Bloomberg News

Ryan Helped Derail Simpson-Bowles Plan Romney Now Sees as Model

August 13, 2012

Wisconsin Representative Paul Ryan

Representative Paul Ryan, Republican from Wisconsin. Photographer: Andrew Harrer/Bloomberg

Representative Paul Ryan was a pivotal figure in killing the 2010 Bowles-Simpson agreement, which Republican presidential candidate Mitt Romney now holds out as a model for putting America’s fiscal house in order.

The 18-member panel needed 14 votes to send a 10-year plan to trim the debt to Congress for a vote. As his party’s then- ranking member on the House Budget Committee, Ryan led a bloc of three House Republicans who denied the additional votes needed.

All three Senate Republicans on the panel backed the plan and one of them, former New Hampshire Senator Judd Gregg, said he believes the House Republicans who rejected it were beholden to an argument by anti-tax advocate Grover Norquist that the measure was tantamount to a tax increase.

“All of the House Republicans were disproportionately affected by the Norquist group on the issue of tax reform,” said Gregg, now a senior adviser at New Mountain Capital LLC. Ryan “clearly was the leader” of House Republicans in setting the terms of a grand debt bargain, said Andy Stern, a panel member and Democrat.

Ryan, now Republican Mitt Romney’s vice presidential running mate, was joined by Representatives David Camp of Michigan, Jeb Hensarling of Texas and four Democrats in opposing a blueprint that would have reduced the federal debt by $3.8 trillion through a three-to-one mix of spending cuts and tax revenue increases. Ryan’s support would have likely drawn votes from Camp and possibly Hensarling and made it all but impossible for the president to reject a plan created by his own self- appointed commission.

The Romney campaign didn’t respond to a request for comment.

Failed Efforts

Instead, the efforts by the commission, comprised of 12 members of Congress and six outside officials, set the stage for a series of failed attempts over the next year by the White House and Congress to reach a bipartisan deal to address the debt, including an ill-fated try late last year by a congressional supercommittee that ended in deadlock.

Illinois Representative Jan Schakowsky, a Democrat on the panel who opposed the plan because of cuts in Social Security benefits, said she believes Ryan became less inclined to compromise following the November 2010 election that had handed Republicans control of the next U.S. House session and put him in line to advance his plan to overhaul Medicare as the new House Budget Committee chairman.

“As his perception of the politics became clearer, I don’t think he felt any need to go with anything less than he would propose,” she said.

Differing Views

That view of Ryan’s role on the debt panel stand in contrast to the profile the Romney campaign is advancing that the 42-year-old lawmaker from Wisconsin is an intellectual leader on economic policy who is immune to the political winds that envelop so many other members of Congress.

Schakowsky was one of four Democrats who opposed the plan, joining Stern, Senator Max Baucus of Montana and Representative Xavier Becerra of California. Each acted on their own objections to the plan, rather than voting as the bloc that Ryan led.

Oklahoma Senator Tom Coburn, a Republican commission member who voted for the Bowles-Simpson plan, called “nonsense” any claim that Ryan acted out of political expediency.

“Paul Ryan doesn’t do things politically, he goes out and leads with his chin,” Coburn said.

Health-Care Focus

The House Republicans’ “price for a grand bargain was ‘do something on health care,’” Coburn said.

The Bowles-Simpson plan would have reduced the deficit by $870 billion in 2020, from a projected $1.15 trillion without action.

It would have reversed the growth of the debt held by the public from 71.5 percent of gross domestic product in 2013 to 60 percent by 2023 by limiting domestic and defense spending and overhauling the tax code. It would have also eliminated all itemized deductions and replaced some of them with refundable tax credits while reducing income tax rates.

In an Aug. 2 Fox News interview, Romney, who has criticized Obama for not embracing the debt reduction package, said “my plan is very similar to the Simpson-Bowles plan.”

Simpson Meeting

Alan Simpson, the panel co-chairman who continues to promote the budget plan, said he met with Ryan, Camp and Hensarling immediately following the December 2010 vote on it.

“I said ‘I’m going to tell you something, if you guys voted against this because you’re afraid of Grover Norquist, I’ve lost all respect for all three of you,’” said Simpson, a former Republican senator from Wyoming.

The three explained that their opposition was instead grounded in the plan’s failure to address revamping the nation’s Medicare health program for the elderly, said Simpson. He said he believes that rationale.

Yet Norquist, president of Americans for Tax Reform, says the House Republicans understood that the plan was tantamount to a tax increase. Norquist is the sponsor of an anti-tax pledge that many Republicans have signed. He said that the Bowles- Simpson plan would have taken taxes from about 18 percent of gross domestic product to 21 percent.

Tax Issue

“The House Republicans intuitively understood that a $5 trillion tax increase is a bad idea, and two, they’d all signed a commitment to their voters,” he said. “They took that pledge seriously.”

Hensarling and Camp, through their spokesmen, David Popp and Sarah Swinehart, both declined to comment.

As it became clear that Republicans had a strong chance of taking control of the U.S. House, Ryan began in September of 2010 to reject key components of the emerging plan and to aggressively push his own plan to convert Medicare to a voucher program, according to two former commission aides familiar with the meetings.

There was no chance the Ryan plan, which is now a flash point in the presidential campaign, could win approval on the commission; and even if it did, the president would have surely vetoed it. “The instruction for Bowles and Simpson was to leave health care alone,” said Coburn. “Obama didn’t want it touched.”

Stern, the former president of the Service Employee’s International Union, said he recalled “two Paul Ryans” on the commission. “There was the pre-November-election Ryan and the post-November election Ryan,” he said.

Ryan, Camp and Hensarling were all in line for leadership positions following the election, with Ryan as budget committee chairman, Camp at the helm of the tax-writing Ways and Means Committee and Hensarling as chairman of the House Republican Conference.

“After the election the House members became more interested in their own leadership and the opportunities to be significant leaders in their own caucus,” Stern said. Signing on to the plan would have invited Republican criticism, he said. “That took priority over the commission.”

To contact the reporter on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net


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