anything on spending as far as i can tell. the metrics he put out are less than the metrics he put

out for the last commission he created which he disavowed. i'm seriously dumb found as to where we get a bipartisan agreement. i was led to believe by some democrats that he was going to offer a social security reform plan today and i was very excited about that. i thought oh, my gosh, this is an opportunity for us to come together as two parties and fix one of the problems we have, which is an insolvent social security system and we didn't get any of that. we got this partisanship. so i don't know where a solution is to be hold. >> rose: as you well know, the president in his state of the union, as well as at ever opportunity he has, talks about winning the future, and he suggests we cannot win the future if we do not make investment in education and science in a whole series of areas in which he says countries that are competing with the united states are doing. south korea, he mentioned in his speech today. >> i think investment is another euphemism for more spending. look, 42 cents on ever

dollar government spends today is borrowed money. hamp of that borrowed money comes from other countries, number one of which is china. you can't sustain a viable economy, win the future, if you have to rely on other foreign companies to cash flow your government. we have to get the spend energy exprol as we do that we have to prioritize spending. under our budget spending on education increases. under our budget spending on medicaid increases. under our budget, spending increases. it doesn't increase athe fast clip that the president wants it to but the reason it doesn't is because we don't want to keep relying on all this borrowed money. we want to get the deficits down, get the deficits paid off. under our bill not only do we end up balancing the budget, we pay off the debt itself. it takes time, but we do that under the c.b.o.oas analysis of the president's budget, he doubles our publicly held debt by the

end of his first term, his term, and then he triples it by the end of his budget wind pt the president doesn't come anywhere close going to the deficits down to what they rate as a sustainable level let alone get the deficit under control, the debt under control. you've got to remember, charlie, today's high deficits and debt mean to entrepreneurs and businesses and job creators more tax increases and higher interest rates tomorrow. so showing that we're not getting this under control shows the economy that it's going to be an ugly road, don't invest in the future, don't win the future. we've got to show that we're getting these deficits and debt under control, which are difit driven high by spend sewing we can get job creation today. spending cuts and deficit reduction is good for job creation today. because it shows the world the aurngz the small business men and women of america, the credit markets, that we're getting our act together, we're getting our situation under control and that they're not going to

have crushingly high taxes and interest rates to pay for this mess we've created. >> rose: can you bring yourself to say the president of the united states and congressman paul ryan agree about the serious economic situation that this country faces. we agree that there is an economic crisis unless we do something about our debt, and all we have is two people, two ideas, that are in collision about what to do about it. because he naz this speech-- and recently-- recognized that there have to be spending cuts. that was part of the deal that was made recently. so the president seems to be saying i understand we've got to cut spending. i understand the problem of the deficit. but we simply have a difference of opinion to get to essentially the same numbers. 4 trillion in 10 years. >> i don't think that's correct. here's why i say this charley-- and with all respect to the president-- we put out an actual plan. we put out a specific plan that does what we say it will do. that pays off this debt,

that balances the budget, that gets the economy growing and preserve medicare, med karkd the safety net, and all of those things. the president has given us speeches. he's given us platitudes, and he's given us commission. he hasn't given us a plan to fix this. his own budget, according to the "washington post," punts and doukz this issue. so he has yet to give us an actual plan that actually fixes the problem so we don't have competing plans. we really don't have competing ideas. we have an actual plan that we have put out there using our principles of growth and opportunity and prosperity, of welfare reform, and we have his speeches. we don't have a plan. so you really can't say that there's plan a. and plan b. let's split the difference. there's plan a., our plan, and there's no other plan from the president. >> rose: why do you think he's not offering more specifics? >> i don't know. i really-- i honestly don't know. i don't know.

i literally thought today that's what he was going to do and that's why i'm really pret disappointed. i thought we were going to get some specifics and we got this campaign speech. so i honestly don't know. i know he sees the numbers. i know he knows the numbers. i know his economic advisors are telling him what a debt crisis looks like. here's the way i look at this charlie. i was involve in the crisis management of the 2008 crash,un, the financial crisis, which created the recession. i was involved in that tarp legislation. really ugly legislation. nobody enjoyed that moment. that thing caught us by surprise, charlie. we didn't see it coming. and what happened? millions of people lost their jobs and trillions of dollars of was lost out of nest eggs. this crisis we see coming. it's the most predictable economic crisis we've had. we know why it's coming, and we know what we need to do to prevent it from happening but we don't have leadership around here to tackle this challenge to prevent it from happening. we decide not to wait around

for the president to act. we decided to act. and, obviously, he doesn't like the way we do it. i argue he could dramatically distort what we do. he doesn't like what we're doing. he doesn't like what his commission did but you would think a leader would propose his alternative. he doesn't that. he has a moral obligation to act. >> rose: with respect he has done more than simply suggest a new commission. i mean he really has, in a sense, given you a philosophical base and made some criticism of your proposals. and suggested some direction that he wants to go in. a lot of other people are demanding more facts-- >> there's no specifics. all i know is he wants to have ipad do more, which is more rationing of medicare. all i know is he wants the government to take decision away from congress on how medicare exprunz give it to the department of health and human services and let them twist the screws and ration care. that's the only idea i got out of him today that actually really saves money and discretionary spending, you know, we had this agreement. he before wanted to spend more than that.

so the only concrete entitlement reform idea i got from him today was, yes, medicare spending is unsustainable and has to be addressed. he agrees with us on that and he wants a bureaucracy and just do price controls. that's the only idea we've gotten from him, and that's it. and there's a lot more you have to do than that, which i don't agree with that, to fix this mess and prevent a debt crisis from hitting this country. >> rose: let me talk about the debt ceiling. it seems the administration wants to separate it out and treat it as an issue alone. are you prepared to do that? >> no, i think what we wanted to do is make sure-- because this is the only game in town, so to speak. it's the only must-pass piecof legislation. as we consider the debt limit, we want to attach spending cuts and spending controls and reforms to it. we see this as an opportunity because we're not sure they're going to pass a budget this year. so if the budget is not going to go anywhere then the debt limit is and we want to use that as an opportunity to get a down payment on spending cuts.

the reason the debt limit is being hit right now is because of all the past spending that went out the door so we want to get a down payment on lowering future spending to try to deal with the debt that way. i just don't agree with the premise that we've just got to raise the debt limit with no concerns nothing, and let's keep talking. well, the talking hasn't gotten us anywhere and we want to get to the actual spending cuts and controls and we think the markets would reward us for that. that would be helpful for interest rates and everything else. >> rose: you have suggest that president didn't even take into account the debt commission that he appointed, of which you were a member. >> yes and i put the recommendations in my budget. >> rose: but you also-- the president failed to subscribe to it, but he did suggest there were certain aspects of it that he would support. >> yes, we're-- he didn't in his budget. he says that there are certain aspect he's would support now. we'll find out what exactly those are. our tax reforms are along their model of lowering

rates, broadening the base. i puts dozens of the debt commission's recommendations in our budget. and because i voted against the debt commission because i didn't think it did enough for health and retirement security reform, i out out my own alternative. we put out our own ideas and we're still waiting for the president to do that, to put out a budget that actually fixes the problem and he hasn't done that. >> rose: who has the next move? >> we're just going to keep working. we're going to just keep working. there's a lot of partisanship that's nowasmed up and flying around here. we're going to go back to work. we're going to pass this continuing resolution agreement that gets-- it's the most historic sized spending cut. we're dog that thursday, and thursday night ask friday we're going to do the budget. we're gog pass our budget. we're going to roll up our sleeves, get to work and try to save this country from going into a desdet crisis. we're hoping for partners on the other side of the aisle. right now we're getting political broadsides. we can't let that deter us and hopefully at the end of the day, cooler heads will

prevail and we can get something done. >> rose: thank you, congressman ryan for joining us. >> thank you, charlie. you've been skrrp patient, appreciate it. >> rose: joining me noun nowas we continue what's happening today, and proposals by the house republican and paul ryan is steven pearlstein of the "washington post." he has been writing about these issues for a long time. he had a piece in the "washington post" that began this way, "among the benefits of should go spent the past several weeks in india is getting away from the tiresome and vacuous debates over the federal budget in washington. it's clear the battle will drag on for years without any satisfying resolution." why is that? >> it's because nobody really wants to solve this from a political standpoint, from a political standpoint, it's better to hold out for everything. and this is really a debate that's been going on, charlie, since 1981. and we have failed to resolve it. and we've been piling up

deficits ever since. and we've never ally resolved the fundamental issues. for example, you know, should the tax code be used to make the economy more fair, which the president raised today. or what's the proper role, you know, of government, and what kind of safety net do we have? we never really have those conversations. we sort of dance around it. >> rose: so you think the president was right to phrase it in that way, to say this is why we're coming to this point? >> yes, it is great that he phrased it that way and tried to frame the issue that way. but, you know, where was he last year when this could have been done in a much better context-- and by the way, in the context of an election year-- as opposed to in the context of the clock ticking on the debt ceiling where, you know, we're playing with fire? and the other side may be quite willing, quite willing to, you know, send this over the edge in order to make their point. >> rose: because of the tea

party element in the house. >> yes, that's right. >> rose: so why isn't the public more angry about this? >> oh, i think they have become-- like i in india was so thrilled to be away from it. the public is so tired of it and it get so arcane. first we were talking about-- last december, about extending tax cuts. then we were talking about continuing resolution for the federal budget for the fiscal year that ends in october. you know, now we're talking about the debt ceiling. when we're finished with that, we're going to talk about next year's budget resolution for the fiscal year that begins in october. then we're going to talk about the appropriations but we probably won't do them so we're going to have a continuing resolution on that. this is highly technical. people have had enough of it already. and we know they want it just resolved and they don't like the bickering and we keep going-- >>. >> rose: so we'll push the ball down the court. >> and what does the president said? we're going to have another format. the vice president and several members of congress

are going to come up and we're going to have meetings. well, we just had meetings, and we had meetings before the meetings. we had an entire bipartisan commission that came wap perfectly good report which was whichis now being given substance in the senate by a group of six senators, three democrats and republicans. >> rose: does the president risk that the country will believe that this budget consideration and the need to do something about the deficit is being driven by republicans in the house? yes. he lost-- he really lost control of this issue. he let them be the ones-- to be the ones-- we've got to do something. it's urgent, and we have to do some cutting. but he let them define it all in terms of what are we going to cut as opposed to, again, what's fair, what do we need -- >> value, vision. >> what do we need to create a good che. what do we need to invest in? what do we not need to spend money on. >> rose: he is laying that out a bit. he makes a distinction

between spending, appropriate spending cuts and investments. now the republicans may not see eye to eye on what he classifies as an investment, whether it's education or science oruring areas. >> but he makes these points, and he's made them in the past but he doesn't keep insisting on them and he doesn't ask them the question, do do you not think that roads are investment in? do you not think that educations investment? he's not joined it. i would have much preferred thoim say, rather than having the vice president meet endlessly with these leaders-- by the way, the work won't be done there. the work will be done by staff. instead of that, why didn't he have a debate with paul ryan? why didn't he come on this show, a special two-hour charmy exproz have a debate with paul ryan? that would be joining the issue a lot more than these processes. he's got to really reframe the debate, not just have more meetings with guys who really are not interested in compromising, and who are sticking to sort of economic nonsense, like we can't possibly raise taxes because

the economy will go into the tank. there's no economic basis for that. we've had higher taxes in the past, and during the clinton years, and we did pretty well. >> rose: the republicans argued on this program this evening-- >> yes. >> rose: that the-- that if the president -- >> yes. >> rose: does not extend the bush tax cuts on the wealthy, the $250,000 number, that it will in fact affect job creation because those tax cuts flow through to individuals and they make up more than $250,000, and if they don't get that tax cut, they're not going to be creating jobs. >> right. >> rose: is that right? >> no, it's not. there's no basis in either economic theory or our experience for that. to do that you have to say the reason people are not creating jobs is they-- they would really love to because there's business to be had. there's work to be done, products to be sold, services to be sold, but i can't do it because i'm cash short at the moment.

and-- and this tax cut will exacerbate that. there is no evidence that they are cash short. and there is-- you know, we're talking about-- the companies that create jobs, charlie are, not all small businesses. it's a very small group of businesses that are growing very fast. and once were small, not so long ago and are now big-- google, facebook. those are the ones creating jobs, and they're not short of cash. >> rose: as you said it was a mistake not to immediately it use the it representatives of the bipartisan commission. he could have leaned on them to give him ammunition to frame the debate. >> absolutely. >> rose: so why didn't he do that? >> because he was playing a cute little-- too reasons. number one, his friends, the democrats in the congress, didn't want to talk about this last year before the election. they were so afraid -- >> that they would lose their base. >> guess what? he followed their advice, and they lost anyway. so that was a mistake. but secondly, now he wants

to play a cute little game, and the cute game was let paul ryan go out there with his radical budget. everyone will be so horrified by it that we will then take-- seize the initiative because he will have overplayed his hand. well, what happened is, he did that, but he-- but he was allowed to redefine the issue in terms of what are we going to cut. and that's only issue -- >> he also gained this-- >> gained credibility, and guess what? the public reaction was not so negative. okay? it's better to lead when you're president. not play cute games. >> rose: the public reaction to ryan, i think, notwithstanding to those who found lots of faults with all the particular proposals-- the idea is somebody is talking about what we all know are the big issues like medicare, social security, defense,. >> right. >> rose: and, therefore, somebody comes along and talks about that and they get a certain favorable attention because they are kick starting the debate. >> you can't beat something with nothing. even on social security, the president sort of punted

again today. i mean, i can't even tell you what he said. other than we ought to really do this. we ought to do it sooner than later. period. no, i think this still-- the thing is, he said looking at his own reelection. he doesn't want to have a lot of negatives associated with him, and one lesson they learned in november was that the elderly voted much more republican than they ever have. >> rose: because they bought into the idea that medicare was under attack? >> right. so what's the answer to that? that was actually wrong. and rather than confront the republicans on that issue, they sort of ran away from it. rather than say, "hey, first of all, none of this is going to affect any of you who are on medicare today. whatever we do to change it will be, with all due respect, long after you stop receiving your medicare benefits." but secondly, this was needed to save the system

because, as everyone knows, it will go broke. the medicare trust fund will go broke if we keep spending more on health care every year, not only more than inflation, not only more than our incomes go up, but another three percentage points. >> rose: thank you for coming. >> my pleasure. >> rose: at the last moment. captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org