What do you think about Rep. Paul Ryan (R-Wis.) as Mitt Romney’s vice-presidential pick?
A: I am thrilled with this pick. I know Paul Ryan very well. We were elected together for the first time in 1998. We served on the budget committee together. We served on the banking committee together. We shared an apartment together. So we know each other well. He’s a terrific guy. He’s as straight a shooter as they come, and there are no skeletons anywhere in the closet in that house. He’s got a wonderful family. He’s earnest, intelligent and a hard-working representative.
The reason I’m so excited about the pick, however, is I think this is the clearest, most unequivocal way Mitt Romney can demonstrate his intention to make this campaign about big ideas. I think we badly need to have a campaign about big ideas — about how we put our federal budget back on a sustainable path. We are on a complete unsustainable, dangerous path, in my view. There are many things we can do to get on a better economic path, and Paul Ryan is at the forefront of those ideas.
Q: You are well-versed in the federal budget. What parts of Ryan’s budget plan do you think need tweaking as Romney looks to put together his plan?
A: The big difference between the budget I introduced this year and the Ryan budget is I cut back a little more on discretionary spending than the Ryan budget did.
There are a hundred ways you can modify and tweak around the edges of Medicare reform, for instance. There are many ideas on ways to modify Medicaid. We’ll have those debates, but the big-picture idea is that we need to put those programs on a sustainable path. That’s what is important.
The president has acknowledged this — he said last summer that Medicare is not sustainable in its current form. And it doesn’t matter how much you raise taxes. He’s right about that. But he hasn’t come forward with his proposal to make it sustainable.
Q: Do you favor raising the Medicare eligibility age to 67?
A: No, I think it’s the right policy to delay the implementation of any major structural changes for a 10-year period and grandfather everybody who is 55 and over under the current system and make reforms for younger people. The one caveat is I think it is reasonable to ask wealthy people to pay more in co-pays and premiums now. I would put that into effect. It continues to be absurd that we subsidize Warren Buffett’s health care.
Q: How do you define “wealthy”?
A: In the budget resolution I introduced, I adopted the president’s figure [$250,000]. Actually, I think I would ask more from the wealthy than the president was proposing, so it’s a scaled rate of contribution. I’m suggesting that as incomes rise, people pay a greater share. I modeled my reforms on the president’s proposal … in the hopes that this is how we start to find common ground.
Q: You made comments at the Brookings Institution last month that implied the GOP might be willing to compromise on increasing taxes on the wealthy. Is that still where things stand?
A: Let me be clear, I wanted to set the record straight at the Brookings Institution about [last year’s] supercommittee. Let me further say that I do not think the optimal way to deal with our massive structural deficits is with a tax increase. The problem is a spending problem. The problem is programs that are growing way too fast, and they need to be redesigned. However, in the supercommittee, since the Democrats’ sine quo non was a big tax increase, I was willing to put that on the table.
I was willing to go there as long as it happened in a pro-growth fashion and they would agree to reasonable spending reductions. I felt like I was meeting them more than halfway, and I was disappointed there wasn’t a response.
Q: Do you favor the permanent extension of the Bush tax cuts?
A: This is not an optimal tax code. So rather than raise these rates, I would extend the current rates. However, I think the ideal approach on tax policy is a temporary extension of the current rates with the caveat that we would give responsibility to the committees of jurisdiction to rewrite the tax code to 1) lower marginal rates, 2) offset the lost revenue by reducing the deductions and loopholes, and 3) maintain existing progressivity.
This is something where folks on the other side have, unfortunately, mischaracterized the tax ideas some of us have been advocating. It is not at all the case that we are looking to raise taxes on the middle class to have a tax cut for the rich. What we want to do is maintain the existing progressivity across income brackets, but do it in a fashion that is simpler, more fair, more transparent and has lower marginal rates.
Q: You have said that if President Obama wins re-election, you expect a bigger recession in 2013. Why?
A: I do because he is calling for a tax policy that is going to be very damaging. His plan explicitly triples the tax rate on dividend income. That can only be very detrimental to economic growth. It’s hard to imagine that doesn’t dramatically undermine stock prices — everyone’s 401(k)s — and it would make it harder to raise equity capital.
Higher marginal rates will also do significant damage. If the president is re-elected, he is also not going to sign a repeal of Obamacare or Dodd-Frank or any of the other excessive regulations that are stifling growth. Right now, we are barely eking out positive GDP growth, and I think that those policies would probably tip us into a recession.
Q: It seems like you have had a collegial relationship with Sen. Bob Casey (D-Pa). How hard are you going to be working to see he is unseated?
A: I get along very well with Sen. Casey. He’s a good man. He’s a sincere guy. We have a mutual respect, and we work together when we can. We’ve had some successes working together, including on judicial appointees. But yes, I’m endorsing Tom Smith. I’ll be working for Republican candidates.
Q: Are you following the Harrisburg debt crisis and potential bankruptcy? How closely are you working with the leadership there?
A: Not very closely, but obviously, I’m aware of this. I’ve known Gen. [William] Lynch for some time. We have a rapport. I’ve made it very clear to him that I want to be helpful in any way that I can. I happen to think we are very fortunate he stepped into this role. He is a very competent guy, and he is taking on a very difficult task.
Q: How is the debate on energy shaping up among the presidential candidates and what does it mean for Pennsylvania?
A: It hinges on domestic production of fossil fuels. The president has made it clear he is not a fan of coal, and his policies are having a huge impact. Six power plants in Pennsylvania are shutting down. This is by design. The administration is not enthusiastic about oil production, and we are choosing not to develop our own oil, which would increase the supply and lower prices.
The president has failed to embrace natural gas the way he could. I won’t say he’s been hostile, but he hasn’t embraced it. I think natural gas is an extremely encouraging game changer.
Now for the first time, we can burn natural gas, which is cleaner than gas or diesel, and it is domestic and it is almost in unlimited supply with all the shale basins we have. It’s exciting, and it is terrific for our economy in Pennsylvania. Wind power is part of the equation eventually, but it is not yet competitive. Solar is also not a viable competitor to much lower cost energy.
Q: What are we going to do about transportation funding? It’s an issue in Pennsylvania and nationally.
A: We did pass a transportation bill, although it’s only a two-year bill. We should be doing longer planning. The fundamental problem is what do we do with the fact that we have declining gas tax revenue? I think these are legitimate funding needs. Building out our infrastructure leads to more economic growth. I’m supportive, for instance, of dredging the Delaware River to bring larger ships into the port of Philadelphia.
As far as tolling goes, I am completely in favor of tolling new capacity. If we’re going to add a new road, build a new bridge or add new lanes, the great thing about technology is that we can toll that new capacity. I think that would generate a lot of revenue. But I would be reluctant to impose tolls on roads that do not have a toll now.
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