The architect of the GOP’s controversial Medicare overhaul delivered a forceful defense of the plan here Monday, saying it would empower seniors and accusing President Obama of having a “shared-scarcity mentality” that promotes “bureaucratically rationed health care.”

Facing a backlash from voters over his proposal to turn Medicare into a system that subsidizes health-care coverage for retirees on the private market, House Budget Chairman Paul Ryan (Wis.) moved to recast the plan as the only one that would make the economy grow.

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.

Facing a backlash from voters over his proposal to overhaul Medicare, Rep. Paul Ryan, shown here in April, is defending his proposal as a way to grow the economy. (Joshua Roberts/BLOOMBERG)

“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.

“We can’t achieve this goal by simply rubber-stamping increases in the national debt limit without reducing spending in Washington,” Ryan said. “For every dollar the president wants to raise the debt ceiling, we can show him plenty of ways to cut far more than a dollar’s worth of spending. Given the magnitude of our debt burden, the size of the spending cuts should exceed the size of the president’s call for a debt-limit increase.”

Democrats and their allies, meanwhile, continued their criticism of Ryan’s proposal. For both parties, the stakes are high as leaders fight to define a debate that will shape Obama’s reelection bid as well as next year’s battle for control of the House and Senate.

“We all agree that we must put our nation on a fiscally sustainable path, which is why we continue to make progress on a bipartisan framework to reduce our deficits by trillions of dollars,” White House spokeswoman Amy Brundage said. “But we must seek a balanced approach that protects our seniors and middle-class families, and does not do anything to impede economic growth.  That being said, failing to live up to our obligations and defaulting on our debt would have catastrophic economic consequences for America and the world.”

 Just before Ryan spoke, the office of House Minority Leader Nancy Pelosi (D-Calif.) e-mailed reporters: “Today’s stop on the GOP ‘damage control and do-over’ message tour: CHICAGO.”

The Democratic Congressional Campaign Committee launched a campaign Monday to target vulnerable House Republicans who endorsed Ryan’s plan, calling voters in their districts to say that their representative “voted to end Medicare.”

As guests arrived at the Palmer House Hilton in downtown Chicago to attend Ryan’s address, a few dozen protesters greeted them, chanting “Tax the rich” and carrying signs that read, “Hands off my Medicare” and “Paul Ryan plan: Let them eat cat food.”

Meanwhile, Pelosi said Monday on CNBC that changes to Medicare are “on the table,” a statement Republican operatives seized on to suggest that Democrats are open to Ryan’s plan.

“I think Medicare’s on the table,” Pelosi said in the television interview. “We have to put it all on the table, see what works.”

Later Monday, Pelosi said on Bloomberg News that Ryan’s Medicare plan is off the table.

“Let me be very clear . . . one suggestion we are not open to is the abolishment of Medicare, and that is what the Republicans have put forth in their budget and we do not support that.” 

Even within GOP ranks, there is dissent over Ryan’s proposal. On Sunday, former House speaker Newt Gingrich, a GOP presidential candidate, likened it to “right-wing social engineering.”

“I don’t think right-wing social engineering is any more desirable than left-wing social engineering,” Gingrich said on NBC’s “Meet the Press.” “I don’t think imposing radical change from the right or the left is a very good way for a free society to operate.”

Ryan shot back Monday on a conservative radio program: “With allies like that, who needs the left?”