In The News

By: AIF Staff

Los Angeles, CA – Talking with David Westin on Bloomberg’s Wall Street Week from the 2024 Milken Institute’s Global Conference, former House Speaker Paul Ryan says the next President could very well face a debt crisis. He says neither President Joe Biden or Donald Trump are doing enough when it comes to getting new trade agreements signed and neither are taking our debt seriously enough.

Video of Ryan’s conversation on Bloomberg TV’s Wall Street Week and excerpts from the interview follow.

The 3 biggest economic policy challenges facing policymakers in 2024-2025

“Number one would be tax policy. What’s the tax code going to look like? What’s tax policy looking like in the future? Number two, I would say tariffs. Number three, I think it’s reasonable to assume the next president is quite possibly going to face a debt crisis. You don’t know when that is or exactly what form that takes place, but a lot of fiscal policies are on the line – tax policy, trade policy, debt policy, and therefore, interest rates.”

The impact of the 2024 election on the future of the US tax code

“It’s more likely than not we are going to have divided government. I feel good as a Republican that we’re going to take the Senate just because the map is so good for us.

The House is basically a tied House right now, so that’s kind of a coin toss which depends on who’s going to win the presidency. My guess is it’s most reasonable to assume divided government because Biden or Trump won’t run the table.

And the law that I worked on quite a bit, the Tax Cuts and Jobs Act, a lot of it expires in 2025 -not the corporate side, not the corporate rate, not the territorial system, but the individual side. If Republicans are in more control [of government], that means we extend the Tax Cuts and Jobs Act and if Democrats are more in control, they will do everything they can to let most of it expire.

If [Democrats] get their way and if they have all of Congress, [Biden] is actually proposing about a 44.6% capital gains tax, which if you add state taxes on top of that you’re at 50% — that’s economic nihilism…

If it’s divided government like I think it’s going to be, we will probably split the difference where maybe the top rate goes up, [the rest of the] individual rates stay the same, hopefully we get a little expensing back in place and Section 199A, which was really important for those medium and small-sized businesses, hopefully that gets extended.”

Both Trump & Biden ‘standing still’ on trade

“I don’t know who’s going to be the president, but Trump’s promising a 10% tariff across the board, which is a giant tax increase on American consumers.

Everybody is going to fight China. A Biden presidency is going to fight China. A Trump presidency is going to fight China. The question is, what about the other countries?

The frustration for me is neither of these two presidents want to do trade agreements. We should have done TPP (the Transpacific Partnership) in my opinion. It’s a very good China policy but neither Trump nor Biden are proposing any trade agreements. Trump is proposing across the board tariffs. Biden is not proposing that, but he’s also not proposing to get new agreements and to get new markets for our products and our goods and services.

And if you’re standing still on trade, you’re falling behind because all the other countries are going around the world getting their own preferential multilateral and bilateral trade agreements, leaving us on the outside looking in. So, you can’t just stand still on trade. But unfortunately, that’s what we’re doing and that’s what, frankly, both these guys are proposing to do.”

Lacking Presidential leadership on the debt & the safety net

“I’m a fan of neither of the guys who are running for president because both of them are demagoguing the issue. In their primaries, they campaigned against people who propose solutions. They’re demagoguing entitlement reforms. They’re basically saying they’re not going to do anything and doing nothing, by the way, makes Medicare go insolvent, makes Social Security go insolvent, and hurts today’s current seniors.

Fixing this problem shores up the finances for these programs so that current seniors can get the promises that are due to them and then solves it for the next generation, so we don’t have a debt crisis.”

Avoiding a debt crisis & acting like the world’s reserve currency

“We’re already on track to spend more in interest payments than we are for national defense and regrettably, none of these guys who are running for president are proposing to do anything about it.

There are good people in Congress that are proposing solutions. There’s bipartisan support for a Fiscal Commission but you have neither Trump nor Biden saying they’re going to do anything about it. So, I think the next president has a reasonable chance of having a debt crisis on their watch…

If the world concludes that America is not going to get its fiscal house in order, that we’re going to get these entitlements under control, then they’re going to conclude that we are going to monetize our debt and there goes dollar dominance. That’s an exorbitant privilege which benefits us greatly.

We’re not acting like a world’s reserve currency. We should be and this, for me, is the biggest fiscal challenge the next president is going to have to confront. I wish I could say somebody has a plan for this but neither of them do. That’s what’s so frustrating for me.”

Stablecoin legislation could help address our fiscal challenges

“I think stablecoin legislation would be a good step in the right direction. It could be helpful, and it could be done this year, but I don’t see anything other than that on the horizon.

Stablecoins are digital and private sector dollar-backed currencies. It’s not cryptocurrency because it’s tethered to the U.S. dollar. They have to have dollar-backed assets. They have to have treasuries or cash to back them. There’s not a law that governs [stablecoins] right now, so they aren’t really deployed…

Reps. Patrick McHenry and Maxine Waters are working to put a deal together and Senator Chuck Schumer is in talks with them, so I think there’s a reasonable chance they could get a deal on stablecoin legislation and that means you have a legal framework to get stablecoins deployed.

[If you have a law governing them] you would go from a couple of hundred billion dollars of stablecoins to maybe trillions. Right now, stablecoins are like the 16^th largest buyer of bonds, bills and notes among all sovereigns.

If you actually regulate stablecoins and have them deployed, that does two things: It gets the U.S. dollar more deeply ingrained in the oncoming digitization of currencies, and that’s a good thing. And it creates new consumer demand for our bonds because they have to have those to back up the stablecoins. So, [it would mean] more demand for treasuries and more use of a digital dollar throughout the system, which would help better entrench the dollar. It’s a win-win situation for America.

I think it’s a no brainer. I’m hopeful. I’m cautiously optimistic Congress might do that this year. There are good talks happening and that’s one thing you could do on the margins to improve demand for our bonds and [strengthen the] dollar.”

Los Angeles, CA – Earlier this week, American Idea Foundation President and former Speaker of the House Paul Ryan was a featured panelist at the 2024 Milken Institute’s Global Conference. While there, he spoke with Yahoo Finance’s Brian Sozzi and Akiko Fujita in a wide ranging interview on Yahoo! Finance. Recaps of Ryan’s comments can be found below, and excerpts of his responses follow.

• Article: Former Speaker Paul Ryan on GOP ‘nihilists’ and Trump’s economic plans
• Article: Ryan says he’s not voting for Trump: ‘Character is too important’  

On Mike Johnson, the foreign aid supplemental, and the Motion to Vacate:

“With a tight margin like this, who you have a few nihilists who are not interested in seeing their team succeed but building a brand for themselves, this is the kind of behavior you’re going to get. If Rep. Marjorie Taylor Greene does this… she’s not going to succeed because [Democratic House Leader] Hakeem Jeffries, rightfully so for the institution’s sake, said they are going to table this. So, this won’t succeed, but it’s a nihilistic approach that some of these members are taking and it makes the place ungovernable.

But even knowing it was potentially going to cost him his job, Mike Johnson still did the right thing. I’ve always said you can’t be good at these jobs unless you’re willing to lose them. You fight for the institution. You do what you think is right, and that’s exactly what Mike Johnson has done.

He’s new to the job, but he’s scaled the learning curve very fast. I’m very proud of him. He’s a smart and decent man who tried his best to bring his team around, irrespective of the fact that he knew they were going to come after his job and threaten him like they just did his predecessor, he went forward anyway and passed this package. That’s what leadership looks like. It may cost him the job in this next term, but he did it anyway and that, to me, is heartening. Our institutions still work.

We have leaders stepping up and doing the right thing, not every time, but in this case, that’s what happened and shame on people who think they should vacate a speaker for a policy disagreement, for simply doing his job.”

On whom he is voting for in 2024:

“I understand the binary argument. It’s a reasonable argument. I just don’t agree with that argument. Character is just too important to me. It’s a job that requires the kind of character that [Trump] just doesn’t have. Having said that, I really disagree with Biden on policy. I wrote a Republican in last time and I’m going to write-in a Republican this time… I don’t know who yet.”

On the dysfunction in Washington impacting business decisions:

“It adds to the “uncertainty tax.” There’s a lot of uncertainty about who is going to be President. There’s a lot of uncertainty about what the tax code is going to look like after 2025. This creates a lot more of that uncertainty. In this case, it is: Are we supporting our allies? What is the war in Ukraine going to look like? This affects agricultural markets and affects a lot of things with respect to supporting Ukraine and Israel. So, just getting the [foreign aid supplemental] through took 4-5 months and that creates a lot of uncertainty and so, [the dysfunction] just adds to the uncertainty tax.”

On a lack of Presidential leadership on the debt:

“Trump and Biden are both promising that they are not going to do anything about this. Not only are they promising not to do anything about this, but they are also demagoguing those who are offering solutions. They are running against these people, trying to scare seniors by going after people who are proposing these reforms.

You have to reform these entitlement programs to prevent their insolvency and to prevent their bankruptcy. Medicare and Social Security go bankrupt within a decade and that hurts current seniors. Proposing to do nothing about that, like Biden and Trump are doing, hurts those seniors. And so, leaders in Congress, it’s bipartisan with both Democrats and Republicans saying we have to do something about this, but the two guys running for President are demagoguing on this. That to me is very frustrating. It’s kind of scary, because we are walking ourselves into a very predictable debt crisis and that’s bad for everybody. Everybody gets hurt under a debt crisis. The economy suffers, seniors suffer, people living on the safety net suffer so the smart thing to do, knowing bankruptcy is coming, is get over this.

Let’s pass reforms that are phased in, which don’t affect current seniors, and which stop bankruptcy from ever happening. This is what a serious government would do. This is what serious politicians would do, but that’s not we have right now.”

On the notion America can tax its way out of a debt crisis:

“You can’t tax your way out of this problem. The numbers are just so big. You can’t cut the Pentagon and you can’t raise a bunch of taxes and come close to solving this problem. The drivers of the debt are these entitlement programs, namely Medicare, Medicaid, and Social Security.

Now, the good news about all of this is: 1) it’s totally within our control as a country to solve these problems; 2) you can solve these problems without affecting current seniors; and 3) we have learned a lot since we started these programs in the 1930’s, the 1960’s, and the 20^th century on how to deliver these benefits. We have got to modernize these programs so the next generation can still have a good safety net and can still have health and retirement security, but you have to reform these programs on a go-forward basis and that can be done.

Raising taxes doesn’t even come close to solving the problem. Can you get a higher revenue line without doing damage to the economy? Yes, I think you can but that’s more of a tax reform question, but if you do what Biden is proposing which is to have effectively a 50% capital gains tax, that’s going to hurt small businesses with a giant tax increase. That’s going to kill economic growth.  

Here’s the last thing I’ll say: You can’t solve this without a growing economy so if you’re going to play with taxes, you have to be careful and do it in a way that keeps the economy growing. You can’t take your eye off the ball which is spending and it’s the way these programs are designed. You can fix them on a go-forward basis without affecting current seniors. If you start soon, you can dodge a debt crisis.

It’s the most predictable economic crisis we will have ever had in this country and frankly, we’re not doing anything about it. That is really disappointing.

On the extension of the TCJA and the need to extend Section 199-A for small businesses:

“Let’s look at what expires: It’s the individual side of the code. It’s not the corporate side of the code, so it’s all those tax crates on families. If you raise those tax rates, you’re going to hurt economic growth.

I could see a deal where the top rate goes up to 39.6% from 37%, which is kind of a rounding error on the numbers, but I can’t imagine either Biden or Trump in divided government, which is what I expect we’re going to have, allowing those tax cuts to expire.

The thing that is not getting covered much is something we call Section 199-A. It’s kind of an obscure provision but when we lowered corporate rates to be commensurate with the rest of the world and to be globally competitive – which was working — we also lowered the tax rates on what we call pass-throughs, sub-chapter S corporations, sole proprietorships, and LLCs which are about 80% of American businesses. They got a corresponding rate decrease so that they were on par with corporations.

Now, think of the person in Janesville, Wisconsin who owns the Ace Hardware competing against Home Depot. Do we want to let that person’s tax rates go back up to above 40% when Home Depot’s is at 21%? I don’t think we want to let that happen but that is what happens if you let Section 199-A expire, which Biden is proposing to do. I think that’s devastating to small and medium sized businesses. It’s really bad for economic growth. I think they need to extend Section 199-A and I think they will extend it because raising taxes on all these small businesses across America is not good economics.

On Trump’s second term economic agenda & why it’s preferable to Biden’s:

“Well, across the board tariffs are not good for the economy. Fighting China is good and necessary, and both of these guys are going to fight China. I think that’s fairly bipartisan. If you look at the House Select Committee with Raja Krishnamoorthi and Mike Gallagher, they put together a Venn Diagram of bipartisan China policy that I think either Administration is going to be effective and committed to fighting China. But I think a 10% tariff across the board is terrible economic policy. It’s a 10% tax on American consumers, making our businesses less competitive so I don’t think that’s good policy but Biden’s proposing this massive tax increase on medium and small-sized businesses. So, is it any wonder I don’t like either of these guys?

I’m a person who is saying, I’m not for Trump but his economics are better than Biden’s. If you’re asking me which is better? I think Trump because he’s better on taxes. I don’t like a lot of the tariffs and that can be done by a President, but I think he’ll be better on regulations and taxes.

The problem with Biden is he went left. He wasn’t the moderate the swing state voters in Wisconsin thought they were getting. They got this progressive. He’s got ideologues in the executive agencies killing energy production, proposing big tax increases so that’s not a very attractive economic agenda.”

By: AIF Staff

Dallas, TX – In late March, American Idea Foundation President Paul Ryan spoke at Southern Methodist University’s Center for Faith & Learning about how to integrate faith-based principles into public life. During the conversation moderated by Dr. Elizabeth Kincaid, Ryan discussed how he developed central tenets of his faith, how he sought to legislate from a philosophical framework which was consistent with Catholic Social Teaching, and how he used his prudential judgement to assess various public policy debates.  

With over 150 students and members of the wider SMU community in attendance, Ryan touched on how faith informed his efforts to reform the tax code, strengthen the social safety, and modernize our criminal justice system. The full discussion is accessible here and selected excerpts, edited slightly for clarity, follow. 

Making an impact while staying true to your beliefs:

“In Congress today, we have legislators and entertainers. If you turn on the TV tonight, you’ll probably see an entertainer on TV tonight…. But if they’re in session and you drive to the Capitol and walk around, the legislators will be in those rooms, sleeves rolled up, working. They will be legislating, negotiating, compromising and the carnival barkers, the entertainers, will be on TV getting hits and clicks. So, be a legislator!

What a legislator does is she listens to the other side, absorbs input, tries to put herself in someone else’s shoes to see what their perspective is and what they’re all about. She filters that through her principles that she’s already thought through and then comes up with a conclusion to try and bridge the gap.

The Founders gave us a country that requires negotiation and compromise, that expects and insists that different people, from different places, with different backgrounds, from different parties and with different philosophies figure out how to bridge the gap… and tackle our challenges. The more you’re able to have that as your mindset, the more successful of a legislator you will be. You might not be entertaining, but you’ll get more done and you’ll make a bigger difference if you do it that way.

The entertainers might get famous and rich, but the legislators will have an impact on society. So, figure out what you believe in, what your principles and policies are, debate based on fact and reason, not emotion, and then listen and empathize with the other side. If you do that, you can be a better policymaker.”

How students can strengthen their communities:

“This Saturday or Sunday, put the phone down and go get involved in a civic organization. Go get involved in a charitable organization, get involved with people that aren’t like you and that get you outside of your comfort zone. Get involved where you can bring your talent and your personality and make a difference working with somebody like the Big Brothers Big Sisters or anything like that.

Get involved in your community and by giving, you’ll get more back in return. You’ll also build this muscle memory by putting yourself in civil society and not focusing on social media. You will build inside yourself a muscle memory because it feels good to do this. You’ll make it contagious and you can spread it to other people. I would say: Find that thing you can do with other people, that doesn’t involve any electronics, and that gets you involved in helping other people in their lives.”

Applying Catholic principles to the question of life:

“Life is such a high principle, especially in Catholic Social Teaching, that wherever you can protect life, you protect life. As a practicing Catholic, we believe life begins at conception and so, you want to protect life whenever you can. Now, in a civil society, you realize lots of people don’t agree with that, so you don’t have to be a stick in the mud and be axiomatic and insist on your way or the highway. You can work to find common ground.

We were just talking about Glenn Youngkin, the Governor of Virginia, because I think his Foundation helps here [at SMU]. He found common ground with the Virginia legislature last session and did a ban after 15-weeks. He [worked to] find common ground and get incremental steps towards protecting life and he brought people along.

I come from the school of persuasion politics, not cram and jam politics or the my way or the highway approach, and that means you work to persuade people or at least find where you have the Venn Diagram of overlap and that’s, I think, a pretty good approach on the life issue.

Breaking polarization fatigue and solving America’s pressing problems:

“What I think is going to end up happening is we, as Americans, are going to get so sick of nothing getting done and we’re going to be tired of polarizing each other that we’re going to be tired of [these types of politicians].  

I mean, Joe Biden’s slogan is: “I’m not Donald Trump.” Donald Trump’s slogan is: “I’m Trump.”

That’s it right there. There’s really no agenda underneath it. There are no solutions, there is no Contract with America. There’s none of the “I’m going to solve these problems so vote for me and I’ll get it done.” No, it’s none of that stuff.

We’re going to get tired of this and that’s the great thing about the regenerative power of democracy throughout America’s history. I think polarization fatigue will set in and these problems are going to start piling up. We will realize that it’s going to be really ugly if we don’t fix these problems – and I can tell you, a debt crisis hits the poor and the elderly the first and the worst – so I think we are going to get through this.

We will muster the stuff we need to muster to say: I’m going to reward the politician who is a unifier. I’m going to go for the politician who is inspiring, who is not trying to divide us, who is offering solutions. It may not be the perfect solution. It may not be the most conservative solution, but it’s a solution.”

For more on Speaker Ryan’s visit to SMU, check out an interview he did with the SMU Campus Daily, accessible here.