Palin's Favorite Republican

Rep. Paul Ryan wants to balance the budget by slashing Social Security and Medicare. He talks to Benjamin Sarlin about the plan that's won Palin over and split the GOP.

The Republican Party has been largely content to say “no” to President Obama on financial matters—offering only a confusing and contradictory mix of calls for tax cuts and spending cuts. But Rep. Paul Ryan (R-WI) just changed the game, putting the first major Republican economic initiative of Obama’s presidency on the table.

It’s a radical plan to balance the federal budget by slashing the sacred cows of American entitlement spending: Social Security and Medicare. And it’s scrambling the political landscape: Sarah Palin loves it. Republicans in Washington are split, wary of the electoral fallout of the spending cuts with the midterm looming. And Democrats are gleeful, confident that they can exploit Ryan’s plan to divide the GOP and perhaps even conquer in a few competitive places this fall.

“I think we as a party need to begin our transition from an effective opposition party and move toward becoming the party of real ideas that turn our economic and fiscal situation around,” Ryan said.

In an interview with The Daily Beast, Ryan, ranking member on the House Budget Committee, said that the time is ripe for the party to once again discuss major spending cuts to entitlement programs, which take up the majority of the budget along with defense spending.

"I think we as a party need to begin our transition from an effective opposition party, which we needed to be because health care and cap and trade were horrible ideas that would bankrupt our country, and move toward becoming the alternative party, the adult party, the party of real ideas that turn our economic and fiscal situation around," Ryan said.

Samuel P. Jacobs: Meet Sarah Palin’s Money Man Matt Latimer: How Palin Could Win Entitlements have traditionally been a third rail for politicians, which helps explains the Republican Party's recent embrace of Medicare. Democrats have already seized on Ryan's draconian cuts and plans to privatize Social Security and Medicare as a wedge issue for the November election, hoping to repeat their earlier political successes against George W. Bush's privatization plan in 2005 and Newt Gingrich's 1995 budget.

Rep. Paul Ryan talks to Lloyd Grove“Entitlement scaring is an old political sport and under normal circumstances it's effective, but we're not in normal circumstances,” Ryan said. “I think the American people are ahead of the political class. They are really worked up and worried about the federal deficit and fiscal crisis coming and ready to be talked to like adults.”

Ryan says his plan has been wrongly portrayed in order to frighten seniors when only Americans under 55 today would suffer the effects of his proposal's heavily decreased health-care subsidies.

"They know they're hurting seniors with Medicare cuts [in health-care legislation] and want to try to out-Mediscare everyone by making current seniors think this plan affects them," he said. "It doesn't. Not for anyone over the age of 55."

Republicans have alternately praised and distanced themselves from the proposal. House Minority Leader John Boehner stressed last week that despite Ryan's position on the House Budget Committee, the plan was firmly his own, though he declined to offer any criticism of its specific proposals. Ryan said he agreed with Boehner's assessment that he shouldn't be singled out as representative of the entire party.

"It’s not like we have some big meeting every week where we say what Republicans are for," he said.

But his bill has found some vocal fans as well: Nine Republicans have signed on to his bill as co-sponsors and Sarah Palin has been quick to attach herself to Ryan's rising star, giving him a shoutout in her speech to the Tea Party Convention in Nashville and volunteering his name as a promising presidential candidate.

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Ryan, for his part, offered an almost Sherman-esque denial of any national ambitions.

"There's no way I'm running for president in 2012," he said.

While Ryan's entitlement-reform plan is likely the most far-reaching conservative legislation put forward this year, his economic record is hardly doctrinaire. He voted for the bank bailout, a position considered heretical by most of the right wing, and the auto bailout, an even more reviled bill among Republicans.

Ryan said his vote for the bailout was influenced by Jonah Goldberg's Liberal Fascism, a popular book among conservatives that argues that Nazism and other fascist movements were actually left wing in origin, and his belief that a second Depression would threaten capitalism—and rescue Obama's presidency.

"I'm a limited-government, free-enterprise guy, but TARP... represented a moment where we had no good options and we were about to fall into a deflationary spiral," he said. "I believe Obama would not only have won, but would have been able to sweep through a huge statist agenda very quickly because there would have been no support for the free-market system."

He couched his support for the auto bailout in similar terms, saying that he feared the bill's failure would have led the Obama administration to use TARP funds in order to rescue the industry with less congressional oversight instead.

“A lot of these votes are defensive votes," he said. "A lot of them are not votes you want to take but under the circumstances they're the best path forward."

Benjamin Sarlin is a reporter for The Daily Beast. He previously covered New York City politics for The New York Sun and has worked for