Ryan’s remarks came as the United States officially hit its $14.3 trillion debt ceiling, setting in motion a three-month scramble in a sharply divided Congress to reach a deal that would raise the government’s legal limit on borrowing to avert a potential financial crisis.
As a result of reaching the debt limit, Treasury Secretary Timothy F. Geithner, who has already suspended a program that helps state and local government manage their finances, will begin to borrow from retirement funds for federal workers. The measure won’t have an impact on retirees because the Treasury is required to reimburse the program.
The maneuver buys Geithner a few months before he is unable to pay all of America’s bills. If Congress does not vote by Aug. 2 to raise the limit, Geithner says the government is likely to default on some of its obligations.
“To an alarming degree, the budget debate has degenerated into a game of green-eyeshade arithmetic, with many in Washington — including the president — demanding that we trade ephemeral spending restraints for large, permanent tax increases,” Ryan said in a luncheon speech before 1,000 business leaders at the Economic Club of Chicago.
“This sets up a debate in which we are really just arguing over who to hurt and how best to manage the decline of our nation. It is a framework that accepts ever-higher taxes and bureaucratically rationed health care as givens. I call it the shared-scarcity mentality. The missing ingredient, of course, is economic growth.”
Ryan said the government cannot fix its fiscal problems without bringing down health-care costs over the long term. He argued that his Medicare plan, which the House approved in April, would do just that by providing “less help for the wealthy and more for the poor and the sick.”
“As we strengthen welfare for those who need it, we propose to end it for those who don’t,” Ryan said, adding that Republicans want to scale back or eliminate corporate tax loopholes, a proposal that drew applause from the business executives here.
“The budget passed by the House last month takes credible steps to controlling health-care costs,” he added. “It aims to do two things: to put our budget on a path to balance and to put our economy on a path to prosperity. I am here today to stress the point that these goals go hand in hand. Stable government finances are essential to a growing economy, and economic growth is essential to balancing the budget.”
Ryan reiterated recent comments by House Speaker John A. Boehner (Ohio) that Republicans would support an increase in the debt limit only if spending were reduced by more than that amount.
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