Insight: Ryan's economic thinking is more Reagan than Tea Party

OXFORD, Ohio Tue Aug 21, 2012 2:25pm EDT

1 of 9. Photographs of Rep. Paul Ryan (R-WI) from a composite picture is seen at the Delta Tau Delta house at Miami University in Oxford, August 15, 2012.

Credit: Reuters/Aaron Bernstein

OXFORD, Ohio (Reuters) - When Cesar Conda was a Republican staff director on the U.S. Senate's small business committee in 1991, he often was badgered with questions on economic theory by Paul Ryan, then a 21-year-old intern.

Ryan, now the Republican candidate for vice president, "worked in the mail room and would constantly pop his head into my office to ask questions about supply-side economics," Conda said. "I had a lot of work to do, so I gave him a couple of books to keep him busy."

Conda, now chief of staff for conservative Florida Senator Marco Rubio, lent Ryan Jude Wanniski's "The Way the World Works" (1978), which Conda called "the Bible" for the 1981 Kemp-Roth tax cut that lowered the top U.S. income tax rate to 50 percent from 70 percent. Conda also lent Ryan George Gilder's "Wealth and Poverty" (1981), which Conda says was a guide for President Ronald Reagan's supply-side economic policies of lowering taxes, slowing government growth and reducing regulation.

Ryan soon returned the Wanniski book, but Conda did not retrieve "Wealth and Poverty" until 2008, when he saw it in Ryan's Capitol Hill office. By then, Ryan was a five-term congressman from Wisconsin and the top Republican on the U.S. House budget committee.

"The margins were full of notes," added Conda, an economic adviser to the 2008 presidential campaign of Republican Mitt Romney, whom Conda introduced to Ryan in 2007.

Those who have known Ryan since the early 1990s describe a young man with a clear idea of his own political and economic philosophy. Ryan spent his formative years strengthening his grasp of supply-side economic theory.

Democratic opponents say that Ryan's austere budget plan -- which would carve into social programs that protect the poor such as food stamps and Medicaid health insurance -- is uncompromisingly cruel and based on an ideology of tax cuts and reduced regulation that, under former President George W. Bush, caused America's current economic woes.

Ryan and other Republicans reject that portrayal of the budget and its author.

Those in what Kansas Governor Sam Brownback calls Ryan's "band of brothers" -- like-minded Republican politicians and strategists from Reagan's tenure in the 1980s and Ryan's formative years in Washington in the 1990s -- say that while Ryan is committed to supply-side economics, he is capable of compromise on economic issues.

That would make Ryan more like Reagan than today's Republican hard-liners, who view Reagan as a conservative icon but typically reject the former president's penchant for compromising with Democrats.

Some recall conversations with Ryan in 2008 before Congress' votes to create the Troubled Asset Relief Program (TARP), the controversial bank bailout that cost taxpayers more than $400 billion. Ryan looked beyond his opposition to TARP because he realized the alternative was to subject America to an economic depression, these Ryan fans and supply-siders said.

"Paul is an eager, happy warrior on the battlefield of ideas," said Vin Weber, a former Minnesota congressman who was a co-director of the now-defunct conservative think tank Empower America, where Ryan worked in the 1990s. "He has strong beliefs, but he's driven by data. Paul knew without TARP in 2008 we would descend into another Great Depression, and I still think he did the right thing by voting for it."

'VISION QUEST'

During a 2009 commencement speech he gave at Miami University in Oxford, Ohio, where he graduated in 1992, Ryan referred to having had a "difficult" time in high school after his father's death.

He also mentioned an economics professor, Rich Hart.

"He provided me with much more than just an education in economics," Ryan said. "He provided a vision quest in my mind to improve the economy of our nation."

Hart, whose "intellectual hero" is economist Milton Friedman, had long conversations with Ryan and gave him a copy of Friedman's "Capitalism and Freedom."

Hart said he often has given students Ayn Rand's "Atlas Shrugged," a novel about a rebellion by citizens against high taxes and government regulation that Ryan has said had a great influence on him. Hart said Ryan already had read the book by the time Hart taught him.

"When Paul Ryan arrived at Miami he already had an economic and political philosophy," Hart said. "He spent his time here refining and strengthening it."

When Ryan went to Oxford in 2009, Hart says he tried to persuade his former student to run for president. He recalls Ryan saying no, that he did not want to leave his three young children to campaign for two years.

'MATURE BEYOND HIS YEARS'

While at Miami, Ryan interned for Republican U.S. Senator Bob Kasten of Wisconsin and for the Senate small business committee. Kasten said he offered Ryan a job after he graduated in 1992 and that Ryan "was always mature beyond his years."

But Kasten recalled a moment of youthful longing by Ryan. When Ryan got the job offer, he said he wanted to take a year off to be a ski instructor in Colorado. Ryan's mother, Elizabeth, insisted he seize the chance to work in Washington.

After Kasten lost to Democrat Russ Feingold in the 1992 election, Ryan joined Empower America, where he helped former congressman Jack Kemp, the co-author of the 1981 tax cut and Empower America's co-director for economic policy.

Founded after Democrat Bill Clinton won the 1992 presidential election, Empower America was intended to compete with Democrats "on the battlefield of ideas," Weber said. The think tank featured economists such as Arthur Laffer, one of Reagan's economic advisers.

Empower America later merged with Citizens for a Sound Economy, which later split into FreedomWorks and Americans for Prosperity, the latter of which has backing from oil and gas billionaire brothers Charles and David Koch.

Ryan was very close to Kemp, who briefly sought the 1988 Republican presidential nomination and was Bob Dole's vice presidential running mate in 1996.

Weber said that Kemp, who died in 2009, "was the great hope for many of us after Reagan because for conservatives of my ilk he best embodied Reagan's policies.

"After Kemp, Paul Ryan emerged as our next great hope," he added.

Some have portrayed Kemp as a second father to Ryan, but Kasten says that is not quite accurate.

Kasten said Ryan has had several brother-type relationships with like-minded conservatives such as Kasten, "based on mutual respect and love."

'HE'S VERY SHARP'

Conda introduced Ryan to Romney in Ryan's office January 2007. What was supposed to be a courtesy meeting quickly became something more.

"Before long they were talking about entitlement reform and marginal income taxes," he said. "Afterwards, Romney said to me, 'I like him; he's very sharp.' "

Apart from sharing an apparent affinity for tax and economic theory, some who know Ryan say he and Romney are both compromisers.

"There are some people who can be a committed conservative and agree with all the ideas, but still be an individual," said Linda Killian, a journalist who chatted with Ryan several times in the mid-1990s for her book "The Freshmen: What Happened to the Republican Revolution?" -- an account of the two years after Republicans took control of Congress for the first time in four decades in 1994.

Ryan is "certainly no partisan robot," Killian said.

But Congressman Chris Van Hollen, the top Democrat on the House Budget Committee, said that although Ryan is personable, "you should not confuse congeniality with an ability to compromise."

"Paul Ryan is a passionate advocate of trickle-down economics that have failed the test of reality," Van Hollen said. "There is no compromise in his budget plan. It's a take-it-or-leave-it proposition with a totally lopsided approach to the budget and the economy."

Conservatives who know Ryan well point to his vote for TARP as an example of his ability to compromise on economic issues.

The bank bailout is anathema to Tea Party activists, who have targeted those who supported it such as Indiana Senator Dick Lugar, who lost a primary election in May.

In 2008 Ryan said in the U.S. House that although TARP was against his principles he would support it "to save" the free-market system.

"Paul Ryan is not a dogmatic, blind conservative," Kasten said. "He's made a number of compromises and will continue to do so."

(Editing by David Lindsey and Cynthia Osterman)

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