Ryan acknowledges debt limit must be raised

Ryan wants to use the debt ceiling to push deep spending cuts, but as interviewer Paul Gigot, of The Wall Street Journal editorial page, noted at the event, if you take a political hostage you have to be prepared to shoot it.

The fact that Republican House leaders know they cannot allow the U.S. to default on its debt might lessen the leverage they enjoy from the fact the nation will probably reach its $14.3 trillion debt limit between March and May, according to Treasury Secretary Timothy Geithner.

Ryan suggested the debt ceiling could be extended for a limited time to keep the pressure on the administration for cuts. 

At the event, Ryan also said GOP plans to return 2011 spending to 2008 levels are now estimated to involve $60 billion in cuts from current levels. In the midterm election campaign, Republicans had pledged to cut $100 billion in spending. Ryan explained the fact that the government is running on a 2010 continuing resolution means spending has already been cut so that number is no longer valid.

Ryan said the 2012 budget resolution he plans to produce from his committee will have a “really low number” that will then be subject to extensive negotiations with the Senate and administration.

He said he wants to include entitlement reform in his budget resolution but he does not know yet if he will be able to do so. Of reforms to Medicare, Social Security and Medicaid, he said reforming Medicaid might be the easiest to accomplish. Ryan favors block-granting funds to states for Medicaid. Currently the federal government increases Medicaid funding to states as healthcare costs rise.

He thinks President Obama might be open to compromising with Republicans on enacting a long-term spending reduction plan such as the Gramm-Rudman act that sets caps on overall spending.