The American Enterprise Debates: Paul Ryan/David Brooks Debate

ARTHUR BROOKS: We welcome you to today's debate, "How Much Government is Good Government?" In September of this year, Congressman Paul Ryan and I wrote a piece, an op-ed, together in the Wall Street Journal that talked about the growing role of government over the past few years and made a fairly philosophical assertion about the way government is moving. We said this: "Today we face a choice between free markets and managed capitalism; between limited government and an ever-expanding state; between rewarding entrepreneurs and equalizing economic rewards. Well, our friend, New York Times columnist David Brooks, who is no relation to me...[LAUGHTER]...responded in the New York Times, in a column the next day with the following: "The American story is not just the story of limited governments; it is the story of limited but energetic governments that used aggressive federal power to promote growth and social mobility." Well, this actually stimulated inside and outside of AEI a very nice debate about what we feel is one of the primary cultural issues of our time: the size of government. This is simply not only about economics and about finance today, and if you didn't believe it, simply paying attention to the last election should assure you, that the size of government and what our government does is a cultural phenomenon as much as anything else. People around AEI mentioned to us that they were impressed at the way that the debate had conducted itself, that our friend David Brooks and our friend Congressman Ryan had gone back and forth trying to understand the contours of the issues as opposed to simply yelling at each other, which would not be either of their way but is increasingly characteristic of the tenor around Washington, DC and in the United States. Well, our colleague, Apoorva Shah, had the idea at this point to actually formalize the conversation and bring it inside AEI such that people could hear more and that's what we're going to hear from our friends about today. Today, we're actually going to pick up where we left off on the pages of the Wall Street Journal and the New York Times to ask, what is the proper role of government, how should we be thinking about it today? The style of this debate will be relatively formal; we're going to start with Congressman Ryan, who's going to give an opening statement, 10 to 20 minutes, followed by David Brooks for 10 to 20 minutes, at which point we'll have rejoinders. I'm delighted to have all of you with us, I'm honored to have our two guests, and at this point, I'm going to turn it over to Congressman Paul Ryan.

[APPLAUSE]

CONGRESSMAN PAUL RYAN: This thing on now? Can you hear me now? Okay. First, let me apologize in advance: a vote is pending fairly soon, so if I have to leave, Arthur Brooks is going to take over so you have to let me know how he did. [LAUGHTER] So that's unfortunately the way our jobs work, this is like my fourth or fifth time in this room this year, I think, so it's good to be back here at AEI. AEI billed this debate as a case for limited government represented by me versus David, a case for energetic government. Unfortunately, I'm not probably going to do a very good job of upholding my end of the bargain because I happen to believe that the choice is a false one. In fact, energetic government is impossible without limits. The idea that mainstream conservatives are anti-government is simply not true, and Arthur and I try to make that point in our first op-ed in the Wall Street Journal, where we quoted Hayek in The Road to Serfdom. Even Hayek said that...he reminded us that "the state has legitimate--and critical--functions for rectifying market failures and securing some minimum standard of living." Edmund Burke, in many ways the founder of modern conservatism, was a champion of ordered liberty, recognizing the impossibility of one without the other. Recent history is filled with examples of conservative leaders. Think about Rudy Giuliani--think about what he did to clean up the police department in New York. Living in New York City is not the same as it was before he arrived. I look at Tommy Thompson, one of my political mentors, former governor of Wisconsin, who made bold steps to clean up the moribund welfare system in Wisconsin. Take a look at Mitch Daniels, who's bringing consumer-directed health care reforms to Indiana. Think about Jeb Bush, who brought some much-needed and bold education reforms to Florida. These leaders have a couple of things in common. They were no strangers to energetic government, and they were widely admired by mainstream, limited-government conservatives. I've also embraced energetic yet limited government with my Roadmap for America's Future. It is a plan that does not do away with government; it's a plan that does not even do away with all of these entitlement programs. It's a plan that makes these entitlement programs sustainable. It's a plan that makes these programs something that we can live with in the next century while keeping a limited government and a free enterprise society. I'll talk more about that in a minute, but I'd like to expand upon this idea that energetic government is impossible without limits. Big government is lethargic government. A government whose size and scope is not properly limited will always seek to raise taxes before it looks for ways to innovate and do more with less. This is why those who do not share our attention to limited government have insisted that higher taxes are always the best way and the easiest and first approach to close our yawning deficits. I see this every day in Congress. This is a solution that I have rejected, not simply because I'm married to some magical, mythical, absolutely perfect tax revenue level per GDP. It's something that I have a fundamental difference with, because those who think our biggest problem is not enough revenue, I just disagree with. In fact, focusing just on size entirely misses the point. We should not be asking, how big should our government be; we should be asking, what is our government for? What is its purpose? Should government enforce the rules, or should it pick winners and losers? Should government provide a basic safety net, or set up an enormous transfer program to fund entitlements for the middle class and the wealthy? Is government instituted by us to secure our liberties and allow us to thrive compatible with a state that consumes an ever-growing share of the private economy? Rather than focus on size alone, we should be asking what makes America exceptional. Who are we and what do we aspire to be at this juncture in our history at the beginning of this century? Abraham Lincoln said it probably best: "The progress by which the poor, honest, industrious and resolute man raises himself, that he may work on his own account and hire somebody else ... is the great principle for which this government was really formed." Do we want to have an opportunity society with a robust, circumscribed safety net so that Lincoln's resolute man is free to work and to take chances or to better himself, or do we want to have a stagnant, cradle-to-grave welfare state, where opportunity is sacrificed for a misguided vision of equality? If we answer these questions correctly, size of government will take care of itself. And if we answer these questions incorrectly, we risk crossing into a tipping point at which the size of government will do irreparable fiscal and moral damage, where we bankrupt the country and turn our safety net into a hammock. That lulls able-bodied people into lives of complacency and dependency that drains them of the will to make the most of their lives. We do face a choice in a battle over that choice. Now, the choice on the debt is so massive, the fiscal situation is so massive, that sooner than we think, we will be facing a collapse of our actual social safety net. Should the government fail to reform entitlements, those very programs will collapse under their own weight and they will bury the next generation with a crushing burden of debt. Clinging to the status quo will not only lead to inevitably to economically stifling tax increases, but deep and sudden and highly disruptive benefit cuts. Failing to address this program now, when necessary adjustments are manageable, assures forced austerity in the near future, imposed by credit markets in a state of panic. I serve on the Fiscal Commission; we're reminded of this every day as we look at these numbers. On the morals side, I find the prospect of irreparable moral damage just as troubling, and as I know David does as well. Europe's people have labored under the rock of its welfare state for decades, and now Europe's debt crisis has lifted this rock and we see the moral ugliness that has developed underneath. Turn on the TV and watch French teenagers lobbing Molotov cocktails at each other and at cars, burning down schools, protesting advancement of the retirement age for fat pensions that they haven't even begun to work yet [sic]. Take a look at British university students, who are shattering windows because they don't want to share the cost of their own educations. Greek mobs murdering bank tellers, because their workplace happens to be a symbol of fiscal reality? Good grief. Let's contrast these riots with the Tea Party protests that we've watched over the last year or two. Instead of taking to the streets to demand more from the government, these citizens took to the streets peacefully to ask the government to do less, to take less, and to return itself to the role government was envisioned by our founders. David has argued that the Tea Party's conception of this nation's founding principles is flawed, and that energetic government has always been a part of this country's tradition. I agree with David on the second part, but I think he has missed what the Tea Party has picked up on, and that is, the current president's vision of this country represents a shift, not just in the size of government, but in the kind of government we have. Nowhere has this been on more vivid display than in the health care debates. The overriding problem with health care is the fact that health care costs and prices go up faster than the rate of inflation; it outpaces our incomes. So we know we're on an irreconcilable path. There are two approaches that simply cannot be reconciled. One approach is represented by the Democrats' health care bill, the Affordable Choice Act, everybody calls this Obamacare, with its trillion-dollar expansion of government and its reliance on the same kinds of price controls that have failed for decades and decades to control costs. The approach outlined by some of us, one that I offered with Alice Rivlin of the Brookings Institute [sic], former Clinton OMB secretary, vice-chair of the Fed, she and I offered a different approach, one that simply says we will build a routine of support to individuals, we will run the money through the individual instead of from the government, we will peg that support to a rate closer to general inflation, and we will use a decentralized market process to discover efficiencies. There's basically two ways to go: you run the money through the individual, make them more powerful, reform our insurance laws, so that they can have power and that the providers of health insurance, health care, hospitals, doctors, insurers, compete against each other for our business in a market-based situation, or we run the money through the government, and we trickle it down, top-to-bottom, through price controls and formulas. That's the choice we have on health care before us. I like to think of the plan that I've offered as an example of energetic, smart government. It takes the Burkean approach to working to conserve arrangements that people have built their lives around. The radicals are those who are committed to the centralized approach to cost control and a blank check version of entitlement reform, even though this approach has manifestly failed. In fact, with the Affordable Health Care Choice Act, they doubled down on this same doctrine, this same dogma. This vision for our future, a vision that imagines we can just tinker at the margins of our entitlement programs and somehow avoid the coming collapse, would lead us into the kind of harsh austerity that would hit those who rely on the safety net the most the hardest. It's a vision that is simply not compatible with mine, and I believe that there is nothing to be gained by pretending to Americans that we do not face a stark choice between the two. Let's focus on today, not the day after tomorrow; that was sort of the substance of our go-between. The consequences of this choice are just too important to pretend that it doesn't exist. I don't want to get into a "do it for the kids" cliché here, but I think it's important to stress. What are we doing, and what are we doing to them? And if you simply look at what we are doing to the next generation, it is actually immoral. My three kids are what motivated me to put this roadmap out there in 2008, when deficits were going down, during the Bush administration, before we were on the precipice of this debt and economic problem. The problem is this: the storm clouds were already growing then; we could see that we needed a course correction, and that we would be giving our kids a lower standard of living and an impoverished and diminished country. Well, now, it's right in front of us. You know, I see the greatness in my three kids, who are 6, 7, and 8, as I'm sure every parent does. But as someone who spends all his time thinking about the budget, [LAUGHTER] probably more than a healthy person should, I know that we are not building that prosperous opportunity society that they need in order to maximize their potential. There is nothing more dispiriting than to think that they're not going to be able to chase their dreams because they'll have had it away by the decisions we make or fail to make right now. There is nothing that disturbs me more in this debate than to think of my kids coming into a country and a society where they are more likely to be dependent upon the government for their future than they are upon themselves. That is the most disturbing, demoralizing thought of all of them. The situation is even worse today than when we first started talking about these ideas, to the point that I am increasingly convinced that we might see a debt crisis in the near future. This is why it is so incredibly urgent to act, to make no bones about the choice before us, and to mobilize the citizenry that appears receptive to our message as evidenced by this past November 2nd. We cannot skirt the edges of this problem, we must truly change course, and we don't have the luxury of waiting until the day after tomorrow to make this choice. We first have to make the choice of who we are, what we want to be, go forward with that, and then we can debate how we do this. Thank you.

[APPLAUSE]

DAVID BROOKS, NEW YORK TIMES: Thank you, I'll try to pick some fights, though maybe less than I thought. First, Arthur wanted me to remind everyone that we are not in fact related. He mentioned it, but he said... he called me a few days ago, mentioned it again that we're not related, called me every day, every 15 minutes, [LAUGHTER] remember to tell them that we have no DNA in common, nothing. It hurt my feelings a little because in fact we are brothers. We are the illegitimate children of Ayn Rand and Russell Kirk. They put us up for adoption. Arthur was raised by the club for growth, I was raised by Jacob Javitz, we do spend the summers together arguing marginal tax rates. It a great honor to be here with Paul, who is the most intellectually formidable member of the house (RYAN: that ain't saying a whole lot), and he stole my joke the bastard. But at least since Jim traffic {unintelligible]

Paul has young guns on his side. He has got the entire GOP caucus, the resources n the budget committee; I have the conservative wing of the New York Times. I liken being a conservative at the NY Times to being chief rabbi at Mecca... not a lot of company, thank God for Ross Douthat, so it's another example of a republican strong person praying on the weak, but I'll do my best.

Now what is this about? I think Paul and I agree that it's not primarily about policy. A lot of people have Farrah Fawcett pictures on their walls, I have the Ryan Rivlin on the wall for Medicare, that's sort of my fantasy poster, it's a great plan (RYAN: who's Farrah Fawcett?) she was the OMB director before Alice...

And so this would end the open-ended Medicare promise, it would give people personal responsibility for care and improve their character. But the fight I want to pick is about mentalities it's not about policy, it's about narrative and how we think about policy. But I think this has an effect on policy, but has a big effect on our effectiveness and really Paul's effectiveness in office. Because in my view I think Paul's prose is sometimes at war with his policy. His rhetoric is going to undermine some of the great things he can achieve in the position he's lucky enough to have and we're lucky to have him to have.

And I'm afraid some of his big ways of looking at the world will lead him to squander this moment, which is a precious moment. Now to explain what I mean by that, I want to talk a little about policies but really go back a couple of hundred years I'm afraid to start with .

And that's with the French enlightenment, and the French enlightenment had a view of nature that defined mankind as primarily a reasoning creature. We use reason to pursue interest and respond in straightforward ways to incentives. Now this view of human nature had two offshoots. The one we're familiar with is the technocratic planning offshoot. If we can use reason, we can plan society through an ordered machine. The second, which was more what we would call economic liberalism, held that individuals are the best judges of their own interests, and that we should maximize freedom, so they can make the best rational choices for themselves.

Now if you're within this mindset, the crucial question of this debate --how much government should we have? Makes perfect sense. Because the debate between these two sides is between the planners and the economic liberals and the crucial conntium is how big government? How much planning, how much freedom?

But there was another enlightenment which irving kristol and Gertrude himmelfarb have written that happened a few hundred miles away this was the biritsh and Scottish enlightenment, led by david hume, adam smith, and Edmund burke.

And they didn't believe reason was the strongest faculty we have, they thought reason was weak, we're primarily creatures of sentiments and passions. And we train our sentiments and passions within society with relationships within institutions and within the things we have that precede choice-family faith region country and government

And what matters is not reason what matters is character and what matters is the nature of the social bonds that create character and so from this perspective (which I will call the conservative perspective) this questions of this debate how much government should be big or small, id basically a meaningless questions. what matters is character. What matters is the character of a country and character of a nation. And whether government erodes it or builds it is possible to imagine big government building characters, it probably happened in world war II, it is possible to imagine small government eroding character.

and so for some of us in this conservative tradition , the conservative obsessions with the size of government is a distraction it is politically damaging because it leads republicans to abstract debates about the size of governments, so they pay less attention to concrete issues that face Americans around their kitchen tables.

And it leads most damagingly to a series of big promises out of power-we're going to cut radically cut government, we're the party of small govt-and then complete stagnation in power. Because republicans come in and have no idea governing philosophy about how to use government. What priorities should be valued and what priorities should not be vcalued. So tio me the crucial conservative question-is government a nurture or undermine good character.

Now this is an abstract questions we can have abstract debates about it. But we don't need to have abstract debate b/w we have a conservative tradition in this country. And this conservative tradition has created a governing philosophy unique to American. I used to work at the work trying to flog free market ideas into the Germans and Dutch-its hopeless. They have a style of government that's fit for their culture, this just not fit for our culture. And American has a governing tradition which uses government which instills the virtues that are distinct to America. a this tradition started at the beginning of the Washington administration which used thanks to Alexander Hamilton the power of government to upend what Thomas Jefferson wanted. Thomas Jefferson wanted an agricultural society with as small a government a possible so oligarchs like him could keep their economic dominance,. Hamilton used the power of government to create credit market to upend the oligarchs. He used industrial policy, he used trade policy, all with a vision of American which could create social mobility and thereby enhance national greatness this Hamiltonian tradition was picked by the whig party which created under Henry clay and Daniela Webster the American system of roads and canals

It was embraced by abraham lincoln. In 1828 abraham Lincoln nearly drove the state of illinois bankrupt with what we would call a stimulus package. Trying to use government to crate banks that would invest in companies, trying to use the government to build roads and canals, but this was his vision and he carried this vision even though he screwed up in 1828 he carried it to the white house. And during the cicvil war the republican party they created the land grant college act the homestead act the railroad legislation, using government to create the means so poor boys like Lincoln and like Hamilton could rise and succeed

This then went on I think through teddy Roosevelt who tried to bust up the trust to create more open competition It went on into california where mid twentieth century governors like earl warren and pat brown created the best school system in the country, big water projects, big highway projects, again not government against the market, government giving people the tools to compete in the market, to encourage a sort of American individualism, an American individualism that I think its best expressed by john Fords movie my darling Clementine, which is not john wayne riding off into the sunset. It's a movie with henry fonda where they go and create a town. They move out west they're pioneers and they're creating community its not create a lone individualistic country its creating a country of bourgeois heroism creating community and order. And that's what this style of government was designed to create to give people the tools to do this

And this style of government occasionally resurfaces. Paul mentioned tommy Thompson welfare reform was an example of big expensive government, but instilling the right values, the values of work. Since we're at aei I should mention the coin strategy , which david petraeus and others are using in Iraq and Afghanistan, using government to create bourgeois towns in valleys in Iraq and afghanstian.

My problem is by and large that this tradition has been lost. We've been trapped for 30 years in a big government vs small government debate, having this abstract argument which is great for talk radio, its not so great for Washington and for governance. Because nothing actually gets done and we've had basically a period of stagnation. the british have gone off they've passed a budget, the germans made difficult labor market reforms. We've done very little to fix the fiscal situation paul described in the past 30 years

And so I guess my problems with paul and the oped paul and Arthur wrote, was not the policies, not the welfare reform, it was the framing of the issue. And I think you guys frame the issues in ways that harken back to the stagnation-causing debate frankly, of the French mindset, if I could accuse you of being pseudo- European (RYAN: maybe Arthur) okay. Because the basic formulation you've made here today and have made several times, is that we face stark choice. we face a stark choice between a free enterprise opportunity society or a European cradle to the grave welfare state. You said on Charlie rose between a fast growing society and a managed decline society. And you said this is a stark and polarizing choice, the lines have been drawn

And to me the crucial sentence in the piece you and Arthur wrote together was this: "the road to serfdom in America does not involve a knock in the night or a jack-booted thug. It starts with smooth-talking politicians offering seemingly innocuous compromises, and an opportunistic leadership that chooses not to stand up for America's enduring principles of freedom and entrepreneurship." so this is what I call the road to serfdom frame, the stark choice, and any compromise with the people on the other side takes us down the road to serfdom.

Now I have a couple problems with this stark choice. First I think it's journalistically wrong. I do not think most democrats want to create a european welfare state. Even when they had all the power in the 30s and in the 60s we didn't go there. I'd say thin when you talk to democrats now, they want to maybe take government up to 25% of GDP, most republicans wouild like it closer to 19, this is not an absolutist difference between two sides. I spend a lot of time interviewing these guys, I've known them for years, and I don't see any European welfare status among them, or at least in the top echelons. Tim geithner, larry summers ben Bernanke, peter orzsag, gene sperling, Jason furman, these guys don't believe in a welfare state, if they do they've hidden it in every single piece they've ever written and in every argument they've ever had.

Even barack obama, if you look at the things he thinks are closest to his nature, it's the Georgetown university speech he gave on the economy . It's a liberal speech he's a liberal, but hes an American liberal, he doesn't believe in an European welfare state. And from his perspective, he's gotten hit on the left again and again and again, from paul krugman and others, for not having a single payers program, for not having a stimulus package. I just don't think they're as extreme as you make them out to be, I think there's much more room for compromise than you make make them out to be.

Second the problem with this frame of the stark choice it begs every important questions. Youre' not a libertarian as you believe as you made clear today in the idea that government has to play a positive role. But exactly how? That is the crucial question. And exactly how exactly how not in the abstract but in specific cases, in the case of Katrina, in the case of the when we did the tarp, exactly how do we defined what government should and should not do. That's a questions where you elide when you make it a polarized choice between the side between free opportunity and the side of socialism its all here and that's where the debate is, and that where really the debate between where barack obama has had.

The third problem with the road to serfdom formulation is that it makes compromise impossible, it makes politics impossible. Ronald Reagan raised taxes 12 times. He did it because he felt he needed to do it to get things done. This formulation would have made much of American history impossible. If we said any compromise towards statism leads us on the road to compromise that really makes alexander Hamilton impossible it makes the railroad act impossible, it makes the new deal impossible it makes the federal reserve impossible these things are open to compromise.

And fourth and most importantly I think it squanders this moment. We're at a moment as you said where the consciousness of the debt is high, cons of the implosion that's about to happen is high, the public is waking up to remake the welfare state. But the two parties at the moment have these absolutist dreams that they'll get their way to remake the welfare state.

The republicans dream they're going to do it without tax increases, that some day they will dominate all branches of government, and they'll be able to pass through the roadmap. At least some republicans think that. The democrats dream of eliminating the republican party, and passing it all by taxing the rich . this will never happen.

And even if it did happen and they magically gained control of the entire government they still would do nothing because they wouldn't want to take the onus of their difficult choices upon themselves.

So we're at a precious moment where we have at divided government, but we have divided government of a specific sort. we have divided government with a series of proposals that are suddenly floating out there, the bowls Simpsons, the bipartisan policy committee, the roadmap, the wyden plan, some of the things geithner is talking about, with a lot of overlap.

And overlap that should be somewhat friendly to conservatives. So I don't see polarized armies when I see all those plans floating out there. I see plans a lot of overlap.

And if republicans are flexible, it creates an opportunity to changes things even in the near term before the fiscal crisis happens. And so if I were you I would hope if Barack Obama called you up, and this probably won't happen, but I hope you would take this deal, if he would call you up and say , "I'll give you Ryan-Rivlin if you'll give me a top tax rate of 39 percent, I hope you would take that deal. I think that's a great deal (RYAN: I don't think he's gonna make that call)

We'll I suspect at the state of the union he's gonna put a stack of papers, say this is the tax code, let's fix it, and that will open up the opportunity to have a conversation. And we shouldn't be hindered in that conversation by the idea that we're two opposing armies.

And finally in conclusion we're going to have the entitlement fights where I think there's room for flexibility, but beyond that we're going to have a series of intractable structural problems that we're going to have to address and the biggest and most near and dear to me is the human capital problem, which will not simply be solved by getting government out of the way. The fact is that we're wasting 30-40% of our human capital.

Then there's problem in the Midwest, we have the problem with widening inequality, the whole segmentation society along educational grounds. All of these problems will take some sort of government action, whether it's KIPP academies, Harlem children zones, training, and infrastructure projects. They will take active government. And it's useful to have a philosophy that encourages the kind of government I think that all conservatives want. As Irving Kristol said, he wanted the welfare state, which would create a ground for people, he wanted a state that would encourage energy, but he didn't want a paternalistic state, which would weaken character. I think that's where we fundamentally agree and the question is how flexible we're going to be to get there.

Paul Ryan (PR): First, let me say a couple of things. Let me go philosophical and then pragmatically on policy. Philosophically, I'd call myself Hume/Smith/Burke-ian, no two ways about it, but when we're talking about the size and role of the government in the 19th C., when we're talking about things Lincoln did, things that were done by Jefferson and other founders and Hamilton, these were done in context where our national policy was still tethered to the founding principles. Still tethered to the idea of America.

I would argue in the 20th C., look I grew up in Janesville, WI right outside Madison, I mean progressivism basically came from the Germans to Madison and then to everyone else, so I'm very familiar with Weber, Hegel, and all this stuff. I think we changed that idea. We went in this country from universally accepting that our rights came, like the Declaration says, from nature and nature not from government to one where government gives and creates new rights for us, where it's government's job to distribute these rights. If I government can give us these rights like health care then government can ration it. They can redistribute it. They can determine how, why or when we get it. So I do believe that the view of government has changed.

And I do believe that there are people in town here on the Left who believe it should change. You might mention that top echelon of NEC ,who are not winning the argument by the way, but I invite you to come to Ways and Means and look at the top echelon of Democrats over there because I'll just give you a vignette.

When we were debating health care, when the House version passed, public option and all that, it had been a long day, every one was tired, emotion were raw, speaker after speaker, whether it was Obie or Pelosi or Reid came to the floor saying by golly this is finally it. The third wave of progressivism where we finally can transform America to what it needs to be. S I do believe there is a strict adherence that that philosophy in leadership positions on the Left.

Not all Democrats are like that. Let me there's a difference and a chasm developing between the Brookings/Rivlin/Erskine Bowles types and the ones I've just mentioned and so we do have to settle this question, I believe. What is the role of government? Is it equal opportunity or is it equal outcomes? Big difference. What is equality? And we have to settle that. Because if you take a look at the genesis behind the ideas on the Left it goes in a different direction, so yes I guess it is stark, so philosophically, I do have an issue with that. But pragmatically I have an issue with it because of the numbers. The numbers are vicious and what I'm talking about with the viciousness of our numbers, demographics is our destiny and our debt situation is so bad and it compounds so viciously that we've got to settle this soon. How we respond to preempting this debt crisis will really determine the outcome of this debate whether we want it to or not. What I mean when I say that is, do we turn these entitlement programs, which are right now defined benefit programs spiraling out of control into defined contribution systems where we do bottom up reforms empowering the individual or do we stick with the government-centric top down reforms where the government controls these markets of our economy. If we stick with that design, which is a European based design then it's austerity. Then it's managed decline.

Because take a look at just interest on the debt right now. $200 billion, pretty low compared to what we're looking at. A trillion by the end of budget window if interest rates stay where they are. They're going to go up. 5.4 trillion more in interest payments within in the first 10 years if we just go back to the average of the 80s. What I'm trying to say is, if we don't turn this thing around soon interest on the debt catches us and puts us in managed decline situation, not unlike Japan where, even if our economy's growing and the interest rates go up, it's not enough to service our debt. It's not enough to give us a limited government, free enterprise, low tax, free opportunity society.

4 basic foundations for economic growth need to be re-adhered to which are not being adhered to: low interest rates, sound money, regulations that don't involve crony capitalism--big government and big business joining in common cause--but that are predictable transparent and reasonable, and spending control and spending discipline, so that we can show our countrymen and the world that we're getting this debt under control. We're going to absorb the Boomers. Get it under control and move on.

So what I would say is that it's not as if people like Arthur and I want to have a stark debate that is chosen right now. We have to because of the numbers. Because of the demographics. And yes because of the motivations from others who would like have a more of a defined benefits, collectivist society.

We just created two new health care entitlements in the last year on top of the other two that are bankrupting us. GAO told us 3 years ago we have a $62.9 trillion unfunded liability, last year 76.4 trillion, two weeks ago it was 88.6 trillion. This thing is going out of control, so we have to win the idea of what this country is and what it stands for if we're going to have a government in the 21st C. that resembles anything like what Lincoln had or what we had in the 20th C.

And so compromise is a good word as long as you're comprising in the right direction in line with the fulfillment of your principles. I'll take an inch rather than a mile, if I can take an inch in the right direction. But I don't want to take an inch backward because looking at the storm on the horizon, it will indebt us to a very ugly future where we will not be able to make these choices. We won't be able to have an energetic government response to the problems of our day and we'll be sucked down into this debt crisis. We'll be paying more and more to creditors overseas and our tax rates will be so high that it will stifle growth and innovation.

So yes, the way I see it, we owe the country a choice. And yes, it needs to be brought to a clear choice because if we don't we'll muddle through this system and we'll end up with this kind of managed decline society. And I do believe it's a choice. A prosperous, free opportunity society with a safety net as opposed to the cradle to grave society where we turn the safety net into a hammock. And that is just the economic consequence of what's in front of us, and yes there is a philosophical difference of opinion. Lots of Democrats don't share that difference of opinion, but many do.

So I'm not trying to be partisan. I believe a centrist coalition is developing. Rivlin-Ryan is a perfect example, Erskine Bowles is a perfect example, of a centrist coalition, that is a right of center coalition forming , where revenues and expenditures are coming together, but that means that the progressivist left will be separated from the centrist Democrats. They're going to have to make their minds up on that and I believe this coalition is going. Unfortunately, I have to go vote, but I believe Arthur is going to take over for me. Thank you very much. Sorry I have to go.

AB: Thank you Congressman Ryan. I believe he was at the end of his rejoinder, so at this point we're going to turn it back over to David Brooks now. I'd like to note that our debate today is slightly truncated because of big government, isn't that just the problem? But the upside is, of course, that I do get to stand in for Congressman Ryan and would like to make some news as Congressman Ryan. A few new planks for the Road Map to America and perhaps to announce that I'd like to step down from Congress and join the American Enterprise Institute

I think that we came to a natural break in his remarks, so will turn it back over to David before we close out our debate today.

DB: I offered to go vote for him, for the Obama tax plan in his name. I guess that one thing that he has that I don't have is that he has to sit in the House of Representatives. And so I don't have to deal with Nancy Pelosi and David Obie (although none of us have to anymore), but the fact is that they no longer have the majority in the House, so don't have as much power. So the situation we find ourselves in is Republicans controlling the house. Democrats with a nervous fragile majority in the Senate including 8-12 Democrats who are in very red states and extremely nervous on top of a series of Democrats who are pretty moderate and willing to compromise. Then you've got a president who is a liberal, but knows he needs to win back Congress, win back independents and is seriously within the administration talking about doing tax reform, so to me this is not a hopeless moment. It's not a great moment, but about as good a moment as we're likely to get in real life. The moment is to be seized to head off the disaster Paul described. To me, the prospect of national bankruptcy is worse than the prospect of some tax increases.

So if I were him in power I would make the deal. David Cameron, the sainted David Cameron, has a budget that is 80 spending cuts 20 tax increases. That's probably the right ratio. Because we do know that spending cuts lead to long term deficit reduction much more than tax increases. Nonetheless it's probably the right ratio for policy grounds and probably political grounds. And my problem with the Republican party now is that it you offered them 80-20 they'd say no, if you offered them 90-10 they'd say no, if you offered them 99-1 they'd say no. And that's because we've substituted governance for rigidity, for rigidity Ronald Reagan didn't have. This rigidity comes from the polarized world view that they're a bunch of socialists over there.

Again, I've spent a lot of time with the President, I've spent a lot of time with the people around him. They're liberals. They have much greater faith in planning than I do and the health care plan that came out of that reflected their faith in planning, that a bunch of guys sitting around in Washington could fix the health care system. But they're not idiots and they're not Europeans and they don't want to be European lovers.

If you read what they've written for the last 20 years, they want an activist government that does a little more planned redistribution, but it's American liberalism and it's not inflexible and I really recommend that Georgetown Speech that Obama gave. It dovetails in some ways with what you guys wrote.

And so to me, I think it's a time for flexibility and some sort of compromise. And compromise built on the principle that what matters is the character, what matters is the character of the country, using government is ways that instill good character, and not using the government in ways to instill bad character. My problem with the Great Society-I'm fine with the New Deal. I'm fine with it because I don't think Social Security, I don't think the Civilian Conservation Corp, weakened society. I'm not fine with the Great Society because it undermined character. It undermined the bourgeois institutions of work, faith, and family, and so you can tell conservatives about what year they'd like to go back to, some in the Tea Party I think would like to go back to the founding, some at the Claremont Institute want to go back before the progressive era and the Federal Reserve Board, some, my friend Amity Shlaes may want to go back before the New Deal. I want to go back from 1965 and start from there. And start with a set of policies that instill initiative and bourgeois values.

I think Paul is on the right track with most of it. I think getting people involved with defined contribution plans in healthcare would get people engaged in their healthcare spending and responsible decisions that no one has to make anymore. The policy is great. That's why I'm in favor of charter schools. They get people involved in responsible, bourgeois decision making. And so the policies are fine if we're willing to do the politics to get there.

But then finally two things that should trouble us, and make life hard. Most of us in this room are college educated. We're willing to take responsibility upon are ourselves. We're willing to have a riskier life because we feel we'll be able to handle our choices. But as we saw in the Social Security debate, there are a lot of people, frankly in less educated parts of the country, who do not want those choices. And Republicans destroyed some of the Social Security reform in these areas because they live in unstable and uncertain circumstances and they didn't want more risk and more choice put upon them. And we ave to be conscious of that if we want to created the opportunity society that Paul and Arthur talk about and that's just a fact because they are fundamentally conservative. They have a tremendous faith in order and authority, which we should all respect.

And then the final thing to be said is that again I keep harping on this day after tomorrow, but I think it is a crucial debate because the reason that America got rich in the 19th C. was because we were the most educated country on earth and we could count on a certain level of social capital we no longer can.

We have a widening segmentation of education levels and people are getting poorer, their families are breaking down, single parenthood is on the rise among all ethnic groups and it's going to take some paternalistic government to fix this. Paternalistic in the sense of the KIPP programs and Harlem children zones because you have families fundamentally breaking down and unless you want sit by and let that go, we're going to have to take some action that does not square with the hands-off laissez faire ideal.

And so I think we're at the moment where we've had this big government/small government debate an my theme of my life is to return us to the Hamiltonian/Whig/Lincoln tradition, which is not small government to enhance a freedom, not big government to enhance equality. It's limited and energetic government to enhance social mobility. Thanks.

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Tuesday, September 16, 2014 | 5:00 p.m. – 6:00 p.m.
The Constitution as political theory

Please join us for the third-annual Walter Berns Constitution Day Lecture as James Ceasar, Harry F. Byrd Professor of Politics at the University of Virginia, explores some of the Constitution’s most significant contributions to political theory, focusing on themes that have been largely unexamined in current scholarship.

Wednesday, September 17, 2014 | 8:10 a.m. – Thursday, September 18, 2014 | 1:30 p.m.
Third international conference on housing risk: New risk measures and their applications

We invite you to join us for this year’s international conference on housing risk — cosponsored by the Collateral Risk Network and AEI International Center on Housing Risk — which will focus on new mortgage and collateral risk measures and their applications.

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Thursday, September 18, 2014 | 2:15 p.m. – 3:00 p.m.
Speaker of the House John Boehner on resetting America’s economic foundation

Please join us as Speaker John Boehner (R-OH) delivers his five-point policy vision to reset America’s economy.

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Friday, September 19, 2014 | 9:15 a.m. – 11:00 a.m.
Reforming Medicare: What does the public think?

Please join us as a panel of distinguished experts explore the implications of the report and the consumer role in shaping the future of Medicare.

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