Paul Ryan: "Revenue neutral" deficit hawk

WALLACE: You are the master of the budget, so briefly, let's go through the plan. The Obama camp says independent groups say if you cut those tax rates for everybody, 20%, it costs $5 trillion over ten years. True?

RYAN: Not in least the bit true. Look, this just goes to show if you torture statistics enough they’ll confess to what you want them to confess to. That study has been so thoroughly discredited. It wasn't even a measurement of Mitt Romney, his policy. Here's what we’re saying --

WALLACE: But how much would it cost?

RYAN: It’s revenue neutral. It doesn’t cost $5 trillion.

WALLACE: I'm just talking about the -- we'll get to the deductions. But the cut in tax rates.

RYAN: The cut in tax rates is lower all Americans tax rates by 20%.

WALLACE: Right. How much does that cost?

RYAN: It is revenue neutral.

WALLACE: It's not revenue neutral unless you take away the deductions.

RYAN: That’s where I’m going.

WALLACE: We're going to get to that in a second. The first half, lowering the tax rates. How much -- does that cost $5 trillion?

RYAN: No. No. Look, I won’t get into a baseline argument with you because that’s what a lot of this is about. We're saying, limited deductions, so you can lower tax rates for everybody and start with people at the higher end. Here's the way it works. I have been on the Ways and Means Committee for 12 years. Both parties, Republicans and Democrats have junked up the tax code with so many giveaways and special interest tax breaks. What we're saying is you keep your money in your pocketbook and your business and your family in the first place. The way it works today is, you send more of your money to Washington, and then if you do what Washington approves of you can have some of it back. We’re saying keep it in the first place. And every time we have done this, whether it was Ronald Reagan working with Tip O'Neill, or the ideas coming from the Bowles-Simpson commission on how to do this -- there has been a traditional Democrat and Republican consensus, lowering the tax rates, by broadening the tax base works and you can –

WALLACE: But I have to point out, you haven’t given me the math.

RYAN: No, but, well… I don't have the time… it would take me too long to go through all the math, but let me say it this way: You can lower tax rates by 20% across the board, by closing loopholes and still have preferences for the middle class for things like charitable deductions, for home purchases, for health care. So what we are saying is, people are going to get lower tax rates and, therefore, they will not send as much money to Washington, and they’ll keep it and decide for themselves. When we’ve done this, we’ve created economic growth.

WALLACE: If, just suppose, that the doubters are right, President Romney takes office and the math doesn’t add up --

RYAN: First of all, we’ve run the numbers. I've run them in Congress and they do. We’ve got about five other studies that show you can do it this way.

WALLACE: But let's assume it doesn't. The question is what is most important to Romney? Would he scale back on the 20% tax cut for the wealthy? Would he scale back and say, okay, we’re going to have to raise taxes for the middle class? I guess the question is, what is most important to him, in his tax reform plan if the numbers don’t…

RYAN: Keeping tax rates down. By lowering tax rates, people keep more of the next dollar that they earn. That matters. That is incentives. That’s pro-growth policy. That creates 7 million jobs and what should go first --

WALLACE: So that is more important than…

RYAN: That’s more important than anything and more importantly, it is not what deductions are in the tax code but it’s who gets them. And, don't forget, that the higher income people have a disproportionate amount of the loopholes that they use. So when you close a tax write off or a tax shelter for a higher income person, more of their income is subject to taxation so you can lower tax rates.