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Paul Ryan and President Obama discuss spending and budget

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Uploaded on Feb 2, 2010

From GOP Retreat in Baltimore:

REP. PAUL RYAN (R-WIS.): Mr. President, first of all, thanks for agreeing to accept our invitation here. It is a real pleasure and honor to have you with us here today.

OBAMA: Good to see you.

Is this your crew right here, by the way?

RYAN: Yes, this is my daughter Liza, my sons Charlie and Sam, and this is my wife Janna.

OBAMA: Hey, guys.

RYAN: Say "hi" to everybody.

(LAUGHTER)

I serve as the ranking member of the Budget Committee, so I want to talk a little budget, if you don't mind.

OBAMA: Yes.

RYAN: The spending bills that you have signed into law, the domestic and discretionary spending has been increased by 84 percent. You now want to freeze spending at this elevated level beginning next year. This means that total spending in your budget would grow at 300ths of 1 percent less than otherwise. I would simply submit that we could do more and start now.

You've also said that you want to take a scalpel to the budget and go through it line by line. We want to give you that scalpel. I have a proposal with my home state senator, Russ Feingold, a bipartisan proposal, to create a constitutional version of the line- item veto.

(APPLAUSE)

The problem is we can't even get a vote on the proposal.

So my question is, why not start freezing spending now? And would you support a line-item veto and helping us get a vote on it in the House?

OBAMA: Let me respond to the two specific questions, but I want to just push back a little bit on the underlying premise, about us increasing spending by 84 percent.

Now, look, I talked to Peter Orszag right before I came here, because I suspected I'd be hearing this -- I'd be hearing this argument.

The fact of the matter is that most of the increases in this year's budget, this past year's budget, were not as a consequence of policies that we initiated, but instead were built in as a consequence of the automatic stabilizers that kick in because of this enormous recession.

So the increase in the budget for this past year was actually predicted before I was even sworn into office and had initiated any policies. Whoever was in there, Paul -- and I don't think you'll dispute that -- whoever was in there would have seen those same increases because of, on the one hand, huge drops in revenue, but at the same time people were hurting and needed help. And a lot of these things happen automatically.

Now, the reason that I'm not proposing the discretionary freeze take into effect this year, retro -- we prepared a budget for 2010, it's now going forward -- is, again, I am just listening to the consensus among people who know the economy best.

And what they will say is that if you either increased taxes or significantly lowered spending when the economy remains somewhat fragile, that that would have a de-stimulative effect and potentially you'd see a lot of folks losing business, more folks potentially losing jobs. That would be a mistake when the economy has not fully taken off.

That's why I've proposed to do it for the next fiscal year. So, that's point number two.

With respect to the line-item veto, I actually -- I think there's not a president out there that wouldn't love to have it. And, you know, I think that this is an area where we can have a serious conversation. I know it is a bipartisan proposal by you and Russ Feingold.

I don't like being held up with big bills that have stuff in them that are wasteful but I've got to sign because it's a defense authorization bill and I've got to make sure that our troops are getting the funding that they need.

I will tell you, I would love for Congress itself to show discipline on both sides of the aisle. I think one thing that, you know, you have to acknowledge, Paul, because you study this stuff and take it pretty seriously, that the earmarks problem is not unique to one party, and you end up getting a lot of pushback when you start going after specific projects of any one of you in your districts, because wasteful spending is usually spent somehow outside of your district. Have you noticed that? The spending in your district tends to seem pretty sensible.

So I would love to see more restraint within Congress. I'd like to work on the earmarks reforms that I mentioned in terms of putting earmarks online, because I think sunshine is the best disinfectant. But I am willing to have a serious discussion on the line-item veto issue.

RYAN: OK. I'd like to walk you through it, because we have a version we think is constitutional . . .

OBAMA: Let me take a look at it.

RYAN: I would simply say that automatic stabilizer spending is mandatory spending. The discretionary spending, the bills that Congresses signs -- that you sign into law, that has increased 84 percent. So . . .

OBAMA: We'll have a -- we'll have a longer debate on the budget numbers there, all right?

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