Ryan: We want tax reform, not tax cuts for rich

Rep. Paul Ryan (R-Wis.) on CBS' "Face the Nation," April 17, 2011.

Wisconsin Rep. Paul Ryan on Sunday disputed recent claims that the Republicans' budget plan proposes enormous cuts in taxes for America's highest earners, arguing that the proposal actually reforms the tax system and closes loopholes, "targeting our revenues at where they are right now."

In an appearance on CBS' "Face the Nation," Ryan, who unveiled the GOP's 2012 budget plan last week, said Republicans were merely making the system more efficient and opposing the president's proposal to end the Bush-era tax cuts for the rich.

"We're not talking about cutting taxes," he told CBS' Bob Schieffer. "We're just not agreeing with the president's tax increases. I guess that's the new definition of tax cuts. We're saying keep tax rates where they are right now. Get rid of all those loopholes and deductions which, by the way, are mostly enjoyed by wealthy people so you can lower tax rates."

Ryan's budget proposal aims to reduce the deficit by $4.4 trillion over ten years, by repealing health care reform, reforming entitlements like Medicare and Medicaid, and making cuts to defense. It also imposes hard spending caps on domestic spending.

Many Democrats argue that the plan places the burden of balancing the budget on the backs of middle-class Americans - particularly in light of the fact that the budget would lower the highest individual and corporate tax rates from 35 percent to 25 percent.

On "Face the Nation," Ryan argued that his proposed "tax reform" would primarily benefit small businesses, and that the changes would create a "simpler, flatter fair tax code [that was] more internationally competitive so we can create jobs" 

"This isn't tax cuts," Ryan said. "We're basically taking a page out of the playbook of the Fiscal Commission. The president's Fiscal Commission, supported by a majority of Democrats, said the same thing: broaden the tax base. Lower the tax rates for economic growth."

When questioned specifically about whether or not lowering tax rates for America's top earners could be described as a tax cut, Ryan implied that it was more of a tradeoff.

The reduced rates would come "in exchange for losing the loopholes and deductions that mostly higher income earners use," he told Schieffer.

"What we're saying is, keep tax revenues where they are. Don't lower tax revenues, but clean up the tax code so that it works," Ryan continued. "If you have really high tax rates, what you end up doing is [penalizing] small businesses."

Responding to Schieffer's question about how Republicans can justify "reducing the amount of taxes that the richest people in the country pay" when the United States has to borrow money from other countries to keep itself running, Ryan argued that America's problem was with spending - not taxes.

"We don't have a tax problem," he said. "Our revenues are going back to where they have been historically. We have a big spending problem. Spending is growing at a very unsustainable rate. So let's focus on spending."

Ryan also argued that high taxes would hurt small businesses and, subsequently, the economy.

"Raising tax rates on anybody - especially successful small businesses - slows down the economy, loses jobs and if you have lower economic growth, you have less revenues and it puts you further behind," he said. "We want more tax revenues, but we want to get it by expanding job creation, by expanding economic growth. So the secret to success here is economic growth and job creation through tax reform, not tax cuts."

Sen. Mark Warner, a moderate Virginia Democrat, argued that Ryan's budget relied too heavily on the middle class and the elderly for reducing the deficit.

"I give Congressman Ryan credit for a serious plan, but I think what you saw... is he basically says no new  revenues of any kind," Warner told Schieffer in a Sunday appearance on "Face the Nation."

"He says defense spending is walled off. That means the only place that he can go to get... his deficit reduction is really this massive transfer of more responsibility onto our seniors in terms of paying for health care."

"The facts are, right now we are spending at an all-time high," Warner continued. "Close to 25 percent of our G.D.P. is being spent on the federal government. But our revenues are at an all-time low, at about 15 percent."

"You know, it doesn't take a math wizard to figure out that delta can't be sustained," he added. "We need both a way to have the tax code generate more revenues, [and] we need to bring spending down. And we have to do it in a way that still protects certain investments where we can grow our economy."